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Surveillance Evidence and Long-Term Disability Claims

Posted On: January, 23 2015

In the recent case of Fernandes v. Penncorp, 2013 ONSC 1637, Justice Hambly for the Ontario Superior Court of Justice found the defendant insurance company liable for over $500,000 in damages flowing from a breach of contract and failure to pay a long-term disability benefits claim.

This case involved a plaintiff who contracted with Penncorp insurance company for long-term disability benefits in the event that the plaintiff ever became injured and unable to work.  The plaintiff was a 48 year old bricklayer who became injured after a fall in the workplace.

A substantial portion of Penncorp’s evidence it relied on at trial came from surveillance video footage purporting to catch the plaintiff doing manual labour work similar to his job.  Justice Hambly rejected this evidence the insurer relied on to deny the claim that the plaintiff was indeed totally disabled.  When cross examined on the surveillance evidence, the plaintiff provided credible explanations of how he could perform manual labour work at his house when he claimed to be disabled, including an explanation that he could only do so because of pain medication.

Justice Hambly’s decision serves as a useful reminder that surveillance evidence in insurance cases may be of limited value. Citing precedent case law, Justice Hambly adopted the position that surveillance evidence is wrought with difficulty due to its inability to provide a fair recording of an individual’s life, instead cherry picking limited, inculpatory evidence.

In his decision, Justice Hambly decided that the plaintiff met the definition of total disability in his insurance policy and awarded the plaintiff $236,773 in damages for breach of contract.  In his decision, Justice Hambly awarded the plaintiff substantial aggravated damages of $100,000 and punitive damages in the amount of $200,000 against Penncorp having found these actions to be highhanded, malicious, arbitrary or highly reprehensible misconduct.

Aggravated damages were awarded for Penncorp’s behaviour which caused great humiliation to the plaintiff, rendered him financially dependent on others, and caused great mental suffering that would have been in the reasonable contemplation of the parties at the time of contract formation.

 

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