Looks like they changed the terms and conditions in the last week or so.

Here is what it said before:
CANCELLATIONS AND NO-SHOWS OF STAYS USING COMPLIMENTARY NIGHT CERTIFICATESYou will forfeit your complimentary night certificate if you do not check into the hotel on the arrival date specified on your reservation confirmation or if you do not cancel the reservation within the hotel’s free cancellation date. It is your responsibility to be aware of hotel’s cancellation policies.

If you cancel a reservation for which you used a complimentary night certificate that you booked prior to September 26, 2018 for a stay after September 26, 2018, you will not receive a return of your complimentary night certificate. In lieu thereof, you will receive Leaders Club points that can be used towards a future redemption booking. The amount of points you receive will be calculated based on a one night stay at the Leaders Club average room rate at the specific member hotel at which the complimentary certificate was originally booked. It may take up to ten (10) days for the points to appear in your account.

OUTSTANDING STAY CREDITSIf on September 26, 2018 you have any existing stay credits but have not earned a sufficient number of stay credits to earn a complimentary night certificate, we will convert those stay credits to Leaders Club points based on the room rate you paid when you earned the stay credit, with a minimum of 1,250 points being awarded. For example, if you paid USD $1,000 per night for two nights at a Member Hotel (a total of USD $2,000) for which you earned a stay credit, you will be awarded 2,000 Leaders Club points and the stay credit will be voided.

https://web.archive.org/web/20181231000218/https://www.lhw.com/terms-and-conditions