In January 2016, the Supreme Court of British Columbia released its decision in Feldstein v 364 Northern Development Corporation, 2016 BCSC 108. The employee in that case suffered from cystic fibrosis, a chronic, degenerative disease primarily affecting the lungs, since the age of nine. The employee stated that given his condition, he would not have accepted employment unless it included sufficient and appropriate LTD benefits, i.e. a benefit equivalent to a significant portion of his monthly salary and which did not preclude pre-existing health conditions.

After two interviews, the employee then received an email offer of employment. He responded by advising that he intended to consider the offer, but required a copy of the benefits brochure first. The benefits document included details of the LTD plan, which provided for coverage of 66.67% of monthly earnings to a maximum of $5,000. However, the benefits summary stated under the heading “Proof of Good Health” that “approval is required for coverage in excess of $1,000”. When the employee inquired what constituted “Proof of Good Health”, the employer responded that working for the company for three months without illness would suffice, notwithstanding his pre-existing condition or the lack of a medical exam or completed health questionnaire. The employee accepted the offer of employment. Subsequently, his health declined and he eventually applied for LTD benefits. The third party benefits provider approved the employee’s LTD claim for only the “Non-Evidence Maximum” of $1,000 per month, because he had not completed a health questionnaire when initially enrolling, which was actually a mandatory requirement.

The Court found that the employer had negligently misrepresented the requirement for “Proof of Good Health” in stating that it merely related to the three months’ waiting period needed to have the plan come into effect. This misled the employee as to the eligibility requirement for the LTD plan, causing him to erroneously believe that he would be eligible for coverage providing for 66.67% of his monthly salary without the need to complete a medical questionnaire. The employee had reasonably relied on the misrepresentation in opting to accept the employment offer. As such, the Court ordered $83,336.80 in damages for lost benefits, as well as aggravated damages for the mental distress he had suffered.

To avoid this scenario, employers should be cautious in answering inquiries relating to their benefits programs from prospective employees, and not to make representations without first definitively ascertaining the accuracy of those representations.

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