To learn more about Disability Insurance Benefits eligibility, definition of "Totally Disabled", submitting a claim and claim denials, wrongful dismissals and cutting off benefits, please read our articles:

1. Overview of Disability Insurance Benefits and Eligibility
2. Applying for Long Term Disability and Denied Claims
3. Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim

Disability Insurance Appeals

Typically, disability insurance policies provide for an internal appeal process that an insured can try before commencing a civil action if their claim has been denied or terminated. There may be one or more than one round of internal appeal available under the policy.

‍

Although internal appeals are an option, they're not often the recommended route because unfortunately often times the Insurer maintains their original decision, it causes extra work (and potentially costs) and can lead to delays in filing of a lawsuit.

‍

The more common approach is to commence a civil action. An insured is not required to use the internal appeal process before commencing a civil action in respect of their benefits entitlement under a disability insurance policy.

‍

Understanding Your Disability Lawsuit

‍

Who Are the Defendants in a Civil Action?

The defendants in a civil action for LTD benefits are:

‍

1. the insurance company (where it underwrites and/or administers the policy);
2. a claims handling company ("third party"), if there is one involved; and
3. the employer (for group policies if the employer underwrites the insurance and/or improperly cancelled the benefits depriving the plan member of access to insurance when they needed it).

‍

There may be further defendants depending on the circumstances of each particular case.

‍

What Remedies Are Available in LTD Lawsuits

The most common outcome for a LTD case is a lump-sum settlement being reached at a mediation.

Here is a list of a number of common remedies sought in an action for LTD benefits, including:

‍

1. A declaration that the plaintiff is entitled to recover disability benefits for the extent and duration of their disability.
2. Payment of all disability benefits due and owing. The remedy in breach of contract is the payment of all disability benefits that the plaintiff would have received had their claim been approved. At the point in time of commencing a lawsuit, there will be a retroactive amount from the date benefits would have first been payable under the policy and, potentially, an ongoing amount in the future (possibly up to age of 65).
3. Future payments.
4. Relief from forfeiture. This is a remedy available to protect a person from a loss of interest or right because of imperfect compliance (not non-compliance) with a condition of a contract. For example, this may arise in disability benefit claims because the insured person may not have submitted their application or proof of claim within the prescribed time period set out in the policy.
5. Waiver and return of premiums. LTD policies typically include a provision for the waiver of premiums during a period of approved disability. Where there has been a dispute about entitlement to benefits, the insured will have continued to pay premiums but will not have received the benefit of the insurance. In an action for breach of contract then, the plaintiff should request a reimbursement for the premiums they have paid, but which they would not have had to pay had their claim been approved.
6. Payment of any income tax or income tax interest and penalties that might arise due to a delay in the payment of benefits, resulting in a lump sum award at trial. Disability benefits might be taxable or non-taxable depending on the policy and who pays the premiums. Typically, if premiums are paid entirely by an employee, then the benefits are non-taxable whereas, if some or all of the premium is paid by the employer, the benefits are taxable. Taxable benefits become taxable damages when awarded as a lump sum by a court. Thus, the plaintiff should seek an order that the defendant be liable to pay all extra income tax payments due, interest, and/or penalties resulting from the delay in benefits and resulting lump sum for arrears awarded at trial.
7. Damages. In a disability benefit action, there may be cause for general damages flowing from the breach of contract, mental distress damages (both arising out of a breach of contract and "true aggravated damages", and punitive damages). Typically, aggravated and punitive damages are pleaded in LTD cases.

‍

Documentary Discovery and List of Documents

After commencing a civil action, the insured or their counsel can start building the file with a view to preparing the List of Documents. As with all civil litigation, documentary disclosure is an ongoing process.

‍

There tends to be a standard set of documents for disability benefit files. Typical documents include:

1. Insurance file. Insurance policy (with any amendments) and employee benefit handbook.
2. LTD claim file. Employee, attending physician (with medicals), and employer forms.
3. Appeal file. If the insured has appealed internally, there will be the appeal submission, medical documents, and the insurer's decision letter.
4. Correspondence file. All correspondence between insured and insurer (or claims handling company), including benefit denial or termination letters.
5. Medical file. All relevant clinical notes and records ("CNRs") covering the disability period, including medical reports, test results, imaging, etc.
6. Employment file. Employment contract (or collective agreement), group health benefit plan documents, T4s covering the disability period, termination letter (if applicable), workplace injury and WSIB forms (if applicable), human rights workplace accommodation documents (if applicable).
7. Income file. Other sources of relevant insurance or disability benefit income.

‍

Documents the insurer typically requests for the insured to obtain include:

‍

1. personal claims history for the time period of disability;
2. pharmacy prescription drug summaries;
3. income tax returns covering the disability period; and
4. CPP disability records.

‍

Our experienced Employment & Disability Group is ready to review your claim in a free consultation, and assist you. Get in touch today.