Financial advice important for long-term-disability recipients | Courtney Mulqueen
Thursday, October 12, 2023 @ 9:43 AM | By Courtney Mulqueen
Because LTD claimants are off work, they may not have the resources to pay for such basics as rent and food, much less treatment. Seeking financial aid is one option but any assistance received could affect an insurance claim.
People may struggle without an income for several months and sometimes even years while managing serious medical conditions that often impair their cognition. They may not understand their eligibility and the impact that those other benefits could have on their LTD claims and their long-term financial situation.
There are some government programs available but it is important to know how they work. Getting advice early can go a long way to ensure their claim is not jeopardized or they are not causing any sort of repayment obligation later.
Those who make an LTD claim typically have short-term disability coverage as part of their workplace insurance to tide them over. When that runs out there is assistance such as Canada Pension Plan disability benefits and EI sickness benefits.
However, there can be confusion about what program to access.
For instance, there is a difference between employment insurance benefits and EI sickness benefits that some people do not understand. With regular EI, you have to be available to work, and you must attest to that. If you are saying you are ready, willing and able to work, then that is contrary to your LTD claim because obviously, if you have a disability, you are unable to work.
I have also counselled LTD claimants who received the Canada emergency response benefit (CERB), which provided financial support to Canadians directly affected by COVID-19.
There was initially confusion about who was eligible for the benefit, and it could be argued the criteria were not specific enough. For example, those who stopped working because of reasons related to the pandemic or who were eligible for Employment Insurance regular or sickness benefits could access the program. So, too, could those who did not quit their job voluntarily.
Some people may have believed they couldn’t work since their disability made them more vulnerable to COVID. And since they were unable to work because of their disability, they did not quit their job voluntarily.
As well, those with mental health or chronic fatigue issues may have struggled to comprehend the guidelines and may have been overwhelmed by the uncertainty of their situation. Some applied out of desperation because their LTD claim had been denied and they did not have income for treatment, let alone to meet their day-to-day living expenses.
It was a simple matter of “click, click, click” on the government website and suddenly there was money in their bank account. People who were at such a low point in their lives could now afford medication or the physiotherapy.
Clients have told me they received CERB either while their LTD was being assessed or while they were waiting for their appeal of a denial to be decided, and I have had to tell them that technically they would not have qualified if the reason they were not working was due to disability. Some were shocked to learn they must repay the benefit but many cannot afford to do that when they have no income from employment or LTD.
Another consequence of receiving CERB while awaiting an LTD claim approval is that insurance companies may attempt to claw back benefits.
Insurers may also use the fact that the person received these benefits to attack a person's credibility. In many LTD cases, we are arguing financial distress. Insurance providers counter that the claimant had some money coming in, so there really is no claim for hardship.
In my view, insurance companies who put very ill people in desperate financial situations by denying their claims should not then use the fact that they applied for other benefits to discredit or disentitle them from benefits.
The CERB issue is not unique to disability law. There has been conflicting case law across Canada about whether any money received from the benefit is deductible from damages in a wrongful dismissal case.
Although I am not aware of any court cases involving CERB and LTD claims, I suspect it is only a matter of time. It will have to come up at some point but, at this point, the majority of cases are not going to trial for the simple reason people cannot wait two or three years to get their day in court. Going to trial means the stress of litigation as well as not having any sort of income. Claimants would rather take some money now so they can focus on their recovery.
Insurers must take a realistic view of the circumstances. In most cities the $2,000 a month that CERB paid may not have been enough to even cover rent. There would be nothing left over for the treatment of a disability.
I have no problem with a claimant being required to repay a benefit if it was found they were not entitled to it. However, there should not be a reduction from any insurance settlement.
The bottom line is that those who are unable to work because of a disability need to be careful when applying for any benefit while waiting for their LTD claim to be resolved.
Courtney Mulqueen, of Mulqueen Disability Law, has over 20 years experience litigating disability claims. Her focus and passion is representing disabled plaintiffs who suffer with complex “invisible conditions” like mental health and chronic conditions that are difficult to prove, diagnose and treat.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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