The following is a verbatum copy of an article in the Canadian Pain Coalition Newsletter with permission from Mr. Wheeler, and contains some useful Canadian info.
What Is A “Long-Term Disability Benefits” Claim?
Canadian Pain Coalition Newsletter Volume 2 Number 4 Fall 2009
By Neil P. Wheeler, Lerners LLP
If you are unable to return to work or to remain at work due to disability, you may be able to reduce your loss of income by applying for “long-term disability” benefits (“LTD” benefits).
You may be able to apply for LTD benefits through an insurance policy provided by your employer. You may also be able to apply for LTD benefits through insurance you arranged for yourself.
Common Features Of LTD Policies
Common features of most LTD policies include the following: a “waiting period” to receive benefits; a monthly LTD benefit that is usually a percentage of the income you earned at the time of your disability; and a “test” for entitlement. The initial test for entitlement under most LTD policies is an
“own occupation” test. This means that you will be entitled to the LTD benefit if you establish that you are unable to perform the essential duties of the job that you had when you applied for benefits. After a specific period of time (often two years), the test for entitlement under most LTD
policies changes to an “any occupation” test. Generally, you must establish that you are unable to perform any occupation for which you are reasonably suited by education, training, or experience. Obviously, the “any occupation” test is harder to meet than the “own occupation” test. If you feel you are entitled to an LTD benefit, you typically must submit an application package to the insurer. This generally includes a statement from you as well as supporting documents from your doctors and your employer. The insurer may accept your application and begin paying benefits. The insurer may also deny the application on the basis that you do not meet the test for entitlement.
Options If Your Insurer Denies Your Application
If your insurer denies your application, you do not simply have to accept the insurer’s decision.
Depending on the wording of your policy, you may have the option of asking the insurer to review or appeal its decision. You also have the option of pursuing a lawsuit against the insurer.
If you are considering these options, you should also consider whether to hire a lawyer to assist you. Most lawyers will speak to you free of charge to discuss your options with you. You will want to hire a lawyer who has experience with LTD claims.
Pursuing Your Claim
Your lawyer will likely take a number of steps to assist you in pursuing your claim for LTD benefits from the insurance company. This will include reviewing the insurer’s file to assess how it managed your claim and why it decided to deny your application. It will also include reviewing the medical records from your doctors. It may include obtaining your employment file or talking to your employer to understand the demands of your job and why your disability prevents you from working. It may include obtaining expert opinion from doctors who can comment on the effect of
your disability on your ability to perform your own job (if the own occupation test applies) or any job for which you are reasonably suited (if the any occupation test applies). Expert comment regarding your vocational aptitudes and other potentially suitable jobs may also be relevant.
The insurer is of course entitled to defend its decision to deny your application for LTD benefits. The insurer may ask that you attend medical assessments to evaluate your disability. The insurer is also entitled, within certain parameters, to conduct “surveillance” of you (generally conducted by a private investigator) to determine if you have accurately reported your activity levels.
Components of The Claim
In a lawsuit for LTD benefits, you typically will claim the value of LTD benefits owing to you to date, plus interest on those benefits. You may also claim a “declaration” that you should be paid these benefits from the date of the trial of your lawsuit onward. If the Court were to grant such a
declaration, your insurer would still be entitled to “cut you off” benefits in the future if it determined that you no longer met the test for disability under the policy.
You are also entitled to claim certain damages above and beyond the value of LTD benefits. This is because the insurer owes you an obligation to handle your claim in “good faith”. The mere fact that your insurer has refused to pay you LTD benefits does not necessarily mean that it has acted in “bad faith”. There must be evidence that your insurer has handled your file in a high-handed or otherwise inappropriate way. If a Court concludes that the insurer has acted in bad faith then you would be entitled to receive an additional award. The most common such award is an award of “punitive damages”. Canadian Courts have typically awarded punitive damages sparingly. However, the frequency and size of these awards seems to have increased in recent years. The threat of punitive damages encourages an insurer to handle a claim fairly and reasonably, even if the insurer ultimately decides that its insured does not meet the test for LTD benefits.
Most lawsuits started in Ontario settle before trial. Your LTD claim can settle on the basis of a “re-instatement” of benefits. This typically means that you would receive an amount in respect of LTD benefits owing to date and that your monthly LTD benefit would resume after the settlement. Your insurer typically would retain the right to cut you off of your benefit in future if it feels you no longer meet the test. You would retain the right to dispute this. Your LTD claim may also settle on the basis of a “lump sum” payment. This means that the insurer would typically make one payment in respect of any amounts that it may owe you to date, plus an amount respecting your future entitlement.
If you are unable to work due to disability, you should consider applying for LTD benefits if they are available to you under an insurance policy. If your insurer denies your application, you do not have to accept that decision without question. Given the stakes, it makes sense for you to speak with a lawyer about whether to pursue a claim for LTD benefits.
Neil Wheeler is a partner at the law firm of Lerners LLP in Toronto. He is also the Practice Group Leader for the Personal Injury Group at Lerners LLP. He acts for injured and disabled persons in litigation matters throughout Ontario. He has conducted trials that have changed the law for the better for injured and disabled persons. If you wish to contact Neil with an idea for a column or with a legal question, you may reach him at 416-601-2384 or firstname.lastname@example.org.