Exclusion Clauses in Long Term Disability Policies
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Howie, Sacks & Henry Associate Eman Khoshbin reviews exclusion policies in long term disability in this presentation, "Sorry, We Don't Cover That: Exclusion Clauses in LTD Policies" presented at the OTLA Fall Conference in October 2016.
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Exclusion Clauses in Long Term Disability Policies
- 1. “Sorry,We Don’t CoverThat” Exclusion Clauses in LTD Policies OTLA Fall Conference October 27-28, 2016 Eman Khoshbin Tel: 416-361-7583 ekhoshbin@hshlawyers.com
- 2. www.hshlawyers.com Introduction Sorry, you’re not covered. Wait. How come? If you look at your policy, there is a list of exclusion clauses and unfortunately, you fell into one of the categories. Exclusion what? An unfortunate reality for many disabled claimants.
- 3. Exclusion Clauses What are Exclusion Clauses? – The “fine print of the contract” – Provisions in the policy that outline certain circumstances or losses that will not be covered by the insurer Examples – Committing or attempting to commit a criminal offence – Active participation in a riot – Workplace injuries that can be made under aWSIB claim – Failing to remain under continuing medical care – Pre-existing conditions Exclusion clauses are provisions that preclude coverage for certain sets of circumstances and types of losses.
- 4. www.hshlawyers.com AVery Brief Recap of Insurance Principles Policy, policy, policy! – Unambiguous language – Reasonable intentions of the parties – Ambiguous language Ambiguous language – interpretive and substantive principles of insurance law come into play – Coverage provisions should be construed broadly and exclusion clauses should be construed narrowly – Contra proferentem The starting point is always the policy. Determine whether there is ambiguity. Exclusion clauses are narrowly construed. Contracts are interpreted against the party that drafted it.
- 5. The Application of Exclusion Clauses Onus is on the insurer to show that the exclusion clause applies If there is ambiguity after a plain reading of the policy’s words and reference to the policy as a whole – The insurer will call evidence to show that its intention was an alternate meaning – Use the strict construction principle and the doctrine of contra proferentem – Marshal the appropriate evidence The onus is on the insurer to prove that the exclusion clause applies. Marshal the required evidence outlined in the jurisprudence and use the doctrines as a sword.
- 6. www.hshlawyers.com Pre-Existing Conditions Exclusion Clauses Onus is on the insurer to prove a causal link between the prior illness or injury with the resulting disability A standard pre-existing conditions exclusion clause may look similar to the one provided below: Benefits are not payable for any disability which begins within the employee’s first 12 months of coverage, if the disability results directly or indirectly from any sickness or injury for which the employee was treated or attended by a physician, or for which prescribed drugs were taken within 90 days prior to the effective date of coverage. If an insured has been treated for a particular illness or has underwent a consultation for a particular illness within a certain period of time prior to obtaining insurance coverage, and that illness causes or contributes to the insured’s disability within a designated period of time, then the insured will be ineligible for receiving disability benefits under the policy www.hshlawyers.com Review the policy’s wording. If an insured has seen a physician for a certain illness or specific symptoms in a certain period of time before the start date of the policy, he/she might be shut out.
- 7. www.hshlawyers.com Seminal Cases Duke v. Clarica Life InsuranceCo., 2007 ABQB 233 – “Illness exclusion” and “Symptom exclusion” – “Associated with a covered critical illness” Hoult Estate v. First Canadian InsuranceCorp., 1994 CarswellBC 841 – Typical symptoms of a cold or mild bronchitis turns out to be terminal lung cancer – Did Mr. Hoult lie on his application? Tyson v. Holloway, 2016 ABQB 284 – Headaches, dizziness and nausea were diagnosed as migraines, but were symptoms of a brain tumour – “Diagnosis” vs. “Diagnostic Process” and their dictionary definitions www.hshlawyers.com Insurers have attempted to use the benefit of hindsight to prove the required causal link. However, exclusion clauses may be unclear as to whether they apply to symptoms that are later connected to serious illnesses.
- 8. www.hshlawyers.com Concurrent Causes of Disability St-Laurent v. Sun Life Assurance Co. of Canada, [1988] NBJ No 621 – “Medically required services” – What if one of the contributing illnesses that caused the total disability did not receive medically required services in the relevant time period? Clarke v. National Life Assurance Co. of Canada, [1990] OJ No 515 – 3 dozen beers per week over a period of 20 to 30 years – Prior substance abuse is not necessarily the precursor to or proximate cause of total disability www.hshlawyers.com When there are 2 concurrent causes of disability and one of them is explicitly excluded from coverage, it does not automatically shut out the claimant.
- 9. FinalTakeaways Policy, policy, policy! – Determine what the policy states regarding pre-existing conditions, diagnoses, symptoms, medications and other relevant considerations Determine whether there is ambiguity or an argument to be made regarding potential ambiguity Invoke the doctrines of strict construction and contra proferentem Marshal evidence that speaks to the chronology of events, medical milestones, reasonable interpretations of the exclusion clause and the causal link between the disability and the pre- existing condition(s) Start with the policy. The policy may be unambiguous and your client may fall within the purview of the exclusion clause. Determine whether there is ambiguity. Use the doctrines. Marshal the evidence.
- 10. Thank you for your time. For more information: Eman Khoshbin, Associate Tel: 416-361-7583 ekhoshbin@hshlawyers.com www.hshlawyers.com Enjoy the rest of the OTLA Fall Conference!