Ever since an Ontario court judge rapped a car-maker with $500,000 in punitive damages (reduced to $100,000 on appeal) for the way it treated a worker with chronic fatigue syndrome, employers have been poring over the
Keays v. Honda Canada Inc.
ruling to glean some lessons on what to avoid.
Here’s another potential lesson to consider: Was the employer right in relying on the insurer’s assessment? If the trial judge found the employee was “wrongly terminated from his long-term disability,” does the employer now have any right of action against the insurer?
Kevin Keays was an employee who had been on the job with Honda at its plant in Alliston, Ont., for 14 years. He suffered from chronic fatigue syndrome, which made him miss work frequently. He was off work between October 1996 and December 1998, when the insurer cut off his long-term disability (LTD). His frequent absences continued when he returned to the job, prompting the employer to start a disciplinary process.
Hugh Scher, the lawyer for Keays, said he’s not aware of any instance where an employer has sued an insurer for benefits, only that there are countless cases out there of employees having to launch their own claims against insurers for coverage.
Elizabeth Lyall, a partner at the Vancouver office of Fasken Martineau who specializes in defending insurers in life insurance and disability insurance claims, said most contracts are set up so that employers don’t have to get involved in such claims.
That’s not to say there hasn’t been any employer that will take up the employee’s cause and go after an insurer for benefits. Lyall said she’s seen a few cases where the employer has done this.
“It was often people (the employer) really liked. You’d see this in a smaller organization, and it would not necessarily be someone powerful,” said Lyall.
“Maybe it would be a situation where the employer had special insight into that person and her work ethic and how she would never ever fake it. That’s where we would see them step in.”
In most cases, where an insurance provider has rejected a claim or terminated benefits, the employer has to decide independently whether the employee’s illness or disability is legitimate.
“Where an insurer decides to terminate benefits, there’s an assumption that the insurer has concluded that the employee doesn’t have a disability,” said Anthony Griffin, a lawyer for the Ontario Human Rights Commission. “But there’s a risk when the employer says, ‘That’s the answer I’m using.’”
Griffin pointed to a 2005 case out of Ontario that reaffirmed the employer’s obligation to conduct its due diligence. In
OI Canada Corp. v. U.S.W.A., Local 260G
, a case involving an employee suffering from migraine headaches, the arbitrator said the findings of the specialist who investigated the cause of the employee’s symptoms were more persuasive than the company’s stance that the employee was not disabled.
“The company relied on the insurer’s decision to decline the (worker’s) weekly indemnity claim. However, the medical basis for that decision is unclear. The company also relied on the opinion of its medical consultant that there were no objective findings associated with (the worker’s) symptoms or of impairment supporting disability. However, there is no principled basis to prefer this evidence over the findings of the specialist after investigations.”
Griffin said the recourse for Honda, given that the insurer had denied Keays benefits, was to tolerate as much absenteeism as possible.
“(Chronic fatigue syndrome) is a real disease but it doesn’t necessarily mean you should be off on long-term disability, just that you may not go into work everyday,” he said.
In that respect, it’s not unlike mental illness, a growing health concern that employers had better learn how to accommodate, he said.
Chris Foulon, partner at Toronto law firm Israel Foulon, said the real issue is why Honda thought it had to bring Keays back to work.
“The problem that employers get into in these circumstances is they get denial of coverage from an insurer and they take the position that the employee has to come back to work,” said Foulon. “And that’s generally not a good position for an employer to take if the employee and the employee’s own doctor says he can’t come back to work.”
What he would advise the employer to do is simply tolerate the prolonged absence. The employer doesn’t have to pay the employee any salary, just continue the employee’s benefit coverage. As for the employee’s income, it’ll be up to him to sue the insurer for the benefits.
In a real case of dispute, the employer could also ask the employee to submit to an independent third-party medical assessment, said Foulon.
“But would I typically recommend that? No, I would typically recommend to an employer, ‘Hey, this employee says he’s too sick to return to work. What is it going to cost you to tolerate his continued absence?’”
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