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© Copyright 2002
Rogers Media. The following article first appeared in the February 2002 edition
of BENEFITS CANADA magazine.
The
Law
Expert advice
Disability management should not be left to plan
sponsors. An independent expert can verify claims and ensure healthy
outcomes.
By Hugh O'Reilly
From left:
Murray Gold, Hugh O'Reilly and Paul Litner
In every economic downturn, disability claims
rise. Short-term and long-term disability (STD and LTD) claims are a significant
cost to employers, ranging from 2% to 8% of payroll. The manner in which plan
sponsors manage STD claims can have a profound impact on their LTD costs, and on
the ability of employees to successfully reintegrate back into the workplace.
Failure to manage a disability case effectively can also lead to legal problems
such as a human rights claim or an action for wrongful dismissal.
Most STD plans are self-insured, and as such they are
little more than top-ups for sick leave policies. As a result, a fundamental
problem with the way in which STD claims are handled is that employers often
attempt to manage these claims themselves. The validity of the claim is based
upon a doctor's note provided to the employee by his or her physician. In turn,
medical notes are handed over to the employer.
These notes are often vague and tend to fuel suspicion on
the part of an employer that the claim is invalid. Yet, an employer who seeks to
discipline an employee on the basis of mere suspicion could face a human rights
claim or prevent an employee who is actually disabled from receiving benefits.
Neither outcome is appropriate and both ignore the essential need to balance the
needs of the employee with the interests of the employer.
An STD claim should lead to either a seamless
reintegration into the workplace or the receipt of LTD benefits. Failing to
properly address the claim can create both legal and employee relations
problems.
Proper claims management is not as difficult as it would
seem. STD claims can be effectively and appropriately managed through the use of
an outside expert who assesses the validity of the claim. This is a practical,
professional and cost-effective solution.
"Outside expertise is the best way to manage STD claims,"
says Fred Holmes, national practice leader, group health & welfare with Buck
Consultants in Toronto. "Most employers have no ability to assess the validity
of a claim. It is in both the employee's and the employer's interest to ensure
that the claim is properly managed."
Holmes adds that an outside expert can help reintegrate
employees into the workplace, and in more severe cases, help ensure that the
individual will receive LTD benefits.
Third-party claims management can also help maintain the
confidentiality of personal medical matters. "Employers need to know that a
claim is valid. But the details about an employee's condition are best left
between an employee and his or her medical advisers," says Holmes.
In order to implement the third-party approach, plan
sponsors need to inform employees that disability benefits will be provided on
condition that they consent to a review of their claim by an expert appointed by
the employer. Given current privacy legislation, it would also be prudent for
any claims application to contain an express consent to this effect.
The consent form should also clearly state that the
employer will only be given specified information concerning the validity of the
claim, the prognosis associated with it, the return to work date and the
reintegration plan that should be put in place.
Employees can benefit from a properly managed claim
because they have the potential to receive benefits and a successful outcome to
their leave in the form of a structured reintegration back into the workplace or
a more seamless transition to LTD benefits.
Employers win as they receive assurance that their claims
are valid. They will be in a better position to assist employees in
reintegration or in receiving appropriate benefits after the STD period ends.
Plan sponsors will also avoid the most dangerous of legal traps--taking action
on the basis of incomplete information. BC
Hugh O'Reilly is a
partner with Torys in Toronto. h'oreilly@torys.com.
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