Baker v. Blue Cross –The Ontario Court Of Appeal Upholds The Largest Known Punitive Damages Award Against A Disability Insurance Company In Canada

On December 20, 2023, the Court of Appeal for Ontario upheld the landmark $1.5 million punitive damages award by a jury in Baker v. Blue Cross. This confirms that disability insurers will be punished for misconduct in handling long-term disability claims. The Plaintiff, Sara Baker, was represented by Thomson Rogers’ lawyers Stephen Birman, Robert Ben and Lucy Jackson.

The Court of Appeal upheld the jury award finding that:

“[The insurance company] at best, shows reckless indifference to its duty to consider the respondent’s claim in good faith…and at worst, demonstrates a deliberate strategy to wrongfully deny her benefits, regardless of the evidence that demonstrated entitlement.”

Recognizing the necessity of deterrence to prevent similar misconduct by the insurer, the Court of Appeal noted “deterrence is impossible unless punishment is meaningful.” Emphasizing the severity of the situation, the Court of Appeal observed that “it is difficult to envision how an award of anything less than $1.5 million would even garner the attention of senior executives let alone deter future misconduct.”

In further support of the punitive damages awarded by the jury, the Court of Appeal found ample evidence indicating systemic problems within Blue Cross. The observation that “many Blue Cross employees who touched the file took the same approach, which ignored the respondent’s rights under the policy” served as a compelling basis on the necessity of a substantial punitive damages award.

In sending a clear and unequivocal message, the Court of Appeal underscores that a small award is insufficient when an insurance company acts in bad faith and disregards its insured’s rights under an insurance policy:

“Put simply, a modest punitive damages award becomes a nominal cost of operating in a way that wrongly and systematically denies policyholders their legal rights.”

Finally, the Court of Appeal also upheld an award that the insurance company fully indemnify Ms. Baker for her legal costs, which exceeded $1,000,000 in the extremely hard fought dispute that spanned seven years.

The award, which will hopefully serve as a deterrent to all insurance companies, is a testament to Ms. Baker’s fortitude and courage, which the Court also noted:

“The evidence suggests that there may be many other claimants that may have been treated in the same manner by Blue Cross. The difference is that, unlike Ms. Baker, most claimants do not have the stamina to engage in long-term litigation.”

The lawyers at Thomson Rogers (Stephen Birman, Robert Ben and Lucy Jackson) are honoured to have been able to represent Ms. Baker and are committed to helping others who find themselves similarly mistreated by their insurance companies.

The decision of the Court of Appeal for Ontario can be found here.

Information on the original jury verdict can be found here.