LTD Denials – When Does The 2-Yr Limitation Period Start?

Article by Gabe Flatt

Limitation periods continue to be a hot topic in the context of disability benefits. A recently released Divisional Court decision seems to have shed a little light on this matter. In Western Life Assurance Company v. Penttila, the insurer brought a summary judgment motion to dismiss the plaintiff’s claim due to being statute barred and out of time. The motion was denied. The insurer appealed the motion judge’s decision.

The relevant dates in this matter are as follows:

  • May 16, 2012 – the plaintiff was approved for long term disability benefits due to back problems.
  • February 19, 2013 – the insurer advised the plaintiff that her benefits would be denied as of March 7, 2013 due to a change in the definition of her disability. The insurer’s correspondence advised that she could appeal its decision by providing a written request for review along with supportive medical documentation.
  • April 8, 2013 – the plaintiff advised the insurer that she wished to appeal the denial, and provided further medical information.
  • November 13, 2013 – the insurer requested reports from two doctors from the plaintiff and advised: “upon receipt of all of the above requested information, we will complete our review of your appeal and advise you of the decision.”
  • The plaintiff provided the requested documentation. On October 21, 2014, the insurer advised that the file had been reviewed and that its position “remained unchanged.”
  • May 25, 2015 – the plaintiff requested a letter from the insurer that outlined its decision from its review of her file.
  • June 18, 2015 – the insurer sent a letter advising that it could not conclude on the basis of the information available that she was unable to perform her occupation and that benefits beyond March 6, 2013 remain declined.
  • June 6, 2016 – the plaintiff issued a Statement of Claim.

At the summary judgment motion, the insurer argued that the Statement of Claim was issued outside of the two year limitation period, which should have commenced as of either February 19, 2013 (the date of the denial letter) or March 7, 2013 (the initial termination date). The motion judge held that either October 21, 2014 (the date the insurer denied the plaintiff’s appeal) or June 18, 2015 (the date of the insurer’s final letter) were the applicable dates on which a reasonable person would have understood that a proceeding was a legally appropriate means to seek a remedy.

On appeal, the Divisional Court found that the motion judge was correct in holding that the triggering event for the commencement of the two-year limitation period was the date upon which it would be legally appropriate to commence legal proceedings to seek payment of disability benefits that the insurer refused to pay. Given that there was an agreed upon right to appeal the insurer’s denial directly to the insurer, it would be premature to commence legal proceedings until that process ran its course.

As a result, the Divisional Court upheld the Motion Judge’s decision, dismissed the summary judgment motion and awarded costs to the plaintiff.

Takeaway

This decision supports the idea that the limitation period for commencing a claim at Court in the disability context only begins to run once there is a final, clear, unequivocal denial of benefits. It also supports the idea that the limitation period only commences once it becomes “legally appropriate” to commence a Court proceeding. If there is another method of appeal that is either agreed upon or should reasonably be concluded prior to commencing a Court proceeding, the limitation period will likely commence only after that appeal process is completed.

This means that insurers should be very wary about providing open-ended rights to insureds to appeal the denial of disability benefits. The insurer should be able to demonstrate that a final decision was made and that the decision was communicated to the insured in a way that makes the denial clear and unequivocal.

See Western Life Assurance Company v. Penttila, 2019 ONSC 14 (CanLII)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq

Fewer CDN’s have disability coverage through workplace benefits, leaving them more at risk

 

Summary: The number of Canadians with disability coverage through workplace benefits has fallen significantly since 2015 – 48% vs 57%. Of those Canadians without disability coverage through their workplace, 84% have not bought coverage themselves. Yet, if faced with the possibility of becoming disabled and unable to work for three months, 68% admit they would face serious financial trouble. However, when it comes to accessing disability coverage, where and how Canadians find work are strong barriers, along with affordability.

The number of Canadians with disability coverage through workplace benefits has declined significantly since 2015, according to a recent RBC Insurance survey. Fewer than half (48 per cent) of employed Canadians say they have disability coverage through their workplace benefits, compared to 57 per cent in 20151. Of those without disability coverage through their workplace, 84 per cent have not bought coverage themselves, leaving them at financial risk if unable to work due to a disability.

“With the majority of employed Canadians indicating that they do not have disability insurance through their workplace benefits package, workers need to review what coverage they do have and take immediate steps to ensure that they are well protected in case something were to happen,” explains Maria Winslow, Senior Director, Life & Health, RBC Insurance. “Without the proper financial protection in place, Canadians are putting themselves and their families at risk if they are faced with a disability and have to take time off work.”

Being off work takes a financial toll that many people are not prepared to handle. A majority (68 per cent) of working Canadians acknowledge the possibility of serious financial implications for them and their family if they were to become disabled and unable to work for three months. In fact, when faced with a disability, 45 per cent of working Canadians would have liked to take time off due to disability but could not because of finances, and 51 per cent said they were forced to go back to work earlier than they wanted because of their financial situation.

“When confronted with a disability, the last thing that should be on your mind is worrying about finances. Purchasing individual disability coverage provides you with the security of knowing you will have money coming in to replace your lost income,” says Winslow.

Barriers to Accessing Disability Coverage
Increasingly, where and how Canadians find work are strong barriers to accessing disability insurance coverage. Those without coverage say:

  • Their workplace doesn’t offer group benefits or disability insurance (35 per cent)
  • They work part-time or on contract and aren’t eligible for benefits (25 per cent)
  • They’re self-employed or freelance (22 per cent)

Cost is another key barrier – one in four (26 per cent) working Canadians without disability coverage feel they cannot afford it.

“There’s a misconception that disability insurance is expensive, yet it’s much less than you might think – generally costing between one and three per cent of your income,” adds Winslow.

Here are a few things Canadians should consider:

  • The best time to buy disability insurance is before an injury or illness occurs.
  • Don’t choose a policy on price alone. Be aware that the prices are aligned with the features and benefits of the policy. Make sure you know the policy’s definition of disability, as the definition may vary among carriers.
  • Review the coverage available through your employer and consider whether you need additional coverage to fill in the gaps.
  • Disability insurance is essentially an income replacement policy; it is designed to cover a portion of your income should you become unable to work.

About the RBC Insurance Survey
These are some of the findings of an Ipsos poll conducted between January 2nd and January 4th, 2018 on behalf of RBC Insurance. For this survey, a sample of 1,505 employed Canadians aged 18+ was interviewed. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the results are considered accurate to within ±3.0 percentage points, 19 times out of 20, had all working Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

About RBC Insurance
RBC Insurance® offers a wide range of life, health, home, auto, travel, wealth and reinsurance advice and solutions, as well as creditor and business insurance services to individual, business and group clients. RBC Insurance is the brand name for the insurance operating entities of Royal Bank of Canada, one of North America’s leading diversified financial services companies. RBC Insurance is among the largest Canadian bank-owned insurance organizations, with approximately 2,500 employees who serve more than four million clients globally. For more information, please visit rbcinsurance.com.

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1 2015 RBC Insurance survey

 

RBC Insurance predicts long term disability incidences to rise in 2018

Long Term Disability Forecast can help businesses manage costs related to claims

TORONTOJan. 30, 2018 /CNW/ – RBC Insurance predicts Long Term Disability (LTD) incidence rates will be 4.7 per cent higher compared to 2017 driven by a strengthening Canadian economy. Using a proprietary algorithm, RBC Insurance has discovered that new LTD claims are linked to GDP growth rates. Understanding the correlation between GDP and LTD claims can help businesses manage costs related to claims, ensure adequate staffing during critical seasons, and help employees get support when they need it the most.

“Using the RBC Insurance Group LTD Forecast, we predict LTD incidence rates will continue their recent rise and increase by 4.7 per cent in 2018 relative to 2017, which will impact both employers and employees alike,” says John Carinci, Vice-President and Head, Operations and Client Experience, RBC Insurance. “Businesses in Canada spent $7.5 billion for LTD coverage in 2016, which is the third largest cost to a group benefits plan after health and dental. Knowing that LTD rates are expected to rise is important information that businesses can use to help manage those costs, support their employees and ensure their operations continue to run smoothly.”

How the RBC Insurance Group LTD forecast works
Based on research conducted by RBC Insurance, as GDP accelerates and the economy grows, there is a corresponding increase in the incidence of LTD claims. Conversely, when the rate of GDP drops, so does the incidence of LTD claims. At the start of 2017, the model successfully predicted an increase in incidence for the year (relative to 2016) that was fairly close to the actual rate experienced. It is believed that during challenging or uncertain times, workers can be concerned about job security and performance, creating significant mental and/or physiological stress. As the economic outlook brightens and GDP rises, workers may begin to feel more secure and the pent up stress and anxiety can take its toll, making them more likely to succumb to illness and taking a leave from work to recoup.

“With the anticipated rise in LTD claims, businesses should proactively create awareness of the support available to employees and create contingency plans to ensure adequate staffing,” says Julie Gaudry, Senior Director, Group Insurance, RBC Insurance. “While employees must deal with the significant emotional and financial stress of being off work, business owners can be particularly hard-hit as they lose employees during times of strong economic activity.”

RBC Insurance offers the following tips to help businesses manage LTD claims:

  • Create additional focus on Employee Assistance Programs (EAP) to support employees as GDP rises – programs such as EAP can help employees manage certain conditions and work-life issues before spiraling to the point of disability
  • Create contingency plans to ensure adequate staffing levels during times of positive economic growth including a buffer for potential claims
  • Look for flexible Group Benefit plans that have options such as allowing employees to return to work on a part-time basis while still receiving benefits
  • Ensure employees understand the coverage in their plan and make use of any ‘Return to Work Benefits’ such as financial planning, rehabilitation and other services to help make a smooth transition back into the workplace

About RBC Insurance
RBC Insurance® offers a wide range of life, health, home, auto, travel, wealth and reinsurance advice and solutions, as well as creditor and business insurance services to individual, business and group clients. RBC Insurance is the brand name for the insurance operating entities of Royal Bank of Canada, one of North America’s leading diversified financial services companies. RBC Insurance is among the largest Canadian bank-owned insurance organizations, with approximately 2,500 employees who serve more than four million clients globally. For more information, please visit rbcinsurance.com.

SOURCE RBC

RBC Insurance Survey: The important conversation Canadian workers aren’t having

TORONTO, September 29, 2015 –  While Canadians may be savvier than ever when it comes to planning their financial futures, many workers are not taking the time to discuss the financial impacts of becoming disabled. According to a recent RBC Insurance survey, 95 per cent of working Canadians agreed that a disability could happen at any time, yet 67 per cent have not discussed with their family how they would face the financial impacts if they could not work due to a disability.

These are important conversations to have considering that 43 per cent of working households have had someone take off time due to disability, and that 72 per cent of Canadians would face serious financial implications if off work for three months.

“Working Canadians cannot ignore the real risk that they may be off work with a disability sometime in their working careers,” explains Mark Hardy, senior manager, Life and Living Benefits, RBC Insurance. “One-in-three working Canadians will experience a period of disability lasting longer than 90 days during their working lives. Workers need to talk with their family and take action today so they are prepared for future financial implications of not being able to work.”

“We Need to Talk”
Not knowing how to start the conversation (20 per cent) and a discomfort with talking about disability (19 per cent) are the leading reasons why Canadians are not talking about the financial implications of missing work. What would get Canadians talking? Thirty-four per cent would be more open to a conversation if their own financial situation worsened and 23 per cent would discuss the topic if they personally knew someone who had missed work due to a disability.

“There is a mistaken perception that a disability ‘will never happen to me,’ but becoming disabled is a real possibility during our careers. Disability can occur suddenly, and beyond the serious financial implications there’s also the emotional toll to consider, which further underscores the need for conversation,” added Hardy.

Canadian Workers Need to Confirm Coverage
Understanding what coverage you have is important for all Canadian workers. Many believe they have enough coverage through their employer, and may not realize that benefit plans have limited coverage. With 43 per cent of families indicating that they do not have disability insurance coverage through their workplace benefits package, workers need to confirm what they have and take immediate steps to ensure that they are protected.

Tips to Consider for Discussing Finances and Being Off Work Due to a Disability

  • Investigate the coverage you have through your employer plans. Understand how the plan defines a disability and what is and isn’t covered. If you need additional coverage talk with an insurance professional.
  • Understand your personal finances and how much income you need to cover monthly expenses.
  • Set aside an emergency budget to help you through at least three months of living expenses.
  • If you need support, talk with friends and family and ask about employee assistance programs at work.
  • The ideal time to bring up this conversation is when you are reviewing and discussing your annual financial goals.

About the RBC Insurance Survey
RBC Insurance commissioned Ipsos to conduct a survey to gauge public opinion of Canadian workers regarding matters related to disability, financial preparedness around disability and attitudes towards disability. The survey was conducted between June 12 to 19, 2015. In total, a sample of n=1,500 working Canadians was surveyed online using Ipsos’s I-Say online panel. The precision of Ipsos’s online survey are measured using a credibility interval, in this case the results are considered accurate to within ± 2.95 percentage points, 19 times out of 20, had the entire population of Canadian workers been polled.

About RBC Insurance
RBC Insurance®, through its operating entities, provides a wide range of travel, life, health, home, auto, wealth and reinsurance products and solutions, as well as creditor and business insurance services to individual, business and group clients. RBC Insurance has more than four million clients globally. We are one of the largest Canadian bank-owned group of insurance companies, and among the fastest growing insurance organizations in the country. RBC Insurance employs more than 3,000 employees, and is the brand name for the insurance operating entities of Royal Bank of Canada.

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For more information, please contact:
Greg Skinner, RBC Corporate Communications, 416-294-5579

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