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Long Term Disability Denial?  A Lawyer’s perspective
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Long Term Disability Denial? A Lawyer’s perspective

June 3, 2018 - in Advice, Insurance

By their very nature, corporations are soul-less, heart-less entities (they exist only as legally created entities). Decisions often appear to be dictated by targets, time-lines and balance sheets. When people are cut off of their benefits by their long-term disability insurers (such as Manulife, Great West Life, London Life, etc.) they often complain about feeling like a number rather than a name, about leaving countless unreturned messages and about trying to chase down and convince cold and disinterested claims adjusters to read what their doctors have written, or to tell them why their medical evidence is not enough. People often complain that the adjusters don’t really care about what is right for the client or the company – they are mostly concerned with not losing their jobs and following instructions and being able to defend themselves when their files are audited. We have also heard the rumours about targets for adjusters to close a certain number of files per year etc.

Many of us have heard the rumours and read the John Grisham books that posit that long term disability insurers know that for every 100 people that they cut off, 50 will do nothing about it, 25 will miss the time-line to commence a legal action, and many of the others will settle cheap. For the small percentage of claimants that truly fight them there remains the option to simply reinstate them or to settle out with them and still maintain a significant profit from the other denials. Call me paranoid, call me jaded, and I fully admit to being jaded against all large insurers after nearly 16 years of doing this.

Some people who have hired a lawyer to sue the long-term disability insurers have been surprised at how hard their own lawyers have pushed them to settle early, on a full and final basis, for a lump sum amount. I believe that, unless navigated appropriately, a traditional contingency fee retainer can set up a conflict of interest between a client and their own lawyer. This is because the lawyer’s fee is far higher if a lump sum settlement is achieved from which a lawyer can take a percentage, than if a client is reinstated. Also, a traditional contingency fee agreement can sometimes make it uneconomical for a lawyer to take a smaller matter to trial because of the set-up of that arrangement.

I have quite literally had adjusters, lawyers and mediators outright threaten to reinstate my clients on benefits if I did not recommend a lump sum settlement offer. The threat was not directed at my client, it was very much directed at me, on the assumption that I myself, as the lawyer, would be unable to recover my fees if they simply reinstated my client. They were unware of the fact that I had specifically structured my retainer to avoid the conflict issue and to ensure that appropriate proviso’s were set up for trial if needed. Some lawyers have mentioned to me that many plaintiff long-term disability lawyers “eat a lot of lunch” – meaning that they attend many mediations and settle their files there without fighting them forwards.

Now don’t get me wrong, there is nothing wrong with settlement in appropriate cases and at appropriate quantum’s. However, the amount has to be right and there are also certain files that should NEVER be settled out on a full and final basis. I have dealt with many files where people are suffering from severe mental health issues and are in their early 30’s or 40’s, have been approved by CPP and sometimes have been deemed to be disabled by their work and collateral benefit/pension insurers, but have been cut off by their long term disability benefit carriers. The idea of simply taking 2-3 years of benefits as a settlement in those cases is not properly protecting the claimants.

The Insurers will often test you and see whether you will take a lower lump settlement until the work is done to properly show them the exposure of a trial (unless they know that yourself and your counsel are serious about proceeding with litigation – in which case they will sometimes make more fair lump sum offers early on).

Make no mistake, that just because your long term disability insurer has denied your claim it does not mean that you are wrong, it does not mean that you are the only one and it is not the end of the road. You do not have to go through this alone. We are here to help. Please bear in mind that we do not take every case that we see – we take cases we believe in and support. We prefer to have a reputation of fighting from our feet rather than from our knees. We welcome your call and we hope that we can assist you.

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