howard levitt: the top 10 reasons insurers deny long-term disability claims
many ltd claims are denied or discontinued prematurely, leaving claimants in financial peril
sep 18 2024
5 minute read
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by howard levitt and rob lilly
untangling the complex web of long-term disability (ltd) insurance is challenging and even more so when you are ill. for many, the promise of financial support during impairment is a lifeline. the reality is that many ltd claims are denied or discontinued prematurely, leaving claimants in financial peril without any source of income. to understand the rationale behind these decisions, here are the top 10 most common reasons insurers deny or discontinue ltd benefits, and how we have assisted our clients to overcome them.
insufficient medical evidence
insurance companies require comprehensive documentation to substantiate a disability claim. this includes detailed medical records and diagnostic test results. claimants who provide their doctors with meticulous descriptions of their symptoms and limitations are more likely to be approved. stoicism has no role here. you are your own best advocate. the more evidence of disability you can provide your doctor, the better.
non-compliance with treatment
insurance policies invariably mandate that claimants must adhere to prescribed treatments, medication and therapies. failure to comply with medical advice may be viewed as deviating from policy requirements. those who do not follow their doctor’s remedial plan do so at their peril. the treatment plan, however, must be reasonable and within the claimant’s financial means.
the corollary is that insurers should not penalize a person suffering from depression, for example. who has insufficient income to pay for the recommended psychotherapy — especially if they have exhausted their group benefits, or worse, have none.
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pre-existing conditions
if a person’s disability is linked to a condition that existed prior to the commencement of the policy, the claim could potentially be denied. however, a pre-existing condition is not carte blanche to deny a claim, and not all policies are the same. some policies allow for a pre-existing condition if the person does not make a claim for ltd based on that preexisting condition within a certain period of time after joining the ltd plan (often one year). other policies allow claims for a pre-existing condition that was treatment- or symptom-free for a certain period of time before joining the plan. a lawyer experienced with ltd can review the plan’s terms along with your medical history and determine whether you have a viable claim.
surveillance and social media
insurance companies employ surveillance tactics. this can include monitoring your social media accounts to compare posts of your recent vacation trekking in machu picchu against what you have told the insurer about your restrictions. insurers will even hire private investigators to follow you. if an insurer discovers that you have contradicted your reported limitations, the odds are that your benefits will stop. be mindful of your online presence and avoid activities that could be misinterpreted.
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policy definitions and terms
perhaps the most common reason for discontinuance is when the eligibility for benefits changes (usually at the two-year mark) from whether you can work in your “own occupation” before two years versus “any occupation” — a much tougher test — after two years. a person may be considered disabled under one definition but not the other. do not be fooled into thinking “any occupation” includes flipping burgers, which lands you a fraction of your previous earnings at the bottom of the corporate ladder. the analysis involves an earnings threshold for the new job — often between 60 and 70 per cent of prior income — and mandates comparable status to your previous role. more often than not, a change in definition denial is overcome with a legal claim along with your doctor’s support.
inconsistent or contradictory statements
consistency is key when dealing with ltd claims. any discrepancies in your statements, medical records, or activities will raise flags. be honest and consistent in your communications with your doctors and your insurers. as a quid pro quo for ltd benefits eligibility, the insurer has a contractual right to your ongoing medical records. expect to provide your insurance company with full disclosure. there is no such thing as medical privacy rights (unless you are prepared to be denied ltd benefits).
administrative and procedural errors
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administrative or procedural errors include missed deadlines, incomplete forms, or failure to provide requested information. our firm often defeats these “form-over-substance” arguments if the claim is brought within the two-year limitation period from the denial of your claim. but why start behind the eight ball when these errors can often be easily avoided? be diligent in following the claims process and ensure that all paperwork is submitted accurately and on time.
independent medical examinations (imes)
insurance companies may require claimants to undergo imes conducted by physicians chosen and, most importantly, paid for by the insurer. some of these doctors are cognizant of “who butters their bread” when arriving at an opinion as to whether or not you are disabled, contrary to your own doctor’s opinion. they often do not do a very deep scrutiny and they generally do not even meet with you, relying only on medical records instead. armed with the ime report, the insurer may deny the claim. in these cases, our practice is to obtain a rebuttal report from an independent medical expert who specializes in your condition and examines you.
vocational assessments
insurance companies may conduct vocational assessments or transferrable skills analyses to determine if you can perform any type of work, even if it is different from your own occupation. like insurer funded imes, these reports are also susceptible to attack. many times the assessors propose jobs that involve much less pay, lower status and occasionally locations outside of your province.
changes in medical condition
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insurers will ask for updated records throughout the claims process. they may rely on documented improvements in your condition to discontinue your claim. improvement is not tantamount to full recovery. after all, while many people improve somewhat with treatment, that does not mean they are able to fulfill the essential duties of a job. to avoid an insurer snapping up any positive updates in your condition, make sure your doctor qualifies such improvements against your ongoing restrictions.
howard levitt is senior partner of levitt llp, employment and labour lawyers with offices in ontario, alberta and british columbia. he practises employment law in eight provinces and is the author of six books, including the law of dismissal in canada. rob lilly is a partner at levitt llp.
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