Blue Cross Insurance Company must pay the highest punitive damages ever forced on a Canadian insurer, as ruled by the Court of Appeal for Ontario, upholding the result of a preceding jury trial. Sara Baker, a mother of three who became unable to work after a stroke in 2016, claimed short-term disability benefits from Blue Cross, her employer’s insurance provider. This claim was accepted, but her subsequent claim for long-term benefits was rejected, leading to a lawsuit being launched in 2017, following an unproductive appeal process with Blue Cross.

Over the following years, Blue Cross conducted extensive surveillance of Baker in a failed attempt to prove she wasn’t completely disabled. In 2022, a delayed trial eventually took place resulting in a victory for Baker, who was declared totally disabled in accordance to Blue Cross’ long-term disability benefits policy by the jury.

The court proceeded to award Baker retroactive benefits dated to the trial totaling $220,604.00, aggravated damages for mental distress amounting to $40,000, and punitive damages of $1,500,000.00—the largest punitive damages ever handed out to a Canadian insurer. Legal expenses exceeding $1 million were also imposed on Blue Cross.

Despite conceding that Baker was totally disabled and accepting the damages for benefits, Blue Cross challenged the punitive damages. However, the appeal was dismissed by Justice Susan Vella of the Superior Court of Justice. Further reinforcing this, Justice William Hourigan of the Court of Appeal stated that “there was ample evidence to support an award of punitive damages.

Several Blue Cross employees were criticized for their handling of Baker’s case, with evidence pointing to a reckless disregard of their duty to consider her claim fairly, potentially indicating a deliberate strategy to wrongfully deny her benefits. The court stressed that other claimants may have been treated similarly, the difference being that not all have the ability to engage in long-term litigation.