Recently in Disability Claim Denied Category

 The next time you see one of those feel-good ads on TV, in a newspaper or on the radio for a insurance company, don't forget that it really is all about the money for insurance companies.   Okay, lawyers work for money too, but we earn it based on the results we get for our clients in pursuing claims against large insurance companies.

A recent case, illustrates just how much money gets thrown around by insurance companies in their efforts to grab further market share.   The Ontario Superior Court released its' decision in Sun Life v. Metropolitan Life, 2010 ONSC 558 (CanLII) on January 22, 2010.   This case is a reminder of the type of stakes involved when one insurer acquires another.   In July, 1998, The Mutual Life Assurance Company of Canada (which changed its' name to Clarica and was then purchased by Sun Life in December 2002), paid $2.2 billion dollars to Metropolitan Life for its' Canadian life insurance related businesses.

The case is about one insurer alleging that they are entitled to further reimbursement or indemnification from liabilities flowing from policies issued by Metropolitan Life prior to its' takeover by Sun Life.    The concern that Sun Life has is that they do not wish to be stuck with the cost of fixing the cost structure of certain policies that Met Life had issued in the past, where their allegations of misrepresentations about the cost of these policies to the end individual policyholders. 

The ins and outs of this particular case will not matter to you if your claim has been denied, be it for long term disability benefits, life insurance or critical illness, but it certainly does reinforce the notion that money really does matter to insurance companies.    Does anything else matter to them?   Absolutely, just nothing matters more than money.

By David Share L.L.B.

President, David Share Associates, Lawyers

By Kirk Sloane B.A.(Hon), LL.B.

Many disability claimants have heard or read about the following scenario: your disability insurer calls you on the phone, sends a representative to your home, or sends a letter proposing a lump sum payment to "buyout" either the future of your disability claim, a disputed portion of unpaid past benefits, or both. In many instances a buyout can be a desirable outcome, but a disability claimant needs to understand the ramifications of such a payment, have confidence that the proposed deal makes sense, and that the proposal is the best available option. Using experienced legal counsel can be an invaluable tool in assessing whether a buyout is the right thing to do and to ensure that the best deal possible is obtained.

One of the first considerations for an individual already receiving benefits is to determine the likelihood of the claim being terminated if the buyout proposal is rejected. Some insurers use the fear of a claim termination as a tactic to convince the claimant to accept a reduced amount. If the claim may truly be on the verge of a termination, however, there needs to be an assessment of the potential costs of a lawsuit and the likelihood of winning or losing the lawsuit. Those factors are essential in arriving at a sensible buyout figure.

Another important piece of the puzzle is to have a realistic assessment of the nature, extent and potential duration of a claimant's disability in order to make appropriate adjustments to the total future expected disability payments. In addition, a disability claimant needs a thorough understanding of the concept of the "present value" of future benefits in order to calculate the true value of the investment power of a proposed lump sum payment of future benefits.

When it comes to a buyout during litigation, the cost and risk factors for further litigation and the potential outcomes are much more prominent factors than in the claim context. In summary, buyout strategies can be complex and it is critical that a disability claimant utilize a lawyer with expertise in dealing with disability claims in order to ensure a satisfactory outcome.

By Leanne Goldstein B.A., LL.B. 

Employment provides financial sustenance and the ability to contribute to society. For many, their employment forms part of their identity, provides a means for self-expression and fuels self-worth. There are a vast number of individuals who have spent a great deal of their working life employed with the same company. Unfortunately, their loyalty is not always rewarded and sometimes in addition to dealing with the effects of their disability, they are dealing with employment issues at the same time.  

It is not uncommon for employers to threaten to terminate employees who are unable to return to work as a result of a disabling physical or psychological condition that prevents them from being able to perform their job duties. These employers send letters to disabled employees threatening to terminate their employment if they do not return to work by a certain date, setting up a "frustration of contract" argument.

At common law an employer may terminate an employee who is unable to work due to illness in certain circumstances, on the basis that the employment contract has been "frustrated". In order to succeed in such a case, the employer would need to prove that the employee's incapacity renders further performance of the employment contract impossible.

There are, however, certain cases in our courts that have held that the employment relationship cannot be frustrated if an employee is receiving long term disability benefits. The theory behind these decisions appears to be that in providing access to benefits the employer contemplated the possibility of an employee being unable to work at some point. 

Our courts have also considered the manner in which a termination or employment takes place. Employers are required to treat employees with good faith and even handedness at the time of their termination. Given that employees with disabilities are often more vulnerable to experiencing psychological distress, this issue becomes particularly pertinent.

In Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701, a 59-year-old employee was dismissed without explanation after fourteen years as a top salesperson. The manner of his dismissal led to him suffering from depression. Courts have relied on this decision to review the employer's conduct during termination. Where employers have for instance been dishonest and misleading with an employee, made unfounded allegations against an employee, withheld money from an employee and embarrassed an employee, the courts have considered this conduct in awarding damages.

The Human Rights Code provides a measure of protection to employees from discrimination on the basis of disability. An employer is required to offer a disabled employee accommodation in the form of modified employment (to the point of hardship for the employer) that would facilitate the employee's ability to perform their job. An employee who is dismissed as a result of being unable to work due to a disability may be able to make a Human Rights complaint against the company.  

Sometimes an employer terminates employment before an employee is able to make a claim for disability benefits, leaving the employee open to coverage issues should the employee attempt to make a claim for disability benefits after their employment has been terminated. Our courts have in certain situations found employers liable for providing disability benefits to employees terminated before or while they experienced a disability (see for instance: Re Stelco Inc. (2005 Ont. S.C.J.): Zorn-Smith v. Bank of Montreal (2003 Ont. S.C.J.): Prinzo v. Baycrest Centre for Geriatric Care (2002 Ont. C.A.): Keays v. Honda Inc. (2005 Ont. S.C.J.).

In certain circumstances, employers provide disabled employees with a termination letter together with a severance offer suggesting that they are complying with their legal requirements. Many employees are unaware that statutory termination and severance pay are minimum legal requirements. Employees often believe that the employment standards payout is the maximum that they can receive. However, depending on the circumstances of a case the true value may be greater than the proposed offer based on common law damages. Often employees are forced to attend meetings and sign documents in which they give up their rights to pursue employment issues.

It is important to know and understand your legal rights at all times. Consulting with a lawyer familiar with the interplay between disability and dismissal is essential to ensure that your legal rights are protected.

By Leanne Goldstein B.A., LL.B. 

An expression of contrition and remorse, an apology can go a long way to healing the emotional wounds that fester in the face of wrongdoing. While an apology cannot undo harm that has been caused, it is a way of showing respect and it is an acknowledgement that another individual has emotions that deserve consideration. Children are taught from a very young age to apologize for wrongdoing and to acknowledge the effects of their negative actions on others.

Unfortunately, the proliferation of litigation in recent times has resulted in an adult society that has shunned the simple apology in fear that it will result in an admission of liability or recrimination. Individuals and corporations are often advised by legal counsel to avoid issuing an apology in cases of alleged wrongdoing.

Doctors and Hospitals for instance, are often cautioned against apologizing for medical errors in order to avoid litigation. They will go to the extent of avoiding all communication with patients in regard to a medical error in order to avoid the possibility that anything said in explanation of what occurred could surface in a law suit.

Ironically, the failure to apologize is sometimes what spurs litigation. Some victims of medical errors commence litigation to seek the answers that they have not received because the doctors and hospitals have been instructed not to communicate with them.

Other litigants are motivated by a desire that there is recognition of the wrongdoing or to ensure that the mistake does not reoccur. It is highly probable that many of these types of litigants may not have commenced litigation had they received an apology.

South Africa embraced the concept of "apology" with the adoption of the Truth and Reconciliation Commission in the 1990's. The Commission was created shortly after the abolition of Apartheid and conducted hearings in which victims of violence and human rights abuses could come forward and tell their stories. Perpetrators of the violence and human rights abuses were also encouraged to come forward, admit to their wrongdoings and offer apologies for their actions.

The Commission was vested with jurisdiction to grant amnesty to perpetrators if the crimes committed were politically motivated, proportionate, and there was full and complete disclosure. Approximately 15% of the perpetrators were granted indemnity from criminal and civil prosecution. In 1998 the Commission presented a report which detailed and condemned the abuses that had been committed.

Although the outcome and efficacy of the Truth and Reconciliation Commission has been debated by many, the fact that Democracy was attained in South Africa post Apartheid without civil war is likely in part testimony to the value of acknowledging wrongdoing and rendering an apology.

After an outbreak of Listeriosis the food-borne illness, caused by the bacterium Listeria monocytogenes, Maple Leaf Foods conducted a very public campaign in Canada. The company CEO held press conferences, ran advertisements on television and in newspapers and posted an apology on the company web site. Instead of being condemned for opening itself to potential lawsuits, the company has been lauded for its effective communication with the public.

On April 15, 2009 a bill (The Apology Act) was introduced in the Ontario Legislature that provides that an apology made would not be admissible in a civil proceeding and would not constitute an admission of liability.

It is not uncommon in our practice to encounter clients who are extremely distressed by the fact that the person or company who caused their injury has never apologized to them or acknowledged their wrongdoing. They will express the fact that they are unable to heal emotionally because of the anger they feel towards those that have caused their injuries. In advocating for our clients, we endeavour to imbue litigation with the human element and attempt to persuade those that we are litigating against that they are dealing with individuals whose emotions are deserving of consideration and respect.

If this legislation is passed, it will be a positive step in recognizing that the victims of wrongdoing are not motivated solely by compensation but are often motivated by the genuine human need for compassion, understanding and the recognition of wrongdoing when it has occurred. 

By David Share, President

David Share Associates, Lawyers 

One of the most challenging aspects of representing people in their disability disputes is figuring out whether we can help them in the first place.   For most people, all they know is that they are supposed to have these benefits that pay them if they are unable to work, and the rest is merely window dressing.    All well and good, but the path to finding a remedy when the benefits are denied is anything but simple.

Is your workplace governed by a Collective Bargaining Agreement?   Are the benefits paid by an insurer in their capacity as a manager of the benefit plan?   When an insurer enters into a contract to manage disability benefits payments for an employer who is financially responsible to pay the benefits?    This contract is usually called an "Administrative Services Only" agreement, or A.S.O. 

Why is this important?   Because, the answers to these questions will determine whether a dispute regarding disability benefits belongs in the courts or must go through the labour relations system.

Disputes that properly arise under a collective bargaining agreement must ultimately be disposed of by way of Arbitration as contemplated by the particular collective bargaining agreement.   Where that is the case, the disabled employee will usually have to seek representation through their union, who will provide a lawyer if required.

As there are numerous unions operating in Ontario, with multiple locals and resulting different benefit plans depending on the particular employer, answering these questions can be a daunting task.   

In these cases, it is imperative for you to determine the correct path as soon as possible so that you do not harm your chances of successfully pursuing your claim due to the running of time.  Consult a lawyer as soon as possible if your benefits have been denied, as time if of the essence and the sooner these questions are raised, the sooner you can determine whether you are the correct path to resolving your dispute. 

By Kirk Sloane B.A.(Hon), LL.B.

There are several investigative tools used by insurers when assessing disability claims, including IME's (Independent Medical Examinations), FCE's (Functional Capacity Evaluations), referrals to medical consultants, home visits and surveillance.   The insurer has a contractual right to compel a claimant to undergo an IME, and in most circumstances, a claimant has the obligation to attend an examination. 

An FCE may, however, be an entirely different matter.  In contrast to an IME, an FCE is not generally contractually required and is not necessarily a "medical examination" as provided for by the policy.  A FCE is a collection of tests utilized by insurers to test a claimant's maximal physical effort. The information from the FCE is then used by the insurance company to make inferences with respect to whether or not an individual can work full time on a sustained basis. There may be legitimate grounds upon which to refuse to attend an FCE, and claimants should be vigilant about asserting rights to refuse such testing.

Insurers often use in house medical consultants to contact a claimant's treating physician to discuss the claimant's condition, restrictions and limitations.  In essence, the insurer's medical staff seeks to develop evidence from the physician to demonstrate that the claimant is not disabled.  Often, the insurer sends a letter to the physician "confirming" the conversation and requesting a signed acknowledgment from the treating physician that he or she agrees with the statements in the letter.  The letter, however, may either distort the facts, or cast the claimant in an unfavorable light.   A claimant should instruct a treating physician to not respond to such a letter without first reviewing the contents of the letter with them in detail.

Insurers also utilize medical consultants to reviews claims, relying upon a non-examining physician to address functional abilities.  This has inherent problems, because it precludes the claimant from receiving an appropriate evaluation of the claim.  It is vitally important therefore that claimants ensure that their treating physicians provide well developed, organized office notes and/or narrative reports to support the claim.

Home visits are common techniques employed by insures when assessing disability claims.  An insurance company representative, often identified as a rehabilitation consultant, will stop by either unannounced or at a prearranged time to speak to the claimant.  This individual will seek to ascertain the claimant's activity level, determine whether the claimant is working on another interest, or to develop other information to be used by the insurer.  Caution should always be used when speaking to the insurer or its representative.  Such interviews should be done on the claimant's terms, whether recorded with witnesses, or by having a confirmation of interview prepared - all to avoid anyone distorting the information provided. 

Surveillance is another technique frequently used in high benefit cases, or where claimants allege disability based upon either subjective type conditions or where the objective support is not indicative of the restrictions or limitations.  In high benefit claims, the insurer is willing to invest significant money to terminate or deny a potentially expensive claim.  Claimants must be wary not only of their activity levels while on claim, but of any statements made to the insurer about their daily activities.  Inconsistencies can be fatal to a claim: the expression "a picture is worth a thousand words" holds very true with regard to surveillance.

By Steven Muller LL.B, J.D, LL.M.,

What does Heath Ledger and Britney Spears have in common? Their life and disability insurance companies delayed payment of legitimate claims worth millions of dollars. Competent specialised lawyers were retained to fight their entitlements.

ReliaStar Life Insurance Company, owned by ING America, refused to pay Heath Ledger's death benefit of $10 million dollars to his 3 year old daughter, Matilda Rose. The 28 year old star of Brokeback Mountain and The Dark Knight is now the winner of the Golden Globe and Oscar posthumously. Ledger was found dead in his New York apartment in January 2008 some seven months after taking out the policy where his daughter Matilda is the beneficiary. The New York medical examiner ruled an accidental prescription drug overdose of painkillers and other medicine: alprazolam, diazepam, doxylamine, hydocodone, oxycodene and temazepam. Despite the ruling, ReliaStar suggested Ledger committed suicide or lied on his insurance application when he said he never used illegal drugs showing bad faith in applying to the policy. ReliaStar refused to pay claiming the policy was voided.

Prior to approving the application, Reliastar didn't ask for Ledger's physicians' records. Post claim the insurance company asked for names of doctors, psychiatrists and all kinds of records. The estate hired a lawyer on behalf of Matilda and sued ReliaStar claiming punitive damages and contending that the insurer acted in bad faith in its refusal to pay the Ledger policy. ReliaStar in January 2009 agreed to a confidential settlement rumoured to be around $10 million. The insurer appears to have attempted to engage in post claims underwriting in order to delay payment to Matilda.  

Britney Spears hasn't been as fortunate with her insurance dispute. In 2005, Spears sued eight international insurance companies including Liberty, AXA and QBE to recover $9.8 million in damages for their refusal to pay her for losses she sustained when her European concert tour in 2004 was cancelled because of a knee injury. Spears paid more than $1.3 million in insurance premiums on contingency insurance, a form of accident and illness insurance for celebrities, to cover abandonment, postponement and cancellation of performances for her 2004 Onyx Hotel Tour through the United States, Canada and Europe. 

Spears underwent a medical examination for her insurers on February 5, 2004 and Dr. Drazin concluded that she was "in sound health and free from disease" and "in fit condition" for the Tour. Unfortunately for Spears, she failed to note on the questionnaire that five years earlier she had an orthopaedic surgery on her left knee and had fully recovered subsequently performing hundreds of times since the surgery. In March 2004 Spears injured her left knee during a performance and cancelled two shows. Spears was examined the by the insurers doctor and cleared to perform further shows. In April 2004 Spears provided an explanation at the request of the insurers for the omission in the 2004 questionnaire. After April 2004 the insurers extended the policy from August 10, 2004 to August 15, 2004 and accepted premiums despite Spears acknowledging that she made a mistake on the 2004 questionnaire. On June 11, 2004 Spears had surgery for her injury that took place on June 8, 2004 while shooting her music video "Outrageous". Ultimately Spears was diagnosed with a floating cartilage and cancelled her summer tour of 2004. Despite Spears insistence that many of the insurers knew of her pre existing problems because they insured her for the Tour 2000 with disclosure at that time, Spears insurers are dragging their feet in paying this legitimate claim. 

Whether you're a celebrity or not, being denied your claim is stressful for you and your family. Insurers delay as a matter of course. Able counsel may reduce the delay and help resolve your life insurance claim and disability insurance claim.