What are long term disability benefits?
Long Term Disability (LTD) benefits are monthly payments you receive from an insurance company if you are unable to work for medical reasons. You can buy individual Long Term Disability policies from a broker. You also may have group insurance through your work that provides LTD coverage, usually through your employer or union.
Some types of insurance policies – like motor vehicle insurance or fire insurance – are standardized by the legislature for the Province. These policies are very similar no matter which insurance company you buy it from. However, there is no standard Long Term Disability policy. Each LTD insurer sells its own unique product.
Still, they are surprisingly consistent from company to company. The policies will vary on the following points:
- to what age the benefits are payable, the most common age is 65 but some provide only to age 60 and others to age 70
- the definition of “total disability”, the wording can vary slightly from company to company and many LTD insurers provide “own occupation” coverage for the first two years and after that you must be disabled from “any occupation”, these are legal terms that are explained in more detail below.
- the offsets on your monthly LTD benefit vary on different policies. Most policies deduct Canada Plan Disability from the LTD payment but not all, other possible offsets include multiple LTD policies, or Workers’ Compensation benefits
- the amount of your monthly LTD benefit will vary among LTD policies, often is a percentage of your income but sometimes it is a set payment.
Long Term Disability policies are commonly provided by insurers such as:
- Blue Cross
- Canada Life
- Desjardins Financial
- Empire Life
- Great West Life
- Industrial Alliance
- Portage La Prairie
- SSQ Insurance
- SunLife Financial
Why do insurance companies deny and terminate LTD benefits?
LTD insurers sometimes deny payments to a person who has applied. Other times, the LTD insurer terminates benefits for a person who has already been receiving Long Term Disability. The LTD insurers will terminate or deny LTD benefits when, in their opinion, there is not enough evidence to support that you cannot work. They frequently get opinions from their own medical team to support their decisions.
Some disabling conditions cannot be proven through “objective evidence, like x-rays or CT scans. Chronic pain and psychological diagnoses are often reliant on subjective reporting, which means there is less objective medical evidence. A lawyer with experience handling LTD claims will know the right way to get the best evidence in the event of a termination for lack of “objective evidence” supporting your disability.
How can a lawyer help with long term disability insurance?
A lawyer who is familiar with LTD claims can help you when you cannot work but your LTD insurer is still denying or terminating your benefit.
An experienced lawyer knows the right questions to ask your doctors to compile the best evidence in support of your disability claim. Where necessary, a lawyer will refer you to a specialist doctor who will provide an Independent Medical Examination to further support your claim. Lawyers are also skilled at conducting legal research related to disability policies. Finally, a lawyer can help move the case towards a resolution by meeting Court deadlines and pushing the case closer to the point where the Court can make your insurance company pay out your benefits.
What are your legal options when LTD benefits have been denied or terminated?
If your LTD benefits have been denied or terminated you have two options. You can appeal the decision internally by writing to the LTD insurer and going through their internal appeals process. The second option is to sue your LTD insurer for breach of contract.
There are different time limits that you should be aware of for each option. First, for an internal appeal, there will be deadlines set out in your denial letter that dictate how long you have to submit documents in support of your appeal. Second, if you pursue a lawsuit against your insurer, you typically have two years to file your claim.
The time limit is set out in your province’s legislation. We have linked to the relevant legislation for each of the Atlantic provinces below for your convenience. While the general limitation period in each of the Atlantic provinces is two years, there may be exceptions. For this reason, it is important to consult with a lawyer following a denial or termination of disability benefits to ensure your right to pursue one of these options is protected.
Nova Scotia’s Limitation of Actions Act
Newfoundland and Labrador’s Limitations Act
New Brunswick’s Limitation of Actions Act
Prince Edward Island’s Statute of Limitations
There are advantages and disadvantages to appealing internally versus suing your LTD insurer. These considerations are specific to your individual circumstances and would best be evaluated in consultation with a lawyer.
How do the Courts determine if you are totally disabled according to your LTD policy?
To determine if you are totally disabled according to an LTD policy the Courts will consider the definition in your policy and how similar definitions have been interpreted in other cases. They will consider your evidence and that of your doctors.
Most LTD policies distinguish between your own occupation and any occupation. Typically for the first two years you have to be totally disabled from your own occupation to qualify for LTD benefits. After two years, you must be disabled from any occupation. The law holds that you are totally disabled if you are substantially unable to do work that is reasonably suitable for you based on your education, training, and work experience.
For 30 years the lawyers at MacGillivray Injury and Insurance Law have been fighting LTD insurance companies who have terminated or denied LTD benefits.
What is a “lack of objective evidence” in a claim?
“Lack of objective evidence” in an LTD claim refers to a situation where there isn’t enough measurable, observable evidence (like medical test results) to support the claim of disability. Your LTD insurer may deny your benefit for a lack of objective evidence but usually there is nothing in the policy requiring “objective evidence. Many types of illnesses, injuries, and diseases cannot be assessed by “objective evidence”. This is not a proper means by which an LTD insurer should terminate or deny disability benefits unless it is specifically referenced in the policy.
What is a lump sum settlement on my long term disability claim?
A lump sum settlement is a one-time payment made to you. It represents the total of your insurance policy, including your back benefits and the value of future disability payments. In return, you agree that the lump sum is all you’re entitled to under the policy, and you give up your rights to future benefits.
What is a reinstatement of long term disability benefits?
Reinstatement of long-term disability benefits refers to the resumption of your regular benefit payments after they’ve been stopped. The court can’t force the LTD insurer to pay you a lump sum. The Judge can award legal costs, aggravated damages, back payments, and order reinstatement going forward, but not a lump sum amount. If you accept a lump sum payment, you give up any further claims you might have under the policy or in Court.
Which should I choose? A lump sum settlement or reinstatement of my benefits?
Whether you should seek a lump sum settlement or reinstatement of your LTD benefits depends on various factors, including your financial needs, the terms of your policy, and the nature of your disability. Remember, if your case goes to trial, a judge can only order reinstatement of benefits.
What are the benefits of a lump-sum settlement in LTD claims?
- Closure and certainty: A lump-sum settlement gives you a sense of closure as it eliminates the uncertainty of future benefits. With reinstatement, there’s always a risk that your benefits could be terminated again. A lump-sum payment, on the other hand, provides a definite amount upfront.
- Tax advantages: The Supreme Court of Canada has ruled that only the arrears portion of a lump sum settlement is taxable. The amount allocated for future benefits is not taxable. This could result in significant tax savings.
- Freedom to work: If your health improves and you’re able to return to work, a lump-sum settlement allows you to do so without having to report to an insurance company.
- Security for your family: If you have concerns about your life expectancy, a lump-sum payment ensures that a set amount of money is available to your family now.
Is it possible to simultaneously receive long-term disability and Canada Pension Plan Disability benefits?
Yes, if you’ve been approved for both, you can indeed draw from both sources. However, there’s a catch. Any benefits you receive from the Canada Pension Plan Disability might be subtracted from your long-term disability policy benefits. This process, known as ‘offsetting,’ reduces the payout from the insurance policy by the amount received from another income source. The specifics of whether CPPD benefits are offset will be detailed in your LTD policy.
If you are struggling to get approved for your Canada Pension Plan Disability benefits, or have been denied long term disability insurance, our legal team might be able to help. Don’t hesitate to book a free consultation.
What types of compensation can you expect in a long-term disability case?
In long-term disability claims, there are three potential types of damages that may be awarded in addition to your past or future monthly benefits: mental distress damages, aggravated damages, and punitive damages. In certain situations, these damages can be claimed in addition to the disability benefits owed under your disability insurance policy. However, eligibility for these damages depends on the specifics of your case including why you were denied or had your long term disability benefits terminated. A skilled long-term disability lawyer can assess your situation and determine if you have a valid claim for these additional damages.
What are aggravated damages in long-term disability cases?
Aggravated damages, or damages for mental distress, are to compensate you for the harm you’ve suffered because of being denied benefits. Aggravated damages are awarded when you can prove that you suffered significant financial and mental distress because of your LTD benefits being denied. This is because LTD insurance is there to give you peace of mind and that is part of the essence of the contract.
What are punitive damages in long-term disability cases?
The most severe category of damages is punitive damages. These damages serve as a punishment for particularly egregious or malicious conduct in the handling or denial of an insurance claim. Unlike compensatory damages, punitive damages are designed to deter insurance companies from engaging in harmful behaviours. However, the insured claimant still receives any punitive damage awards.
What have the Courts awarded for aggravated and punitive damages in long term disability cases?
Understanding the difference between the two types of compensatory damages can be challenging, as some courts have conflated them in the past. Recent case law provides examples of the amounts of compensatory damages awarded in Canadian courts, offering insight into potential outcomes in long-term disability cases. The following cases are just a few out of many cases where aggravated and punitive damages have been awarded.
In the case of Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, the Supreme Court of Canada upheld a $20,000 award. They recognized that Mr. Fidler had suffered significant additional distress due to the loss of disability coverage.
The BC Court of Appeal case, Asselstine v. Manufacturers Life Insurance Co., 2005 BCCA 292, saw the court uphold an award for aggravated damages of $35,000. This decision was due to Mr. Asselstine’s increased anxiety, mental, emotional, and financial distress following the rejection of his claim and appeals.
In Cross v. Canada Life Assurance Co., 2002 CanLII 49610 (ON SC), the court awarded $29,000 in aggravated damages. The court found that the insurance company’s failure to process a disability claim in a timely manner constituted a separate actionable wrong, causing Ms. Cross significant anxiety and distress.
In the leading Nova Scotia case, Industrial Alliance and Financial Services Inc. v. Brine, 2015 NSCA 104, the Court of Appeal awarded a significant $90,000 in compensatory damages. This award was for mental distress caused by a breach of contract, which included breaches of the contractual duty of good faith.
In Newfoundland, in the case of Fowler v. Maritime Life Assurance Co., 2002 CanLII 54081 (NL SC), the court found that the insurance company had breached its duty to interpret a ‘peace of mind’ income security insurance policy in a reasonable, balanced manner. As a result, Justice Adams awarded a substantial $75,000 in aggravated damages.
To the extent the Court relies on these past awards for guidance, they are updated for inflation.
What happens if I’m receiving LTD because of a car accident and decide to sue the person responsible?
If you’ve been in an accident that resulted in disabling injuries and have received long-term disability benefits, your insurer might be entitled to a part of any settlement you receive. Specifically, they may claim a portion of the settlement awarded for past or future earnings. This process is known as ‘subrogation’ in legal terms. The extent to which they can do this depends on your specific policy. There are several considerations and your lawyer for the car accident should assist you in negotiating with your LTD insurer.
The following cases are just a couple of examples of many cases across Canada dealing with subrogation in car accident injury cases where the person is receiving LTD payments.
In Melanson v. Co-Operators General Insurance Co., 1996 CanLII 18440 (NBKB), the court explained it like this: Insurance is there to cover your losses, nothing more. So, if you get money from somewhere else, like a lawsuit, your insurance company can ask for a refund of the benefits they paid you. This only happens after you’ve been fully compensated for your losses. To prevent you from getting paid twice for the same thing, all insurance policies have this ‘subrogation’ rule, even if they don’t spell it out.
In another case, Nova Scotia Public Service Long Term Disability Plan Trust Fund Trustees v. McNally, 1999 NSCA 129, Mr. McNally got hurt in a car accident. He stopped working and started receiving long-term disability benefits. Later, he won a lawsuit for his injuries and got $85,000, part of which was for lost wages. The insurance company claimed part of this money, saying they should be paid back for the disability benefits they gave Mr. McNally. The court agreed and ordered Mr. McNally to pay back $40,238.21 plus interest to the insurance company.
These cases just provide two examples about the law of subrogation, they vary depending on the province and your particular long term disability policy.
What happens to your LTD benefit if you’re asked to return to work in a job that pays less than you used to make?
Every insurance policy is different, but many long-term disability policies set a minimum income you can earn. This is based on a job that fits your education, training, and experience. This becomes an issue once the definition of disability in your LTD policy changes from “own occupation” to “any occupation”.
Usually, under the “any occupation” definition if you can go back to a job that fits your skills and background, and you can earn between 60% and 70% of what you made before you were disabled, you might not be eligible for long-term disability benefits anymore. But it’s important to check your policy for the exact rules.
If your long-term disability benefits have been stopped because the insurance company thinks you can work in a different job that pays much less than your old job, you might have legal options. Our team can review your policy and your situation to make sure the insurance company is doing what it should.
What happens if you don’t follow the recovery plan recommended by your doctors?
If you do not take part in the recovery programs your doctors recommend, your insurance company might stop your benefits. When you’re applying for or getting long-term disability benefits, it’s important to do everything you can to get better. This includes following any recovery programs your doctors recommend. LTD policies will sometimes specifically say that you have a duty to lessen your injuries as much as possible. Even if it is not specifically mentioned, the Courts will not look favorably on your case if you are not following medical advice.
If you do not agree with a specific doctor’s recommendations, you should get a second opinion. Your legal team can help here to help your LTD insurance company understand why you did not want to follow a specific treatment plan.
How much pain do you have to have before you can stop working?
If you can struggle through a workday, but it causes you significant pain, either during or after your workday, you may be entitled to Long Term Disability insurance. If working results in an unreasonable amount of pain, you might not be medically fit to work. It’s not just about being able to do the job – it’s also about whether the job causes you undue suffering. You shouldn’t be expected to work at a job that causes you significant pain, either during work or afterwards. Pain is difficult to measure, so you have to communicate to your doctors honestly and frankly without downplaying the problems you are having.
Can social media posts impact my LTD claim?
Yes, your social media posts can influence your LTD claim. Honesty is crucial when applying for LTD benefits, especially for “invisible illnesses” that can’t be easily measured by medical tests. Your credibility plays a significant role in these situations.
It’s important not to exaggerate or be inconsistent when reporting symptoms. Similarly, downplaying your symptoms on public platforms like social media can be detrimental. Insurance companies can access your social media posts and use them against you during litigation. For instance, if you post photos or videos of yourself doing activities that you claim your disability prevents you from doing, it could harm your credibility.
Remember, even if you’ve set your social media privacy settings to the highest level, a court can order you to produce these documents if the insurance company can prove their relevance.
MacGillivray Law can help you get fair compensation
Having your long term disability denied or terminated by an insurance company can be a stressful experience. Our lawyers will help you determine the best course of action to have your benefits reinstated or dispute a denied claim. Contact us today for a free consultation.
Have questions for our team?
MacGillivray Law is a personal injury law firm with offices in Nova Scotia, New Brunswick, and Newfoundland and Labrador. We serve clients all across Canada.
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