When someone has long-term disability (LTD) coverage under an employee group benefits plan, they are eligible for income replacement coverage if they are unable to work due to an injury or an illness. Individuals who qualify for disability coverage may also continue to receive other benefits, such as dental, health and life insurance coverage. Unfortunately, all too often, insurance companies deny LTD payments to claimants who are genuinely unable to work due to their disability, and this creates real financial hardship for individuals who are already struggling with an injury or illness. Denial of long-term disability benefits may also impact supplementary benefits that would normally be paid to the ill or injured person. This latter issue was the subject of a 2017 civil action, Hogarth v. The Great-West Life Assurance Company.
A woman commenced a civil action against the insurer and her employer after her long-term disability benefits were terminated by the insurance company that indemnified her employer’s group benefits insurance plan. The insurer, Great-West Life Assurance Company (GWL) eventually reached a settlement with the claimant for payment of LTD benefits. However, her employer, Ontario Lottery and Gaming Corporation (OLG), sought a motion to have the claim against them for supplementary benefits dismissed, on the grounds that the plaintiff knew or should have known that the reason for her action arose more than two years before she commenced her claim and in such a case, the claim does not comply with the limitation period set out in the Limitations Act.
The plaintiff was employed by OLG when she was injured in a car accident in March 2004. She subsequently applied for long-term disability (LTD) benefits through her employer and received LTD payments for about 18 months. After this point, GWL alleged that the claimant was not ‘totally disabled’. She was reinstated at OLG between July and September of 2006, but then began an unpaid leave of absence. However, GWL asserted that she was not disabled and therefore not eligible to receive LTD payments after Sept 15, 2006. In February 2009, the plaintiff initiated a civil action against GWL.
In October 2008, OLG cancelled the plaintiff’s supplementary health benefit coverage, asserting that she failed to maintain her benefit payments while on leave of absence. Then, in May 2011, OLG terminated the plaintiff’s employment on the grounds that she could no longer perform the necessary tasks of her employment.
The plaintiff settled her action against GWL in December 2010 – GWL accepted that she was totally disabled and the insurer offered the plaintiff the choice of having her LTD benefits retroactively reinstated from September 2006 or alternatively, receiving a lump sum for past and future LTD entitlement. The plaintiff chose the settlement option and accordingly, she received $123,500 plus costs.
The plaintiff’s continued civil action concerned OLG’s treatment of the plaintiff’s supplementary health, dental and life insurance benefits after September 15, 2006, while she was disabled. The plaintiff alleged that OLG was obligated to pay such benefits because the employee group benefits policy stated that employees continue to be eligible during a period of disability. The plan also stated that coverage would continue after an employee is terminated, if they were absent due to disability.
While employed, the OLG group plan provides that employees are responsible for a portion of the payment of monthly premiums during a leave of absence. In September 2008, OLG informed the plaintiff that her supplementary benefits under the group Policy were cancelled because she was $2,607.36 in arrears in benefit premium payments. OLG then ignored several letters sent to them by the plaintiff’s lawyer on the issue of reinstatement of her medical benefits. Her lawyer also sent a letter to advise OLG that the plaintiff’s health and dental coverage should continue past her termination date because she was terminated due to her disability.
The opposing arguments and decision
After the claimant’s settlement with GWL, including retroactive reinstatement of her LTD benefits, OLG refunded $4,700.43 to the plaintiff which they contended were for benefit premium payments made to OLG since her accident and up to 2008; however, OLG did not restate her dental/health benefits. This re-payment was made after the plaintiff’s lawyer sent a letter to OLG requesting reinstatement of her supplementary health/dental coverage as well as repayment of any premiums wrongfully paid since her accident. The lawyer followed up on this letter with a phone call to the Human Resources (HR) Manager for OLG in which he alleged, on cross-examination, that OLG agreed to re-instatement of supplementary benefits as well as the repayment of premiums. However, no written confirmation of this conversation was received from OLG by the lawyer. On the issue of reinstatement of supplementary coverage, OLG’s HR Manager gave testimony that he did not recall a letter or phone conversation on this issue and he also stated that there was never any suggestion that the plaintiff’s supplementary benefits would be reinstated.
In their motion to have the claimant’s case against them dismissed, OLG argued that the plaintiff was informed, and aware, that she did not have supplementary dental and health after October 2008 when OLG cancelled her benefits due to her failure to pay premiums during her ‘leave of absence’. OLG also submits that the plaintiff’s claim was made too late.
The plaintiff argued that there is a genuine issue requiring a trial on discoverability of her cause of action, or alternatively, the court can rule in her favour on the basis of the facts of the case. She argued that GWL acknowledged her disability when they paid her LTD benefits, and after this was done, OLG became obliged to reimburse her the portions of the premiums she paid while she was disabled as well as retroactive supplementary health benefits during the period she was acknowledged to be disabled. The claimant also argued that the fact that she was disabled at the time of her termination means that she is entitled to supplementary health benefits in the future.
A number of questions were considered by Justice Rady in coming to a decision for this case. The first was whether OLG can fairly take the position that the claimant’s supplementary benefits were cancelled in 2008 for non-payment of premiums when it was later established that she was not obligated to pay premiums at all during this period, given that GWL paid her a settlement for LTD payments and thus acknowledged that she was disabled. Another question was whether OLG was effectively acknowledging that the plaintiff was disabled and that they should have paid her premiums to ensure coverage, when they took the step of refunding premiums paid from 2006 to 2008. Justice Rady questioned the significance of OLG’s failure to reply to the plaintiff’s letter and also, whether OLG unequivocally informed the plaintiff of the cancellation of her supplementary benefits. The judge also raised the question of what is the relevant limitation period – although the plaintiff knew in October 2008 that her benefits were cancelled, this is not necessarily determinative given the many issues and events that arose after that time, including an (unsuccessful) attempt in 2013 to have the case resolved in Small Claims Court.
In consideration of the many unresolved issues, Justice Rady found that the case cannot be resolved in summary judgement and accordingly, the defendant’s motion was dismissed.
An insurance dispute over long-term disability benefits can sometimes be resolved by fairly straight-forward steps, such as providing the required objective medical evidence to substantiate that your symptoms prevent you from performing the essential aspects of your job. Unfortunately, in many cases when an insurer denies a claim for long-term disability coverage, they have made up their mind about the legitimacy of a specific claim and it can be an uphill battle to have the insurer’s decision reversed. For this reason, if your LTD claim is denied, it is a good idea to seek the opinion of an experienced LTD lawyer who can provide informed advice on the most effective step to successfully appeal your claim or, alternatively, to provide expert representation in a civil action. At Kotak Personal Injury Law, we specialize in insurance disputes over disability payments and are happy to meet with you to assess your unique situation and decide on a best course of action.