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Company’s negligent misrepresentation results in $83,337 award for lost benefits
June 14, 2017
Author(s): Jeremy Dong

In Feldstein v. 364 Northern Development Corp., the British Columbia Court of Appeal upheld an award of $83,337 to a former employee for lost benefits due to a negligent misrepresentation made in the context of pre-employment discussions.

364 offered Cary Feldstein a position as a software engineer. Prior to accepting 364’s offer of employment, Feldstein disclosed that he had cystic fibrosis and inquired about the eligibility requirements for long-term disability (“LTD”) coverage under the company’s benefits plan. 364’s Chief Information Officer informed Feldstein that “proof of good health” required for full LTD coverage was equated to three months of continuous employment. Feldstein accepted the position with 364 in April 2012.

In May 2013, Feldstein’s health declined. When he applied for LTD, he was advised that he did not qualify for full benefits. Instead of qualifying for $4,667 per month, Feldstein discovered he was only eligible for $1,000 per month because he had not filled out a medical questionnaire after being enrolled in the benefits program.

Feldstein sued 364 for negligent misrepresentation. At trial, the Court found that 364’s assurance to Felstein were misleading and inaccurate because the insurer’s more stringent requirements for full coverage were inconsistent with what he had been assured by the company. Feldstein was entitled to rely on the information he initially received from 364 and it was determined that the company had acted negligently.

The Court determined that, had Feldstein been properly informed, he would have either accepted employment with a different employer or stayed with his prior employer, who provided full LTD benefits. The Court awarded Feldstein $83,337 in lost benefits and $10,000 for aggravated damages based on a finding that the misrepresentation had also caused stress and anxiety.

On appeal, the Court upheld the lower Court’s ruling that Feldstein had disclosed his cystic fibrosis and that 364 was negligent in failing to give Feldstein the proper information regarding the LTD coverage eligibility. However, the Court overturned the $10,000 in aggravated damages as there had been no deceit or insulting behaviour by the company that would justify that award.

This decision serves as a reminder to employers to provide accurate information of their benefits plan to prospective employees.

The full text of the case can be read here.

Questions relating to the content of the article may be directed to Colin Gibson.

This article may not be republished without the express written permission of Harris and Company LLP