Case number: August 2015

Transcription

1 Determination Case number: August Overview 1.1 Dispute The Applicant holds an income protection policy (Policy) with the Financial Services Provider (FSP). The Applicant claimed for a chronic headache condition and the FSP accepted the claim on 8 June The Applicant and the FSP currently dispute how often the Applicant should provide medical and financial reports to establish an ongoing entitlement to receive benefits. 1.2 Issues and key findings How frequently is the Applicant required to provide medical reports? The FSP must reasonably exercise its right to seek a medical report to establish the Applicant s ongoing entitlement to benefits. Given the Applicant s condition is unlikely to change, the failure of treatment and the difficulties in obtaining the necessary material from the preferred specialist; an annual review is appropriate. How frequently is the Applicant required to provide financial documents? The Policy requires payment of a monthly benefit in arrears, however this does not indicate the frequency of a financial review. Given the Applicant s financial position has not changed and is unlikely to change, it would be reasonable to require a twice yearly review of the Applicant s financial position. 1.3 Determination This Determination is substantially in favour of the Applicant. The FSP shall be entitled to an annual medical review of the Applicant s condition and ongoing entitlement to benefits. The FSP shall pay the Applicant monthly in arrears and review the Applicant s financial circumstances twice yearly to ascertain an ongoing entitlement to benefits. The Applicant should notify the FSP immediately of any alteration in his financial position outside of the review period as the FSP will have an entitlement to recover any amount paid in excess of the benefit. Case No: Determination Page 1 of 11

2 2 Reasons for Determination 2.1 How frequently is the Applicant required to provide medical reports? The Policy wording allows the FSP to seek proof the Applicant is entitled to benefits but there is no time frames provided The Policy clearly provides the FSP with an entitlement to seek proof that the Applicant is still entitled to Benefits. However, the Policy does not set out time frames for the frequency of the FSP's right to seek this information. Similarly, the Policy entrenches the requirement for the Applicant to seek medical advice and treatment from a medical practitioner for as long as he is on claim but sets no time frames for doing so. In the current circumstances the FSP considers quarterly assessments as appropriate because semi-annual or annual assessments are reserved for terminal conditions or medical conditions with no prospect of recovery. The Applicant considers an annual assessment as appropriate given the nature of the condition, the need to drive a substantial distance to the FSP s preferred medical practitioner and the medical practitioner s preferred review interval. The FSP s entitlement to seek proof the Applicant is entitled to benefits should be exercised reasonably The FSP contends that the case of Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 is applicable. That is, that FOS can only decide what is unreasonable (rather than reasonable) based on the evidence available to the insurer at the time of making its decision. The following is noted from the judgment:.in the field of insurance, it is well established that where under a contract of insurance an element of the insurer's liability is expressed in terms of the satisfaction or opinion of the insurer, the insurer is obliged to act reasonably in considering and determining that matter.to say that an insurer must act reasonably in forming or declining to form an opinion is not to say that a Court can substitute its own view for that of the insurer. As North J pointed out in Doyle at 529, reasonable persons may reasonably take different views. Unless the view taken by the insurer can be shown to have been unreasonable on the material then before the insurer, the decision of the insurer cannot be successfully attacked on this ground. The decision is authority for an insurer exercising judgment regarding liability under the policy that is expressed in terms of its satisfaction or opinion for a group policy. The Court also confirmed the manner in which a Trustee s decision could be deemed unreasonable: In a case like the present where the evidence allows the information placed before the Trustee to be identified, if the Trustee came to a conclusion which no reasonable person could have come to one of the first three grounds of challenge referred in Rapa v. Patience must be available; an unreasonable conclusion cannot be reached without either a failure to exercise power in good faith, or a failure to exercise the power upon real and genuine consideration, or a failure to exercise the power in accordance with the purposes for which it was conferred. See Maciejewski at [21]. Necessarily the consideration of the challenge to these opinions is restricted to consideration of material which was available for the Trustee and the insurer to consider: Tonkin v. Western Mining Corporation Ltd [1998] 10 ANZ Ins Ca s The FSP in this matter has already formed an opinion on the terms of its liability under the individual Policy which is not framed in the context of own opinion. In addition to this the claims and payment clause is relating to the seeking of Case No: Determination Page 2 of 11

3 information to establish an ongoing entitlement rather than whether the Applicant is entitled to the benefit. More importantly, the FSP must exercise any discretion under the higher duty of utmost good faith rather than the good faith applicable to the Trustee for a group policy. The case of Sayseng is not analogous with the current dispute before FOS and the authority of Sayseng cannot be extended to require FOS only to consider whether the requested frequency of relevant reports is unreasonable. In the absence of guidance from the Policy it is my view that the entitlement to seek proof must comply with the duty of good faith. The duty of good faith in this dispute is what is reasonable in the circumstances having regard to: whether the Applicant s condition is such that it requires frequent advice or treatment; whether the Applicant's condition is such that it would be likely to change markedly and affect an entitlement to benefits; whether the Applicant's medical reports indicate a good or poor prognosis overall; whether the treating medical practitioners suggest there is likely to be any changes in the short or long term future. The Applicant s condition is unlikely to change The medical evidence demonstrates the Applicant s condition is chronic, has limited treatment prospects and a poor overall prognosis as outlined by the treating specialist Dr W. There is no medical report which suggests that the Applicant is likely to experience a short or long term recovery or improvement of his condition. Given these circumstances, it is reasonable to conclude that the Applicant s poor prognosis is unlikely to change in the short to long term. The medical evidence supports that treatment options have been exhausted At present the medical evidence does not suggest that the Applicant has further treatment options in relation to his condition. As a result he is not required to see a medical practitioner regularly for treatment or advice. Dr W has noted that the Applicant has exhausted preventative medications, underwent an unsuccessful lignocaine infusion and that cognitive behavioural therapy might assist with pain management but would not cure the condition. There is a suggestion that Botox may assist but no evidence that he was considered appropriate for this treatment or that it would likely help. Even though the Applicant has not sought advice or treatment more regularly, he still meets the Policy requirement to seek medical advice and treatment whilst on claim. Several common law cases suggest that even a 'once only' medical advice which applies over a long period of time can qualify as being under the continuous direction and professional care of a medical practitioner. 1 Under the circumstances the Applicant has been seeking advice and treatment from a medical practitioner whilst 1 White v National Mutual [2003] NSWSC 1209 Abacus Consultants P/L v National Mutual Life Australia P/L [2003] SADC 135 Case No: Determination Page 3 of 11

4 on claim for the purposes of the Policy. This has bearing on whether the need to attend a medical practitioner for the production of a report more regularly is reasonable. An annual review period is appropriate given the prognosis and lack of options There is no evidence suggesting why a frequent interval of review during the year is necessary or appropriate based on the Applicant s unchanging condition. The Policy terms provide no guidance regarding the interval when a report should be requested The FSP has noted it arranges a semi-annual or annual review for more extreme cases such as terminal conditions or conditions where there is no prospect of improvement. The medical evidence supports there being no prospect of improvement which would suggest a semi-annual or annual review is indicated. The general difficulties of obtaining the preferred specialist appointments and the distance of the Applicant from the specialist should also be taken into account. This makes compliance with a request for medical documentation from the specialist more onerous if it is on a regular basis. Given the above, I consider it fair in all the circumstances that the Applicant should only be required to provide medical evidence on an annual basis. 2.2 How often is the Applicant required to provide financial documents? The FSP should be reasonable in requesting financial information The Policy wording states the FSP may seek proof that the Policy owner is still entitled to benefits. The FSP is entitled to require production of financial documents by the Applicant prior to making ongoing payments. For similar reasons to above, the exercise of this right must be reasonable. It is noted the FSP is entitled to such information prior to making ongoing payments. The parties dispute the current payment and financial review schedules The allegations regarding varying payment periods and provision of financial information has been raised. It would appear that the payment period has varied but it would appear that at least on some occasions this may have been due to the late provision of evidence by the Applicant. The FSP has paid the benefit in arrears, after the receipt of the relevant information. There is insufficient evidence to consider this issue further and the payment schedule will be addressed below. The parties have disputed the frequency of the financial review. It would appear that the FSP believed this was occurring already on a quarterly basis whilst the Applicant has disputed this. This issue will be further addressed below. The term monthly benefit indicates a monthly arrears payment schedule but not the frequency of any financial review The definition of monthly benefit states the monthly benefit is the amount shown on the policy schedule subject to any applicable indexing or reduction. The definition also suggests the benefit is calculated based on a month or alternatively an Case No: Determination Page 4 of 11

5 apportioned part of a month if the payment period is less than a month. The calculation of the benefit suggests a monthly payment schedule paid in arrears as the payment period is calculated on the elapse of a month during which the Applicant accrues the benefit. It is further noted that this has been the process applied by the insurer during the claim period. The monthly benefit definition does not provide terms regarding the frequency of a financial review and accordingly it does not assist a review of this issue. The Applicant s financial circumstances are unlikely to change The financial documentation provided for the Applicant suggests he has minimal passive income and is not currently receiving an income for work based activities. The majority of his income is received from the insurance payments. This has not altered significantly over the period spanned by the annual tax returns provided to FOS. Similarly, the family trust returns do not suggest a significant taxable income. This analysis is supported by a report obtained by the FSP from C who was engaged to assess the Applicant s financials in It is noted that there is no information regarding TS the trustee of the family trust which was believed to be the same entity as the Applicant s consultancy business. The FSP would be entitled to this information if it wished to review same. Based on the information provided, the Applicant s financial position has not altered markedly over the years he has been on claim. There is no further information suggesting that his financial position would be likely to positively change in the short or long term future. It is reasonable for the FSP to seek financial evidence on a twice yearly basis The FSP is entitled to seek financial evidence but it must exercise this right in a reasonable manner. It is noted that the provision of financial documents cannot be considered particularly onerous when compared to the requirements of obtaining a specialist medical opinion. However, there would appear to be little necessity in a frequent review period given the unchanging nature of the Applicant s financial situation. Based on this, it is considered reasonable for the FSP to seek any financial documentation it requires twice a year and it may elect to do so within a calendar or financial year. It should be noted however, that if the Applicant earns income or receives monies that otherwise affect his entitlement to the benefit that he should inform the FSP immediately. This is because if the FSP determines at the time of review that the Applicant has not been entitled to any benefits which it has already paid monthly in arrears, then the FSP would be entitled to recover those monies and/or deduct same from future payments. Case No: Determination Page 5 of 11

6 3 Supporting information 3.1 Relevant Policy Wording Customer Information Brochure and Policy Terms 10. CLAIMS AND PAYMENTS.. Give us full information if there is a claim. This includes any medical reports from people who have treated you for illness or injury. If we ask you to undergo any medical examinations, you must agree to do so. We will pay for these. State your correct age because if your age has been understated, the monthly benefits will be those that the premium would have purchased for your correct age. If your age has been overstated we will refund any extra premium paid. Before we pay the benefit, we must be satisfied that the policy owner is entitled to it. For this reason, we may ask to look at your birth certificate. Seek medical advice and treatment from a medical practitioner for as long as you are on claim. You must do this if we are to pay the benefit. Make sure the policy owner is still entitled to benefits because we have the right to ask for proof. If proof is not provided or the policy owner is no longer entitled to benefits, we may reduce or end the benefits... Medical Practitioner A registered and qualified medical practitioner, not including the policy owner, you, an Immediate Family Member, not a respective partner or spouse. Monthly Benefit The amount shown on the policy schedule plus any increases under index linking (or, if applicable, the Increasing Claim Benefit). Where applicable, it includes any reduced benefit. If a period of payment is less than a month, we pay one thirtieth of the monthly benefit for each day of the period. 3.2 Policy Schedule The following information is provided by the Policy Schedule: The Policy commenced on 8 February The Applicant had income protection plus cover with increasing claim benefit. The monthly benefit is listed as $5, Original Claim Form and Doctor s Statement Original Claim Form dated 5 June 2007 The Claim Form provides the following material: The Applicant is in IT management. The Applicant estimates 80% of his work is manual and he works 60 hours. The Applicant s income net of expenses was $83,000 in last 12 months a nd $90,000 in the prior financial year. The Applicant is experiencing constant migraines and has not been able to attend work since 14 May The Applicant is a director of the company and the business continues to trade. The Applicant currently has no staff. Case No: Determination Page 6 of 11

7 Treating Doctor s Statement dated 4 June 2007 from Dr P (General Practitioner) The Applicant has chronic intermittent headaches, photophobia, phonophobia and blurring of vision. The Applicant has prolonged headache and symptoms with neurological deficits. The prognosis is recorded as long course. The patient is prevented from working due to distraction, fatigue, disturbed balance and coordination affecting normal performance of duties. The Applicant was able to work part time from 11 July 2006 and disabled full time from 14 May Relevant Medical Reports Report Provider and Date Dr D (Consultant Occupational physician) Date unknown Dr P (General Practitioner) 19 July 2007 Dr H (General Practitioner) 30 September 2009 Key Points The Applicant has atypical migraine The Applicant s occupational duties would be significantly interfered with even by minimal symptoms. Dr D expects the current presentation and history as presented over the last two years will continue indefinitely into the future. Dr D doubts the Applicant will likely be able to return to either part or full time work. Retraining is not a practical option given that irrespective of what occupation he might reasonably be retrained for, the level of symptomology is likely to interfere in the same way as it does he usual occupation. The Applicant was diagnosed with atypical migraine. The headaches significantly impact on his ability to perform his usual occupational duties as an IT manager. The pain affects concentration, vision, ability to use a computer screen. The degree of impediment would be classified as partial. The prognosis in the long term is hope for complete recovery. In the short term the Applicant continues to have headaches whilst on medication and under close management by a neurologist. The Applicant has had atypical migraine since With current ongoing symptoms and headaches the Applicant s job performance would be very limited. The Applicant is due to see Dr W for a lignocaine infusion. The long term prognosis is uncertain as the migraine he is suffering is not usual and depends on the opinion of a neurologist. No contributing factors to the condition have been identified. Rehabilitation is unlikely to be useful given the underlying condition is hard to treat with rehabilitation. Case No: Determination Page 7 of 11

8 Dr Du (general practitioner) 30 October 2009 Dr W (Neurologist) 22 February 2010 Dr RM (Neurologist) 24 April 2012 Dr KD 9 September 2013 Dr W 3 March 2014 Dr W 13 May 2014 Medical notations of various dates The Applicant has atypical migraines/chronic tension type headache with chronic daily headaches. Future management includes further consultations with neurologist Dr W. The prognosis is uncertain. Dr Du would be happy for the Applicant to undertake a rehabilitation program if this is advised by a rehabilitation specialist. The Applicant has chronic daily headache with chronic tension-type headache and migraine features. Treatment by lignocaine infusion was unsuccessful. Preventative medications have been exhausted. Dr W did note to the general practitioner that cognitive behavior therapy might help pain management but should not be seen as a cure. The prognosis is guarded and somewhat gloomy. The Applicant has chronic daily headache for the last 6 years which is resistant to treatment. The headache is not migrainous and the ADAPT programme has not been beneficial. Dr RM agrees with the previous diagnosis of the Applicant s condition. Dr RM does not anticipate a rehabilitation programme would assist with the resolution of the headache. The Applicant s condition is ongoing. There has been no change since last July The Applicant has seen two treating neurologists and there are no further treatment options available to him. He sees Dr W annually and Dr KD believes this letter provides the most accurate and up to date treatment report. Completed an ongoing treating doctor s statement. Dr W confirmed the Applicant s condition had not changed. The Applicant is clinically the same. A colleague has suggested trying Botox for the treatment of migraine headaches. Dr W will refer the Applicant to this colleague to determine whether this is suitable. On 27 July 2006 notation of sinusitis and headaches. On 14 August 2006 a constant headache in the occipital region is noted. On 29 August 2006 several symptoms were noted including fevers, trouble with concentration, vision, dizziness or vertigo and clicking in ear. On 28 September 2006 headaches are noted. On 4 October 2006 no change in symptoms and the Case No: Determination Page 8 of 11

9 headaches are continuing. O 17 October 2006 there is a notation regarding the Applicant seeing a Dr Watson. On 19 July 2007 there is a notation regarding atypical migraine. On 13 August 2007 the Applicant remains unwell with headaches. On 3 September 2007, 2 October 2007 and 26 November 2007 the Applicant attended for the completion of income protection form regarding ongoing atypical migraines. 7 January 2008 the notes record persistent atypical migraines. 18 February 2008 the applicant attended for the purpose of the income protection progress claim and an earache. It is further noted that the Applicant has continuing headaches. On 7 May 2008 the notations reveal persisting headaches. On 27 June 2008 notation records chronic headaches. On 21 August 2008 the notation records the persisting chronic headaches. On 5 September 2008 the notations record chronic headaches. On 31 October 2008 the notations record attendance for the income protection claim form for migraines. On 5 December 2008 the notations record attendance for completion of income protection claim form and daily headaches. On 24 January 2009 the notations record the situation as unchanged an ongoing migraines. On 23 March 2009 the notations record treating doctors report for income protection claim. The Applicant is still experiencing daily headaches. On 3 June 2009 the persisting headaches are recorded together with the need to complete income protection form. On 22 June 2009 the doctor was attempting to follow up with the insurer regarding matters. 20 August 2009 consideration was been given for lignocaine infusion due to persistent headaches The medical notations demonstrate ongoing headaches during 2009, 2010 and 2011 with referrals to medical specialists. Additional records suggest the headaches were ongoing in Case No: Determination Page 9 of 11

10 3.5 Taxation Documentation Tax Return and Year Individual Tax Return Financial Year Ending 30/6/2006 Individual Tax Return Financial year ending 30/6/2007 Tax Return for the Applicant s family trust Key Points The total income recorded is $59,811 The total taxable income is $54,991. The Applicant receives rental income but after works and deductions, he had a net loss of $7,549. The total income recorded for the Applicant was $38,708. The total taxable income was $29,651 The total business income is recorded as $89,672. The business had a net income of $20,325. Financial year ending 30/6/2007 Individual Tax Return Financial Year Ending 30/6/2008 Tax Return for the Applicant s family trust Financial year ending 30/6/2008 Individual Tax Return Financial year ending 30/6/2010 Tax Return for the Applicant s family trust Financial year ending 30/6/2010 Tax Return for the Applicant s family trust Financial Year Ending 30/6/2011 Individual Tax Return Year ending 30/6/2011 Individual Return Financial Year ending 30/6/2013 The total income was $72,339. The taxable income is listed as $58,980 Rental losses were $6,964 The Applicant received some income from non-primary production. The Applicant received income from the income protection cover in the sum of $71,445. The total business income is recorded as $5,239 from non-primary production. The business had a net loss of $212. The taxable income was $109,298 constituted of dividends, rental, capital gains income. The majority of the income ($105,956) was from insurance benefits. The trust had a total net income of $32. The trust has assets of $28,572 and liabilities of $28,562. The Applicant is listed as a beneficiary of the trust. The total income was $997 and the net income after deductions was $694. The total assets are $27,943 and liabilities are $27,933. The Applicant s taxable income was $58,557 (the net income was $64,940 with deductions of $6,383. The Applicant had a net rent of $3,474 and income from dividends/interest. The sickness/accident income was $58,315 The Applicant s taxable income was $91,722. The Applicant received income from the income protection cover and some shares. The Applicant sustained a loss on the rental property. Case No: Determination Page 10 of 11

11 Tax Return for the Applicant s family trust The taxable income of the trust estate was $625. Financial year ending 30/6/2013 Report dated 9 November 2011 from C regarding Applicant s 2010 and 2011 earnings The individual tax returns show no earned income. The income report in these two financial years show profit on two investment rental properties owned since 1999, dividends from share portfolio and small capital gains made on sale of shares, distributions from the family trust and income protection benefits and premium refunds. There is no evidence of sales/trading activities other than for investment purposes. The Family Trust showed only small amounts of dividend income and capital gains on the sale of shares. There is no information for TS the trustee of the family trust. This entity is believed to be the name of the Applicant s consultancy business. There is no financial information regarding this entity. Case No: Determination Page 11 of 11