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Fernandes v. Penncorp Life Insurance Company – Appeal Decision

On September 2, 2014, the Court of Appeal released its decision in Fernandes v. Penncorp Life Insurance Company.

At trial, the judge awarded Mr. Fernandes past long-term disability benefits, $200,000 for punitive damages, $100,000 for aggravated damages (for mental distress) and full indemnity costs of $212,130.66. Not surprisingly, the insurer, Penncorp Life Insurance Company, appealed.

The Court of Appeal upheld the decision as it related to the award for punitive damages, relying on the trial judge’s findings that the insurer had not dealt with Mr. Fernandes in a fair and balanced manner and that the insurer’s representative had taken an adversarial approach to the claim. The findings included:

• there was no medical evidence to support termination
• the surveillance did not reasonably support the decision to terminate
• the insurer did not formally advise Mr. Fernandes of the termination – it simply stopped sending cheques

The Court of Appeal did, however, reduce the claim for mental distress damages. On this point, at appeal, the insurer conceded that some entitlement of damages was warranted but disputed the quantum of the award. It should be noted that the award was four times the amount requested by the lawyer for Mr. Fernandes at trial. After reviewing the applicable cases and noting that there was no explanation as to how the trial judge arrived at the figure of $100,000, the Court of Appeal found the award to be inordinately high and entirely disproportionate. The Court of Appeal reduced the quantum of mental distress damages to $25,000, which was the amount original requested by Plaintiff counsel.

The trial judge had also awarded Mr. Fernandes full indemnity costs of $212,130.66. Without any explanation, the Court of Appeal reduced that award by $30,000.

No costs were ordered for the appeal given the divided success of the parties.

Mr. Fernandes’ long-term disability benefits were terminated July 21, 2005. It should be assumed that the insurer paid past benefits owing after the trial decision was released in March 2013 (almost 8 years later). One should question whether an extra-contractual payment of $225,000 for punitive and aggravated damages truly punishes the insurer for wrongfully withholding benefits for that period of time and compensates Mr. Fernandes for the mental distress he experienced during that long wait.

Without the help of an experienced long-term disability lawyer, undoubtedly Mr. Fernandes would not have received the compensation he was entitled to and had faithfully paid premiums for.

For the entire decision, visit the link below:


Ferguson Barristers and our team of personal injury lawyers specialize in long-term disability cases, slip and fall injuries, tort claims, accident benefit claims and offer unparalleled legal services. Contact us today for more information about your rights if you have suffered a disability or have been injured.

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