$5m in damages awarded due to ‘cruel and malicious’ treatment from insurers
SASKATOON (Canadian OH&S News)
SASKATOON (Canadian OH&S News)
The Saskatchewan courts have handed two insurance companies the largest ever punitive damages penalty in Canada for their “abhorrent” treatment of an injured worker.
Justice Murray Acton of the Queen’s Bench for Saskatchewan has ordered Zurich Life Insurance Co. and AIG to pay $3 million and $1.5 million respectively, after an eight-year ordeal where they were wrongfully withholding workers’ compensation payments to 62-year-old Luciano Branco, a “sought-after, highly-trained” welder.
“It was pretty emotional,” Branco’s lawyer, Alex Kotkas, said about the decision. “He was very, very pleased and happy and thankful to the judge. It was a very good reaction.”
Branco was also awarded aggravated damages of $300,000 from Zurich and $150,000 from AIG in the March 21 decision. Actions against mine owner Cameco Corp., based in Saskatoon, were dismissed.
In December of 1999, while working as a welder at a Kyrgyzstan gold mine, Branco dropped a steel plate on his foot. Though he continued to work, he re-injured the foot in February. In June of 2000, the injury was finally reported to the company.
AIG, who provides benefits based on rates set by the Saskatchewan Workers’ Compensation Board, received two reports informing them that Branco was permanently disabled after surgery failed to fix his foot — including one from a doctor that AIG had referred — before the insurance company offered in July of 2001 to settle the claim for $22,500, which Branco rejected.
Branco was then inspected by a specialist in Saskatoon, who confirmed the disability, though AIG continued its practice of withholding payments, cutting them off twice; once in the spring of 2001 and again in the fall of 2002, both times without any explanation, Murray wrote.
Though he was unable to work on uneven ground, AIG attempted to have him rehabilitated as a gardener at a facility in Lisbon, Portugal, three hours from where he was living with family, and threatened to terminate his benefits entirely if he did not take the gardener job or find his own vocational training that would be suitable.
“The insistence that he attend the vocational re-training program found in Lisbon was totally inappropriate,” Murray wrote. “The reason for choosing this program in spite of the position taken by Branco and supported by the supervisor of the Lisbon school was solely to provide a justification for alleging that Branco was unco-operative.”
Despite reporting to the Saskatchewan Workers Compensation Board for physical rehabilitation and job retraining, AIG stopped benefit payments for good in 2004, and Branco received no payments from the company until August of 2012, just days before the start of the trial, when he was paid all the money the insurer owed from the date of his injury.
“He had to borrow money from his daughter, his mother, and close family members. He had to re-amortize his mortgage and put the house in his daughter’s name. His marriage broke down for a period of 10 months during which time he was forced to live with his mother as he could not afford other accommodation. His daughter had to buy him clothes. When his daughter got married her parents were unable to afford to even provide her with a wedding present,” Murray wrote.
Branco developed mental health issues as well as Reflex Sympathetic Dystrophy, or complex regional pain syndrome, which Murray wrote has an extremely poor rehabilitation rate. Calgary specialists — requested by Zurich — confirmed Branco’s long-term disabilities in 2007, but Zurich did not make any disability payments for another year and a half, despite having accepted the medical exam.
It is not the first time AIG has been penalized by the Saskatchewan courts for such behaviour — $60,000 in punitive damages were awarded against the company in a case that involved the same gold mine, the same policy and the same adjuster. The penalty was handed out in May of 2003 — two months before the same actions were taken against Branco.
“The cruel and malicious acts of AIG and Zurich combined with the previously ignored award of punitive damages against AIG is evidence of how calculated and abhorrent the actions of AIG were in dealing with Branco,” Murray wrote.
“The court is cognizant of the fact that a punitive damages award of $3 million may not be particularly significant to the financial bottom line of a successful worldwide insurance company. It is hoped that this award will gain the attention of the insurance industry. The industry must recognize the destruction and devastation that their actions cause in failing to honour their contractual policy commitments to the individuals insured.”