DISABILITY INSURANCE
CLAIM DENIALS

Why Your Long-Term Disability Claim May Have Been Denied

There may be several reasons why your claim for long-term disability insurance may have been denied. These include, but are not limited to, the following:

a) You are not “totally disabled”. But, be careful! Do not be too quick to accept this explanation, as it is often used in an intentionally misleading way. A disabled employee does not need to be in a coma or to otherwise be completely incapacitated to qualify for long-term disability. As long as you are unable to do substantial aspects of your occupation, or any occupation for which you are suited either by training, education, or experience, then you may be “totally disabled” as required. See: Nantsios v. The Canada Life Assurance Company, [1996] O.J. No. 4381.

b) You can do similar work. An insurer might argue the employee is now able to transfer into another occupation. Where this goes against the advice of your doctor, you should be suspicious. You should seek legal advice if your insurer expects you to work contrary to the advice of your doctor.

c) You have not provided enough medical documentation. Many insurance companies will take the position that the medical documents you have provided do not actually support your disability claim. This is a common tactic insurance companies will use to deny your disability claim. They also commonly do not explain exactly why your documentation is not good enough. Generally, as long as your doctor supports your disability, you should qualify for long-term disability. If an insurance company uses this tactic to deny your claim, you should seek legal advice.

d) The insurance company’s doctor does not think you are disabled. Be very cautious in this situation. Often, the medical consultants used by insurance companies are “hired guns”, meaning they will side with the insurance company regardless of whether your claim has merit. Sometimes, they are not even doctors! You should always have an independent doctor review your disability.

e) The insurance company has had you under surveillance. The idea of the insurance company watching your every move is undoubtedly a scary thought. It is intended to be.

Time for Appealing Denial: Limitation Period

In Ontario, an employee who has their long-term disability claim denied has only two years to sue, after which they will no longer be able to. This is set out in the Limitations Act, 2002. The difficult part is determining when the clock starts to run. In the decision Western Life Assurance Company v. Penttila, the Court determined that the limitation period begins to run once an employee receives a final decision from the insurance company, after all appeals are finished. The long term disability claim must first have been clearly and unequivocally denied. This suggests that legal proceedings may be premature if they are started prior to the end of the insurance company’s internal appeal process.
In Clarke v. Sun Life Assurance Company of Canada, the Ontario Court of Appeal confirmed that an insured has a cause of action for breach of contract against her insurer when the insurer stops paying long-term disability benefits.