Digest: Spencer Health Network Inc. v Co-operators Life Insurance Co., 2018 SKQB 244

• Date: September 18, 2019

Reported as: 2018 SKQB 244

Docket Number: QB18237 , QBG 1718/10 JCR

Court: Court of Queen's Bench

Date: 2019-09-18

Judges:

• Barrington-Foote

Subjects:

• Contracts � Interpretation
• Contracts � Estoppel
• Contracts � Interpretation � Implied Term
• Contracts � Interpretation � Rectification
• Limitations of Actions

Digest: The plaintiff developed vision care benefits and the defendant was a life and disability insurer that provided extended health insurance (EHC). The parties entered into a service agreement in November 2000 that provided the plaintiff would make vision care benefits (plaintiff benefits) available to members of EHC plans issued by the defendant. The defendant would pay access fees to the plaintiff. The arrangement was terminated by the defendant in October 2008. The plaintiff claimed that the defendant underpaid access fees for the entire term of the service agreement, the total being $539,787.38. The defendant argued that the plaintiff was incorrectly interpreting the service agreement and they counterclaimed. The parties agreed that the defendant would pay an access fee of seven cents per month for each EHC group plan member. The plaintiff would pay a usage fee to the defendant. The plaintiff testified that he agreed to the lower than usual access fee because he understood that it would be paid for every EHC group plan member in the defendant�s �book of business�. There were four drafts of the service agreement. The final version indicated that dependents would be excluded for the purpose of calculating access fees, but that group EHC plan members without vision care benefits would be included. Payments were made quarterly to the plaintiff. The defendant only paid the access fee for those members that had the plaintiff benefits, not all plan members. The parties disagreed on who should be subject to the access fee. The plaintiff first questioned the defendant�s calculation of payments when the defendant claimed that they had miscalculated access fees by including fees for members of a stop-loss insurance plan.
HELD: The plaintiff was entitled to recover a portion of the amount claimed. The defendant�s counterclaim was dismissed. Because the plaintiff knew that not all members had the plaintiff benefit, it did not mean that he also knew that the defendant was not calculating the fee based on the total number of people covered under a group contract of EHC issued by the defendant. The court determined the payment to be for the number of persons (excluding dependents) covered under a group contract of EHC issued by defendant, regardless of whether they were eligible to receive vision care benefits under the group contract. The defendant argued that the plaintiff knew or ought to have known that the defendant could not impose the plaintiff benefits on third-party administrators...