The Court of Appeal recently rendered its decision in the McQueen v. Echelon General Insurance Co.  O.J. No. 4563 (Ont CA) case. The plaintiff Janey McQueen was injured in a motor vehicle accident on January 31, 2004. She applied for various accident benefits from Echelon. She was diagnosed with soft tissue injuries, chronic pain and psychological problems. The trial occurred in 2009. In addition to claiming payment for various accident benefits, she also brought a bad faith claim for damages for mental distress due to the denial of benefits.
At trial, evidence was led that Echelon had requisitioned an in home assessment which recommended housekeeping benefits. However, it also obtained an orthopedic surgeon’s report which concluded that Ms. McQueen did not require any housekeeping assistance. Echelon relied on this report to terminate benefits. There were also allegations that Echelon did not pay for assessments which its experts recommended and that it did not explain many of its decisions as to why various benefits were not reasonable and necessary.
At trial, the plaintiff was awarded approximately $20,000 for housekeeping benefits, travel expenses and the cost of various assessments. The trial judge also awarded $25,000 in damages for mental distress.
The Court of Appeal upheld the trial judge’s decision. Justice Gillese held:
People purchase motor vehicle liability policies to protect themselves from financial and emotional stress and insecurity. An object of such contracts is to secure a psychological benefit that brought the prospect of mental distress upon breach within the reasonable contemption of the parties at the time the contract was made. As an insured person entitled to call on the policy, Ms. McQueen was entitled to that peace of mind and to damages when she suffered mental distress on breach.
The Court found that Echelon had acted in bad faith by denying benefits without explaining why and by ignoring its own experts’ recommendations and reports. The Court opined that Echelon took an adversarial approach to the claim from the outset and did not fairly approach the request for benefits.
This case is important because it confirms that mental distress claims can successfully be made in AB claims, based on breach of contract and that an award of damages for mental distress does not need to meet the level of conduct which would attract a bad faith award.