The Case For a National Short-Term Disability Insurance Plan

National Short-Term Disability Insurance | By Bram Lecker, Employment Lawyer

---

National Short-Term Disability Insurance: A clear and present need in a just society.

Employment lawyers regularly take on cases involving clients who have trouble accessing their employee disability insurance benefits. Indeed, many individuals desperately need them to get through short-term and long-term illnesses and injuries. Third-party private insurance companies administer these plans and make the claim processes very complicated. They deny applications often, leaving ill, injured, and disabled individuals to seek out lawyers for recourse. For well over 30 years, such cases cause us to decry the lack of an equivalent federal program in Canada. National short-term disability coverage would dovetail perfectly with the long-held Canadian tradition of universal healthcare. And implementing it would require nothing more than simple modifications to existing programs.

The COVID-19 crisis has put a glaring spotlight on this issue. Governments of all levels recognize the need to keep workers financially compensated when they are off from work. And nobody can deny that those who fall ill should return to their workplaces healthy, both physically and financially.

Sick Leave and Private Insurance

While government officials tell Canadians to stay home when they exhibit symptoms of COVID-19, the reality for individuals is not so simple. Presently in Ontario, employees have access to three days of unpaid sick leave annually. Unless employers offer it, they are not entitled to paid sick leave. Workers in other Canadian provinces do not fare any better. As a result, unless they are suffering from a severe illness or injury, most Canadians bite their tongue, take a pill, and push on with their day.

It does not matter that provincial laws were recently upgraded to prevent employers from firing employees who take COVID-19 related quarantines or sick leave. Those who cannot afford to be without a paycheque, or unable to work remotely, simply won’t stay home.

A small percentage of fortunate employees receive disability benefits as an employment perk. This permits them to take short-term and long-term disability leaves of absence with some financial compensation. However, to keep costs low, many employers purchase “Administrative Services Only (ASO) plans from the insurers. This is particularly true for short-term disability plans. With ASO, employers remain directly responsible for paying claims. But advisors from the insurance company maintain the responsibility for screening claims. This unholy alliance is detrimental for employees on many fronts.

Firstly, anyone who has tried to access insurance benefits will attest to receiving very poor treatment by administrators and unsympathetic employers. Collectively, they would lead one to believe we are a nation of lazy fakers and hypochondriacs. They portray every employee as one waiting in glee for the opportunity to stay home, drink beer, and watch Netflix. This is predictable and not surprising at all. An insurance administrator’s job is to keep the costs down for their client, the employer. Consequently, they deploy efficient standard operating procedures of delaying all but the most serious claims. A majority of claimants simply quit the claims process, call in their losses and return to work prematurely.

Secondly, this arrangement makes insurance administrators the gatekeepers of patient wellness. They determine who can access treatment, for how long and when employees must return to work. This is contrary to all other aspects of our health system, where decisions about patient care rightfully belong to the medical profession.

And finally, our most egregious point of contention rests with the privacy of medical data. The main reason why employers hire third-party administrators for this task is to shield themselves from liability. Our privacy laws deny them access to employee medical data. The claims process for private disability plans requires individuals to disclose intimate details of their medical condition and treatment to paper-pushers who are not medical professionals. This information is sacrosanct. It should remain between patient and physician. We consequently open the potential for leakage.

Wrongful Dismissal Cases

Over the last decade, our firm has witnessed a disturbing trend between employee illness and dismissal. At least 40% of all wrongful dismissal cases have some component of disability leave. When employees give up on the tedious process of seeing a disability claim through, they invariably return to work prematurely, knowing they are unprepared to work at full capacity. Consequently, employers do not take kindly to their reduced productivity and treat them as “damaged goods”. We fully expect to see this trend with workers suffering from extended and prolonged symptoms that follow a Covid-19 infection.

Unfortunately, we know the turn of events for these individuals will be predictable, thereafter. Following a short grace period, the performance warnings will begin to fly. Like any lawyer practicing employment law, I find this infuriating. Here are a few examples of cases we have managed over the years:

·       A 36-year-old production supervisor with an excellent work record laid on his hospital bed suffering from Lupus. His insurance company delayed approving his short-term disability claim for six months. Meanwhile, back in the office, job performance warnings and threats of firing due to job abandonment were accumulating on his empty desk.

·       After her initial claim was rejected, a woman with breast cancer returned to work three months early from her chemotherapy. She simply needed the money. The next day, she was told that she was to be the only person “restructured” in a large prosperous company.

·      A senior manager, employed for 8 years with a major bank, required medical stress leave. The insurer cut off her benefits after six weeks merely because her physician reported a positive response to treatment. She was far from 100% recovered. However, she started receiving daily calls from the workplace occupational health nurse harassing her to return to work to a team that ostensibly needed her. How much of her medical information passed from the insurance company to the employer? This was left unexplained.

·       A young mother experiencing complications from her pregnancy was told by her employer, a US-based multinational company, that they would cut her off from their disability program, justifying it with an unwritten policy that she was not allowed to become pregnant while on leave.

These situations are not fictional, and they are hardly atypical to the types of cases we see.

Lack of Accountability & Legal Recourse

Even before COVID-19, our courts began to discern the toxic symbiotic relationship between the HR departments and the insurance administrators they engage to weed out claims. In response, courts have tried to balance the interests of both the corporations and vulnerable employees, but with limited success. While you can sue your employer for obstructing your insurance coverage and claims, you cannot hold the insurance company liable for adjudicating your claim incorrectly. The B.C Court of Appeal set a precedent in the case, Nayyar v. Manufacturers Life Insurance Company, stating the insurer simply presented advice. In our opinion, why permit non-medical people to provide such “advice” at all?

What ill, injured, and disabled Canadians are experiencing without a national short-term disability insurance plan is equivalent to what Americans face with their privately run healthcare management system. Many Canadians have very basic and limited income protection from the government when they fall ill. It barely covers living costs and for COVID-19, it doesn’t take an extended recovery period into consideration. And for those who receive private coverage, profit-motivated parties, namely employers and insurers, become the ultimate arbiters of who can receive income protection and who is left to fend for themselves.

A Direct Path to Poverty

Our present system puts vulnerable people on a direct path to a vicious “disability purgatory”. And the reason is simple and clear.

Financially strapped individuals will make compromises to a full recovery from their medical condition, even when the treatment is free if it involves time off from work with insufficient or no pay.

Instead, they will return to work sick, fearful of not being able to provide for their families. Some may also become anxious about the threat of being demoted or fired for job abandonment. And when they return, with their illness in tow, they will face ongoing threats to their job security, this time for poor performance. The entire chain of events is set up to see vulnerable ill and injured individuals fail. Consequently, an increasing number of people end up shuffling their way through government-run, taxpayer-supported programs like EI, CPP, disability and even welfare. Going into debt is predictable.

This scenario is particularly deadly where COVID-19 is concerned. While we have kept our infection and fatality rates lower than the U.S., the present income protection plans put Canadians at a risk for prolonged and continuous outbreaks in workplaces. Taking sick leave is neither affordable nor easy. This fact negates all benefits we have gleaned from the commercial lockdown. In fact, it throws shade on the sacrifices frontline medical professionals continue to make in the hospitals across the land.

It cannot be more evident just how much all Canadians deserve a reliable national short-term disability program for adequate income replacement when they fall ill, one that puts our financial needs on equal footing with the medical treatment we deserve. Privately run short-term disability plans simply fulfil the role of a deterrent for the worst employers. This is ineffective and akin to putting a finger in the dyke.

A National Short-Term Disability Program

We are not asking Canadians to support an expensive new government program to replace private plans. In fact, a solution for national short-term disability insurance coverage already exists. It only requires a few tweaks.

The present EI Sickness Benefits Program is well run and progressive. It currently provides up to 15 weeks of income replacement. Applicants simply require an opinion of a qualified medical professional that he or she is sick or injured, and unable to attend work for a specified period. The process is relatively simple and fair, and most importantly, it puts a medical professional in charge of the treatment and recovery of ill and injured Canadians. As a government-run program, not motivated by profit, administrators do not hound applicants incessantly for medical information or cause spitefully delays with applications as we witness regularly with private employer-sponsored programs. Most importantly, a public plan would prevent exclusion based on pre-existing conditions.

Upgrading EI Sickness Benefits

To be effective and comparable to private short-term disability programs, the EI Sickness Benefits Program would require enhancements. The Liberal Government promised to expand it to 26 weeks in the 2019 election. However, also increasing coverage to 70% of basic income would bring peace of mind to ill and injured individuals. We could fund this with a small increase to EI premiums that would encourage employers to ditch more expensive private plans, keeping their costs under control.

Essentially, we suggest pooling what employers and employees already pay for private coverage and combine those funds with what we already pay for EI, to come up with a wholesome STD plan that benefits all Canadians.

In addition, physicians should receive a stipend for standardized medical letters that they are now asked to provide for free. General practitioners could take some of the load off specialists, who presently carry the burden of writing detailed medical information for private disability claims. All the present rules regarding eligibility and fraudulent misrepresentation of claims would remain in place. We would expect medical professionals to provide accurate assessments that are free of influence and to the best standards of their profession.

Employers could continue to offer their employees private plans for long-term disability or top-ups to the national short-term disability insurance plan. We would have no reason to change present laws that require employers to return employees to comparable work after recovery. These laws would, in fact, carry more weight than they presently do. If employees had proper financial alternatives for time to recover fully, they would not require as many workplace accommodations.

Also, governments would find long-term savings in health and social programs because ultimately, fewer people would suffer health complications from returning to work prematurely from an illness.

Since the days of Tommy Douglas, Canadians have proudly upheld and vigorously defended universal health care. We categorically reject the model deployed by our U.S. neighbour. So why is health care treated as a human right in Canada, while an essential component of an individual’s treatment and recovery, namely paid time off from work, is not? Why do we let that part mimic the private healthcare system of the U.S, and set the most vulnerable in our society on the path to poverty?

A national short-term disability program, like universal health care, is an absolute necessity today, more so than ever. It would allow Canadians to manage illness and injuries with dignity and financial security.

---