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ARTICLE · 26 MARCH 2024

ONCA Upholds Record Setting Punitive Damages Award For Insurer's Bad Faith Claim Handling

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The recent Court of Appeal for Ontario decision in Baker v Blue Cross upheld a $1,500,000 punitive damages award concerning a denied long-term disability claim.

CanadaLitigation, Mediation & Arbitration
Michael Dunk
Michael Dunk
Benjamin Hantsis
Benjamin Hantsis
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The recent Court of Appeal for Ontario decision in Baker v Blue Cross upheld a $1,500,000 punitive damages award concerning a denied long-term disability claim. The decision marks the largest punitive damages award against a long-term disability insurer in Canada. It may signal a willingness of courts to grant higher punitive damages awards in the future, and demonstrates some of the risks associated with jury trials.

BACKGROUND

38-year-old Sara Baker suffered a stroke while exercising in October 2013. She had a disability insurance policy with the Blue Cross Life Insurance Company ("Blue Cross") through her employer.

After the incident, Ms. Baker was paid short-term disability benefits by Blue Cross. Once her eligibility for short-term disability elapsed, she applied for long-term disability benefits ("LTD"). She was paid two years of LTD benefits. During this period Blue Cross stopped the payment of LTD benefits, but reinstated it after an internal appeal

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