Area of Law: Personal Injury
Answer # 493
What to do if your claim is deniedRegion: Ontario Answer # 493
If your claim for long-term disability (LTD) benefits is denied, or if you have been receiving benefits and the payments are terminated, the insurance company will inform you in writing and provide the reason why. If you do not receive a letter, ask the insurance company to provide you with one.
When are claims denied?
Your insurance company can deny your claim for LTD disability benefits for many reasons, including the following:
- you missed deadlines or time limitations for filing
- there are clerical errors in your application
- you have pre-existing medical conditions you were not aware made you ineligible or that you did not list in your claim
- you received your disability from an activity that is excluded in your policy (e.g. drinking or drug use)
- you failed to provide required medical evidence, or the information that you submitted was incomplete or unclear
- your insurance company obtained evidence, such as from surveillance or from social media that contradicted your claim of disability (such as, you posted photos of yourself engaged in an activity that would not be possible due to your disability)
- you did not make all your premium payments
- you failed your medical assessment, meaning a medical professional found that your disability did not prevent you from working
- there is a discrepancy with the information provided by your employer
- your condition did not meet your insurance company’s definition of ‘disability’
- the insurance company believes you refused to undergo treatment or a medical appointment arranged by them
- the insurance company believes you are not regularly seeing a doctor or getting reasonable medical treatment
- you are in prison or a similar institution
What to do if your claim is denied
If your claim has been denied or your benefits were terminated, and you do not agree with the decision, you have three options:
- Appeal the decision
- File a lawsuit
- Negotiate a Settlement
Which option you choose may depend on the reason why your claim was denied or your benefits were terminated.
Appealing the decision
To appeal the decision an application is submitted using the insurance company’s internal appeal process. Appealing the decision might be the best option if your claim was denied for the following reasons:
- you failed to provide required medical evidence or the information was incomplete or unclear
- you did not provide other necessary documentation
- there was a discrepancy with the information provided by your employer or it was not provided in the first place
- you did not comply with medical treatment or assessment requirements but have since done so or have agreed to do so
- you were not examined by insurance company approved doctors but have since been examined or have agreed to do so
If you appeal, contact your doctor or employer and ask them to provide all the required information. This may result in the decision being reversed and your claim may be approved. It is important to respond as soon as possible to the insurance company as there will be time limits you must follow which will be listed in your policy.
Things to consider before making an appeal
While you may believe you have a good chance of winning an appeal and having the insurance company reverse their denial of your claim, there are factors to consider before choosing this option.
- an appeal could take months, even years and during this time you cannot work and earn an income and may have very limited financial resources to live on
- you may miss the deadline to file a lawsuit, which insurance companies say begins from the time they send their first denial letter to you
- you may provide further medical evidence that harms your appeal
Filing a lawsuit
If your claim is denied for more serious or complex reasons an appeal may not be successful and filing a lawsuit may be your best option. For example, starting a lawsuit may be more appropriate than bringing an appeal if the insurance denies or terminates your benefits because they say you:
- missed deadlines or time limitations
- have pre-existing medical conditions
- received your disability from an excluded activity
- engaged in an activity that would not be possible due to your disability
- do not have a condition that meets the insurance company’s definition of ‘disability’
- are able to work part-time or with modified tasks because do not suffer a total disability which prevents you from working at any job
- failed your medical assessment
- refused to undergo treatment or a medical appointment arranged by them
- are not regularly seeing a doctor or getting reasonable medical treatment
A lawsuit may also be the best option if you have been receiving LTD benefits for two years but the insurance company has told you your benefits are being terminated because you do not meet the two-year definition of disability. When you first apply for benefits, you are only required to be unable to perform the essential duties of the job you had before you became disabled. After two years, to continue receiving benefits, “you must not be able to perform the duties of any occupation you are reasonably qualified or could become qualified for in order to continue receiving benefits”.
Lawsuit limitation periods
It is a good idea to consult with a lawyer as soon as your insurance company denies your LTD claim, as there are strict limitation periods in which you can file a lawsuit.
Under the Ontario Limitations Act, the limitation period is generally two years. However, insurance companies often reduce that time-period to one year in their policies. As the policy is considered to be a contract, the insurance company may use this to argue that it takes precedence over the limitation periods set out in the Act.
Who should you sue?
There are usually three parties (called the defendants) that you may be able to sue when your claim for LTD benefits has been denied or your benefits have been terminated:
- the insurance company,
- the insurance broker who sold you the LTD insurance policy, or
- your employer.
A disability insurance or personal injury lawyer can help you to decide whom you should sue. In most cases, lawsuits are brought against the insurance company who denied the claim.
What can you sue for?
You may be able to bring a claim in court for one or all of the following:
- the payment of the LTD benefit to which you are entitled
- “bad faith,” meaning you believe the insurance company acted unfairly when they denied LTD insurance claim
- pre- and post-judgment interest on the amounts claimed
- all or some of your legal fees
How do you sue?
The procedure for bringing a lawsuit includes:
- A Statement of Claim prepared by your lawyer that sets out the allegations you are making against the insurance company or other defendant
- A Statement of Defence filed by the defendant(s)
- An Examination for Discovery, which is a proceeding in which you are asked questions under oath
- You may have to undergo medical assessments by your own doctor and the doctor for the insurance company.
- There may be settlement negotiations or both parties may agree to mediation to settle the claim.
Can you settle without going to court?
In many cases, the parties come to an agreement during negotiations or mediation before the case ends up in court. Many settlements include a lump-sum payment of an amount that represents both the LTD benefits that were denied in the past, as well as future LTD benefits. If a settlement is not reached, then your claim for LTD benefits will likely go to trial.
For more information, refer to topic #494 Things to consider before agreeing to a settlement with the insurance company.
Get legal advice and help
Filing or appealing a claim for LTD can be a difficult, confusing and lengthy process. Each policy is different. Submitting an incomplete or inaccurate application can lead to a claim being denied. A personal injury or disability insurance lawyer can help you understand your policy, notify you of any deadlines, guide you through the claim process, review your forms and documents and deal with the insurance company. This will help ensure that you will get the benefits you deserve in a timely manner.
Even when an individual has a legitimate cause for claiming their long-term disability benefits, often insurance companies will initially deny the claim, or offer an amount much lower than asked for.
If you or someone you care about suffers from a long-term disability and has disability insurance, contact our preferred experts. They can help you get the LTD benefits you are entitled to, even if your claim was denied. They offer a free consultation and do not charge up-front fees:
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