COLUMN

The tangle of disability claims

Diane Francis December 14 1987
COLUMN

The tangle of disability claims

Diane Francis December 14 1987

The tangle of disability claims

COLUMN

Diane Francis

For 20 years Douglas McTaggart’s independent agency, Planned Insurance Portfolios Co. Ltd., sold insurance for Crown Life Insurance Co.—about $2 billion worth. By 1979 the business relationship had deteriorated, and in December, 1982, Crown terminated his company’s services. Ever since, McTaggart, 56, has been embroiled in legal battles with Crown Life. And although his case is still before the courts, one aspect is noteworthy, involving a claim by McTaggart under a group disability insurance policy with Crown into which he paid for 20 years. McTaggart says that he became totally disabled in December, 1982, as a result of heart problems and severe depression, and under the terms of Crown Life’s policy is entitled to benefits. Indeed, he now receives disability benefits through another policy with Canada Life Insurance Co., as well as the Canada Pension Plan (CPP). Crown says that he was not disabled and refuses to pay.

Regardless of who is right or wrong, it is an interesting case. Canadians buy a lot of insurance, and the McTaggartCrown tangle illustrates the need for some kind of arbitration for disputes of this nature, particularly those involving disability claims. Complaints can now be made to the Canadian Life and Health Insurance Association, but it has no binding authority. And government regulators are slow to respond and rarely get involved in individual spats. The only serious recourse is to sue but, as McTaggart’s case shows, that can take years—and a lot of money.

And by definition, someone who is disabled cannot make money the way he or she used to, making it very difficult to afford that recourse. Luckily for McTaggart, he is a man of means who is fighting Crown on what he says is a point of principle. And he is married to an enormously wealthy woman—Mary Eleanor Hunter, widow of former Maclean Hunter Ltd. chairman, president and chief executive officer Donald Hunter. But a less fortunate person would be out of luck, another illustration that our justice system only caters to the rich, or the poor—who can qualify for legal aid—leaving the majority out in the legal cold. “If I were not married to a wealthy woman and did not have a great many assets of my own, I could never have come this far,” McTaggart said. “The insurance industry must come up with a binding

arbitration mechanism of some sort.”

McTaggart’s agency began selling insurance for Crown in June, 1963, and McTaggart paid premiums on a Crown group disability policy designed to replace agency employees’ incomes if illness struck them down. For two decades he never claimed on that policy. In a letter dated Dec. 15, 1982, Crown dismissed his agency after disagreements dating back to 1979. Both sides had sought an amicable parting of the ways, but to no avail. After his dismissal McTaggart sued Crown for breach of contract and damages in the millions on alleged unpaid commissions on policy renewals. In addition, the suit included his claim for disability benefits on the grounds of his heart problems and mental depression, which he says worsened in the fall of 1982 before his dismissal.

In McTaggart’s case, the benefits under the Crown group policy would amount to $5,870 a month. In August,

The legal profession, courts and insurance industry must devise some sort of quick and binding arbitration process

1981, Crown Life announced that it was increasing group benefits to agents and sales managers such as McTaggart, so his coverage increased. In September, 1981, he also asked Crown to increase a second, personal disability policy that he had with the company to $2,500 a month from $500. Crown refused. But Canada Life granted him a policy, which McTaggart claims was based on an examination by the same medical doctor who had examined him for the increased benefits on his Crown Life policy— which he was denied.

On Dec. 12, 1982, three days before the date of Crown’s letter of dismissal to him, McTaggart claimed for disability benefits from both the Crown group plan—which covered managers and agents during their employment and for up to 30 days after termination—and Canada Life’s individual plan. Both Crown and Canada Life had McTaggart submit to doctors’ examinations. Canada Life approved benefits, but Crown denied them in October, 1983. Since then, McTaggart has received $2,500 a month from Canada Life, as well as $475 monthly in CPP disability benefits.

Crown would not comment because the case is before the courts. But the company’s statement of defence reads: “The defendant [Crown] denies the plaintiff McTaggart became disabled in the month of December, 1982. In fact, the plaintiff McTaggart was able to obtain, and did obtain, alternative employment immediately upon the termination of the plaintiff’s relationship with the defendant and the plaintiff McTaggart is accordingly not entitled to any benefits from the defendant. . . .” In reply, McTaggart says that he never worked again after his firm’s dismissal, although his agency’s salesmen sold insurance for another company.

As well, McTaggart twice took his case to Ontario insurance regulators, only to be told that they would not become involved because the matter was already before the courts. He also took it up with the federal government’s superintendent of insurance, Robert Hammond, but without success. Hammond wrote to McTaggart: “I have personally written to [Robert] Luba, the new president of the company [Crown Life], to seek his assistance in resolving your claim. Constitutional division of jurisdictions does not give us the power to force insurance companies to pay claims or to change their treatment of policyholders.” And whatever the merits of either case, McTaggart is far from alone in seeking arbitration. Ivan Scott, spokesman for the Canadian Life and Health Association, a trade association representing 109 life and health insurance companies, said that the association received more than 250 written complaints in 1986. Those complaints, Scott said, most often centred around “health claims—and by far the most difficult is disability.” He added: “We have the facility to get the data as the consumer or claimant wants to present it and pass it on for review to the company with a covering letter. I have seen this change things—and seen it more firmly fix a company’s opinion about the matter. It is a capacity which has limitations.” Clearly, the McTaggart matter shows that the legal profession, courts and insurance industry must devise some sort of quick and binding arbitration process. McTaggart has a right to have his claim adjudicated by an independent group. Those of lesser means than his would have even more need for this. Conversely, Crown Life is entitled to have its decision evaluated by an impartial body. Justice delayed for years in this case, and in others like it, is justice denied.