Harold Levitt
Oct. 23, 2020
There are four main reasons for denial
COVID-19 can cause blood clots which, in turn, causes strokes, leading to extensive medical intervention, physiotherapy and speech therapy. A case involving those very issues is one of many COVID-related disability cases my firm is handling against insurers.
Recently, I wrote about long-term disability claims in the age of the pandemic, but that’s only one aspect of a disabled employee’s claim. Another, often overlooked claim, is critical illness insurance. One of our employee client’s human resource department — intentionally or by oversight — missed that critical illness insurance component. When our client requested her group insurance forms, her HR department provided only the standard short-term disability and LTD forms. She was told nothing about the critical illness insurance that she also had available. She was fortunate to have it.
What is critical illness insurance? Most employees have it as part of their group benefits — in addition to LTD coverage. It provides a one-time lump sum payment for a confirmed serious medical condition. A tax-free silver lining to an unfortunate diagnosis. Critical illness policies typically cover the gambit of major illnesses such as cancer, stroke, heart attack, multiple sclerosis, paralysis, Parkinson’s and Alzheimer’s disease, to name a few.
It differs from long-term disability insurance which protects your employment income. There is no requirement to even be working under critical illness policies. It also covers you to age 75 or even 100, much longer than LTD coverage which always ends at 65. You just need to prove the diagnosis occurred to receive the critical illness payment, whereas you need to prove an ongoing inability to work to receive monthly LTD benefits.
One would assume critical illness payouts would therefore be much easier to obtain from insurers than LTD benefits, which require medical proof of an ongoing inability to work and adherence to a treatment plan. After all, if you contract cancer or have a heart attack, you should receive a $100,000 payout, right? Unfortunately, it’s not that simple. It is therefore important to know why insurers deny claims and how a skilled disability benefits lawyer can assist.
There are four main reasons for denial.
The first is death. Most critical illness policies require a survival period of 30 to 90 days after diagnosis. If the policy holder passes away during this time, there is no payout. A lawyer cannot do much to assist.
A pre-existing illness is another. Policies (albeit no two are the same) will not usually cover you for illnesses or symptoms associated with the critical illness if you saw a doctor for them in the year before you started the policy. A proverbial gray area in which a lawyer can indeed help. For example, in one case a man had reduced function in his leg and arm. Neither he, nor his doctor, ever associated the symptom with Parkinson’s disease prior to obtaining coverage. Shortly after purchasing the policy, he was diagnosed with Parkinson’s. The insurer denied the claim based on the prior symptoms’ exclusion. But with the assistance of counsel, the court ruled in his favour by construing the technical exclusion clause narrowly against the insurer. The point being, pre-existing illness clauses are susceptible to attack.
Third, claims that do not fall within the list of covered illnesses or the precise definition of a particular illness are also denied. If it’s not on the list, there is no coverage, and not much can be done about it. Whether the illness meets the definition is another gray area, however.
For example, one of our clients fought with an insurance company for months over whether he, in fact, had suffered a heart attack. It was seemingly an obvious approval. But, the technical policy definition of “myocardial infarction” (aka heart attack) was enough to make most readers’ eyes gloss over. We obtained and submitted the proper cardiologist reports along with an opinion from an independent medical professional to bolster our position. The claim was paid.
Finally, if you lied or omitted information on your medical application, your claim may be denied. If you are part of a group plan with critical illness insurance, you are automatically covered without an application, so this won’t apply to you. For those required to complete an application, be truthful and forthcoming. Although if you made the misstatement innocently or without proper case, a lawyer may be able to fight the denial.
Eight months into the pandemic, COVID-19 is not about to end. The second wave resulted in a tsunami of disability and illness related claims. Critical illness insurance is one way to obtain peace of mind. It is offered as a stand-alone benefit or as a complement to LTD coverage. I encourage employees to review their group benefits policies for critical illness insurance. Ask your employer about it. Employers should consider adding it to coverage to protect employees during vulnerable times. While the first client I discussed was successful in obtaining LTD benefits following her stroke, she also obtained a sizable lump sum payment for critical illness insurance that she did not even know she had. With the lump sum, her spouse was able to take months off from work and the two relocated to another city for experimental treatment. Something they could never have afforded with LTD benefits alone.
