Objective vs. Subjective Evidence – Bad Faith Long-Term Disability Claims

Many employers offer their employees the opportunity to buy into disability insurance benefits when hired. These benefits are meant to provide protection in the form of income continuance in the event an employee is not able to work due to injury or illness. These are sometimes described as “peace of mind” insurance contracts. Sometimes joining an employer’s group benefits plan is not an option and the premium is automatically deducted from an employee’s paycheque.

Most of us do not even think about what will happen financially in the event we get into an accident or suffer the onset of a serious illness. If you can no longer work as a result and you have the right level of insurance coverage, at least you know you have access to long-term disability (LTD) benefits, and will be protected because you pay your premium.

The sad reality is that even with payment of those premiums and a valid policy of insurance, there are many situations where the insurance company will improperly – sometimes negligently – deny your claim for LTD benefits.

Why Are Claims Denied?

Most LTD insurance policies in Canada require that the employee meet the definition of “total disability” in order to qualify for benefits. This typically means that, for the first two years of disability, the employee cannot perform the essential tasks of their own occupation due to the onset of injury or illness. After two years, the policy will typically change to being unable to perform any occupation for which the employee has training, education, or experience due to the onset of injury or illness.

Many LTD insurance policies are ambiguous as to what evidence is required to prove an employee cannot work. Discretionary decision-making powers about approving or denying benefits is often in the hands of the claim manager. For example, many policies require claimants to provide “sufficient medical evidence” in order to prove that they meet the definition of total disability. Whether or not that medical evidence is sufficient is entirely up to the claim manager to decide.

Often the insurer will distinguish between objective evidence (e.g. X-rays, MRIs, or other kinds of formal medical testing) vs. subjective evidence. Subjective evidence is largely based on the self-reporting of the employee’s symptoms to their medical professionals. Insurers are more likely to deny claims for LTD benefits without the support of objective evidence.

Proving Mental Health Claims without Objective Evidence

Without the support of objective evidence, it can be difficult  for many individuals to prove the extent of their disability. In situations involving psychological conditions, the diagnosis is often based on the subjective complaints of the patient.

Anyone who has suffered from severe depression or disabling panic attacks knows how seriously these conditions can impact a person’s ability to work. Unfortunately, insurers frequently deny LTD claims when the disability arises from mental health conditions.

Similarly, individuals who suffer from chronic pain conditions like Fibromyalgia, or those who have sustained mild traumatic brain injuries that do not definitively register on a medical imaging scan can also face additional scrutiny from their insurers when applying for LTD benefits. Without objective evidence, these applicants’ claims are often denied.

If a file has limited objective evidence, claim managers frequently send the claimant for a medical consultation before rendering a decision. This consultation is usually conducted by a medical professional who is hired by the insurer. This medical professional is hired to give an opinion as to whether the employee’s disabling condition is sufficiently severe to approve their application for LTD benefits.

However, this process can often feel like an echo chamber. Medical consultants often render an opinion citing insufficient “objective” evidence to account for the patient’s symptoms. Despite ample records of an employee’s subjective complaints, their claims may be disbelieved without measurable, observable proof.

How Can a Lawyer Help?

The failure to approve a claim based on lack of objective evidence can sometimes lead to a bad faith claim against the insurer. Insurers have a “duty of good faith” to their customers. Disabled policyholders who have paid their premiums and apply for LTD benefits should be able to access the coverage to which they are entitled.

An insurer’s duty of good faith requires them to assess a claim in a fair, reasonable and unbiased manner.  The claim manager must consider all the evidence that is provided. They should not cherry-pick evidence that supports a claim’s denial while disregarding evidence that supports an approval.

Individuals suffering from a disabling condition that is based largely on subjective evidence should provide as much supporting documentation as possible at their claim’s outset. Including letters from treating physicians or specialists with the claimant’s application for benefits can often provide additional context to the disability that may not be present in the medical charts. It can be very difficult for a claim manager to disregard a treating physician’s opinion that the employee cannot work when presented with a detailed explanation about the disabling condition.

If the insurer disregards evidence that would have clearly led to an approval of benefits, the employee may be entitled to both punitive and aggravated damages in a lawsuit.

Punitive damages arise where the conduct of the insurer is so egregious that the court seeks to punish the insurance company for their behaviour. For example, if an insurer completely disregards the supporting letters and evidence of treating doctors in favour of biased opinions from hired medical consultants, the claimant may be eligible to pursue punitive damages.  Aggravated damages might be awarded in situations where the actions of the insurer cause the claimant to develop additional emotional or mental distress.

By working with an Ontario long-term disability lawyer, insurance policyholders whose claims have been unfairly denied may be able to fight for the compensation and fair treatment they deserve. To learn more about the damages that might be available to you, contact us today and receive a free initial consultation on your case.

This article has been authored by John D. Philip.