When insurance companies abuse claimants, they should pay

The Globe and Mail

Published Tuesday, Apr. 09 2013, 8:54 AM EDT

A Saskatchewan judge has sent a sharp and justified rebuke to insurance companies that refuse to pay for legitimate claims or make the claimant’s life unnecessarily difficult. The $4.95-million award, which includes $4.5-million in punitive damages, should make it clear that Canadian courts will not tolerate what the judge referred to in his ruling as “protracted and reprehensible behaviour.”

Luciano Branco was a Canadian welder working for a Saskatchewan-based company in Kyrgyzstan in 1999 when a heavy steel plate fell on his foot. He finished his shift, but the injury became aggravated and he soon found he couldn’t work. Doctors eventually told him the injury was untreatable and permanent. In 2000, two insurance companies got involved. A year later, after being offered unsatisfactory compensation, Mr. Branco filed a lawsuit against both companies, Zurich Life Insurance and American Home Assurance Company (AIG). It would take another 12 years for Mr. Branco to see any money.

According to the judgment, one company, Zurich, “blatantly” refused to hand over “what had been owed in monthly payments for almost eight years.” The other company, AIG, used delaying tactics the judge described as “malicious” in order to “leverage a reduced settlement.” Both companies hoped, the judge said, that Mr. Branco’s dire financial straits, brought on by his inability to work, would prompt him to drop his lawsuit and settle for lesser amounts.

“The actions of AIG and Zurich establish a pattern of abuse of an individual suffering from financial and emotional vulnerability,” Justice Murray Acton wrote in his decision.

“The fact that Branco was able to continue to withstand this pressure for so many years on two different fronts is truly remarkable and almost superhuman,” the judge also wrote.

Insurance companies in Canada spend millions investigating insurance fraud – investigations that often result in criminal charges. But the onus to deal honestly and fairly lies on both the insurer and the insured. Mr. Branco is a hard-working, proud man who suffered a legitimate job-related injury and met all the requirements for collecting disability insurance payments. But instead of honouring their end of the bargain, Zurich and AIG used their financial muscle to abuse, in what a judge called a “calculated and abhorrent” manner, an honest claimant. Mr. Justice Acton’s ruling, both in its wording and the punitive damages it awards, was calculated to send insurance companies a warning. They should listen carefully.

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