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Fairness Means No Double-Dipping

In many cases (but not all) fairness requires that a disabled worker reimburse her insurance company for disability benefits received when she’s already being compensated for her lost income from another source. This principle was examined by the Court in Garneau vs. Industrial Alliance Insurance and Financial Services Inc. this past May.

A disabled worker started receiving disability benefits in 1996. In September of 2002, she took medical retirement and began to receive superannuation payments. Unfortunately, she forgot to tell her insurance company.

Six years later, Mrs. Garneau’s insurance company discovered that they’d been paying the full amount of the monthly long term disability benefit while she had been receiving her medical retirement payments at the same time.

The contract of insurance between Mrs. Garneau and Industrial Alliance allowed the insurance company to deduct the medical superannuation payments from her long term disability payment. When you consider that she paid premiums for the insurance policy and earned the medical retirement payments by going to work every day, it may not seem entirely fair that Industrial Alliance be allowed to deduct one from the other. Nevertheless, that’s what the contract said. In light of this permitted setoff (one benefit deducted from the other), Mrs. Garneau ended up owing Industrial Alliance well over $100,000.00. The insurance company stopped payment of her long term disability benefits but then reinstated the benefits three months later at 50% of the normal rate. It proposes to continue doing this in an effort to recover the money that it paid in error. The Court agrees that it can do so.

It’s vitally important in long term disability cases to be aware of how the various benefits available to an injured worker interact with each other. It can become a complicated mess, particularly when the injured worker has the legal right to make a claim against an at-fault party for damages.

Knowledge and full understanding of the wording to the policies that protect you and your family are a key factor in securing your financial future. Be sure that you either understand the policies or have a lawyer who does.

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