LONG TERM DISABILITY (LTD) CLAIMS

Don’t Take No for an Answer
While hanging blinds at his house, Ron fell through a window and sliced through he ulnar nerve in his right dominant hand.  His grip strength was cut down by 90%.  The hand was functionally useless and a mass of pain.  His LTD insurer paid benefits for a while but then concluded that Ron, a tool and die maker, could pump gas for a living.  They cut him off.  A proud man in his 40’s, Ron became depressed and his marriage suffered while his finances crumbled.

That is where we came in.  Ron instructed our firm to sue.  Surprisingly, many people like Ron do nothing when benefits are cut off.  They shrug and conclude that nothing can be done.  We have found it to be the rare exception where we cannot negotiate a fair settlement following an initial denial of the claim. 

We arranged Ron to be assessed by a leading Ontario hand expert and obtained a medical report backing him up as being disabled.  The insurer folded, paid retroactive benefits, reinstated ongoing benefits and paid a large part of his legal costs. All because he did not take no for an answer.

Whether your claim is with Manulife, Cooperators, Sun Life or any other insurer, call us, meet with us, let us order the file and tell you what can be done for your peace of mind.

The Two Year Fight
Many disability disputes arise two years following the date your disability first arose.  Why is that?  Under most policies, for the first two years (sometimes it is 30 months), you get benefits if you are unable to perform your own occupation.  Ron was a tool and die maker and it was pretty clear that he could not do that with one hand.

But after two years, with many policies, the test changes to whether you can perform any occupation for which you are suited.  Now, the insurer must be reasonable – you are not required to collect road kill, generally the proposed job must pay 60% of your previous income and it does not count if all you can do is work sporadically (and thus unreliably) around your pain.

You must of course at all times be truthful about your condition.  But if at any time in the lawsuit you state that you are able to work full time, such will likely be fatal to your case.  

Remember the Deductions!
Most group (as opposed to privately purchased) plans require you to apply for Canada Pension Plan disability benefits.  These benefits are deducted dollar for dollar from any LTD benefit payable to you.

Why bother then to apply for CPP?  First, again, you are obliged to apply under most LTD policies.  Second, if you qualify for CPP as “unemployable”, the LTD insurer will be hard pressed to argue that you do not meet the “unemployable” test for LTD benefits.  Third, if you are on CPP disability, such will enhance the CPP pension you would receive at age 60 or 65.

What About Taxes?
LTD benefits are generally taxable where the employer has been the one paying the LTD benefit premiums.  If we settle your claim on a lump sum basis, you will have taxes deducted from any retroactive amount but generally no taxes will be payable on that part of the lump sum representing future LTD benefits. 

Should I take the case to trial or try to settle?
If the matter does proceed to trial and we are successful, the court can only order a continuation of the monthly cheque.  Apart from some other types of compensation (see below), that is all it can order.  The court cannot order a lump sum payment.  Further, following trial the insurer may challenge you again after a period of time and argue that your condition has improved.  In other words, your file will remain open. 

For that reason, you ought to consider a settlement if fair compensation is offered.

If the matter settles prior to trial, it will usually result in a negotiated ‘lump sum’ payment.  That is, the insurer will want to close its file for all time and will want to pay you a final amount of money.  The amount will depend on the strength of the medical information and the period of time for which the insurer believes it is exposed to ongoing payments.

We will in most cases retain the services of an accountant to tell us the present value of all future payments that the insurer will have to make if we succeed at trial.  The insurer will not agree to pay this amount and will argue that the amount should be reduced or discounted to reflect the fact that we may not succeed at trial and to reflect the advantages to you of a lump sum payment.  This is where the negotiations play a critical role and we will of course discuss this with you as the file progresses.

What evidence is needed to prove my claim?
In proving our claim, we rely on your past medical records, your family physician and medical experts arranged by our office.  In addition, we rely on certain persons such as past employers, special friends and relatives who might be able to provide statements that are supportive.  We also rely of course on your personal story of pain and attempted recovery.  However, the more objective the evidence the better.

What about my immediate financial needs?
This is always a very big problem for our clients.   If you have not been on LTD too long, EI may have a disability stream of income for you.  If not, consider ODSP or a CPP application, although either of those routes may entail a large delay and several appeals stages as well.

We push these LTD cases quite aggressively precisely because we know you do not have money to spare in the interim.

May I sue the insurer for its treatment of me?
In certain cases clients tell us horror stories about how their claim was treated by their insurance company.  In these cases, we will usually sue for compensation for something known as their ‘bad faith’ treatment of you.  The fact that they have denied you benefits after two years is not enough; there must be something more in the manner in which your claim was held that may expose the insurance company to a claim for bad faith compensation.

Again, we will discuss this with you on a case by case basis.