Canadian workplaces are riddled with depression and anxiety. In any given year, one in five Canadians suffers a mental health issue. This is further exacerbated by dismissal. Even our Supreme Court has recognized that losing one’s job often represents losing one’s identity.
Not surprisingly, many new employee clients suffer depression and anxiety and I am asked whether they can sue for their mental stress.
Like many legal questions, it depends.
Courts appreciate that termination leads to some form of mental anguish so that, provided an employer acts professionally, there is no claim for the ensuing mental illness. But if an employer terminates in a manner that is unfair, in bad faith, untruthful, misleading or unduly insensitive, the employee could be entitled to moral, punitive or mental distress damages.
These latter cases are, thankfully, aberrations. Most employers understand the need to treat employees with civility or, at least, not to willfully exacerbate the inherent stress of dismissal.
In my firm’s short-term and long-term disability benefits practice, claims for depression, anxiety and other forms of mental illness are dramatically increasing.
A recent report by a major disability insurer revealed that mental illness now represents the majority of disability claims. Mental health claims are treated differently than other disabilities because they are more subjective than, say, a fractured leg or heart attack — which can be objectively confirmed.
Depression, on the other hand, is diagnosed through self-reported data making it easier for an insurance company to deny the claim. By the time we meet a client, his or her disability benefits claim has usually already been denied, which, in turns, exacerbates the underlying emotional turmoil.
Rarely do I come across a malingerer. So why are disability claims denied?
First, I often see the “politics at work” or “toxic work environment” denial.
The insurer (or third-party administrator hired to evaluate the claim) takes the erroneous position that the employee is not totally disabled but that his or her symptoms stem from an internal dispute that can be resolved through a kumbaya facilitated by human resources.
This is nonsensica, legally. While it may be possible to resolve the workplace dispute (which, of course, is not always viable and the employee may have been constructively dismissed as result of a poisoned work environment), the point is that the individual suffered mental harm as a direct result of the environment and objectively requires time off to recover, with pay, which the short-term disability or long-term disability policy is intended to provide.
I find it helps to avoid a denial if the doctor makes this distinction in her medical notes or statement to the insurer. However, most employees’ doctors don’t do that and employees have insufficient legal knowledge to request it.
Occasionally, insurers force the employee to apply for the Workplace Safety and Insurance Board benefits on account of work-related chronic mental stress. Since WSIB denies 90 per cent of these claims, that request is another illegitimate tactic designed to overcome a lawsuit.
Second, insurers deny long-term disability claims due to insufficient medical records.
Stigma against the mentally ill still exists. For that reason, some clients are reluctant to even speak to their trusted health-care providers. But medical documents are the foundation of an LTD claim. To succeed, we implore our clients to be open, honest and frank about their symptoms.
We want to avoid an insurer’s argument that sparse reporting to a doctor is tantamount to the absence of disability. The patient should see their doctor frequently, at least every two weeks to demonstrate that they are receiving appropriate treatment, which leads to the third most common reason for a denial.
Claims are denied for failure to have or follow an appropriate treatment plan. The insurer will expect the claimant to, at least, see a family doctor. Even that usually is insufficient. Most policies require the involvement of a “specialist” such as a psychiatrist despite OHIP’s protracted wait times to see one. It is best to, at least, obtain a referral to a specialist to demonstrate compliance.
Depending on the nature of the disability, the insurer often denies or discontinues coverage if the claimant is not prescribed an anti-depressant. Once prescribed, the insurer will expect improvement in an, often unrealistic, six to eight weeks.
This is true despite psychotherapy’s sometimes equal or greater efficacy. Regardless of the form of treatment, if results are not reached in short order, the insurer often takes a “we-know-best” approach and forces the employee to return to work. When we have a doctor on board, we encourage our clients to stand their ground.
Instead of consulting a disability lawyer, many people waste their time exhausting the appeal process. The insurance company representative who initially denied the claim is normally the same person evaluating the appeal. Weeks lead to months with no income.
Our practice is to commence a claim immediately after a denial to circumvent unnecessary delay and put the power back in the employee’s hands. Employees pay expensive premiums every paycheque for peace of mind and the financial security of two-thirds of their salary (often tax free) until age 65. That is a very significant sum. Insurers, despite their good-faith obligation to try to find coverage, aren’t in the business of doing so.
Why pay and then walk away? Take, for example, a recent client, a human resources director earning $150,000 in base pay. She fell victim to a toxic workplace. After 12 months of approved LTD, the insurer tried to force her back to work through a work-hardening plan. Neither she, nor her doctor, felt she was ready to return. But, the insurer made her attend a medical exam with its “independent” psychiatrist that it practically had on speed dial.
To no one’s surprise, the specialist supported the insurer’s position. Not knowing her rights, the client felt she had no other option than to prepare for her certain crash course at the office or face discontinuance of her benefits. At 45, she stood to leave 20 years of LTD benefits, valued collectively at $2 million, on the table. She stood her ground. We arranged for her to see a well-known, respected psychiatrist in short order..
Armed with a strong medical opinion and our expertise, the insurer settled for a very significant sum and the client was able to convalesce comfortably. Shortly after, we negotiated her severance package, which the insurer could not set off against the benefits because we strategically settled the LTD claim first. She is now happily re-employed. We, of course, cannot create employment prospects, but we provided her the time and financial security to heal and be selective about her next job.
Financial Post
Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.