Our law firm sees some very seriously injured accident victims and disability claimants. Many of our long term disability clients who have cases against large multi national insurers such as Manulife, SunLife, Great West Life, Standard Life, Desjardins, Industrial Alliance, SSQ, Equitable Life etc; want to know how an insurer can place a dollar figure on their disability and inability to work for the rest of their lives.
For a disability claimant, the answer to this question can be very simple. If I can’t work for the rest of my life, then naturally, I should be entitled to MILLIONS of dollars worth of compensation. Afterall, my pain and suffering is immeasurable.
One of the most common misconceptions in long term disability cases is that claimants are entitled to damages to compensate them for their pain and suffering. This is NOT true. At our Law Firm, we refer to LTD cases as “four corner” cases. That means that your damages, or benefits, are limited to what the four corners of the policy provide for. If you have a bad policy, which, based on the wording of the policy will not properly compensate you in disability benefits; then your award will reflect that.
There are some situations where awards in long term disability cases can fall outside of the four corners of the policy.
We see this in cases where there is EVIDENCE of bad faith claims handling, aggravated damages, punitive damages, or damages for mental anguish on account of an completely unreasonable denial or poor claims management.
When can punitive damages be awarded against an insurer? The Supreme Court of Canada, had this to say on one of the leading cases on punitive damages in Canada, Whiten v. Piliot Insurance:
When then can punitive damages be awarded? It must never be forgotten that when awarded by a judge or jury, a punishment is imposed upon a person by a Court by the operation of the judicial process. What is it that is punished? It surely cannot be merely conduct of which the Court disapproves, however strongly the judge may feel. Punishment may not be imposed in a civilized community without a justification in law. The only basis for the imposition of such punishment must be a finding of the commission of an actionable wrong which caused the injury complained of by the plaintiff.
In my view, the correct approach is to assess the conduct in the context of all the circumstances and determine whether it is deserving of punishment because of its shockingly harsh, vindictive, reprehensible or malicious nature. Undoubtedly some conduct found to be deserving of punishment will constitute an actionable wrong but other conduct might not.
Having said that, establishing a claim for aggravated damages, punitive damages, or damages for mental distress is very difficult to establish against an insurer without the supporting evidence of such a claim. Despite what some claimants may think; NOT EVERY CASE IS ONE WHERE THE GROUND FOR PUNITIVE DAMAGES, AGGRAVATED DAMAGES, OR DAMAGES FOR MENTAL DISTRESS EXIST. While the lawyers at my firm would love to prove it on each and every one of our cases, sometimes, the facts and the evidence just isn’t there. We cannot prove what’s not there. We’re lawyers, not magicians and certainly NOT fabricators of false evidence.
This leaves us to the four corners of the policy. So, if your monthly long term disability benefit amount if $1,500/month, then you might be entitled to $1,500/month up to the ago of 65; or whenever your policy says that benefits terminate.
The insurer might agree to pay for all backpayments owing. These backpayments might be significant, or they might not be. It all depends on the facts surrounding your case. The insurer may also agree to pay all of your backpayments, and re-instate your benefits on a month to month basis.
In the above noted example, a 60 year old person, whose monthly LTD benefit amount of $1,500/month, the insurer might agree to pay for benefits up to the age of 65. This amounts to $90,000 over the 5 year period. If that same person went on disability at the age of 62, then that’s just 3 years of benefits at $1,500 per month ($54,000).
This is a far cry than the millions of dollars which claimants might expect to receive out of their claim. The reality is that quantifying damages in long term disability claims is mainly a mathematical or scientific calculation. You can’t just make up a large number out of thin air and expect an insurance company to pay that number. Insurers don’t work that way. They retain armies of actuaries to work out the probability of mortality rates, illness rates, etc; upon which to base their premius. So, why on earth would you expect them to just go along with a figure picked out of mid air without any evidence, or math to substantiate that figure.
Here is an example. Recently, at mediation, a client insisted that we make an offer in a long term disability action not based on math or any logical calculation. But rather, on how that person felt their damages were worth. In that instance, a person who worked at a job which paid $35,000/year insisted that they were owed $900,000 from the insurrance company, along with payment of legal costs, interest and disbursements. Needless to say, this offer didn’t go over so well when it was presnted to the insurance company. They scoffed at it and responded with a counter offer of ZERO. Their ZERO offer also came with a message. If the claimant wasn’t going to take the mediation process seriously, and present so serious figures based on evidence and the math of how damages are quantified, then the insurer would walk out of the mediation and the day would end.
While the above noted examples are very simplistic, things get more complicated when you consider the set-offs which the insurer is entitled to which are contained in virtually every LTD policy which our law firm has come across. Insurers are entitled to set offs against any amounts received from CPP-Disability, WSIB, and Pension Plan. This meanst that if you’re entitled to $2,000/month in LTD Benefits; but you’re receieving $1,000/month in CPP Benefits, along with $500/month in WSIB benefits; then the LTD insurer is only on the hook to pay you $500/month to bring you up to that $2,000 amount. You’re NOT entitled to be in a better income position pre-disability than post disability. This set off provision is very significant, and complicates the quantification and understanding of many LTD cases for claimants. Nobody seems to understand WHY LTD insurers are entitled to such a set off. I agree.
It seems odd, but when you think about it; it’s really not. At the end of the day, these contracts, while you think they protect you; really provide the most BASIC level of income protection. You get what you pay for when it comes to insurance. If you pay ZERO for LTD benefits and they’re just provided to you on account of your employment through a group policy; changes are that group policy is a VERY CHEAP ONE; which does not have many of the protections afforded in other more expensive; yet more claimant friendly private policies.
Another big issue for claimants to understand is the change of defintion of disability contained in many policies, often at the 2 year mark from “own occupation” to “any occupation“. Own occupation means if the disability prevents you from performing your job at the time of the disability. If you can no longer perform that same job, then you might be entitled to LTD benefits.
Any occupation means ANY OCCUPATION. If you cannot perform ANY OCCUPATION, then you may be found to be disabled. This is always very difficult to establish and is only reserved for the most seriously injured/ill/disabled claimants. Any occupation could be a greeter at Walmart, a parking lot attendant, or working at a desk performing data entry or answering phones in a call centre. Think of the easiest, most basic, most rudimentary job on the planet. If you can perform that job, even for a few hours a day, then you may not qualify for LTD benefits under your policy.
Got other questions about your LTD Insurance? Claim denied? Give us a call. We’d be happy to chat with you and provide a free, no hassle legal consultation at on of our three locations: Toronto, London or Peterborough. Can’t make it out to one of our offices? NO PROBLEM! We travel! We’d be happy to visit you wherever you are (provided that it’s in Ontario).