How will my LTD case settle?

I have spent many years representing people across Ontario whose short-term disability (STD) and long-term disability (LTD) claims have been denied or terminated.

In previous articles, I have discussed how you can decide whether to appeal the insurance company’s decision or start a lawsuit and explained the steps in an LTD lawsuit and how your lawyer can move your case toward a settlement quickly and efficiently.

The great news is that the vast majority of lawsuits settle out of court. But the quality of the settlement depends on the strength of your case and on the work your lawyer has put in before the settlement negotiation even starts. That means understanding the terms of your policy and how they apply to your situation and it means building a strong case with medical records and medical and vocational experts. Your lawyer should begin building your case the very first time you meet or speak on the phone.

But what does it mean to settle your LTD case? What will a settlement look like?

Two kinds of settlement

There are two kinds of settlement: reinstatement and full and final settlement.

• Reinstatement means that the insurance company reverses their position and starts paying you benefits. They will also have to pay you benefits for the period of time between when they denied your claim and the day of the settlement, with interest. Finally, they will be required to pay a portion of your legal expenses – after all, if they hadn’t denied your claim in the first place, you wouldn’t have needed to hire a lawyer.
• A full and final settlement means that the insurance company will write one cheque to cover all of your past and future STD and LTD entitlement. They may pay you benefits for years into the future, all at once. This can be a very significant amount of money. In exchange, you give them a release stating that your claim has ended. They will also have to pay a portion of your legal expenses to settle the case.

You may be surprised to learn that full and final settlements are more common than reinstatements. Insurance companies like full and final settlements because they are able to close their files. Often, people who have been denied benefits by their insurance company want to end the relationship as well, because dealing with their insurance company has been stressful and they do not trust their insurance company to continue paying their benefits in the future.

What about other types of benefits?

Clients often worry that settling their LTD cases will mean that they lose the other benefits they have through work, like prescription drug, dental, and extended health benefits. Younger clients also wonder what will happen if they return to work but become disabled at some point in the future. Will they still be able to claim disability benefits if they need them in the future?

The simple answer is that you don’t need to agree to give up anything that you are not willing to give up. Your lawyer must carefully review the terms of any proposed settlement and ensure that your rights and entitlements are protected. Your lawyer should discuss the terms of the proposed settlement with you to ensure that it protects the benefits that are important to you. If the proposed settlement doesn’t protect those benefits, then your lawyer should demand a deal that does.

A settlement is within reach

I have seen how shocking it can be for my clients when they receive a letter from their insurance company denying or terminating their disability claim when they are still not well enough to return to work. They worry about how they will make ends meet without the support of their insurance. They can feel like giving up. But if you don’t let yourself become too discouraged and you take the right steps, a settlement may be closer than you think.