One of the most commonly asked questions of clients at my law firm is “how much is my case worth?”
This is never an easy question to answer. When assessing the value of a claim, particularly an LTD claim, there are a variety of factors which need to be examined such as:
- The age of the LTD Claimant
- The duration which benefits are payable under the policy (age 65 or earlier?)
- Were any back payments/arrears paid out by the LTD Insurer or not?
- The value of the monthly LTD benefit
- Are there any set offs which the LTD insurer is entitled to under the policy such as CPP, WSIB or otherwise
- Is there an all source maximum deduction at play
- What are the nature of the injuries causing the disability and are those injuries likely to heal
- What the claimant’s doctors have to say about a potential return to work
- What the insurer doctors have to say about the injuries and the potential return to work
- Has the insurer conducted any surveillance (real time, online, cyber or otherwise) and what does that surveillance show
- What sort of education, training and work experience does the claimant have
- Can the claimant read and write in English or French
- What is the employability potential of the claimant following the LTD claim
- Has there been any bad faith handling of the LTD file on the part of the insurer. If so, what is the nature of that bad faith claims handling and how has it impacted the claimant’s entitlement to LTD benefits?
The value of the LTD claim depends in large part on how the above noted questions are answered, amongst other factors which may be unique to one’s case.
Unlike other injury or accident cases, LTD claims are largely assessed based on mathematical equations. Take the value of the LTD benefit, less any off sets, by the number of months owing in arrears and future benefits owing by the insurer; et voila; you will have the maximum exposure owing by an insurer.
In a car accident claim, the award for pain and suffering, is somewhat subjectively based on historical precedent of cases built over the years. There are different heads of damages for car accident claims such as pain and suffering, past/future income loss, housekeeping claim, attendant care claim, claim for out of pocket expenses, claim for past and future care costs, claim for a modified home or vehicle, family law act claim for loss of guidance care and companionship etc. On the tort end of a car accident claim, there are a variety of heads of damages upon which to base a claim.
LTD claims are different because many of these heads of damages simply don’t exist. LTD claims are contract claims. No contract of insurance; NO CLAIM. Because they are contractual claims, they are based primarily on what’s contained inside of the policy and its wording. These are NOT claims for pain and suffering. These are claims for past and future benefits, based on an amount as defined and calculated pursuant to the policy. Therefore, establishing damages is not based on legal precedent. It’s based on what the policy says, along with the factors set out above.
So, while a lawyer in a car accident case can assess you damages for pain and suffering for a brain injury at $75,000-$150,000+ in general damages; the same cannot be said in LTD claims. Those case assessments and evaluations come down to straight math.
One of the common misconceptions with LTD claims is that insurers automatically pay out claims until the policy has ended. This happens in certain cases, where there’s a claimant who is approaching the end of duration of the benefits (like a 63 year old claimant where benefits go up to the age of 65).
In other cases, this simply doesn’t happen too often. A closed file for an insurer is a good file. And a clean breakup for a client with his/her insurer is often the best relationship. This doesn’t happen if the insurer re-instates benefits. This only happens if there is a full and final/lump sum settlement.
That lump sum, if there’s a young Plaintiff will not reflect 100% of the totality of the claim. There’s a good reason for this. Let’s take the example of a 40 year old postal worker who has been diagnosed with fibromyalgia and chronic pain. They cannot return to work at all. They would have worked up the age of 65; and their LTD benefits are payable to 65; but the LTD insurer has refused to pay any benefits because they don’t believe the person is disabled and they don’t believe that fibromyalgia is a disabling condition; or that it exists at all. The insurer and their doctors believe that it’s all in the worker’s head.
In such an example, benefits would be paid for another 25 years or 300 months. If the monthly LTD benefit amount of $2,100/month; then $2,100 x 300 months = $630,000.
That’s a lot of money. Let’s assume that the insurer pays $630,000 to the claimant, representing 100% of the LTD claim.
Let’s assume that two days after the cheque is cashed, that the claimant dies. Does that seem fair to the insurer having paid for LTD benefits up to the age of 65, but the person does well before that time? Should the estate have to return the money? Should the insurer get their money back?
In the same example, let’s assume that the injured worker gets better, and finds another job which pays $15/hr. Now they have a lump sum of $630,000, and they are receiving an income of $15/hr. Does that seem right?
In both of those examples, the deal for the Plaintiff is amazing. The deal for the insurer is terrible.
Insurer aren’t stupid. They know these deals aren’t favourable. This is why they rarely pay out on 100% of the claim. Even if you went to Court and won your case a trial, a Judge CANNOT ORDER an insurer to pay out 100% of your future benefits. All the Judge can Order is that the insurer pay 100% of the arrears, plus interest, plus put the Plaintiff back on claim.
Once a Plaintiff is back on claim, they are still subjected to the same rules and regulations as would apply to any normal claimant. Hence, they would need to attend Insurer Examinations when asked to do so, be vulnerable to surveillance, and need to get their family doctors to provide regular reporting on the status of their injury and disability. The relationship between claimant and insurer continues until the term of the policy has come to a close.
The lump sum is also subject to a present value or discount rate. This is an economics term, whereby the value of a dollar today, is worth MORE than the value of a dollar tomorrow. Hence, a discount rate is generally applied to lump sum settlements. Read more about discount rates and present value calculations and how they work here.
If you need more information about how to calculate and assess your LTD claim, give our office a call.
Enough law talk? Sure. Was anyone else shocked that LeBron James didn’t win the NBA Finals MVP or was it just me? How does a guy who carried a team on his back throughout the entire playoffs not deserve the award. Igudola winning the MVP award was based on the premise that he was able to defend LeBron. While I admire and respect Iggy, that’s not what the MVP award is about. Take Iggy off the Warriors and they still have a chance of winning the NBA championship. Take LeBron off the Cavs and they get swept handily by the Warriors. When did the NBA and its writers turn so hard against LeBron. In 50 years we will all look back on the decision to snub LeBron from this individual award and laugh. He was snubbed. No ifs, ands or buts about it.