Personal injury lawyers acting for disabled clients are forced to routinely navigate a myriad of insurance company procedural roadblocks erected to make it more difficult for legitimate claimants to receive fair compensation. Some tactics are more frustrating than others and can delay the resolution of a long-term disability claim by months or years.
However, the Ontario Superior Court of Justice decision in Heathcote v. RBC Life Insurance Company is a significant case that may assist in bringing about increased insurer transparency and accountability and untangling some of the procedural knots that can tie up the litigation process.
One of the problems that claimants often face is a lack of understanding about what materials adjusters consult and rely on in adjudicating on a file. As a result, many Plaintiffs are forced to bring motions to force the production of relevant documents.
In Heathcote, Justice Joseph R. Henderson was asked to decide such a motion. He considered several production requests from the plaintiff and, in a well-reasoned and balanced decision, he ordered production of many (but not all) of the background materials that plaintiff's counsel had requested. His ruling is a welcome step forward and may assist in shining a light on disability insurers' systemic biases in the training and handling processes that are potentially unfair to insurance claimants.
Aim Was to Get a Better Understanding.
The decision comes after the plaintiff, who has been on long-term disability since October 2019, sought to compel RBC Life Insurance to fulfill outstanding undertakings and answer questions refused at discovery. The aim was to get a better understanding of the adjuster's training and to compel production of the manuals and the learning materials that the adjuster relied upon in adjudicating Heathcote's insurance claim.
In disability insurance claims litigation, it is important to understand the basis for the insurer's decision to deny or discontinue benefits. An important step in understanding the insurer's conduct requires learning who made the decision to terminate and why they decided to terminate.
How was the decision-maker trained? What were their qualifications? Were they simply applying algorithms and/or rigid policies or were they doing a meaningful medical and vocational analysis in coming to the decision to deny the claim?
Historically, insurance companies have been reluctant to let plaintiffs take a look behind the curtain to better understand how these claims are ultimately decided. The battle to compel production of claims manuals and training materials has been particularly problematic.
That information is important because, in many of these disability cases, plaintiffs cannot conduct a meaningful analysis of whether the denial is fair and reasonable without understanding the basis upon which the decision was made. In many cases, there may be an argument that the adjudicator's actions were not proper and that the decision-maker might not be fully qualified to make the decision.
Perhaps the decision to terminate is based on rigid and improper criteria that benefit the insurer over the insured. This is a clear violation of the insurer's good faith obligations. However, if plaintiffs are not able to even review the manuals and training materials, they cannot even begin to review these important questions.
Claimants often have the support of their family doctor, their specialist, their psychologist, their therapist and their employer who all say that they are disabled. But they are still denied benefits. When they seek legal advice, counsel is simply told that the insurance company has carefully reviewed all relevant records and that the plaintiff hasn't proven that she is disabled, but they won't say why.
Working From Claims Manuals.
In many cases, the adjudicator likely does not have a medical degree and is not even an occupational therapist or other medical professional; however, they are vetoing the decision of the plaintiff's medical professionals. Instead, adjudicators are often working from claims manuals that the insurance company either denies exist or refuses to produce. If the manuals are flawed, they may lead to an inevitable outcome favouring the insurer.
What the decision in Heathcote v. RBC Life Insurance Company affirms is the idea that, while insurers are permitted to deny claims, claimants are entitled to receive sufficient production to shine a spotlight on the education, training and expertise of the decision-maker.
The motions judge also agreed that, in the right circumstances, insurers must produce the manuals and training materials which inform and educate the decision-maker. While many decision-makers will have sufficient training, there will also be cases where adjudicators may arguably lack sufficient (or any) specialized experience and the plaintiff should have sufficient production to determine if they can make this argument at trial.
There can be people making these important, life-altering benefit denials who have unrelated degrees, or, worse, no education at all. However, they went through the insurance provider's sanctioned training course. Claimants are entitled to know about the training provided and materials used by those adjudicators. They are entitled to determine if there is sufficient evidence to allow them to argue that manuals are biased resulting in a claims adjudication process that is tainted by bad faith.
Offer Only Limited Information.
When asked to provide fulsome production, insurance companies have sometimes countered by denying that they have a training or policy manual. This position is, frankly, difficult to accept. If they do admit to having a manual, they usually agree to provide only the limited parts which they deem to be "relevant." Such limited production is inconsistent with the Rules of Civil Procedure and the Common Law.
Production of these materials is required to screen denials for the presence of bad faith conduct and lack of fairness. Are there systemic biases in the claims handling, training and processes that are potentially unfair to applicants?
In Heathcote v. RBC Life Insurance Company, the court is basically saying 'No. If you're denying somebody, you are going to have to share the material that went into training the people that denied it.'
This decision is a positive development signaling that the Courts acknowledge that plaintiffs are entitled to take a long and hard look at the adjudication process. Plaintiffs are entitled to sufficient production to understand the denial process.
What steps were involved? What training was provided to the adjudicator? Were they qualified? Was the process fair?
This case is a further step from the rights of plaintiffs that were affirmed by the Ontario Court of Appeal in Baker v. Blue Cross, a long-term disability insurance case involving a woman wrongfully denied benefits even though she suffered from a serious brain bleed. She was awarded almost $3 million in damages, including $1.5M in punitive damages, and over $1M in costs.
'Created a Closed Loop of Information'
In upholding the decision, the Ontario Court of Appeal wrote: "Overall, we see repeated instances of the Blue Cross team ignoring information, misinterpreting experts' reports, and relying on the ill-informed advice of their contracted doctors to deny benefits.
In effect, they created a closed loop of information that ignored contrary information and created a counter-narrative based on their misinterpretation of the relevant data. This is a pattern of misconduct that, at best, shows reckless indifference to its duty to consider the respondent's claim in good faith and conduct a good faith investigation, and at worst, demonstrates a deliberate strategy to wrongfully deny her benefits, regardless of the evidence that demonstrated an entitlement."
Time will tell if Heathcote and Baker are outliers or part of a larger trend to encourage transparency and accountability of insurers in disability litigation cases. As we move forward this case could well become the basis for compelling more fulsome discovery in all of these types of cases.
If these cases result in insurers examining their claims-handling processes, everyone will benefit. If insurers continue to resist transparency and refuse to produce claims manuals and training materials, Heathcote will give plaintiffs' counsel a solid precedent for compelling production when they move for same.
We Are Here to Answer Your Questions.
A claims denial does not mean you are not entitled to benefits. You have the legal right to challenge your insurance company's decision and you don't have to go through the insurer's internal appeal process first.
Our team of personal injury lawyers understands disability insurance laws and long-term disability insurance. We know how to litigate your claim, how to draft appropriate pleadings that protect your interests, what experts to hire and how to position your case in a to get the settlement you deserve.
Your initial consultation is free and without obligation and we only charge you legal fees once your claim is settled. Contact us today.