Disability Insurance and Legal Rights

Warren Berg 0:00

Good morning and welcome to the January edition of Ask the Lawyer Across Alberta on Windspeaker Radio CFWE and CJWE . I'm your host , Warren Berg , and joining us this month again is Cynthia Carels of Weir Bowen LLP in Edmonton .

Cynthia Carels 0:14

Thanks very much for having us back , Warren .

Warren Berg 0:16

And I see we have a new face with us this month .

Cynthia Carels 0:19

We do indeed . I have the great pleasure of introducing my colleague , Michael Shepherd . Mike is a partner with Weir Bowen and has quite a fascinating background . Prior to becoming a lawyer , he actually worked in road building , earth moving and rock blasting .

Warren Berg 0:35

All of which probably could be metaphors for what you do in the legal industry too , I guess . In any event , Michael , it's fantastic to have you here with us today .

Michael Shepherd 0:43

It's great to be here .

Warren Berg 0:44

Weir Bowen is an Edmonton-based law firm . However , the lawyers have represented clients across Alberta , bc , saskatchewan and the Northwest Territories and have been counsel in precedent-setting cases all the way up to the Supreme Court of Canada . Now , what are we going to be focusing on today ?

Cynthia Carels 1:06

Well we're in the last few months we've talked about various topics relating to proving personal injury cases . We've talked about things like medical malpractice , birth injury cases , more specifically , motor vehicle accidents a little more broadly again , and also wrongful death cases . But this month we thought we would talk about another really important area of law that many injured and disabled Albertans face , and that is the area of law that many injured and disabled Albertans face , and that is the area of disability law .

Michael Shepherd 1:27

Right , and we thought that it would be helpful for your listeners to hear about some of the things that they can do and what their rights are if they find themselves in that unfortunate situation of being unable , due to their injuries or their illness , to continue in their work , either temporarily or permanently .

Cynthia Carels 1:41

Yeah , so specifically , we're going to be talking about access to income replacement benefits , both through private disability insurers as well as public disability insurance , and what to do if those benefits are requested but denied .

Warren Berg 1:57

Now is this a common problem in Alberta .

Michael Shepherd 1:59

Very common . Unfortunately , people with disabilities have always faced discrimination , stigma and barriers to full and equal participation in society . Common . Unfortunately , people with disabilities have always faced discrimination , stigma and barriers to full and equal participation in society . These barriers often take the form of physical barriers , and those can be such things as inaccessible building or transportation issues or attitudinal barriers , and that can be things like the negative stereotypes or assumptions about what people with a disability can and cannot do . And unfortunately , these barriers also express themselves throughout the process of application and approval for public and private disability insurance .

Cynthia Carels 2:31

Yeah , that's right . It is a really big problem for many people , because disability insurance is a type of insurance that's designed to provide financial protection for individuals and their families , as it helps to ensure they can meet their most basic needs and maintain their standard of living even if they are unable to work due to a disability .

Warren Berg 2:50

So this is the kind of insurance that people have in case they get sick or hurt and can't work . Right , this is different . So this would be then , if I'm assuming correctly , different than the personal injury cases we typically talk about , where you're suing somebody for causing your injuries .

Michael Shepherd 3:07

Exactly Lots of people will have this kind of coverage through their employers or they will take out a personal disability policy , with a variety of reasons .

Cynthia Carels 3:16

But what's interesting is , just because you have a policy , it doesn't necessarily mean the insurance company is always going to cooperate or actually pay you , so in fact these denials are so common . When that happens , we actually just direct our clients straight towards Mr Mike Shepard .

Michael Shepherd 3:35

And being denied such coverage will typically result in an inability for an already disadvantaged person from being able to cover the cost of everyday living and medical expenses , and it robs these people of the peace of mind and the safety net that they believe that they've built for themselves .

Warren Berg 3:49

How often does this actually happen ?

Michael Shepherd 3:51

Well , I've read something quite interesting on that quite recently . Every now and then , the Auditor General of Canada will produce a report on certain government programs and in 2014 , it did a review and produced a report on the Canadian Pension Plan Disability Program , often called the CPPD program , and they found that over 57% of applicants who believed that it stopped work due to disability and had applied for this coverage had been denied in the first instance . And , quite noteworthy , of these denials , some were appealed and 35% of these appeals ended up being overturned . And , quite noteworthy , of these denials , some were appealed and 35% of these appeals ended up being overturned . And , to add insult to injury , the general wait time of the appeal process for this , on average , was just over a year , which is quite concerning considering how critical these benefits can be for these applicants .

Cynthia Carels 4:38

Yeah , so from our experience , the private disability insurance experience doesn't actually seem to be all that much different than the public disability insurance either that Mike was just talking about .

Cynthia Carels 4:47

Through that Canadian Pension Plan Disability Program , Denials , unfortunately , are quite common and in the public realm the government is held to task by , you know , scathing reports like the one that the Auditor General did that was described by Mike .

Cynthia Carels 5:02

But in the private insurance realm , the large insurance companies that offer these short-term and long-term disability policies are really only held to task by the courts or potentially an ombudsman in the circumstances of a motivated policyholder . But unfortunately these cases are not being brought as much as they could or they should . Why is that ? It could be for a number of different reasons , Potentially first of all , I guess , because of just a general lack of understanding as to the options people face in the face of a denial . Or it could be because of difficulties finding lawyers that practice in this area . So , luckily , when these cases are brought they are actually quite frequently successful and some harsh reprimands from the courts are more common in this area than in other areas of law . We'll see things like aggravated and punitive damages being awarded a much higher rate in these kinds of cases and , you know , a greater rate than , say , the personal injury cases that we typically talk about , or even simple contract cases .

Warren Berg 6:03

So this is probably a good time to talk to our listeners about how they can get in touch with you . If they need to talk to a lawyer about disability insurance issues , what is the best way to connect with you ?

Michael Shepherd 6:13

Well , the easiest way is to check out our website , and that's at weir bowen dot com . That's W-E-I-R-B-O-W-E-N dot com on our contact page . There's a form there that you can fill in and our reception staff will make sure that the inquiry gets to the right people .

Warren Berg 6:30

And what if the Internet isn't an option ?

Cynthia Carels 6:32

We also will frequently take what we call cold calls , so where someone calls us out of the blue , you can just give our main reception line a call at 780-424-2030 . And we do have a stable of lawyers that practice in this area in disability law , personal injury law , medical malpractice , all of those sorts of things , and they would always be more than willing to respond to your inquiry .

Warren Berg 6:57

This is Ask the Lawyer on Windspeaker Radio CFWE and CJWE , I'm your host , Warren Berg , and joining us again today are Michael Shepherd and Cynthia Carels of Weir Bowen LLP in Edmonton . That's W-E-I-R-B-O-W-E-N . 780-424-2030 or online at weirbowencom . Now today we are talking about disability insurance and how important obtaining benefits can be for people who become unable to work due to injury or illness . You brought up a concept that I'd like to dig a little bit deeper into . You mentioned the idea of aggravated and punitive damages . What's all that about ?

Michael Shepherd 7:38

That's right . It's not lost on the court how invaluable these benefits are to disabled Canadians and how vulnerable they are to these big insurance companies . And those are the insurance companies that are deciding their economic and mental well-being

Disability Insurance and Legal Protections

Michael Shepherd 7:54

. And the courts have carved out a niche area of contract law for disability cases and have held these disability contracts that they're not merely commercial contracts but rather are contracts with benefits that are both tangible , as far as monthly payments are concerned , and intangible , such as the comfort and knowledge that such contracts will provide income security in the event of disability .

Cynthia Carels 8:17

Exactly . These are what we call peace of mind contracts , and the nature of a disability contract as a peace of mind contract is what enables the courts to award damages for the mental distress . That's not typically allowed in other contractual cases , but , you know , in traditional contract law if a plaintiff is successful , they are awarded what we call expectation damages . Those are damages that would be basically intending to put the plaintiff into the space they otherwise would have been had the breaching party not done so , and in a peace of mind contract that has really not been viewed by the courts as a part of a typical transactional deal .

Cynthia Carels 9:00

So thankfully , the courts have recognized that one of the main reasons why a disability policyholder purchased the policy in the first place is specifically for that peace of mind .

Warren Berg 9:21

And , if I'm not mistaken , these kinds of policies are frequently advertised where it seems like they are selling "peace of mind" as the product .

Cynthia Carels 9:24

Your absolutely right on that Warren, the marketing of these kinds of policies leads purchasers to think that the insurer is going to be on their side or that they're going to have their back when facing an unexpected crisis .

Cynthia Carels 9:32

But unfortunately , another unique issue in insurance law is how vulnerable the policyholder is to big insurance companies , and that vulnerability of the plaintiff and that vulnerability of the plaintiff and , to a certain extent , the vulnerability of the insurer to the truthfulness of the policyholder was one of the founding principles behind a legal duty that really perfuses through all areas of this area of law , and it is commonly referred to as a duty of utmost good faith .

Warren Berg 9:59

Okay , this duty of utmost good faith , this sounds like legalese that we should probably take a minute to unpack .

Cynthia Carels 10:06

Yeah , that's fair . I'm sure many of our listeners have heard of the concept of dealing in good faith with other parties , but contracts of insurance actually place an extra emphasis on the importance of honesty , transparency and fairness , and it actually does go both ways . These contracts require the purchasers to be extremely honest about the information that they disclose to the insurer , because the insurer really has to rely on that information to assess their risks and obviously that risk functions to guide the insurer regarding setting the premiums that they're charging for this coverage . So the courts do take this duty quite seriously and sophisticated parties like insurance parties are very well aware of the duty . And when they're dealing with members of the public who may or may not be as well educated on these issues , so when insurance companies deviate from their duty , that's when we're going to see those substantial awards for those aggravated and punitive damages .

Michael Shepherd 11:05

That's right , and often insurers' deviation from their duty of utmost good faith are manifestations of the insurer not treating the insured even-handedly or on the same plane as themselves . For example , they can make decisions in an evidentiary vacuum , they may fail to seek outside medical opinions when the plaintiff's doctors are clearly of the mind that the plaintiff is disabled , or they may make a decision on medical records that are conflicting without first taking steps to resolve that conflict .

Warren Berg 11:33

So what can you tell our listeners about ? What benefits are typically available to them when they stop working because of a disability ?

Cynthia Carels 11:40

So , as Mike alluded to before , there are both public and private sources of income replacement for individuals who become disabled . So the public sources , these are things that are probably well known . Those include things like medical EI for otherwise , or they're otherwise known as the EI , sickness benefits , and there are other benefits available through that Canada Pension Plan Disability Program that we already talked about . But the private sources either include an individual policy purchased through an agent or directly from an insurance company or , what many of us know about , those group disability policies that are typically offered in your contracts of employment . So there are different legal implications depending on what type of policy it is and also how it was negotiated and even who was at the table for negotiating those contracts .

Michael Shepherd 12:28

That's right , and another big difference is whether the policy was underwritten or not .

Warren Berg 12:31

Now I've heard the term underwriting . What does that exactly mean ?

Michael Shepherd 12:35

So underwriting is the process by which an insurer determines the risks associated with a particular policy . So for big employer group plans with many subscribers , the insurer they're not going to take the time to go through individually evaluate the specific risk for each single person on the plan .

Michael Shepherd 12:52

So those kinds of policies are going to deal with risks and disputes very differently than a policy that takes the time to assess each individual person's risks , based on a much closer examination of their health history and possibly even a medical evaluation .

Cynthia Carels 13:06

And since the language and features of these policies are highly customizable , employers , unions and insurers themselves have a lot of leeway to negotiate contractual terms , including what needs to happen in case of disputes . So , for example , a case may need to first be arbitrated before the courts can get involved , or , potentially , the lawsuit might need to be filed against an employer instead of the insurer . So these different legal implications can be really tricky to figure out on your own , and this is one of the reasons why we tell people considering challenging their insurance denial to first call a lawyer ,

Michael Shepherd 13:47

And that's a good point .

Michael Shepherd 13:48

And before we get to the denial and returning to your question about what benefits could be available , for a moment , it's completely appropriate to check in with your employer about what insurances and medical leave programs are currently in place through your work . Some employers do not offer short-term disability insurance as a bridge to long-term disability . When that kicks in , other employers may offer short-term disability through the same carriers . The long disability insurance provider and some other employers might have nothing and require the employer to take EI sickness benefits as a bridge . Whatever the program , though , apply immediately for benefits . There are some time constraints , depending on the program , on when to apply , and staying on top of that will avoid plenty of unnecessary difficulties later down the road .

Cynthia Carels 14:32

Yeah , and on a side note , your employment is required to be protected under the Employment Standards Code for a period of time , which should ease some of the stress in deciding whether or not stopping work is right for you in the moment .

Disability Benefits and Legal Assistance

Warren Berg 14:44

You had mentioned CPP , disability payments . What can you tell me about those ?

Cynthia Carels 14:49

Yeah , if your medical condition is expected to be long-term or permanent , you might be eligible for disability benefits under the Canada Pension Plan or even , in Alberta , the AISH program , the Assured Income for the Severely Handicapped .

Cynthia Carels 15:02

So the Canada Pension Plan Disability Program . It's a relatively unknown government program and the benefits there are completely different than what we hear about just in regular CPP pension payments . The good news is that you don't need to worry about negatively impacting your eventual CPP pension if you need to use the CPP Disability Program . If you remain in the CPP disability program when you turn 65 , you'll just transfer into the CPP pension program , as if you would have done without having access to the disability . So for eligibility requirements as long as you have an injury or illness that is prolonged and severe that keeps you from working , you should be able to have access to these benefits , but the test is a bit more strict than the test for private disability insurance . But nonetheless , it still is a really good idea to apply , and you can do so directly with the federal government through their online portals . The benefit is provided on a monthly benefit to eligible individuals and it is one of those programs that is actually adjusted annually to keep up with the cost of living .

Michael Shepherd 16:11

Also , as another eligibility requirement for the CPPD disability benefits , an individual needs to have made at least one contribution to the Canadian pension plan within the four years prior to becoming disabled and unable to work . This is not typically an issue , though , since most people accessing the plan are doing so because they became disabled while employed , but it is good to know , however , that you can still access these benefits if you were employed or paying into CPP as a self-employed individual within four years of the date of your disability onset as a self-employed individual within four years of the date of your disability onset . So a common example of this would be a parent who becomes disabled while already off work to raise their children .

Warren Berg 16:51

If you have private disability insurance , do you still recommend that an individual applies for CPP disability ?

Michael Shepherd 16:58

benefits . That's a great question , and we do Not only do some disability insurance contracts require an individual to seek out these other sources of disability benefits to offset the total payments to you , but also that utmost duty of good faith that we had discussed previously could be interpreted in in such a way as to require the individual to to take reasonable steps to obtain these other sources of income replacement in any event of the contract what it has to say . So , in other words , you may have a duty of good faith to apply for CPP disability just to reduce the amount of money that your insurer will have to pay you each month .

Cynthia Carels 17:33

And not only that , but you'll recall , it's quite common for an individual applying for both private and public disability insurance to be denied that coverage in the first instance , even if they have a valid claim .

Warren Berg 17:51

So , basically , if a disabled person applies for both CPP disability and their private disability benefits , they are both fulfilling their good faith duties and maximizing their chances at getting benefits in the first place .

Michael Shepherd 17:57

Exactly right , and it is not uncommon to be accepted by one benefit provider but being denied by the other . So do not let one denial dissuade you from making the application to the other . You may very well have a valid claim despite the decision of the other benefits provider , and these disability case managers are by no means always correct in their decision and nobody knows whether you're medically fit to work better than you do .

Warren Berg 18:24

What recourse is available to people who have been denied disability insurance coverage ?

Cynthia Carels 18:28

Well , there are internal appeal processes both with the public disability programs and also with the private disability insurance , and it is generally a good idea to appeal a CPP disability denial if you believe the decision to deny your claim was incorrect . The internal appeal process is designed to give you an opportunity to present new information that might have been missing in the initial application process or at no fault of your own , or to be challenging the decision based on a basis that it wasn't made according to the rules or the laws that govern CPP disability . So there will typically be a denial letter that's sent to you that lists out all the reasons that your CPP denial was denied or that your CPP disability claim was denied , and they'll also generally provide an easy , step-by-step instruction for how to file that appeal internally

Warren Berg 19:22

Now do you assist people with CPP .

Warren Berg 19:24

Disability appeals at Weir Bowen LLP .

Michael Shepherd 19:27

Not through formal retention . No , unfortunately there's a pretty big problem with access to justice with CPP disability benefits denials due to some specific wording that we won't get into today in the governing legislation . But we are hopeful that one day these things will change , but for now , with the current restrictions in place , we are limited in the amount of assistance that we can provide these people . But don't get me wrong though as Cynthia alluded to , we still do recommend that people seek legal advice on CPP disability issues , since , at least from our perspective , we can still provide , and are more than willing to provide , free consults over the phone .

Warren Berg 20:02

This is Ask the Lawyer on Windspeaker Radio CFWE and CJWE . I'm your host , Warren Berg , and joining us once again today are Michael Shepherd and Cynthia Carels of Weir Bowen LLP in Edmonton . That's W-E-I-R-B-O-W-E-N . Their phone number is 780-424-2030 . You can also see them online at weirbowen . com . Today we have been talking about Canada Pension Plan Disability Appeals , but what about private disability insurance appeals ? What do you recommend individuals do when they're faced with a denial from an insurance company ?

Cynthia Carels 20:43

We consistently advise people to call a lawyer and seek legal advice immediately , even before you consider doing an internal appeal . This is because it might actually make sense in your particular case to file the lawsuit right away instead of going down that internal appeal process . The internal appeal process can be quite lengthy , with up to one or two subsequent appeals required if the insurer maintains their denial , and at each step further information or clarification might be required , and gathering this information can take months and this can leave somebody without benefits for more than a year after onset of disability , and the person will still be no closer to benefits if the lawsuit has yet to be commenced . And obviously this can put people in a very bad situation , given that that limitation period to bring a lawsuit can be as short as two years from the date of disability , depending on the contract as well as the laws governing your jurisdiction .

Warren Berg 21:42

So are you telling me that a disabled person could run out of time to file a lawsuit just because their case is caught up in internal appeals with an insurance company ?

Michael Shepherd 21:50

That's right .

Michael Shepherd 21:52

If you feel that you should not be working due to your injury or illness , despite the decision of your insurer , call a lawyer right away .

Michael Shepherd 21:58

Aside from the possibility that it may make better sense to gain access to benefits quicker through filing that immediate lawsuit , a lawyer could also help an insured with gaining a better understanding of that internal appeal process , if that is the preferred route in your case .

Understanding Disability Insurance Disputes

Michael Shepherd 22:13

The appeals process is complex and differs quite a bit depending on whether your insurance policy was collectively bargained through a union or privately , between either your employer and yourself or the insurance company , or privately between either your employer and yourself or the insurance company . In the former case , it is not uncommon for a union to appoint a disability advocate to assist you in completing your application and appeal , and in the latter case , when a disability private disability insurer is involved , a lawyer can help provide that function . It is also not uncommon for a union to hire a disability lawyer to prosecute the claim if a lawsuit is later required , and in my experience , having a prior relationship with a disability lawyer can help speed that process up quite a bit .

Warren Berg 22:53

And what are some of the typical reasons insurance companies would give people when they're denying the disability claims ?

Cynthia Carels 22:59

Well , if we look at it through the insurer's perspective , it all comes back to the nature of disability insurance being a contract with an agreed upon outcome . So the agreed upon outcome is obviously the payment of benefits based on those certain prerequisites , like meeting all of the eligibility criteria in the policy for payment of benefits . To meet any of those eligibility criteria , as defined in the policy and as defined and understood by the insurer , will typically result in the denial of your claim . So , speaking simply , the policy will include very specific definitions for disability , certain preconditions for eligibility for coverage , like the payment of premiums , the timing of the disability onset , and also certain exclusionary provisions , like those , for example , a common one is pre-existing conditions . And because the contract is quite explicit about all of these requirements , the specific wording contained in the policy itself is of critical importance , and very minor differences in wording or , believe it or not , even in punctuation , can have a dramatic impact on an individual's ability to collect benefits .

Michael Shepherd 24:12

That's right , and qualifying the reasons for denial as being from the perspective of the insurer is a great way to look at it . This is because every denial is based on an interpretation of not only the policy wording but also an interpretation of your medical records . This makes it an opinion , and that opinion is not always correct in fact or in a law . An obvious example of this would be misinterpretation of physician charting in your records . So these records will be submitted to the insurer and will typically have qualitative descriptors interspersed throughout the record , like feeling better or medication helping records , and these are helpful descriptors for your physician but can easily be misconstrued by your adjuster , who may take these notations to mean that you are no longer disabled , when in fact , if you were to ask your physician , they may say that , instead of describing situation where you're going , where you're better , that you're actually going from you know 10 out of 10 on the symptom spectrum , down to an 8 out of 10 . Thereby you're still quite disabled , despite the slight improvement noted in the chart .

Cynthia Carels 25:15

Yeah . So to be fair to insurance company adjusters though , the meaning of doctor's notes can be really difficult to decipher , and the adjusters are tasked with a fairly unenviable job of taking a very imperfect source material like your application materials and medical records , and then they're trying to piece together your complete medical picture . Then they're overlapping that medical picture onto the policy requirements and determining whether or not your particular circumstances meet those required for eligibility for benefits .

Michael Shepherd 25:46

That's exactly right . Another way that these can lead to misinterpretation would be a misapplication or misinterpretation of the law by the insurance company . As you can imagine , the courts often disagree with the insurer on not only their interpretation of your clinical picture , but also with respect to their interpretation of the policy as well . The policy was written by the insurer and they know exactly what it means to them , but this often differs from the objective reality of that contract wording , and someone else reading the policy may very well disagree , and at law , this is often much more important than what the insurer thinks .

Warren Berg 26:24

You had mentioned that the policy will contain a definition of disability . What does that typically look like ?

Cynthia Carels 26:30

You know , warren , the language used to define disability can vary widely depending on the specific policy , but there are some common elements that are typically included . So , for example , most Canadian policies will contain two separate definitions of the term total disability , depending on how long the insured person has been off of work . Depending on how long the insured person has been off of work , so there's typically a first time period that's known as what we call an own occupation period . So that's loosely defined as the period in time where an individual is unable to perform the material and substantial duties of their own occupation .

Cynthia Carels 27:12

And this period is typically in play for the first one to two years that a person is off of work .

Warren Berg 27:14

Okay , so let's use a hypothetical situation . Let's use me , for example , as a radio host .

Cynthia Carels 27:18

Yeah . So as a radio host , to be considered disabled in the own occupation period , you would be required to show that your injury or illness makes you unable to perform the duties of a radio host . Specifically , it's not asking whether you can work at being a parking lot attendant or a ticket taker at the movie theater . This is generally considered a more favorable and inclusive definition for the policy holder , so the insured person , as it allows them to collect benefits even if they might be able to work in a different profession . So , going back and borrowing from the radio host example , losing your voice might leave you unable to do your own occupation , rendering you eligible for benefits under that own occupation period , even though you might still be able to work off air in a different capacity .

Cynthia Carels 28:07

Now the second time period , which typically comes one to two years after that own occupation period , is called an any occupation period , which typically comes one to two years after that own occupation period , is called an any occupation period . That typically runs from the end of that first own occupation period until age 65 . So the definition of total disability during the any occupation period is typically that there is an injury or illness that renders the person unable to perform the material and substantial duties of any occupation . So , borrowing from the radio host example , you likely will not be able to continue your claim in the any occupation period after losing your voice unless , in addition to losing your voice , you also have some other physical or mental disability that would prevent you from performing the substantial duties of another occupation .

Michael Shepherd 28:53

Surprising isn't it ?

Michael Shepherd 28:55

Most of our clients are quite surprised when they find out about these differing definitions of disability in their contracts .

Michael Shepherd 29:01

They find out that they're only actually covered for one to two years for a disability that prevents them from doing their current role , and this is especially the case when they're a trained professional and have spent years to decades in schooling and training for their chosen career .

Michael Shepherd 29:16

Luckily , though , as with most areas of law in disability insurance , the courts have read down this own occupation provision and the any occupation provision and soften the corners quite a bit . So , basically , they're not allowed to argue that a CEO , for example , would not be disabled under any occupation if they can still be a Walmart greeter , say . Instead , the courts have consistently held that this alleged secondary role that they can still do it must still be similar in status and reward to their prior occupation and reward to their prior occupation . In this way , any occupation definition it's not intended to be a strict or unrealistic standard , but rather an objective standard that takes into account an individual's realistic opportunities for employment and whether a reasonable employer would hire the person given their disability . Basically , the court will take into account an individual's transferable skills , their experience and qualifications and see whether an other role is reasonably suited to that person by reason of that education and training .

Warren Berg 30:23

So what does it mean exactly to be unable to perform your substantial duties ?

Michael Shepherd 30:29

Okay , that's a pretty complex question , no kidding . It has an eloquent answer from the courts , though , no matter what the policy language for definition of disability , the insurer will have to rely on words like quote , you know unable or restricted or prevented in the context of how the injury or illness affects the ability to maintain employment . And that begs the question what do those words mean ? What does it mean to be unable to perform your job due to injury ? Does it mean that you're physically restricted from performing your job ? And if so , how would that apply to mental illness ? Is it enough to say that your daily work activities cause unbearable pain and mental anguish and that attempting to complete a full day of work necessitates that you take 12 to 14 hours of rest just to be able to try it again ? Luckily it doesn't . So the courts have weighed in on this .

Michael Shepherd 31:23

About 40 years ago , there's a quite important seminal case from 1983 called Sukharov v Paul Revere , and in that case the Supreme Court of Canada .

Michael Shepherd 31:34

They stated quote the test for total disability is satisfied when the circumstances are such that a reasonable man would recognize that he should not engage in certain activities even though he literally is not physically unable to do so . In other words , total disability does not mean absolute physical inability to transect any kind of business pertaining to one's occupation , is not physically unable to do so . In other words , total disability does not mean absolute physical inability to transect any kind of business pertaining to one's occupation , but rather there is total disability if the insured's injuries are such that common care and prudence require him to desist in his business or occupation in order to effectuate a cure . Hence if the condition of the insured is such that , in order to effectuate a cure , hence if the condition of the insured is such that , in order to effect a cure or prolongation of life , common care and prudence will require that he cease work , he is totally disabled within the meaning of health and accident insurance policies

Understanding Disability Insurance Denial Criteria

Michael Shepherd 32:24

.

Cynthia Carels 32:24

Close quote so we'll rephrase that in plain language . Basically , the court is saying it's not going to get into a metaphysical argument on what it means to be unable or prevented from work , but rather you are considered disabled as long as a reasonable person . Now I know the Supreme Court in 1983 wasn't using those gender neutral terms , so the quote had a lot of he's in it . But a reasonable person would recognize that they should stop working so that they can get better or so that they can improve their symptoms in a meaningful way .

Warren Berg 32:56

OK , that makes sense . Now , you would also mention that people are often denied due to preconditions as well .

Cynthia Carels 33:03

Yeah , there are several preconditions that must be met before a person is eligible for coverage , and that's a slightly different question as to whether a person is eligible for benefits . So there's a distinction there between eligibility for coverage and eligibility for benefits . And one question answers whether or not you are in breach of your policy at the time of the disability and whether you have taken steps required to apply for benefits as laid out in the policy . The second question answers whether or not you meet the definitions for disability as set forth in the policy .

Michael Shepherd 33:38

Right , and for some examples of those commonly breached preconditions , one obvious one would be the precondition for the policy being up to date with premium payment . If this is not met , then typically the insurance will deny . That being said , though , the insured can still be successful in a lawsuit here if there is sufficient reason for the nonpayment , or the nonpayment potentially can be the fault of another party , say like your employer , which , when you think about it , it's objectively fair , since most Canadians would have a disability policy through their employer and they wouldn't quite be responsible for the payments that are being made . So in these cases , the eventual lawsuit would just have to include the employer as well as the insurer as defendants , and the allegation here would just be that the employer breached their employment duties by failing to properly manage the disability program . It just be that the employer breached their employment duties by failing to properly manage the disability program .

Cynthia Carels 34:32

And another precondition can be whether or not the policyholder meets the minimal requirement for being actively employed by the employer prior to the onset of disability . So there's not much you can typically do about this , unless there is some argument that on the date of hire or total time from an on-again , off-again employment prior to disability onset . Now a third common precondition would be whether disability occurred prior to ceasing work . This seems obvious , but it is surprising how often this comes up . The usual context is when a disabled person tries to tough it out and is really struggling with work and probably should not be there .

Cynthia Carels 35:13

This tends to lead to a reduction in performance and then potentially a termination by the employer before any application for disability , before those disability benefit applications are even made . So then the question becomes when is the actual date of onset of the disability , since all the contracts require it be before termination and prior to stopping active work . So the insurer argues in these cases that if you were still at work and not disabled before you were terminated , then you were not disabled at the time of termination . So in other words , how can you say you're disabled from work if you're still working ? It's a common question in these kinds of policies . On the other hand , the employee might argue that they were working while they were disabled , and in our experience , these are often really good claims for litigation .

Michael Shepherd 36:08

And , as one last example of a precondition is when a policy holder needs to be following the claim filing procedures as outlined in the policy . This would include filing the appropriate application form , having your physician fill and submit in to the insurance company the appropriate form , meeting procedural deadlines like the typical 90 day deadline to apply for benefits , and things like that . If you have any questions about what needs to be done for this , this information is typically available through both your employer and the insurance company . Do not look in the policy for this information on your own , though , since not everything you will need will be in there . The better sources are typically the insurer and your employer . These procedures can still be quite complicated , though , and difficult to understand , and denials for making mistakes here are quite common . Luckily , though , if , for some reason , there is a procedural noncompliance and the reason for that noncompliance is a good one , which there are many examples of good reasons for that then it is not uncommon for these procedural preconditions to be waived by the court .

Warren Berg 37:13

Actually , so how does that work ? How can a person gain access to benefits when they have messed up a procedural step , not like , let's say , they don't meet the deadline for filing the application ?

Cynthia Carels 37:26

This is what makes this area of law so interesting , Warren .

Cynthia Carels 37:30

Sometimes one plus two doesn't always equal three when it comes to a private disability insurance .

Cynthia Carels 37:35

So outcomes that might seem reasonable , given a strict adherence to the contract wording , are not always upheld when the matter proceeds to trial , that there should be other indicia considered in these cases , including fairness . And , unlike in other areas of contract law , fairness plays a large role in whether a private disability insurance denial is upheld . So , basically , the courts have recognized that it would be unfair in all instances to allow a denial of benefits just based on a technicality , when that technicality was created by a party that not only drafted the contract but also holds all the power in the relationship . And , as you can imagine , disability insurance policies are drafted in such a way as to be excessively focused on protecting the position of the insurance company rather than an open and favorable approach for a policyholder . So , in acknowledging these realities of the industry , the courts have attempted to level the playing field through the application of some very old equitable legal principles , like relief from forfeiture that didn't come out very well , or another term called contra preferentum .

Warren Berg 38:47

You know , these principles sound like they are straight from a textbook used at Hogwarts in a Harry Potter movie .

Cynthia Carels 38:53

Yeah , and I didn't eloquently deliver those either . I'm no Hermione Granger , sorry about that . So let's talk about relief from forfeiture first . This principle allows the courts to forgive certain breaches by a plaintiff , like filing a late application for benefits , based on the idea that the policy holder should not be unfairly penalized for an unintentional or minor breach of the policy when the effect of that breach is going to be unduly severe on them . So the key here again is fairness . Application of any of these equitable principles relies on rebalancing those inequities , and so the conduct of a policyholder must be fair and reasonable as well .

Michael Shepherd 39:34

That's right , and there was actually a pretty interesting case on this recently that captures this .

Michael Shepherd 39:39

It's the decision that came out in 2021 .

Michael Shepherd 39:42

And that case is the Smith v Sun Life case , and this is a great case to go over today because it is quite the prototypical case for disability law and it illustrates many of the common pitfalls that belie disability applicants .

Michael Shepherd 39:56

So , in this case , the plaintiff had been insured under both short-term and long-term disability benefits under a group policy with Sun Life , and the plaintiff then became disabled by way of a mental illness and applied for and luckily this time was approved for the short-term disability benefits . The plaintiff then improved slightly and began an approved graduated return to work program before her short-term disability ran out , and this , in effect , knocked her off the policy while she was back at work . She then suffered a setback and left work once more . This time , though , she unfortunately waited four months to submit her short-term disability claim , which she would have needed because she had returned to work , instead of just going back on the original claim , and Sun Life reviewed the claim anyway , even though it was late , and had a medical consultant complete two internal psychiatric reviews of the plaintiff and relied on those reviews to deny the subsequent claim .

Cynthia Carels 40:55

So in this case , sun Life concluded basically that there was insufficient information to find that the plaintiff was unable to return to work . The plaintiff had undertaken the internal appeal process and those denials were upheld . So the plaintiff decided , as a result of the short-term disability denial , not to submit a long-term disability claim and you know that's not uncommon at all for most people if they think I'm denied on short-term , I'm probably not going to get on long-term . But instead the plaintiff commenced her lawsuit for failing to pay long-term disability benefits and later amended that claim , for this concept again called relief from forfeiture . Sun Life argued that the plaintiff's failure to submit a formal claim for long-term disability was technically non-compliance with the policy terms and it was grounds to dismiss the proceedings . Sun Life also argued that even if relief from forfeiture was available , it was not warranted .

Michael Shepherd 41:51

Based on these facts , A motion for dismissal of the claim was brought for that reason by Sun Life and it was dismissed . In short , the plaintiff was granted relief from forfeiture for failing to submit the LTD claim at all . The court found in this case that the plaintiff's failure to submit a formal LTD claim was reasonable . To submit a formal LTD claim was reasonable . The court held that Sun Life's argument that an LTD claim needed to be filed despite them having already denied the short-term disability claim was merely a technical argument . This was because short-term disability claim there was already one and it was reviewed , submitted and denied . So the court basically found that the filing of the long-term disability claim was unnecessary , since it was fair and reasonable to assume that any subsequent claim for long-term disability would also be denied .

Warren Berg 42:37

That makes a lot of sense . I mean , why would somebody bother filing a claim for long-term disability if their short-term disability had already been denied by the same company ?

Cynthia Carels 42:47

Right . Yeah , it's completely reasonable for someone to make that assumption , and so this just highlights again why it is so important to call a lawyer when you have been denied any form of insurance benefits . It would be completely reasonable for a person to assume that the insurer was right in denying their claim of the long-term disability benefits when the claim was clearly filed late or , in a more extreme example , is included in this 2021 case involving Sun Life that the application wasn't even made at all for the long-term disability , and it can have devastating consequences to make those kinds of assumptions or assuming that an insurer's denial decision is actually correct , both in fact and in law .

Warren Berg 43:31

And those reasons for denial you had mentioned . They commonly include exclusion clauses like pre-existing conditions . What can you tell us about those ?

Cynthia Carels 43:40

Yeah , exclusion clauses are unfortunately another one of those common reasons for denial , and the wording in a policy of those kinds of clauses makes a major , major difference .

Cynthia Carels 43:52

It's important to continue to note that each policy is going to have different phrasing , so these contracts are not standardized and the clauses themselves are always evolving as the courts continue to find ways around them to try to benefit disadvantaged policyholders , but the gists of the clauses are generally the same .

Cynthia Carels 44:12

So exclusion clauses are provisions in a policy that exclude certain types of disabilities or situations from coverage entirely . So some typical examples of a disability would be due to something like an act of accident or war , whether it was declared or undeclared , or due to normal pregnancy or childbirth . Of note , most policies will cover disabling complications arising out of an abnormal pregnancy or childbirth , but a normal policy or a normal pregnancy or childbirth might be excluded in those policy conditions , or another one that's not uncommon is a period that somebody is in jail . So the important thing to remember is that the decision as to whether an exclusion clause applies is an opinion of the insurer . In this case it is an opinion both on interpretation of the wording of the clause and also an opinion on whether your factual conditions meet that interpretation . So those opinions may not be correct and an insurer can imply an interpretation that is much too broad or encompassing for your particular situation , even though the facts of your case might seem to fall within a category that's outlined as an exclusion clause . That's right .

Michael Shepherd 45:29

The courts have provided some good insight into this area of disability law and have appropriately narrowed the application of many of these common exclusion clauses . As a general rule , the courts are going to treat coverage provisions in an insurance policy quite broadly , but will interpret exclusion clauses narrowly and in favor of the policyholder . This again harkens back to those legalese principles that we spoke about earlier , particularly the equitable principle of contra preferendum , and that's roughly translated from Latin to English as interpretation against the draftsman .

Cynthia Carels 46:05

So , in simple terms , if the language of the clause can be viewed as ambiguous or confusing terms , if the language of the clause can be viewed as ambiguous or confusing , or if it can be interpreted one way in favor of the policyholder and interpreted another way in favor of the insurer , the court will very likely interpret it in a way that benefits the policyholder . Additionally , if there's a conflict between the exclusion clause and other provisions of the policy , the court will typically interpret the policy as a whole , again trying to find a way to favor the policyholder .

Warren Berg 46:34

Does it ever work ?

Michael Shepherd 46:35

the other way it does . The contrary is quite true too . So if the language of the exclusion clause is clear and specific , then the court will likely enforce it just as it's written . Again , though what may be clear to you might be quite ambiguous to your lawyer , and so we always recommend to contact a lawyer if an insurer is denying coverage for an exclusionary purpose . A misplaced comma or the use of restricted language can make a huge difference here .

Michael Shepherd 47:02

An example of this would be the typical pre-existing condition clause , and these are typically worded as any disability caused , within a specific time period following the policy coming into place , by an injury or illness that was diagnosed or treated with a specified time period before the contract coming into force . So , for example , a policy caused by heart attack or a disability caused by the heart attack when the patient was on beta blockers and blood thinners for heart disease within the specified time period prior to the policy coming into force . That seems clear , right ? Well , it depends , and that's because . What does the word caused mean in this context ? Does it mean sole cause , contributory cause or partly caused by ?

Michael Shepherd 47:48

Most people do not only have one single condition that hinders their day-to-day , and what if the heart attack in this case was only one , but a variety of disabling conditions of this individual , which is quite common . What if they also suffered from anxiety and depression or back pain ? What happens when these other conditions do not fall within that time frame that would be included in the pre-existing condition provision ?

Limits of Disability Insurance Coverage

Michael Shepherd 48:14

Should the exclusion clause be interpreted broadly and should the policyholder be excluded from coverage if only the heart attack is found to be pre-existing ? Well , not , in my opinion , and the courts will typically narrowly construe the word cause here , in the context of exclusionary clauses , to mean sole cause . And this is particularly the case when the policy is not explicit with respect to how to treat these circumstances , which most of them aren't . They don't typically deal with multiple cause disabilities .

Cynthia Carels 48:46

So ambiguity can be found in a situation like this In what exact degree of diagnosis and treatment of the medical or psychological condition had to have taken place during this pre-existing time . For example , what if you'd taken a Tylenol for a headache during that period and you go for a regular physician assessment and the headache is discussed just in passing , but then you go on to suffer from a burst aneurysm and all of this happens within that pre-existing condition period ? Should that pre-existing condition clause be construed as including this discussion of just a regular run-of-the-mill headache as medical treatment for a condition that eventually caused this disability like this burst aneurysm ? Potentially not .

Warren Berg 49:37

So what about the limitation periods to bring a claim ? We seem to talk about limitation periods in every edition of Ask the Lawyer . It's our favorite topic Is the same two-year rule applicable in disability law .

Cynthia Carels 49:49

Yes and no . As with most areas of law , the limitation to bring a disability lawsuit can be quite complicated , so different acts or emissions on either your behalf or on the insurer's behalf can trigger a limitation period . Starting and what actions can do this are not always clear , and once that limitation clock is commenced , there are three different primary sources of limitations information for private disability insurance in Alberta , and these sources , even amongst themselves , are not always consistent with each other , and it can create a conflict of laws . For example , the policy itself can contain a limitation period to bring the lawsuit , and this contractual limitation period can , on occasion , differ from the limitation legislation in your jurisdiction In Alberta . This policy limitation period cannot be any shorter , though , than the legislated limitation period . There are also pseudo limitation periods in the policy , like a deadline to apply for benefits . These are not the same as a traditional limitation period , and a different analysis applies as to whether or not you can validly make a late claim .

Warren Berg 50:56

So how would a person figure all of that out ?

Cynthia Carels 50:59

The legislated limitation period is found in two separate sources in Alberta for insurance law . One place is the Insurance Act and the other is the Limitations Act , and these pieces of legislation are commonly in conflict , creating a complicated framework that has resulted in a whole body of limitation law that is distinct to private disability insurance from other areas of negligence . So , in effect , how one would arrive at a limitation period in the context of private disability insurance would be quite different than the law of negligence that we've discussed in earlier talks , so we defer to Mike Shepard .

Michael Shepherd 51:35

Exactly . That's a good way to put it . We can provide some general guidelines or best practices for people to use in these cases . So , for example , it's generally understood that you are safe to assume that your limitation to file your lawsuit is the two-year anniversary date of the earliest of these , following three dates . So the first one would be the date when your disability payments to you should have been made . The second date would be the date when your denial of the claim was first communicated to you , and that could be by phone or by letter of the claim was first communicated to you , and that could be by phone or by letter . Or the third date would be the date when the last short or long-term disability benefit payment was made , if your claim had already been accepted .

Michael Shepherd 52:20

So , basically , you're looking for two years from when you could have known or should have known that there was something going on , something was up , have known or should have known that there was something going on , something was up , you didn't get paid when the contract said you should , or the insurer told you that your claim was being denied . But of course , there are exceptions to these general rules . Your limitation could start just two years from your date of disability , or it could be quite later , and there have been successful cases when a party has filed their lawsuit well after the two years date of their initial denial , and this is why it's very important to contact a lawyer in these cases . Even if the reason expressed by the insurer in the denial letter for why you were being denied your benefit seems quite reasonable and justified , according to their interpretation and how they laid it out to you , it's still a great idea Just call a lawyer and get their opinion .

Warren Berg 53:14

In prior Ask the Lawyer talks we have discussed an exception to limitation periods for disabled persons . Now does this apply in the disability insurance context ?

Cynthia Carels 53:24

Excellent memory , arren . There is an exception to limitation periods for people who are under a disability . The applicability of this exception period , however , is quite limited and we do not recommend that anyone rely on it without a guardianship order being in place and also without talking to a lawyer . You will recall , the test for a severe disability has to be severe enough to avoid that two year limitation period . And it's not just someone who is disabled from work . Rather , we're looking for someone who is unable to make reasonable judgments in respect of matters related to a claim , and unfortunately , that is a lot higher of a threshold than someone who is simply disabled from work . And it will only apply to a long-term disability case in very limited circumstances .

Warren Berg 54:10

So now , how does one know whether or not they should call a lawyer ? We've talked about a lot of different things here . If they may be in a situation where they have a claim but there might be some potential defenses for it ?

Michael Shepherd 54:21

my advice is always just to err on the side of calling and call early if possible .

Michael Shepherd 54:26

We get dozens of calls every week and have a team of lawyers that can ask you the questions that need to be answered in order to determine whether it makes sense for you to bring a claim or proceed with an internal appeal on your own , and while many lawyers may advise somebody that has been served with a prima facie reasonable denial letter that it doesn't make sense to pursue the disability claim , we are often open to taking on these difficult claims that require litigation , and often being called early allows us to secure the evidence that we need properly to refute defences that may be raised and get people the disability benefits they need in a much more timely basis .

Cynthia Carels 55:05

Yeah , and as we say on every show , Warren , every single case is different . The information we give on Ask the Lawyer is not to be construed as legal advice , and every situation really is going to turn on the facts . So it is best to speak to a lawyer who knows what they're doing in this particular area of law , so that they can give you personalized advice based on your particular set of circumstances .

Warren Berg 55:28

So what kind of information are you looking for in that first call ?

Cynthia Carels 55:32

Well , since most of the time we're being contacted by people on disability matters who have already been served with a denial of their application for disability benefits , we're typically asking for details with respect to the reason that the denial was provided by the insurer a list of those disabling symptoms , whether there's been a medical diagnosis or not . A description of how those symptoms are impacting your ability to work and reduce your quality of life . We'll ask what factors you weighed in your decision to stopping work and , more specifically , whether that decision was made in concert and care with your care providers . And we're also going to ask for details about what your care providers said and their opinions regarding stopping work . You know what your prognosis is , what your diagnosis is and , obviously , what your future care plan is , and we're also going to likely ask about your education and work history . You know details about your job description and salary and , finally , we'll have some questions about the amounts specified for your disability coverage .

Michael Shepherd 56:29

Right , and following that call or , even better , before the call , we would also want to be looking at a copy of the policy booklet or a copy of the contract , as well as a copy of that denial letter that most people are served with before they call us and as things progress . If needed , we may also ask the caller to ask their insurance company for a complete copy of their file so that we may look at the notes of the disability benefits professional that assessed your claim and we can look at it to see whether any mistakes were made in either a misapplication of the facts or a misapplication of the law .

Warren Berg 57:04

So this seems like a really a lot of information . What if somebody doesn't have all of these answers ?

Cynthia Carels 57:09

You know , as we say , it's always okay if you don't have all the answers . Most times , our potential clients don't have all those answers and that's why we encourage people to call early . We may even need to hire experts to answer some of those questions . We might need to talk to your doctors or we might need to coordinate production of records with your insurer right away .

Warren Berg 57:28

Now hiring experts . That sounds expensive . Does this mean you have to have a lot of money in order to be successful in a disability lawsuit ?

Michael Shepherd 57:42

Thankfully no . If it is our opinion that a potential claim has merit , we will generally run these kinds of files on a contingency fee agreement and we will get paid on a percentage of what we ultimately recover for . Our clients and the law societies have identified that the cost of legal fees on an hourly basis can present a barrier to justice , particularly for individuals who have been injured as a consequence of someone else's negligence . So clients who can't work or need money to pay for treatment don't also need to worry about coming up with resources to pay their lawyer's fees , especially since these cases can take time to work their way through the system .

Warren Berg 58:17

We have covered a lot of ground here today in the January edition of Ask the Lawyer for 2023 with Michael Shepherd and Cynthia Carels of Weir Bowen LLP in Edmonton . If you want to find out more about Weir Bowen , you can visit their website , weir bowencdot om . That's W-E-I-R-B-O-W-E-Ncom . Their phone number 780-424-2030 . You can also find a link to Ask the Lawyer on our homepage on the radio station , where these shows will be available to stream on demand . So if there's something you heard you want to listen back , go to our website and you can stream those particular episodes . Thanks again to Michael and Cynthia .

Michael Shepherd 58:56

It was great being here . Thanks , Warren .

Cynthia Carels 58:58

Thanks , Warren , for giving us the opportunity once again to bring a little bit of education to your listeners .

Warren Berg 59:03

You are most welcome . I'm Warren Berg , and we will look forward to learning much more through this series . No-transcript .