understanding how to apply for damages in long-term disability claims
3 minute read
when an experienced disability lawyer meets with an individual who has been denied ltd benefits, one of the first things he or she should do is look through the claims file.
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if you have been improperly denied long-term disability (ltd) benefits in a way that caused additional harm to your financial, emotional or mental wellbeing, did you know you could be entitled to receive compensation?
not every case gives rise to these extra-contractual damages—more commonly known as punitive and aggravated damages—but some certainly do.
punitive damages are punishment-oriented and act as a deterrent to bad faith conduct of an insurance company. essentially, punitive damages are awarded to deter the insurance company from engaging in similar behaviour with other claimants.
to be awarded punitive damages, a plaintiff must prove that the insurer was acting in a high-handed or malicious manner. bad faith conduct goes well beyond the insurance company making an honest mistake. it’s important to note that not all bad faith conduct gives rise to punitive damages, but all punitive awards involve bad faith conduct.
punitive damages can be significant
punitive damages are rarely awarded in canada, but there have been some significant cases where plaintiffs have been awarded between $10,000 and $1 million, depending on the conduct. but just because an insurance company acts in bad faith doesn’t mean a claimant will be awarded damages. they are the exception rather than the rule.
aggravated damages are compensatory and arise out of the failure of an insurance company to pay disability benefits or for their conduct that resulted in a failure to pay.
for example, if your insurance company’s refusal to pay benefits resulted in mental distress and financial hardship, you could seek aggravated damages. however, in canada, the awards for aggravated damages are in the range of $10,000 to $100,000, and most are on the lower end of the scale.
in one recent case, the ontario superior court of justice felt the plaintiff met the test for disability concerning her “own occupation.” she was awarded $10,000 for the mental distress caused by the insurer’s breach of the duty of good faith.
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in another decision by the british columbia court of appeal, the appellant challenged the trial judge’s decision not to award her a lump sum payment of future long‑term disability benefits or punitive damages after finding her insurance company had breached its duty of good faith.
while the appeal was dismissed, the injured women did receive $30,000 in aggravated damages for mental distress at the trial level. although it’s a mixed result, it’s still a win for the plaintiff, because she received aggravated damages in addition to the payment of the “own occupation” benefits.
aggravated damages are easier to obtain through the courts than punitive damages and both damages are not readily awarded in canada. they are possible, however.
one rare case in ontario filed by a hospital employee who suffered a stroke but was denied ltd, resulted not only in retroactive benefits paid to her plus aggravated damages for mental distress, but punitive damages of $1.5 million against the large insurance company.
impact of ltd denial on wellbeing
when an experienced disability lawyer meets with an individual who has been denied ltd benefits, one of the first things he or she should do is look through the claims file. this is an essential part of the process, because the file—which contains all the comments, emails and notes about their claim—gives insight into the mindset of the person who has been handling the claim and any biases they may have in terms of how they treated the client throughout the process.
concerning aggravated damages, a good lawyer will look at the impact the denial of ltd benefits had on your financial, emotional and mental wellbeing. for example, what steps did you take to make ends meet? did you have to sell your home? did you lose relationships? it’s important to detail the extent of mental distress, because you will be compensated for the level of your damage.
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if your ltd claim has been denied or terminated, contact an experienced disability lawyer right away. your insurance company may offer an internal appeal process, but it’s akin to the right hand judging the left. these appeals rarely result in a different decision.
not every case gives rise to punitive or aggravated damages, but some certainly do.
nainesh kotak is the founder of kotak personal injury law, a firm focusing on protecting their client’s rights to justice and obtaining the compensation their clients deserve. he is a member of the ontario justices of the peace appointments advisory committee of the central west region and was past chair of the long-term disability section of the ontario trial lawyers’ association.
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