Things don't always appear as they seem. When it comes to disability benefits claims, an insurer must look at the facts objectively and within context. Making assumptions or judgments could seriously interfere with the outcome and lead to a decision that not only puts the insurer at risk of further liability but also prevent the insured party's ability to obtain appropriate monthly benefits, adequate treatment and ultimately improvement.
Below are some signs an insurer has failed to adjudicate on a good faith basis:
An insurer has an obligation to act in good faith when handling an insured's claim for disability benefits. The following represent some claims handling approaches that could form the basis for additional heads of damages:
1. Ignoring treating practitioners' opinions, especially if they are specialists in their field
2. Comments between the claims manager and anyone else who is considered internal (or contracted through the insurance company) that would indicate:
- a. they are sorry for an unfavorable result (i.e., that the claim cannot be resolved or that rehab was not successful);
- b. they are making assumptions on a file not based on any documentation provided;
- c. they are misinterpreting the medical documentation;
- d. they are asking the Employer (i.e., insurer's client as a policyholder) how to proceed with the adjudication of the file; or
- e. they do not like the client or are making disparaging comments about the client and his/her medical condition.
3. Failing to assign a new claims manager to a file when the relationship between the claims manager and the client has broken down.
4. Suggestions made by a medical consultant, rehab specialist or even the claims manager that are not followed through, prior to a denial.
5. Failing to submit the file to the medical consultant prior to denying benefits (i.e., the claims manager is not qualified to deny benefits based on medicals where no opinion has been provided that the client can return to work).
6. Taking statements in medical records or statements made by the client out of context in order to deny benefits.
7. Not following up for medical records and denying the claim based on insufficient medicals.
8. Denying benefits because the insurer's own rehab team thinks the client is ready to return to work. The claims manager has to investigate further to determine if the client's treating practitioner(s) agree with a return to work. At the very least, it should be reviewed by a medical consultant (i.e., a doctor, not a PT, Chiro or OT) to determine a readiness for return to work.
9. Assuming that the client is no longer disabled because the treating practitioner approves a return to work program. Further, when the client cannot complete the return to work program due to their disabling condition and a denial of benefits is issued in any event due to their "lack of cooperation" with the return to work plan.
10. Terminating benefits where the claims manager ignores the remainder of the medical documentation (which may evidence total disability) when the claims manager sees that there may have been: work stress; workplace issues; performance issues; or notes in the GP's clinical notes and records about not enjoying his/her job. The claims manager needs to investigate further by asking:
- a. if there were other stressors in the claimant's life other than work stress that lead to a psychiatric illness; or
- b. is the client's disability even related to whether he/she enjoyed the job?
11. Not paying benefits while adjudicating the file, including when they are assessing the file at change of definition. In some cases, it's been seen that an assessment can take 6 months, during which the client is not being paid, but does not have a denial on the file. Benefits ought to be paid during this time on a good faith basis.
12. In relation to pre-existing clauses, there are times when a client will be disabled from a series of medical problems. For instance, they could have fibromyalgia, depression and carpal tunnel syndrome. Did the claims examiner deny benefits based on just one of these conditions due to it being a pre-existing condition? The claims manager has a duty to investigate further by asking:
- a. Is the client disabled from either or both of the other two conditions, without the pre-existing condition?
- b. If so, the claim should be approved.
13. Where a denial of benefits occurs based on a few days of innocuous surveillance. Often surveillance can be explained away. In fact, we recently had a file where the client suffered from chronic fatigue. Her vehicle was parked in the garage, but since the investigator did not see any movement from the house and did not see the vehicle, it was concluded that the client was away on holiday. This is also another example of assumptions being made.
- a. The case manager has a responsibility to objectively look at the surveillance.
- b. The case manager has a responsibility not to come to the same conclusions on the surveillance as the investigator, without proof that the assumption is actually a fact.
- c. In the case above, the client was actually house bound most of the time due to her fatigue and she slept 18 hours per day which is why no activity was observed by the investigator. However, the claims manager adopted the investigator's assumption that the client was on holidays and denied her claim on this basis.
- d. The case manager has an obligation to review this surveillance with the client's treating practitioner if they are going to rely upon it for the denial of benefits.