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Understanding and navigating declined disability claims

Disability-Denial

Growing market demands and our high-performance culture can make it challenging for Canadian employers to balance the health of their business against the health of their workforce. Disability absences can affect a company’s bottom line with drug costs, benefit plan costs, productivity costs and replacement costs of absent employees.[1]

Navigating the costly impact of a disability absence is further complicated when an insurer or third-party provider declines a disability claim. Employers and their employees in this situation must now digest that the contractual definition of disability used to assess the employees’ entitlement to the benefit differs quite dramatically from what their own understanding may be—further complicating the situation for employers.

What is a disability?

By design, disability benefits protect employees should they encounter an illness or injury severe enough to prohibit them from performing the essential duties of their occupation. These benefits provide employees with a level of income based on a percentage of their pre-disability earnings.

Given that an employee’s absence from work commences with an illness or injury, be it physical or psychological, there is often an expectation that disability is related to biology[2] and that disability benefits are only payable in the presence of a medical condition. While a health condition is an attribute of disability to the extent that clinical investigations look to the conclusions given by health care providers, it is not the basis for supporting disability under most disability benefit plans. Rather, analyses are made against the essential duties of the occupation and the clinically-supported functional impairments.

Essential vs. nonessential job duties

In light of the above, how does an employer define the various functions performed by a particular role as essential versus nonessential? The Ontario Human Rights Commission notes that when assessing a particular task or duty as essential, consideration must be given to the frequency with which the duty is performed, the time spent on a given duty, whether the job function would change if the duty is removed and how the duty fits with other duties performed in the job.[3]

Disability adjudication is a multifaceted analysis taking into account a number of variables from multiple sources. Insurers and third-party providers predominantly look to third-party databases for unbiased qualitative and quantitative measures related to the variables associated with the individual’s disability. For instance, when considering occupational demands and what an insurer would deem essential versus nonessential duties, many Canadian insurers and providers refer to databases such as the National Occupational Classification (NOC) system for the essential duties of a given occupational category. In this database, for example, a bank teller would have the same core occupational functions regardless of which bank they work for. The tasks or duties that are specific to their particular employer would not be considered part of the essential duties of that occupation.

When an occupational activity is unique to a specific employer and not seen in the same occupation at most other employers, it can make determining occupational requirements more difficult. It may be that an individual is unable to perform certain duties or demands unique to their company’s job description, and yet these are not considered core functions of their occupation. In these situations, disability benefits are often declined because the employee’s inability to perform the essential duties of the occupation has not been satisfied.

Thus, it is imperative that when employers create job descriptions, they proceed with a full understanding of what is being demanded of their employees and how that differs from the demands being asked by employers of similar occupations. By doing so, an organization is in a better position to assess and accommodate absences of all varieties, medical or otherwise, not just those adhering to the template defined by the NOC.

Accommodation strategies

Employers are obliged to accommodate employees presenting with a disability, provided the accommodation does not result in undue hardship for the employer. It is important that employers have progressive workplace and accessibility practices to support the needs of their employees.

The Canadian Human Rights Commission has provided a guide for employers managing the return to work of employees following a prolonged absence. It provides a framework for facilitating the transitional return of employees who may need workplace accommodations and a step-by-step approach for how to manage accommodation requests. This includes the need to clarify functional abilities, create a case record, contact the employee, determine accommodation options, implement and monitor accommodations, and engage necessary stakeholders.[4]

While most employers understand and appreciate the duty to accommodate, the challenge becomes how to do so if the employee’s disability claim has been declined by the insurer or third-party provider. Are employers to presume that an employee is no longer disabled? It is critical for employers to understand the rationale for the decision in order to determine how best to support the employee. Was the decision the result of insufficient medical information or a contractual decline? Or it may be that certain provisions limit who qualifies for disability benefits or that the information submitted failed to establish how a medical condition impacts an employee’s ability to function within their essential occupational duties. One or more of these reasons may apply, but may not negate the existence of a disability or functional impairment. Further information is warranted. On a fundamental level, the ultimate goal for any employer should be to immediately begin assessing and implementing workplace accommodations from the onset of an absence.

Organizations that can quickly appraise their current human resources capital in order to help create return-to-work opportunities tend to be more resilient in response to employee disabilities. When an organization can leverage existing solutions to maximize the return-to-work potential of a disability absence from its initial onset, it creates a culture of awareness for pre- and post-disability options that will foster a more sustainable workforce. By applying this approach, employers can regain control of their workforce, production and expenses at the commencement of a disability absence rather than be left at the discretion of a pending decision by the insurer or third-party provider. In return, employees will also perceive and appreciate that such policies help to ensure that progress for workplace accommodations doesn’t stall and doesn’t place a disproportionate strain on them.

In conclusion

The strategies and practices outlined in this article are by no means market disruptors, nor do they give rise to a material change in how employers interact with disability benefits. However, strategies and practices such as these are often overlooked. Employers have tremendous opportunity to plan ahead and implement strategies today that will contribute to a favourable bottom line tomorrow.

Written by Jessica Gobran, Director of Disability, at People Corporation.

Adapted from the article of same name in the Fourth Quarter 2020 issue of BENEFITS QUARTERLY, published by the International Society of Certified Employee Benefit Specialists.


[1] Mood Disorders Society of Canada (2009). Quick Facts on Mental Illness and Addictions in Canada, third edition. See: https://mdsc.ca /quick-facts.
[2] See: PSAC-ncr.com/defining-disability-medical-model-social -model-disability.
[3] Human Rights at Work 2008. Third edition. “IV. Human Rights Issues at all Stages in Employment. (2. Setting job requirements.)”
[4] Canadian Human Rights Commission, Minister of Public Works and Government Services. A Guide for Managing the Return to Work. 2007.

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