ALUCA CMG / VIC. Melbourne Legal Session. 19 th APRIL 2018

Transcription

1 ALUCA CMG / VIC Melbourne Legal Session 19 th APRIL 2018

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3 ALUCA Life insurance Excellence Awards 10 categories: Leadership x 2, Claims x 2, Underwriting x 2, Rehab x 1, Education x 1, Innovation x 1 and Service x 1. Prizes for winner & logo for all finalists to use. Nominations close April 20 th Early bird tickets for black tie event $125+ GST@ aluca.com/events/event-calendar

4 TPD - How should you deal with events between the date of assessment and trial? Darryl Pereira, Partner Sofia Papachristos, Partner turkslegal.com.au

5 Overview Subsequent Events how should they be treated? Subsequent Deteriorations Subsequent Injuries Subsequent Job Applications Subsequent Work Summary 5

6 Regulatory Landscape - TPD definitions PJC Report March 2018 Committee recommended standardising TPD definitions Insurance in Superannuation Code of Practice be updated to reflect this recommendation APRA Deputy Chairman Helen Rowell's speech 'APRA Update: What can you expect in 2018' Acknowledged Insurance in Superannuation Code was a significant industryled effort and an important step forward However, APRA consider Code should be strengthened including by standardising definitions for disability 6

7 Standard TPD Definition a) absent from work through illness or injury for six consecutive months; and b) in the opinion of the insurer, the life insured has become incapacitated to such an extent as to render the life insured unlikely ever to engage in or work for reward in any occupation or work for which [he/she] is reasonably capable of performing by reason of education, training or experience Whilst the words Date of Assessment rarely appear in the definition, it is the contractually agreed marker when the opinion on the likelihood of a return to ETE work is to be formed. The DOA is generally accepted as being at the end of the qualifying period 3 or 6 months continuous absence from work. 7

8 Timeline of a Claim Assessment Date of Assessment Date Claim Lodged Date opinion formed 6 months qualification period (past) Subsequent events Date of Injury or Illness Subsequent deterioration Subsequent injuries Subsequent Job Applications Subsequent Work

9 The TPD Flow Chart Injury Date of Assessment Date Opinion Formed Good H E A L T H Return to Work Point Health outcomes Poor TIME 9

10 The subsequent events complexity The DOA will invariably be a date long past by the time the insurer is ready to form an opinion on likelihood of a return to ETE work. The misalignment of these two dates will throw up complexities for insurers: in obtaining evidence which will need to deal with historical events and the subsequent events which occur between the two bookend dates how is the DOA prognostication impacted by events that are no longer future possibilities but actual events occurring after the DOA the subsequent events 10

11 Subsequent Deteriorations Subsequent Injuries Subsequent Job Applications Subsequent Employment Summary 11

12 Tower v Farkas 1 Deteriorations Dispute over whether the insured was TI under a life policy (non-hodgkins lymphoma). Definition of TI was an illness or condition which is highly likely to result in death within 12 months. Lower court found that the insured met this definition and the insurer appealed to CoA. One issue the CoA raised was how it should deal with the fact that the insured was in remission at the time the insurer s decision was made. 12

13 Tower v Farkas 1 Deteriorations Mason P the evidence in question in the present case must relate to the insured s prognosis as at the date of diagnosis/occurrence of the relevant disease But it is only the prognosis as at that date that governs entitlements under the Policy evidence that the insured did or did not survive for 12 months casts no relevant light on that prognostic matter. For the Court to have regard to facts which could not be known at the contractually agreed date for assessment would effectively deny the bargain struck between the parties. 13

14 Tower v Farkas 1 Deteriorations Mason P to pay regard to later events, except those reflecting on the prognosis that was or ought to have been formed on 1 May 2002, would be to depart from the relevant bargain which was necessarily forward-looking in a prognostic sense 14

15 Halloran v Harwood Nominees 1 Deteriorations If an employee is not disabled as defined at the relevant date, a subsequent deterioration in his or her condition would not qualify him [or her] for a disablement benefit. Conversely, if he or she is disabled as defined at the relevant date, a subsequent improvement in his or her condition does not retrospectively disqualify the employee from the benefit. 15

16 McArthur v Mercantile Mutual 1 Deteriorations Muir J As the Court s role is to determine whether the definition of total and permanent disablement has been fulfilled there is no reason why the Court performing that task, should be confined to the evidence before the respondent on 14 October Medical reports coming into existence after the relevant time will be admissible provided that they are pertinent to the determination of the appellant s condition at the relevant time 16

17 TAL v Shuetrim 1 Deteriorations Issue arose as to how one of the insurers dealt with medical reports coming into existence after the DOA - they were given less weight The Court approved of the reasoning above in McArthur (para 150) Approved of the phrase the court does not speculate when it can know - used in Willis v the Commonwealth [1946] Approved of this is comment in Finch v Telstra [2010] 17

18 TAL v Shuetrim 1 Deteriorations What matters is that that state of affairs arose while I was a Telstra Employee. It does not matter that the symptoms of that state of affairs emerged more clearly after I left Telstra s employment. 18

19 Wheeler v FSS 1 Deteriorations Former NSW Police officer Medically discharged due to PTSD chronic psychiatric illness years for condition to stabilise/reach a point where reliable psychiatric prognosis can be given 19

20 Wheeler v FSS 1 Deteriorations Later evidence cannot be discounted in favour of evidence contemporaneous with the date of assessment. The required incapacity must exist as at the end of the period. However, the question is whether the insured person is in fact incapacitated in the relevant way, and all evidence probative of that question that is brought into existence between the date of assessment and the date of the determination must be taken into account. 20

21 Hellessey v MetLife 1 Deteriorations Former police officer Witnessed numerous traumatic events during course of employment Medically discharged on basis developed PTSD, Major Depressive Disorder and Anxiety Insurer decline strong emphasis on preferring evidence closer in proximity to DOA 21

22 Hellessey v MetLife 1 Deteriorations The question is whether the claimant s incapacity satisfies the clause at the assessment date, not whether the prognosis as at the assessment date suggested that the ETE clause is satisfied. Consequently, where time elapses after the assessment date before the insurer decides whether it is satisfied that the TPD definition has been established, the insurer must have due regard to all medical and other evidence concerning the likely consequences of the claimant s incapacity as at the assessment date that becomes available. 22

23 Hellessey v MetLife 1 Deteriorations In the case of psychological injuries such as PTSD, some members will recover and others psychological injuries will become chronic, and they will not recover The evidence available as at the assessment date may be an unsound basis for determining whether the TPD clause has been satisfied The consequences of later and particularly longitudinal evidence may be a more reliable guide to the true nature of the claimant s incapacity as at the assessment date 23

24 Implications 1 Deteriorations Subsequent deterioration that could not have been in the reasonable contemplation of the decision maker at the DOA should not be considered. The concept that the court does not speculate when it can know has no application here where there is a contractually agreed date for the prognostication A deterioration should be taken into account if it is simply a detectable manifestation of what is already happening with the insured at the relevant date Evidence can be dated well past the DOA but still be pertinent A decline based on the likelihood of an improvement in the underlying condition as at the DOA will be vulnerable when there is evidence the improvement has not occurred between DOA and opinion formation 24

25 Subsequent Deteriorations Subsequent Injuries Subsequent Job Applications Subsequent Work Summary 25

26 Fresh Injury Date of Assessment Fresh injury not considered Fresh injury (unrelated to existing condition) 2 Subsequent Injury Date Opinion Formed Date of Assessment Deterioration (in existing condition) Date Opinion Formed Should the Deterioration be taken into account? 26

27 Implications 2 Subsequent Injury Events need not be taken into account if not indicative of true state of affairs at DOA e.g. the occurrence of a wholly unrelated frank injury does not need to be taken into account for the TPD question because it cannot be relevant to true state of affairs as at the DOA However, will be trickier where it is possible to link the new injury to the existing condition at DOA 27

28 Subsequent Deteriorations Subsequent Injuries Subsequent Job Applications Subsequent Work Summary 28

29 Job Applications 3 Job Applications Insured s submitting failed job applications (often occurring years after DOA) as evidence TPD How should they be treated in context of the likelihood of the insured returning to a suitable occupation as at the DOA? 29

30 Case Examples 3 Job Applications Case Insured s Evidence Judgment Erzurumlu v Kellogg Superannuation Pty Limited [2013] Insured argued can t do alternative work as shown by fact unsuccessfully applied for over 700 IT jobs Insured entitled to discount evidence because it was evidence of the reaction of employers in a different industry at a different time. Birdsall v MTAA [2014, first decision, Hallen J) Robert Long v United Super Pty Ltd [2014] Unsuccessfully applied for 50 jobs as shown in workers compensation file Insured argued failure to obtain a job despite 130 weeks of professional job seeking assistance was a key guide that he was TPD Court determined unsuccessful applications were relevant and insurer failed to demonstrate had regard to it in its decisionmaking process. However, unsuccessful job applications did not lead to conclusion insured was TPD because steps insured took in submitting application not known. Limited weight on the unsuccessful job search because details on positions applied for and reasons not successful were scant. different conclusion might have been reached had the plaintiff provided a detailed work attempt diary 30

31 Implications 3 Job Applications Unsuccessful job applications should be treated as a factor relevant to whether insured TPD as at DOA Court s reasoning appears to be that failed job applications cast light on the insured s employability as at (and since) the DOA However, the extent of its relevance will depend on what is known about the failed job applications weighed against the medical evidence Failed job applications that are well past the DOA should not be a significant factor absent compelling evidence 31

32 Subsequent Deteriorations Subsequent Injuries Subsequent Job Applications Subsequent Work Summary 32

33 Returns to Work 4 Subsequent Work Focus on returns to ETE work after DOA but before opinion formed How far is such subsequent employment relevant? 33

34 Case Examples 4 Subsequent Work Case Facts Judgment Halloran v Harwood Nominees Pty Ltd [2007 NSWSC] Insured ceased working as a greaser in May 1996 due to back problems Requalified and returned to work outside of DOA ETE 3 years later If Mr Halloran had returned to work as a greaser or had returned to heavy labour that would prove that he could not have been permanently disabled for work for which he was suited as at the relevant date for assessment Panos v FSS Trustee Corporation [2015 NSWSC] DOA November 2011 September Insured completed a return to work trial nursing home Judge found insured was not TPD given the subsequent work performed: o was within ETE at DOA; October offered casual position in that role o proved the insured was capable of doing that work at the DOA 34

35 SCT Example 4 Subsequent Work Case Facts Determination SCT Determination D14-15\165 Insured returned after DOA to employment within ETE Insurer denied claim based primarily on return to work Insurer s decision fair and reasonable May take account of actual events arising after the qualifying period, providing those events follow a probable course of events arising from the complainant s condition at the end of the qualifying period 35

36 Williams v Mercer Super (QDC, Dec 2017) 4 Subsequent Work Facts Plaintiff ceased work with a merchant bank in October 2009 Claimed TPD due to health problems including fibromyalgia Subsequently worked an hour or so per week for husband s business Commenced a law degree in 2012, received credits and distinctions whilst claim being considered Judgment More significant emphasis on the study undertaken than the work performed Because the plaintiff demonstrated tenacious resilience for three years in spite of those symptoms, it is likely that she can summons the same tenacious resilience if called upon to do part-time administrative work. That causes me to doubt the pessimism of the plaintiff, her husband and Dr Stringer. The plaintiff s academic achievements make more credible the opinions of doctors who each accept the plaintiff has an ability to handle part-time work, at least 2015: completed her law degree 36

37 Carroll v United Super (SC, 4 April 2018) 4 Subsequent Work Facts Insurer s Arguments Insured s Arguments Insured ceased work as a carpenter due bilateral hip dysplasia in March 2012 Work involved demanding physical activity DOA 9 June evidence showed had involvement in small importing business owned by his wife Return to work in 2015 meant insured not TPD Insured s activities in the business (such as answering phones, s, listed as point of contact) showed had capacity to engage in day to day running of business Showed medical evidence was correct that the insured had capacity to work within ETE The work he did for his wife s businesses was intermittent and voluntary to help out his wife Did not demonstrate he was doing or capable of doing regular remuneration work Business was unsuccessful 37

38 Judgment 4 Subsequent Work Judgment The work performed by insured was relevant to TPD question Held the work performing in the business was unprofitable and of an intermittent nature did not qualify as regular remunerative work Evidence only showed had capacity to undertake some tasks in an undemanding situation Determined insured was TPD 38

39 Judgment 4 Subsequent Work And the Court concludes that he underplayed his involvement in the business. But the crossexamination did not establish that this business was capable of providing regular remunerative work for Mr Carroll. Nor did it establish that Mr Carroll was sufficiently regularly involved in the administration of the business that his activity could be used as a signpost of his capacity to perform regular remunerative work 39

40 Implications 4 Subsequent Work Returns to ETE work clearly relevant and may be decisive Critical issue is whether the return to ETE work demonstrates one can continue that work on a sustained basis Returns to work in a family business will be more closely scrutinised as to whether such work truly reflects ability to cope with day to day stresses of work or attend work on a sustained basis Returns to work outside of ETE may still be relevant to showing capacity as at DOA 40

41 Subsequent Deteriorations Subsequent Injuries Subsequent Job Applications Subsequent Work Summary 41

42 Disability Support Pension 5 Summary Qualification for DSP includes a requirement that the person has a continual inability to work as defined under the Social Security Act 1991 Authorities accept that issue must be considered based on the applicants situation as it was at the time of the application for the DSP How have DSP cases treated subsequent events which occur after the DSP date of assessment? 42

43 DSP approach to subsequent events 5 Summary Leading Principles: Subsequent events relevant if referable to the Applicant s condition during the qualification period. Evolution of a medical condition relevant to weight place on competing opinions: Any subsequent evolution of a particular condition might be relevant to any weight the Tribunal places on competing prognostications is not open in law for this Tribunal to use any evidence of such progression [of a medical condition] to directly award a DSP because of those changed circumstances. [Bobera and the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] Shouldn t use hindsight! While hindsight may suggest that treatment did not result in improvement within two years, that is not the question for the Tribunal to determine For that reason, evidence of treatment, and the efficacy of that treatment, after the qualification period is not directly relevant to the Tribunal s decision. [Fanning and Secretary, Department of Social Services 2014] 43

44 Key Takeaways Deteriorations 5 Summary A deterioration should be taken into account if it illuminates an existing state of affairs. Courts will strain to classify subsequent events in this longitudinal way The key is whether subsequent evidence is pertinent to the determination of the appellant s condition at the relevant time Avoid discounting evidence well past the DOA in favour of evidence closer to the DOA just because of the temporal difference Use language which demonstrates subsequent changes were considered to determine the true state of affairs at the DOA 44

45 Key Takeaways Subsequent Injury 45 Returns Summaryto Work The occurrence of a wholly unrelated frank injury or illness is not required to be taken into account because cannot be indicative of the true state of affairs as at the DOA If this applies, ensure documentation reflects new conditions are not relevant to the state of affairs at the DOA 45

46 Key Takeaways Job Applications 5 Summary Ensure assessment documentation reflects took into account unsuccessful job applications as relevant to TPD question In terms of weight to give to such unsuccessful applications consider: Types of roles applied for were they realistically within insured s ETE? Evidence regarding depth and breadth of job seeking effort Unsuccessful applications are of limited importance absent compelling evidence regarding roles applied for, efforts to obtain those roles and reasons for rejection 46

47 Key Takeaways Subsequent Work 5 Summary Consider if return to work demonstrates ability to work on a sustained basis such that continued employment is not in jeopardy Returns to work in a family business requires closer scrutiny Where failed return to work due to medical conditions can be a strong factor in favour of TPD Subsequent work outside of ETE may still be relevant but only as a signpost of the true state of affairs at DOA While every care has been taken in its preparation of this presentation, it does not constitute legal advice and should not be relied upon for this purpose. TurksLegal does not accept responsibility for any errors or omissions from this publication. 47

48 For more information, please contact: Darryl Pereira Partner Sofia Papachristos Partner turkslegal.com.au Sydney Melbourne Brisbane Newcastle

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50 TPD Claims The Next Frontier CMG ALUCA Presentation Presented by Nicholas Matkovich and Diren Fernando 19 April 2018

51 Overview What s next? Unresolved issues in TPD assessments The duty of utmost good faith what are its implications? Determining the Date for Assessment Issues re ETE The trustee s duty Making use of Section 29(6) ICA 51

52 Court s reviewing Insurer s (-and Trustee s) Decisions Stage One Enquiry Whether the decisions to decline a claim can be set aside because the decisions have been made in breach of the duties owed by the trustee and the insurer. 52

53 Court s reviewing Insurer s (-and Trustee s) Decisions Stage Two Enquiry Assuming the decisions to decline a claim can be set aside, the Court will then reserve to itself the assessment of whether the claimant is entitled to the TPD benefit on the basis of the whole of the evidence including events which have occurred after the insurer s decision to decline the claim. Hannover Life v Sayseng [2005] NSWCA 214 Birdsall v MTAA Superannuation Fund Pty Ltd [2015] NSWCA

54 Separate Determination The Court can determine the First and Second Stage enquiries separately. In fact, Courts in NSW have been prepared to order separate determinations of the First and Second Stage issues. In reviewing the First Stage, the Court will usually limit its review to the material which was before the insurer. Note: Wild v FSS [2017] NSWSC 237 Annan v FSS [2017] NSWSC

55 Duties of Decision Makers Trustee The trustee is required to act in good faith, on a real and genuine consideration of the material before it, for the purpose for which it was conferred, for sound reasons where reasons are disclosed, although the trustee is not obliged to give reasons for its decision. Hannover Life v Sayseng [2005] NSWCA

56 Insurer Duty of Utmost Good Faith / Good Faith Imposes an obligation on the insurer to exercise its rights and discharge its obligations under the insurance contract with utmost good faith. Ziogos v FSS [2015] NSWSC

57 Insurer Duty to Form an Opinion Subjective TPD Definition The insurer is obliged to act reasonably in considering and determining the issue. Test of reasonableness is whether the opinion formed by the insurer was not open to an insurer acting reasonably and fairly in consideration of the claim. The assessment of reasonableness is based on the material before the insurer at the time. The assessment of reasonableness does not require the Court to undertake a review of the merits of the insurer s decision. Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas Hannover Life v Jones [2017] NSWCA

58 Insurer Duty to Give Reasons Insurer should give reasons for its decisions Ziogos v FSS [2015] NSWSC

59 Issues around duty of good faith The claims handling process Investigating the Claim The evidence presented in support of a Claim Decline What standard is expected in a Decline Letter? 59

60 Focus on the Trustee s duty Superannuation Industry (Supervision) Act 1993 (Cth) (7) The covenants referred to in subsection (1) include the following covenants by each trustee of the entity: (d) to do everything that is reasonable to pursue an insurance claim for the benefit of a beneficiary, if claim has a reasonable prospect of success. the What does this mean? 60

61 Interpretation of ETE Clause ETE Clause Reasonably fitted by education, training or experience, expresses notion of a link or connection between future work and the insured s past education, training or experience. Hannover Life v Jones [2017] NSWCA

62 Interpretation of ETE Clause Unlikely Ever No real chance of employment, as distinct from a remote or speculative possibility of employment. TAL Life Ltd v Shuetrim (2016) 91 NSWLR

63 Interpretation of ETE Clause Regular Remuneration Work Capacity to perform regular remunerative work is different from the capacity to perform a particular work task. The physical capacity to perform one or more work tasks does not mean a person has the ability to engage in remunerative work. Hannover Life v Colella (2014) VSCA 205 Jones v United Super [2016] NSWSC

64 Interpretation of ETE Clause Regular Remuneration Work A person can be reasonably fitted for Regular Remuneration Work by reason of education or training or experience, or a combination of them. Hannover Life v Dargan [2013] NSWCA 57 64

65 Interpretation of ETE Clause Regular Remuneration Work Part-Time Work Regular Casual Work BUT NOT Irregular and occasional casual/intermittent work Hannover Life v Dargan [2013] NSWCA 57 Manglicmot v CBOSC Pty Ltd [2011] NSWCA

66 Unanswered Questions re ETE Need for the insurer to adduce evidence of the local labour market What to do with pre-career occupations 66

67 Date for Assessment of TPD Status The date for assessment to determine TPD Status is the expiration of the applicable qualifying period as the relevant date. Halloran v Harwood Nominees [2007] NSWSC

68 Difficulties in determining the Date for Assessment How to address repeated cessations of work? ADD TIMELINE GRAPHIC 68

69 Use of Subsequent Medical and Other Evidence Later expert opinions may be relevant to and may be taken into account when the Court is considering the probability of claimant being able to engage in suggested occupations at the date for assessment. TAL Life Ltd v Shuetrim (2016) 91 NSWLR

70 Difficulties in interpreting later medical evidence How to deal with retrospective prognoses How to think about likelihood 70

71 Remedies for Misrepresentation and Non-Disclosure Section 29 (6) If the insurer has not avoided the contract or has not varied the contract under subsection (4), the insurer may, by notice in writing given to the insured, vary the contract in such a way as to place the insurer in the position (subject to subsection (7)) in which the insurer would have been if the duty of disclosure had been complied with or the misrepresentation had not been made.... (7) The position of the insurer under a contract (the relevant contract ) that is varied under subsection (6) must not be inconsistent with the position in which other reasonable and prudent insurers would have been if: (a) they had entered into similar contracts of life insurance to the relevant contract; and (b) there had been no failure to comply with the duty of disclosure, and no misrepresentation, by the insureds under the similar contracts before they were entered into. 71

72 Use of Section 29(6) What evidence needs to be marshalled to use the remedy? What consideration needs to be given to section 29(7) at an early stage? 72

73 QUESTIONS? 73

74 Team Contacts Nicholas Matkovich Partner P E nmatkovich@hwle.com.au Diren Fernando Special Counsel P E dfernando@hwle.com.au 74

75 Adelaide Brisbane Canberra Darwin Hobart Melbourne Norwest Perth Sydney