This article, the seventh in a series about insurance clawbacks, was written by Steven Muller, Vice President Litigation at Share Lawyers. Click here to read the rest of the series.
A few years ago, I was representing a disabled client who, after retaining our services for denial of their mental health disability claim, was charged, convicted, imprisoned, and placed in solitary confinement. While my client was somewhat remorseful, he lacked insight that his actions impacted the lives of his victims. I wonder what if the disability insurer had stepped up and provided the support my client desperately needed when he made his long term disability claim.
In Canada, financial compensation for victims of violent or personal crimes is administrated by the provinces. These programs are not contribution-based social insurance programs. Why would they be? This public spending is funded by taxpayers with the objective of providing some compensation in a practical way to victims for medical and therapy expenses, funeral and burial expenses, legal expenses, loss of income or support, as well as pain and suffering.
Historically, some Life and Health insurers have included a clawback provision in long term disability policies that target a victim of crime who receives monies from a provincial benefit victim compensation scheme. The insurance policy language is intentionally written broadly so that any payment made by these provincial schemes may be clawed back by the insurer. Since this clawback is part of the policy contractual terms, our courts are thrown into the uncomfortable position of adopting this provision as valid and enforceable.
This clawback allows insurers to reduce their insurance exposure to 25% or less from the victim’s pre-disability earnings by clawing back the income received from the provincial benefit victim compensation scheme. The victim of the crime never gets anywhere close to full recovery of their loss of earnings. The public policy implication here is that if you suffered PTSD because of a crime and you cannot work, your disability insurer gets the compensation that our community set aside for you. Employers, federal, provincial and territorial governments—is this what you want for victims of crime in our communities? Do we really want to treat remedies for victims of crime as equal to remedies for persons with personal injuries?
It is time for us in Canada to rethink our archaic approach to clawbacks in a long term disability scenario.
Denied your long term disability claim?
Contact lawyers for long term disability at Share Lawyers today and put our experience to work for you. Our 35+ years of experience can help you win your case against Canada Life, Desjardins, Manulife, RBC Insurance, Sun Life, and other insurance companies. We offer free consultations and there are no fees unless you win your case. Watch our web show, Your Disability Lawyers, on YouTube, or listen to the podcast on Google Podcasts.