This is a good question and one that we’re often asked by our new clients. Many claimants who are denied long term disability benefits are often confused about what they’re entitled to. Even worse, many claimants who’s disability benefits have terminated are not even aware that they are entitled to contact a disability lawyer for legal advice or legal assistance on what to do. Many claimants believe that once their claim is rejected, the decision is final and cannot be challenged.
The opposite is in fact true. You are entitled to consult a disability lawyer who specializes in litigating the intricate complexities of regulations, policies, and procedures related to disability claims. Disability lawyers can advocate on behalf of claimants, ensuring that their rights are upheld and that they receive the benefits they are entitled to and potentially reverse unwarranted denials.
If you’ve been denied long term disability benefits, we would encourage you to call us today. Our disability lawyers have been litigating against every major disability insurance company throughout Canada since 1984 and have recovered tens of millions in wrongfully denied benefits. We would be happy to explain your rights to you and outline any legal recourse you may have.
In Canada, when an individual files a lawsuit contesting his or her denial of long-term disability benefits, the case is fundamentally framed as a breach of contract case. This is because long-term disability insurance policies are contracts between the policyholder (often an employee or an individual) and the disability insurance company. When a claimant’s long-term disability benefits are denied, the argument is that the insurance company has not upheld its end of the agreement, thereby breaching the terms of the contract.
To address this, the plaintiff must seek a declaration at law, which is a formal statement by the court that determines the rights of the parties involved. This declaration is twofold – first – whether or not the insurance company has, in fact, violated the terms of the insurance contract by unjustly denying the claimant’s benefits and second – whether the claimant is disabled as per policy definition.
In simpler terms this means that a plaintiff must seek a declaration by a judge in their lawsuit to clarify or confirm their rights without seeking damages or specific relief. Essentially the declaratory judgment aims to resolve uncertainty – meeting whether or not the contract has been breached and whether the claimant satisfies the definition of the disability insurance policy.
When plaintiff seeks a declaration in a lawsuit, the only relief that he or she could be provided is a declaratory judgment. In terms of disability litigation, if you are successful, then you will seek a declaratory judgment that you are disabled as per the policy definition and that the disability insurance carrier breached the terms of its contract. At that point, it would normally be paid all arrears from the date you were cut off long term disability, until the date of the declaratory judgment.
From that point on, your disability carrier must put you back on claim and pay your disability benefits on a monthly basis just as things were before your benefits were terminated. The obvious risk with this, is there at any point in the future, your benefits can be terminated again.
This is the only recourse at law which may be litigated in terms of a claimant’s long-term terminated monthly long-term disability benefits.
Yes, and it does happen quite often. Settlements in long-term disability cases typically involve the disability insurance company agreeing to pay the claimant a lump-sum amount or negotiate a revised benefit structure in exchange for the claimant dropping their claim or lawsuit.
This resolution often occurs at mediation or before the case goes to trial, as settlements can provide a quicker and sometimes more predictable outcome for both parties. The decision to settle usually considers the strength of the evidence, potential litigation costs, the anticipated duration of the disability, and the potential risks and rewards of taking the case to court.
LTD claims can typically be settled in two ways – either by lump sum settlement or reinstatement.
Reinstatement – if the claim is reinstated, disability insurers will normally pay some of all of the arrears owed from the date or termination to the date of settlement as well as prejudgment interest and a contribution to your legal costs.
Then the claimant will be put “back on claim” and all the normal terms of the policy will apply going forward. For some – reinstatement is a perfect solution while for others – the relationship with their disability adjusters has been irreparably poisoned. Many claimants are often emotionally damaged by the way they were treated by their their disability carrier and too personally affected to consider a reinstatement.
Lump Sum Settlement – at some point during your disability claim, our disability lawyers and your disability insurer can engage in settlement discussion in regard to a lump sum payout of future benefits. Typically there will be significant discounts applied against the 100% value of the future stream of benefits such as litigation risk, collateral benefit offsets and a present value discount (PVR).
Litigation risk can be considered as sort of the encapsulation of the uncertainties and the potential pitfalls tied to a lawsuit. Understanding litigation risk is very important when considering the prospect of settling your case. There is always an unpredictability in terms of court decisions: even the most apparent victories can be turned on their heads, leading to unexpected outcomes. Additionally, litigation can drag on for extended periods, straining resources and potentially harming reputations. Understanding litigation risk can help the parties in making informed decisions about whether settling at a discount might be a more pragmatic approach rather than facing the potential downsides of a protracted court battle.
A present value discount is a way to figure out what a future amount of money is worth in today’s terms. Think of it like this: if someone offered you $100 now or $100 five years from now, you’d likely prefer the money now. That’s because you can do something with that money today, like put it in a bank or invest it, and over time, it can grow. This concept is called the “time value of money.”
When we talk about a lump sum settlement for future benefits, it’s like someone giving you a chunk of money today instead of smaller amounts spread out over many years. Because of the time value of money, we have to adjust the total of those future payments to account for what they’d be worth if you got them all today. This adjustment is where the present value discount comes into play. It helps make sure that the lump sum you get today is fair compared to the total of the spread-out payments you would have received in the future.
If your benefits were taxable (i.e. employer paid) then all of the arrears paid as part of a settlement will be taxed. Normally we can work with your disability insurer to fill out a T-1198 form which allows you to amortize the taxable benefits over the years they would have been received so they are not all taxable in the year they are received – i.e. the settlement date/year.
For example, if our disability lawyers recovered $50,000 in arrears which spanned over 5 years (from the date of termination to the date of settlement) then we would be able to amortize the benefits over 5 years at $10,000.00 a year in order to lessen your marginal tax rate and hence the amounts owed to the CRA.
Claimants whose disability benefits have been cut-off find themselves in a terribly financial predicament. Disability benefits often serve as their primary source of income, enabling them to cover basic living expenses due to their inability to work or earn consistently. Without this safety net, they face immediate financial strain, struggling to meet essential needs like housing, food, and medical care, thereby exacerbating their vulnerabilities and pushing them towards potential economic hardship or debt – and not to mention the possibility of exacerbated any mental health issues that they might already be suffering from.
If your disability claim has been denied or your benefits have been terminated for any other reason – call us today. Our long-term disability lawyers have recovered tens of millions in wrongfully denied long-term disability benefits for residents in Ontario and throughout Canada.
Contact us today no matter where you are in Canada by calling us at 1-844-4-DISABILITY. Alternatively you can email us confidentially and our intake specialist will help you set up an appointment in-person, by phone or by virtual video conference. Our Ontario Disability Lawyers are based in Hamilton, Ontario and serve disability claimants all across Canada.