My Disability Claim Was Denied: Should I Appeal or Sue?

I represent people across Ontario whose short-term disability (STD) and long-term disability (LTD) claims have been denied or terminated. One of the first questions new clients ask me is whether they should appeal the insurance company’s decision or just go ahead and start a lawsuit. It’s up to you. You do not need to appeal before you proceed with a lawsuit. In my practice I help people with both lawsuits and appeals.

What’s the difference between appealing an STD or LTD denial and suing?

An appeal is the insurance company’s own internal process for deciding if they want to reverse their own decision to deny you benefits. It is not a review of the decision by a neutral third party. Starting a lawsuit, by contrast, tells the insurer that you do not accept their decision, and either they will start paying you benefits, agree to a settlement with you, or else you will let a court decide whether you are entitled to benefits. A lawsuit takes the decision out of the insurance company’s hands.

When does it make sense to appeal an STD or LTD denial?

There are circumstances where an appeal makes sense. For example, sometimes an insurance company’s decision is based on incomplete information or documentation. Maybe the insurer has only heard from your family doctor and doesn’t know that you have also been seeing a specialist who agrees that you are not ready to return to work. Maybe you have recently undergone imaging or testing that resulted in a clear diagnosis that the insurer does not yet know about. In these cases, I often help clients prepare a brief appeal letter enclosing the new medical information.

However, most appeals are not successful, especially when there isn’t a substantial amount of new medical information to provide. You send in your appeal letter, wait a month or more, and the insurer finally sends you a letter maintaining its original decision. They may offer you the chance to make another appeal. Some people choose to appeal as many as three times. Months later, they are often exactly where they started. Insurance companies would prefer not to be sued and they know that while you are appealing, you aren’t suing. I generally do not recommend that clients appeal more than once.

When should I start a lawsuit for an STD or LTD denial?

There are strict time limits for starting a lawsuit – in most cases, if you do not start a lawsuit within two years of the first time the insurance company denied your benefits, you will lose your right to sue. Appeals do not extend this deadline.

Just as importantly, if you spend months appealing the insurer’s decision, those are months when you aren’t receiving a salary or disability benefits, causing your financial situation to get worse and worse. This increases the risk that you will feel compelled to attempt a return to work before you are ready, possibly compromising your health even more.

So, should you sue right away or try appealing first? Here’s the short answer.

If there is a substantial amount of important medical documentation that the insurance company did not have when they made their decision to deny or terminate your claim, it may be beneficial to write an appeal letter providing that documentation to them. However, if you believe that the insurance company already had all the information they needed to make the right decision, an appeal is unlikely to change their decision and you would likely be better off simply starting a lawsuit.

It is best to get started with an appeal or a lawsuit as soon as reasonably possible. A lawyer can help you with both. The court system in Ontario can take time, even when your lawyer is committed to moving your case forward quickly and efficiently. The first step is calling a lawyer for a free consultation, so you can get advice about whether to appeal or sue that is tailored to your personal situation and the facts of your case.