The Court dismissed the insured’s action for breach of contract and breach of the duty of good faith in relation to the termination of disability benefits

C.B. v. Standard Life Assurance Co., [2006] B.C.J. No. 94 British Columbia Provincial Court

The insured received long term disability benefits from 1997 to October 2002, at which point the benefits were terminated by the insurer.

In 2002, the insurer engaged two consultants to determine whether the insured was employable. The insured told both consultants that he was interested in finding employment and that he had some skills he felt could be utilized in an appropriate employment setting. Based on those reports, the insurer terminated the insured’s benefits effective October 1, 2002.

Subsequently, the insured found a new psychiatrist, whose opinion was forwarded to the insurer. Based upon the psychiatrist’s opinion, the insurer concluded that the insured was totally disabled due to mental illness. As a result, the insured’s benefits were immediately re-instated and retroactive payments were made.

The Court found that the insurer clearly made an error in judgment, in basing its opinion on the self reported information from the insured rather than that of a physician. However, the Court found that the insurer drew a reasonable conclusion based on all of the information it had. In the result, the Court dismissed the claim as there was no basis on which to conclude that the insurer had breached its contract with the insured.

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