Long-term disability benefits are a type of benefit most commonly provided to employees by their employer through a group benefits plan. The insurance policy will pay a portion of the person’s income if they cannot work due to an injury or illness.
We recently wrote an introductory article on long-term disability benefits. This article elaborates on the claims process and looks at what can happen if the claimant makes an error in the process, such as missing the deadline to file a claim or not filing a formal claim at all.
Claims for long-term disability benefits
If a person is unable to work as a result of a disability, they may have access to benefits under a policy of insurance, for example, provided by their employer.
Employers may provide their workers with policies designed to address short-term disability and/or long-term disability. While each type of policy provides employees with a portion of their wages in the event of disability, the former covers short periods of being unable to work and the latter provides coverage after a longer period of being unable to work, such as six months.
The steps in the claims process
Each long-term disability benefits plan is different, so the specific terms and conditions stated in the policy are important.
The person will need to file a claim form with the insurance company by the applicable deadline. The claimant’s doctor will need to complete part of the claim and the insurance company may require further medical documentation or appointments.
If the insurer rejects the application, which may occur at the outset or after some period of disability, you can appeal and ask them to reconsider the decision. If your claim for long-term disability benefits is still denied, you may be able to bring a court claim against the insurance company for compensation.
What can happen if the claimant does not comply with the policy requirements?
In circumstances of non-compliance with the policy requirements, the courts will not permit the claimant to bring proceedings against the insurance company.
For example, in the case of Wiles v Sun Life Assurance Company of Canada, the claimant made a claim for salary continuation after termination on the basis that she was disabled. The plaintiff commenced proceedings against Sun Life, who defended the action on the basis that it had no liability because salary continuation was a benefit provided by her employer and it only acted as the administrator of the program.
The plaintiff later filed a long-term disability benefits claim with Sun Life (after the deadline specified in the insurance policy) and amended her court claim to seek damages for breach of the long-term disability policy provided by Sun Life. This amendment was made after the deadline set out in the policy for commencing legal action, which was one year after the initial claim was required to be made.
The Ontario Superior Court of Justice dismissed the plaintiff’s case, concluding that the plaintiff’s action was doomed to fail because it was not brought forward within the period prescribed by the policy.
What can happen if the claimant imperfectly complies with the policy requirements?
However, courts may take a different approach when the claimant has “imperfectly complied” with the policy requirements in lieu of outright noncompliance.
For example, in Smith v Sun Life Assurance Company of Canada, the claimant’s application for short-term disability benefits was rejected by the insurer. The claimant later commenced court proceedings seeking payment of long-term disability benefits, despite not having formally applied for such benefits with the insurer.
The Ontario Superior Court of Justice decided that there had been imperfect compliance with the terms of the policy because the insurer was aware of the nature of the plaintiff’s alleged disability, having already adjudicated the claim for short-term disability benefits. Further, the insurer had received a completed long-term disability benefits questionnaire from the plaintiff’s doctor.
The court then decided that it was in the interests of justice to grant the plaintiff a remedy known as relief from forfeiture. This remedy allows the court to protect a person against the loss of an interest where they have failed to follow the terms of a contract. Thus, the plaintiff could continue pursuing his court proceedings for the allegedly outstanding long-term disability benefits.
What can happen if the claimant waits too long to commence court proceedings?
In the event that the insurance company denies the claimant’s application for long-term disability benefits and it is necessary to commence court proceedings, it is critical to meet the statutory limitation period to avoid being time-barred. This is generally the second anniversary of the day on which the claim was discovered.
For example, in Kumarasamy v Western Life Assurance Company, the claimant missed the insurer’s deadline for submitting the long-term disability benefits claim. After the claim was denied, he commenced court proceedings.
The Ontario Court of Appeal disagreed with the plaintiff’s argument that the claim was discovered when the insurer denied the benefits claim. Instead, the court decided that the plaintiff’s claim was discovered when the plaintiff knew he was injured, believed himself entitled to long-term disability payments and knew the insurer was not making those payments. Given that the plaintiff commenced court proceedings more than two years after that date, the court decided that the plaintiff’s claim was statute-barred and, therefore, could not proceed.
Contact the Personal Injury Lawyers at Tierney Stauffer LLP in Ottawa, North Bay, and Eastern Ontario for Advice on Disability Benefits
If you run into any trouble when making a claim for long-term disability benefits, contact the experienced team at Tierney Stauffer LLP. We can help you navigate the process with the insurance company and ensure that you meet applicable deadlines.
At Tierney Stauffer LLP, we understand being denied disability benefits can cause financial ruin for injury victims. We recognize no two claims are the same, which is why we give each client the personal attention needed to bring about the best possible resolution.