Steps to deal with the denial of a long-term disability claim
Having your long-term disability (LTD) claim denied is additional stress and worry on top of dealing with serious health concerns. The below are some quick, informative points to know which can demystify next steps following a denial letter.
Review of the Decision: In certain circumstances, a denial letter was issued because the insurer simply lacked sufficient information to support a finding of disability under the contract. The insurer has an obligation to provide you a written letter with reasons for the denial. If no reasons were provided, or you struggle to understand the reasons, reaching out to the insurer for clarification can sometimes be the quickest and fastest way to resolve a denial. Sometimes, a denial is based on the lack of medical documentation which can be easily rectified by obtaining a copy of requested medical records and providing them to the insurer. If a denial is maintained even after all documentation is provided, you can request a review of the decision within a specified timeframe, usually between 30 and 60 days, which information should be provided in the denial letter. Occasionally, a review of the decision may lead to a reversal of the denial.
Good Faith Contract: Long-term disability contracts are peace of mind contracts, like all insurance contracts. There is a mutual obligation to act in good faith between insured and insurer. This means, among other things, that the insured has an obligation to answer questions truthfully and honestly, to provide the required information, and abide by the terms of the contract, and the insurer has an obligation to adjust the claim in good faith, quickly, expeditiously, and in an honest manner. Delay in reply, failure to provide reasons, and arbitrary decision making are all examples of conduct which can amount to a breach of the duty of good faith. Particularly extemely terrible breaches of this duty can result in entitlement to punitive damages. Not only must the insurer conduct be shockingly bad, but the insured must come with “clean hands”, meaning that the insured cannot also have been acting in bad faith as that would seriously jeopardize a successful punitive damages claim.
Own Occupation vs. Any Occupation Test: It is important to understand that the test one must meet to receive LTD benefits changes after two years. In the first two years you must meet the “Own Occupation” test, being that you must be unable to perform the essential duties of your own job. After two years, a stricter test is applied, the “Any Occupation” test. To continue receiving benefits after the two-year mark, you must prove that your medical conditions prevent you from substantially performing the duties of any job for which you are reasonably qualified by training, education, or experience. The test is made somewhat more forgiving in that the “any” job has to be one that generates a meaningful income, which is usually considered to be 60% of pre-disability earnings. If your long-term disability claim is denied at the outset, the insurer is in effect finding that you would not meet the “Own Occupation” test, but if you have been receiving benefits for approximately two years or so, and suddenly receive a denial for further benefits, it could be as a result of the insurer’s belief that you would not satisfy the “Any Occupation” test. Typically, if you are receiving benefits for about two years, you can expect requests for medical assessments and further medical documentation.
Limitation Period: Once your long-term disability claim is denied, the limitation period begins to run. Typically, the limitation period is two years from the date of denial, though some policies can shorten this period further. The limitation period is the time you have to file a claim in a court in Ontario. Failure to do so within the prescribed time may result in being barred from doing so, and accordingly, being unable to pursue your entitlement to benefits.
Duration of Benefits: Usually, long-term disability benefits can last until age 65. However, certain policies may cap the duration of benefits to a certain number of years. If you receive an unexpected denial, it may be due to the expiry of this term in the policy.
This information is just the starting point, and when it comes to long term disability claims, the interaction of your particular medical history with the legal requirements of your policy and the laws of Ontario can make navigating a denial complex. Thus, it is important to consult a disability lawyer as soon as possible. The legal team at Singer Kwinter has extensive experience successfully changeling denials and securing entitlement to benefits.
