Long-term Disability: Your Questions Answered

It is an awful realization to discover the rejection of your long-term disability (LTD) claim. The very purpose of LTD insurance is to protect you financially when you need it because you can’t work due to an illness, injury or accident. If you’re in the process of determining whether to dispute the denial, consider some of the common reasons LTD claims are denied. With the legal assistance of a disability lawyer in Owen Sound, several disputes about your benefits can be resolved.

My insurer just cut off my benefits. What are my options?


It depends.  You have to be honest with yourself.  Start by having a long chat with your doctor.


If you think you may be able to go back to work and your doctor agrees, give it a go and try a return to work.  For many, not working can be a terrible thing which leads to depression – a disability in its own right.  As I say, it is better to have a good life than a good legal case.


But if you don’t think you can manage a return, you can either sue or ask for an internal appeal of the decision by the insurer.



Do those internal appeals work?


In thirty years, I can count on one hand the clients who got the insurer to say “Oops, I can’t believe what we we’re thinking, we made a mistake and we are going to reinstate your benefits.” I remember Jim, who fell through a plate glass window, severing completely the ulnar nerve in his right and dominant hand.  Before we even sued, we sent a video clip of Jim “holding” a cup. They immediately put him back on benefit.  But it usually does not work like that.  Most clients have to sue.



Why do insurers cut off benefits?


The cynical answer is why not cut people off?  Almost a full third of people do not even bother to object to being cut off LTD benefits.  If an insurer can cancel 30% of its claims by emailing you a two page denial letter, they are ahead of the game by a mile, even if the other 70% go to battle.


Less cynically, they may paid someone to follow you in a black van with tinted windows.  They may have some video tape of you lifting concrete patio blocks, despite your bad back.  Or they might have a doctor review your medical records and conclude you can do some other job.


Sometimes, they make big mistakes and admit that up front.  Ruth had severe rheumatoid arthritis.  Her hands were shaped into fixed claws.  We met with the insurer and its lawyer at a discovery.   They looked at her trying to hold a pen, asked to meet with me for a moment, and we settled the case for top dollar an hour later.  Sometimes meeting with our client (rather than reading paper about my client) is all they need.



Why did I get cut off two years after being on benefit?


Almost every policy has a two year change in the test for benefits.  For the first two years, the question is – Can you do your old job?  After two years, the question becomes more difficult – Can you do any job for which you are reasonably suited?



I don’t understand that two year change.  If I am disabled, I am disabled, no?


In many cases, the two year change in the test does not matter.  For example, if you suffer profound depression or have a serious head injury, you likely can’t work at anything.  But take Ken, who is 40, worked a production line and broke his leg at home on his ATV.   Ken can likely retrain; it is pretty hard to argue that he could not do a sit down (sedentary) job.  In such cases, benefits may well end after two years.



To be honest, I don’t know if I am disabled from my old job.  I can likely work at it a bit.


The test is not whether, on one of your “good days” you could go into work and put in some hours.  The test is whether you could be a reliable employee from day to day, capable of putting in a full shift.  If you are disabled from doing that, you are disabled under the policy.  But, again, why not try a return to work?  If you succeed, you are in the workforce where you want to be.  If you can’t do the job, a judge will be impressed that you tried.



If we sue, how long will it take?


I don’t like it when lawyers dodge these kinds of questions.  So I won’t.  The best thing I can provide to you are our firm averages.  Over the past decades, we have resolved most of our LTD claims within a year of suing, many of them within 6 months.  Some are resolved faster; some do take several years.  Some insurers are next to impossible to deal with.  


But more than anything, it depends on whether an insurer finds you credible.  If you are believable, if you have a clear disability, the insurer’s representative will know this when we meet and it makes the path that much smoother.



Will my case go to trial?


I enjoy trials and, of course, have taken disability cases to trial.  That said, the vast majority of claims settle – we just don’t have enough judges or court time to try every case.  



What does a settlement look like without trial?


If your case does resolve, it will likely resolve on the basis of a lump sum payment; they close their file and you accept a lump sum instead of ongoing monthly benefits.  That lump sum is, of course, discounted to reflect the fact that they are settling and that you are saving the time and expense of trial.  Most clients want something certain in hand and want to get on with their lives.  A lump sum allows just that.



Do all settlements involve such a lump sum?


Not all.  Sometimes we cannot agree with the insurer as to how long you will be disabled into the future.  We then get a cheque for the past benefits owing and the insurer “reinstates” our client (that is, continues to pay her benefits). Take our past client Heather, a senior manager with a corporation who suffered from deep depression.  The insurer thought she would be good to return to work within 5 years and offered a lump sum for five years of future benefits.  I was uncomfortable with any settlement that did not allow for ten years. We could not agree on a lump sum.  The insurer paid the past benefits and put her “back on claim”.



Is such reinstatement of benefits always possible?


No.  Insurers like to permanently close files.  It is expensive to keep them open.  For the disabled person, reinstatement means that they can continue to video your moves if they want, demand updated medical assessments and generally continue to be a pain.  For these and other reasons, if the lump sum is a decent one, it is better than reinstatement.  



What is the deal about Canada Pension Plan Benefits?


It may not be fair, but the insurer is usually allowed to both force you to apply for CPP disability and to deduct those benefits from the LTD benefits it would otherwise have to pay you.  That is right, the insurer gets to freeload off the government benefits to which you may be entitled.  CPP caps out at around $1,100 (more if you have young kids) and is only payable to those who have been in the workplace for enough years.  But CPP can really reduce the value of your LTD lawsuit.  If your LTD benefit is $2,500 per month and if your CPP benefit is $1,000 per month, your LTD is reduced to $1,500.



Someone told me that I should sue for punitive damages.  Your thoughts?


These are the exceptional claims, not the rule.  In rare cases, an insurer may be so reckless, so negligent in how it handled your claim that it may be liable for punitive (or something called “moral” damages.  


They will never settle the claim based on a payment for punitive damages, but it may ramp up the lump sum for future benefits.  I remember Clara, who was clearly unable to walk or sit for any length of time due to a hip issue.  I asked the claims adjuster questions under oath and it was absolutely clear that she had given no thought into why she cut off Clara’s benefits.  It was embarrassing for her. The insurer lawyer ramped up the settlement amount by a lot – he did not want her going to trial.




I just applied for LTD benefits and they denied me on the basis of something called a pre-existing condition.  Can they do that?


On the right facts, your insurer can in fact deny you benefits when you first apply, based on a health condition you brought with you.  This only makes sense.  It would be strange if you could start a new job and then going on LTD within a matter of months – all based on a health condition which existed before you were hired.  


On the other hand, if you have been a good employee for months after you were hired and if the pre-existing health condition did not impact your ability to work for a long stretch, it would be unfair if you were denied LTD benefits.  It is all about balance.



What kinds of pre-existing health conditions count?


It depends on the type of the condition, whether that condition was a “live” matter in your life when you were hired and exactly when that condition disabled you from working.  The first thing to figure out is the date you were first covered by the LTD policy.  This is usually *** months after you started work.


Most policies ask three questions.  


First question - Are you applying for LTD benefits within 12 months of first being covered by the LTD policy?  If you are outside of this 12 month period, you are free to claim benefits.  However, if you have applied for LTD within that 12 month period, we go on to ask the…


Second question – Did that medical condition exist at the time you first were covered by the LTD policy?  If not, you are free to claim benefits.  However, if the answer is yes and if that condition did exist when you first were covered by the policy, we go onto ask the…


Third Question – During the 13 week period from when you were first covered by the LTD policy, did you i) receive any treatments or assessments for that condition; or ii) did you have more than three days off work because of that condition?  If yes, you are not entitled to benefits.  If no, then the 13 week periods acts as a “cleansing period of sorts” and you are not barred from making an LTD claim.



Any other advice?


Just this:  You have paid towards your long term disability benefit in most cases.  That means for years the insurer dipped into your pocket and paid itself a premium.  The deal they made with you was simple:  when you are in desperate straits, we will be there for you.  When this turns out to be a lie, when the insurer denies you coverage for the most superficial of reasons, you deserve to be upset.   And you have every right to sue.  At Tamming Law, we're happy to help. Contact us today to find out how we can assist you with you long-term disability claim denial.

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