Be careful what you say…

August 15, 2016 | Kim Ozubko

The case of Feldstein v. 364 Northern Development Corporation, 2016 BCSC 108 from earlier this year is a reminder to employers to be careful what they say to current and prospective employees.

Mr. Feldstein had recently been provided with working notice by his current employer and was looking for a new job. Because Mr. Feldstein suffered from cystic fibrosis, the health and welfare benefits and, in particular, the long-term disability (“LTD”) benefits, offered by any future employer were critical to him.

Mr. Feldstein interviewed with 364 Northern Development Corporation (“Northern”) and asked several questions about the benefits provided by Northern. With respect to LTD benefits, he was advised that the benefits were available to employees after 3 months of employment; he was not advised that he had to fill out a health questionnaire or undergo a medical examination to qualify for LTD.

Mr. Feldstein accepted employment with Northern and soon became ill. When he applied for LTD, he was advised that he was only entitled to the “Non-Evidence Maximum” of $1000 per month because he had failed to fill out a health questionnaire when he had initially enrolled in the benefits program. Mr. Feldstein had expected to receive 66.67% of his monthly salary, approximately $4,669, in monthly LTD benefits, not $1000. When he learned of the discrepancy, he filed a claim against Northern for negligent misrepresentation and sought damages for the lost LTD benefits.

At trial, the British Columbia Supreme Court (the “Court”) held that Mr. Feldstein had established a claim for negligent misrepresentation. He was awarded damages in an amount equal to the LTD benefits he would have received from his prior employer (less the benefits he was currently receiving) for a period of 40 months plus $10,000 in aggravated damages.

After reviewing the evidence, the Court found that, in light of his health condition, it was clear that Mr. Feldstein would not have accepted employment with an employer that did not provide adequate disability benefits. It further found that: (i) Northern owed a duty of care to Mr. Feldstein; (ii) it acted negligently when it described the available benefits; (iii) it took no steps to verify the accuracy of the information it provided; (iv) it should have known that LTD benefits were an important part of his decision making process; and (v) it was reasonable for him to rely on the information that it provided.

The Lesson for Employers

An employer can avoid the mistakes made in this case by ensuring that the benefits information it provides to employees and prospective employees is accurate. A simple review of the benefits contract or call to the benefits provider to confirm the LTD eligibility requirements may have avoided the whole situation.

We understand that the decision of the Court in this case is under appeal. We will keep you up-to-date on any developments.


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