The personal injury lawyers here at my law firm, Goldfinger Injury Lawyers have developed a unique term for certain long term disability cases.
We call it getting “mathed out“.
What does it mean to get “mathed out“? It means that the math is working against you to defeat your claim, regardless of the merits of your disability.
Let’s explore how long term disability cases work.
These are cases which are based in contract. That contract takes the form of an insurance policy. Often we see our claimants with group policies, which contain sections for health, dental, life, and long term disability insurance. These group policies are a perk of employment (a benefit). Had the person not been gainfully employed, they would not have been covered under the policy; hence they would have no cause of action.
Some employees don’t have any benefits whatsoever, so if they don’t have their own personal long term disability insurance, they won’t have a cause of action.
On one hand the claimant needs to be thankful that they have a policy or long term disability coverage to lean on. But on the other hand, many claimants get upset that the policy seems to work in favour of the insurer and not the other way around.
The wording contained in these policies is written by large insurers. Because large insurers write the policies, you can expect that they contain a lot of favourable clauses protect their own interests and not yours. Why would you expect an insurer to draft a policy that doesn’t work in their favour? We just don’t see this sort of thing.
Some people are clearly disabled. One would think this bodes well for a large award. Strong injuries/strong disability should equate to a strong award.
But that’s not true in long term disability cases.
Because of the way which long term disability contracts are worded, personal injury lawyers like Brian Goldfinger have to look to other factors outside of the disability which will have a significant impact on the amount of money compensable in a long term disability claim.
Let’s assume that the claimant is very disabled. For arguments sake, this Plaintiff is the MOST DISABLED person on the face of the earth. Despite that, the insurance company was willfully blind and denied their benefits after the two year mark on account of a defence medical report from one of their quack doctors which provided an erroneous medical opinion unsubstantiated by any real medical evidence.
The Plaintiff will likely succeed in recovering benefits. But for how much?
Removing from the equation any claims for aggravated damages, punitive damages, damages for mental distress etc., what are the outstanding benefits owing to this seriously disabled person? This all depends on certain variables:
- What is the age of the claimant? If the claimant is 64 years old, and long term disability benefits only go up to age 65, then you can only fight over 1 year of benefits. That’s it. This is what we call at Goldfinger Injury Lawyers getting mathed out of a claim.
- What was the person’s pre-disability salary? Was the person a high income earner or not? If the person was making under $20,000/year ($1,666 gross per month). This translates in to a $1,166/month long term disability benefit at 70% or just $13,994/year (without set offs!). To put things in to perspective two years of max benefits at this rate are just over the Small Claims Court Limits of $25,000 (*Note that Long Term Disability Claims cannot be litigated in Small Claims Court if your are seeking declaratory relief).
- What are the applicable set offs to the monthly long term disability amount? Let’s say that the totally disabled person who earned $20,000/year as a hotel housekeeper was approved for CPP Disability Benefits. They were receiving $800/month on CPP Disability Benefits. The way that long term disability policies work is such that the long term disability insurer is entitled to a dollar for dollar set off for any disability pension payment made. In this case, the monthly long term disability amount of $1,666 is reduced by the CPP Disability of $800/month for a new long term disability total of $866/month or just $10,392/year.
- Is the Long Term Disability Benefit taxable or not? Some policies provide for taxable benefits. Others don’t. The case where benefits are taxable, the arrears are taxable. The tax owing is withheld by the long term disability insurer and paid directly to Revenue Canada. It use to be that you were expected to pay the tax directly to Revenue Canada, but too many people weren’t. So the laws were changed such that the insurer withholds the taxable portion and pays it direction to Revenue Canada. This translates in to less money in your pocket. Future benefits are NOT taxable. The more money can be allocated towards payment of future benefits, the more money you will get in your pocket. On the $10,392 annualized arrears owing, if you have to pay any of it back to Revenue Canada, you simply get less money. You are being mathed out of a claim through no fault of your own.
- Did you take out a litigation loan? If so, you will need to pay the loan company from the proceeds of settlement, with interest. The loan with accumulated interest will bite in to your total recovery in the case. In some circumstances, clients need to take out loans on account of extenuating circumstances. But when this happens, be aware that the tab when the case settles can be more than what you expected.
- Did the Plaintiff at any period of time return to work, or earn any income? This is a significant question because it will have an impact on the duration of benefits, and the quantum of benefits. Sometimes the return to work trial can work in a Plaintiff’s favour because it shows they were doing their best to re-enter the workforce and move on with their lives. If they couldn’t keep up with the demands of the workplace, it shows the insurer that their disability is real and not fictituous. The Plaintiff did their best to mitigate their damages and did not rest of their laurels.