Individuals who have coverage for disability benefits under an employee benefits plan or another policy are entitled to receive income replacement benefits if they become injured or ill and are no longer able to perform their job. Unfortunately, insurance companies sometimes deny coverage for legitimate claims. One of the most common reasons for denial of claims is a lack of medical documentation that substantiates how the person’s disability prevents them from performing the essential tasks of their job. Claims may also be denied if the insurer can point to an exclusionary provision in the disability policy that may apply to the applicant’s claim.
A recent trial, Tanious v. The Empire Life Insurance Company, resulted after the insurer denied a woman’s claim for long-term disability benefits under her employer group disability policy, on the basis that she was working and not totally disabled at the time of her termination from work, or alternatively, because she was disabled by an excluded illness under the policy (i.e. substance use disorder). The applicant later filed a civil action against her insurer for long-term disability benefits from Dec 28, 2011, the date her medical condition prevented her from working, to the age of 65. She also sought damages for mental distress.
In her Statement of Claim, the plaintiff declared that she has been ‘totally disabled’ from working in her own occupation from Dec 38, 2011 (or before Jan 10, 2012) to May 1, 2014, due to the effects of Multiple Sclerosis (MS), depression and anxiety. She further claimed that she has been ‘totally disabled’ from performing any gainful occupation for which she is reasonably suited by education, training or experience, from May 2, 2014 onwards, due to MS, anxiety and depression. Some of the specific disabling symptoms and limitations she claimed to suffer were: feeling anxious and easily overwhelmed, depression, extreme fatigue, cognitive problems, weakness in her left leg, weak grip strength, poor balance and difficulty walking.
The two primary issues to be decided in this case were: 1) whether the plaintiff is totally disabled as defined in her Policy on Dec 28 or prior to Jan 10, 2012 when she was terminated by her employer; and 2) whether she forfeited LTD benefits pursuant to the exclusion provisions in her Policy based on an alleged substance abuse disorder.
In 2002 and at the age of 25, the plaintiff was diagnosed with MS and her condition worsened in the years prior to her termination from her job. Based on the evidence presented, particularly the medical evidence given by the plaintiff’s physicians, the judge noted that the plaintiff’s cognitive weaknesses in her memory, concentration, judgement, self-control and other areas, as well as her depression and anxiety, are commonly experienced by individuals with MS. Further, if not for the plaintiff’s MS, she would not have suffered from depression, fatigue, anxiety and neurological symptoms which together, disabled her from performing her job and any form of employment for which she was reasonably suited.
Under the plaintiff’s benefits Policy, benefits coverage is mandatory and there is no obligation for employees to show they are insurable before they can sign up under the plan. Therefore, whether the plaintiff was diagnosed with MS prior to registering under the plan is not relevant to eligibility for coverage. For this employer-provided Policy, coverage terminates on the date an insured person ceases to be an employee.
On the issue of the plaintiff’s alleged addiction to crystal methamphetamine, the judge found that although her use of crystal meth aggravated her anxiety and paranoia, the plaintiff would have suffered those disabling symptoms (as well as several other psychological and neurological conditions) as a result of MS, irrespective of her use of the drug. It was noted that the plaintiff had a prior history of a strong work ethic, ambition, a positive disposition, and support of family and friends, which was not consistent with “significant abuse of illicit substances for self-gratification”. The judge also considered evidence that the plaintiff resorted to the drug only after symptoms caused by MS made performance in work and everyday living increasingly difficult, and after a friend suggested she try crystal meth to improve her energy and cognitive abilities. Also, there was medical evidence that patients with MS sometimes resort to amphetamines to combat declining cognitive abilities, and if carefully supervised by a physician, amphetamines can provide some benefit.
The judge concluded that the plaintiff was totally disabled before Jan 10, 2012, when she was still covered by her employee disability benefits, and also, that she remained totally disabled during the elimination period and her own-occupation period. It was noted that since being treated for MS and while abstaining from drugs, the plaintiff’s behaviour did not change and she continued to exhibit poorly modulated behaviour that was evidenced while using drugs. Also, the medications used to stop the progression of her MS had serious side effects which required hospital admissions. The judge concluded that the plaintiff’s disability resulted from MS, not from substance abuse, and further, that she has not recovered and will not recover sufficiently to allow her to perform any job for which she is reasonably suited by education, training and experience. Therefore, the judge allowed the plaintiff’s action for long-term disability benefits to age 65.
The judge also considered the question of whether the plaintiff suffered from mental distress due to the insurer’s denial of benefits and if so, what is a fair and reasonable amount of damages for her suffering. The plaintiff alleged that Empire Life’s refusal to pay owed benefits in the 3 ½ years since she filed her application, increased the burden of her emotional and financial stressors and may even have put her life at risk. The judge agreed that the insurer’s denial of benefits did significantly add to her suffering and accordingly, he awarded $15,000 in aggravated damages for mental distress and loss of peace of mind and of dignity as a person.
In a separate action in 2017, the plaintiff sought special costs for full indemnification of her litigation costs incurred in her disability insurance action. The plaintiff did not claim that the insurer was guilty of reprehensible conduct; however, she argued that there were unique circumstances in her claim that merited an award of full costs. The Court agreed that the particular circumstances of this case merited a full award of costs. Some of the reasons for the Court’s decisions were: the fact that the plaintiff did, in fact, suffer a disability which prevented her from working, and this triggered the insurer’s obligation to pay disability benefits, which it failed to do; and also, the fact that the legal costs the plaintiff incurred significantly deprived her of the full benefit of her contractual benefits, which left her with less than the required amount of income for the necessities in life.
If you or a loved one were denied long-term disability benefits, talk to an experienced LTD benefits lawyer at Kotak Personal Injury Law to find out about your legal rights and options in the matter. Let us help you get the disability benefits you are owed.