Northern Exposure

Managing LTD Claims: Less Pain, More Gain

By Suzanne Porteous and Wendy Wang

The bad news is that one of your employees has just commenced a long-term disability (LTD) leave. You may well have concerns like: (1) Will the employee ever return to work? (2) If so, when? (3) What accommodations would be needed to allow a return to work? (4) What will it all cost?

The good news is that the method in which many LTD carriers are now handling such claims can actually help employees return to work sooner than once was the case. This can in turn assist in relieving some of the economic burden you as an employer may face arising from the employee’s disability. How can you make this work well for all concerned? What are some of the legal issues?

Collaborating on Return to Work Plans
The issue of accommodating a particular employee’s disability is often fraught with uncertainty. How much is sufficient? And for how long? How much incremental cost must the employer bear? These questions become even more disconcerting when the employee suffers from a disability that will keep him or her from the workplace for an extended period of time. However, collaboration between the employer, employee and LTD carrier can create favourable outcomes.

Picture the following scenario:

The employee is allowed to return to work part-time for the employer for as much as his or her disability permits. The employer pays the salary actually earned by the employee during the part-time hours, and the insurer compensates for the balance with LTD benefits. This facilitates the employee’s early return to work and  gradual return to full-time hours.

Though the practice may sound novel to some, it has been available through many LTD carriers for years. It is commonly referred to as a gradual (or modified) return to work or “work hardening” plan.

Making It Work in Your Workplace
There is a lot of flexibility in how this practice can be integrated into your workplace. Depending on the circumstances, the employee could start with one or two days of work every week, or partial days, or both. Typically, the hours of work increase over time. It is also common to begin with light duties and increase the work requirements over time.

The important thing is that the parties work together in structuring a plan, focusing on their common interests. Specific doctors’ recommendations as to what a specific employee can do during the “work hardening” process are important.

Employers have rights here too. While under a duty to accommodate disabilities, you need only do so to the point of undue hardship. And you are entitled to adequate and reliable medical information to enable you to fulfill that duty.

Collaboration with the case manager assigned by the carrier would also be beneficial. All parties should have a mutual interest in seeing the employee return to work as soon as possible.

Ensuring Success
You should always keep in mind that the success of such a program depends on many factors, including the employee’s particular disability. This risk of failure can be minimized if a gradual return to work plan is implemented correctly, with full awareness of an employee’s capabilities. One company we interviewed has had a number of employees back at full-time employment sooner than was originally expected due to the collaborative efforts of their LTD insurer, the employee and management.

According to this company, one of the keys to success with this approach is ensuring that employees advise of their LTD claim and report their absence immediately. This is crucial in jump-starting the accommodation process and tailoring a plan early on.

Legal Complications
One arbitration decision has, however, created some doubt about what constitutes equal treatment of employees when these modified work plans are in effect.  In The Ottawa Hospital and OPSEU Local 474 (2008), Arbitrator Brian Keller surprisingly ruled that such a plan, which in that case operated during short-term disabilities, discriminated against the employees who took advantage of them. He reasoned that those employees were “partially disabled” and were treated worse than those who returned to full time employment after being totally disabled. The partially disabled group on modified work could not requalify for a fresh disability claim, while the others could. That decision was upheld by Ontario’s Superior Court and an attempt to appeal it was denied.  But the decision does not appear to have been widely followed.

In a more recent decision, Boehringer Ingelheim (Canada) Ltd. v. Kerr, 2010 BCSC 427, the British Columbia Human Rights Tribunal upheld a discrimination complaint in part because the employer had created a return to work plan without consulting with the disabled employee, but based on medical information the employee had provided. This emphasizes the need for consultation with the employee. The decision was later upheld by the British Columbia Supreme Court but the court focused on other issues.

Your Choice
Long-term disability benefits are, of course, a common employee benefit, providing protection against long-term illness.  Sometimes it is feared that such benefits may have the effect of encouraging prolonged absences.  Modified work programs help avoid that outcome for the mutual benefit of all concerned.

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