Why are employees not challenging the insurance companies to prove their adjuster’s medical qualifications when claims are denied?
Question: I was just reading the recent Keays v. Honda decision and it raises the following questions to me.
In my experience with short-term or long-term disability the insurance company adjusters review and make decisions on medical information to support a claim. Having worked in the insurance industry I know these claims adjusters are not medical doctors nor have they had medical training but in almost all cases the employer defers to the insurance company adjusters as “the experts.”
Why are employees not challenging the insurance companies to prove their adjuster’s medical qualifications when claims are denied? How can a medically unqualified insurance adjuster deny a claim when evidence is provided by a medical specialist (such as a qualified physician)? Does an employee have any legal recourse against the insurance company?
Answer: The issue of why people who are not trained medical practitioners are making decisions to approve, deny, or cut off disability benefits is an interesting one. At a theoretical level, one would argue that these are important decisions, affecting people’s livelihoods, and should be left to the experts. Practically speaking, however, insurance companies do not want to pay doctors to review these files. It is far more cost-effective to have their adjusters do so, with input from medical practitioners as needed.
Legally speaking, the insurance companies don’t have a specific obligation to consult with medical practitioners before making the decision to deny or discontinue benefits. They do, however, have a duty to act in good faith. That was confirmed not too long ago in the Whiten v. Pilot Insurance case, where substantial punitive damages were awarded against an insurance company that acted in bad faith toward its insured. Although that case did not involve disability benefits, the same principles apply.
The reader asks why employees are not challenging insurance companies to defend decisions to deny coverage, and whether employees have legal recourse in such circumstances. The answer to the second question is yes, they do. I have several ongoing files which involve a claim arising out of either a denial of coverage, or a discontinuance of benefits. In all of these cases, at some point along the way, a determination was made that the individual in question was fit to return to work or, for some other reason, did not qualify for benefits. In one, it was based on the determination that the individual was not under appropriate medical care. In each case, the employee disputes that decision and points to medical information from their own doctors to defend their position.
If a court agrees with the individual, it can order that benefits be reinstated, along with retroactive payments for the time during which benefits were not paid. The insurer can, in appropriate circumstances, be ordered to pay punitive or aggravated damages as well. A recent case that went all the way to the Supreme Court of Canada provides a good example. In Fidler v. Sun Life Assurance Co. of Canada, the worker received long-term disability benefits for six-and-a-half years due to her chronic fatigue syndrome and fibromyalgia. The insurer had her put under surveillance and obtained a videotape of her driving, shopping, and climbing into the rear of her vehicle. Without any medical evidence that she could return to work, the insurer terminated her benefits. Fidler sued. Very shortly before trial, the insurer agreed to reinstate benefits. The trial proceeded on the other claims for damages, and after a trial and two appeals, Fidler also received additional damages for mental distress.
Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672 or by e-mail at [email protected].
In my experience with short-term or long-term disability the insurance company adjusters review and make decisions on medical information to support a claim. Having worked in the insurance industry I know these claims adjusters are not medical doctors nor have they had medical training but in almost all cases the employer defers to the insurance company adjusters as “the experts.”
Why are employees not challenging the insurance companies to prove their adjuster’s medical qualifications when claims are denied? How can a medically unqualified insurance adjuster deny a claim when evidence is provided by a medical specialist (such as a qualified physician)? Does an employee have any legal recourse against the insurance company?
Answer: The issue of why people who are not trained medical practitioners are making decisions to approve, deny, or cut off disability benefits is an interesting one. At a theoretical level, one would argue that these are important decisions, affecting people’s livelihoods, and should be left to the experts. Practically speaking, however, insurance companies do not want to pay doctors to review these files. It is far more cost-effective to have their adjusters do so, with input from medical practitioners as needed.
Legally speaking, the insurance companies don’t have a specific obligation to consult with medical practitioners before making the decision to deny or discontinue benefits. They do, however, have a duty to act in good faith. That was confirmed not too long ago in the Whiten v. Pilot Insurance case, where substantial punitive damages were awarded against an insurance company that acted in bad faith toward its insured. Although that case did not involve disability benefits, the same principles apply.
The reader asks why employees are not challenging insurance companies to defend decisions to deny coverage, and whether employees have legal recourse in such circumstances. The answer to the second question is yes, they do. I have several ongoing files which involve a claim arising out of either a denial of coverage, or a discontinuance of benefits. In all of these cases, at some point along the way, a determination was made that the individual in question was fit to return to work or, for some other reason, did not qualify for benefits. In one, it was based on the determination that the individual was not under appropriate medical care. In each case, the employee disputes that decision and points to medical information from their own doctors to defend their position.
If a court agrees with the individual, it can order that benefits be reinstated, along with retroactive payments for the time during which benefits were not paid. The insurer can, in appropriate circumstances, be ordered to pay punitive or aggravated damages as well. A recent case that went all the way to the Supreme Court of Canada provides a good example. In Fidler v. Sun Life Assurance Co. of Canada, the worker received long-term disability benefits for six-and-a-half years due to her chronic fatigue syndrome and fibromyalgia. The insurer had her put under surveillance and obtained a videotape of her driving, shopping, and climbing into the rear of her vehicle. Without any medical evidence that she could return to work, the insurer terminated her benefits. Fidler sued. Very shortly before trial, the insurer agreed to reinstate benefits. The trial proceeded on the other claims for damages, and after a trial and two appeals, Fidler also received additional damages for mental distress.
Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672 or by e-mail at [email protected].
