Judgment could encourage LTD claimants to pursue their cases

By Tony Poland, LegalMatters Staff • A long-term disability (LTD) case that saw a woman who suffered a stroke awarded $1.08 million in legal costs may well provide others with the impetus to seek justice in their insurance claims, says Ontario disability insurance lawyer Courtney Mulqueen.

Earlier this year, the Superior Court of Ontario ordered Blue Cross Life Insurance Company of Canada to pay a woman her full court costs.

Typically, the successful party in a lawsuit is awarded a percentage of their legal costs to cover lawyers’ fees and other expenses associated with litigation. This is done to encourage settlements by creating a cost consequence to going to trial and to discourage and penalize inappropriate and unreasonable conduct by parties.

Costs awarded on a partial indemnity basis are considered standard and are usually in the range of 50 per cent of the winning party’s actual costs, says Mulqueen, principal lawyer of Mulqueen Disability Law Professional Corporation.

However, in Baker v. Blue Cross, Justice Susan Vella ruled Sara Baker was entitled to full indemnity, stating “insurers must bear the risk if they wrongfully deny coverage in long-term disability policies, forcing an insured, who is economically disadvantaged from challenging the insurer by reason of a wrongful denial of benefits, to pursue costly litigation that can take years to resolve.” 

Justified ‘elevated award’

“I find that the wrongful denial of long-term disability benefits by an insurer, given the unique character of long-term disability insurance policies, constitutes special circumstances justifying this elevated award,” she ruled.

Along with getting her full legal costs, a jury had also awarded Baker $1.5 million in punitive damages, $40,000 in aggravated damages for mental distress and $220,000 in retroactive benefits.   

“It is fitting that we have just observed Access to Justice Week because to me, this judgment gives people the courage to proceed with their case and prove their claim,” says Mulqueen, who was not involved in the case but comments generally. “Seeking justice can come with risk because justice is a bit of a moving target. 

“It can be frustrating to wait years to get your day in court. There can be the temptation to take what the insurance company is offering, even if it is an inferior offer, just so you can get on with your life,” she tells LegalMattersCanada.ca. “What this judgment demonstrates is that you don’t always have to settle if you believe you have a good case.”

Baker was a director at a Toronto hospital when she suffered a sudden brain bleed while exercising in 2013, the court heard. After receiving LTD benefits under her employer’s group disability insurance policy, Blue Cross determined the woman did not “meet the eligibility criteria for ‘total disability’ as defined by its policy” and ended her claim, according to the judgment. 

Subjected to hundreds of hours of surveillance

Baker filed a lawsuit in 2017 with the insurance company insisting on a jury trial that was delayed, chiefly because of the pandemic. In a five-week trial that ended in June 2022, the jury heard Baker was subjected to 375 hours of covert surveillance.

Mulqueen says contesting an insurance claim denial is stressful for even the strongest person. Insurance companies can afford to let a case drag on for years but claimants are not able to work and likely facing serious financial pressures, she says.

“Many people cannot hold on to get to trial,” Mulqueen says. “I have seen cases where my clients are desperate and have absolutely no money. They end up settling for less than they deserve rather than taking it to trial.”

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For some, dealing with the insurer just adds to their stress, especially if they find themselves under constant surveillance, she says. 

“I believe surveillance is a waste of time and money. But I still warn my clients that the insurance company may use it,” Mulqueen says. “Unfortunately, some clients suffer from so much anxiety at the thought of being constantly watched that it may motivate them to settle because they do not want to have to deal with it.

“Some of my clients have serious mental health issues and litigation can actually make their condition worse,” she adds. “For them, it can become a balancing act. Is it better for their health to settle now as opposed to continuing to deal with the stress and perhaps worsening their condition?”

Settling early may mean accepting an offer that may not adequately address the claimant’s future needs, says Mulqueen. However, fighting the insurance company comes with challenges, she says.

‘Uncertainty of waiting for a claim to be resolved’

“We always warn our clients that if they lose at trial they could be on the hook for the other side’s costs,” says Mulqueen. “There is adverse cost insurance that clients can access to cover that contingency but there is still the issue of court delays and the stress of a trial. There is also the uncertainty of waiting for a claim to be resolved.

“In many cases, it seems like the target is moving further and further away and justice can become an illusion that you cannot quite get to.”

She says judgments such as in Baker v. Blue Cross could motivate more people to see their claims through to the court stage.

“It really is significant when you are talking about the issue of access to justice,” Mulqueen says. “A case dealing with damages and costs with a positive outcome for the plaintiff provides hope.”

Access to justice can be elusive, she says.

“What is justice for people? is it getting their benefits? Is it settling and no longer having to deal with the insurance company?” asks Mulqueen. “To me, justice is getting people back to where they were before their benefits were denied or terminated. Unfortunately, many people never get back to where they were initially because of all the harm that results from that denial or termination. They may never fully be compensated unless you get one of these unicorn settlements such as Baker v. Blue Cross.”

Access to justice is a fundamental principle

According to the Law Society of Ontario (LSO) “access to justice is a fundamental principle of our justice system, and yet every day many are faced with barriers to getting the help they need.” 

“Vulnerable and marginalized populations face additional barriers to accessing justice based on factors like gender, race, culture, age, language, literacy, disability, income support, and geographical location,” states the LSO. “Quite simply, access to justice means that people have access to the information, resources and services necessary to effectively resolve their legal issues.”

Mulqueen says it is important to consider the toll litigation can take on clients.

“As lawyers, we should always be looking at ways to encourage and accommodate people when they are seeking justice,” she says. “In a trauma-informed approach to law, there are all sorts of ways to serve our clients to help them continue litigation and limit the anxiety so they are not feeling the pressure to settle.

“Perhaps it is as simple as finding the time of day the client prefers to speak. Some people do not want a video conference, they prefer to meet in person in order to process information,” Mulqueen adds. “Others need plenty of breaks during a meeting. Some want constant updates because they are anxious about knowing what is happening while other clients don’t want to hear from you unless there is something urgent to deal with.”

Taking the time to know the client is essential, she says.

“There are so many variables in terms of how people can get through litigation and as lawyers, we have an obligation to have that conversation,” Mulqueen says. “Some solutions are basic and simple but they can make such a difference and clients are so grateful in the end.”