CR11 Disability claim repudiated on basis of failure to meet criteria of screening tests


• Disability claim – claim repudiated on basis of failure to meet criteria of screening tests – insured’s medical practitioners’ view that insured not capable of engaging in his occupation.

The complainant, a self-employed mechanic, was diagnosed as having a prothombotic tendency after suffering a deep vein thrombosis with severe pulmonary embolism, and a sagittal sinus thrombosis with cerebral venous infarcts and generalised seizures.

The view of the neurologist who treated him was that he no longer capable of engaging in his former occupation as a mechanic. Formal neuropsychological testing revealed deficits in executive functioning – he was unable to engage in abstract thought, and displayed perseveration and deficits in attention and working memory. In addition, the neurologist noted that he would have to take Warfarin, a blood-thinning drug, for life, and stated his view that “the combination of using Warfarin in a patient with seizures is fraught with difficulty, and then to additionally expose such a patient to a workshop environment with dangerous moving machinery and expect him to continue to work is an irresponsible and dangerous practice. “ It appears that the complainant would run the risk of severe bleeding if injured while on Warfarin, as a relatively minor laceration could result in hospitalisation.

The complainant had purchased a “new generation” disability product. A selling point for this product was that a lump sum disability benefit was payable not if an impairment affected one’s ability to perform a specific occupation, as in the classic disability benefit, but according to a system of strict medical criteria, described as “objective and fair”. Thus, when the complainant submitted his claim, it was assessed against the “nervous system” criteria. To qualify for a 50% benefit these criteria were: “inability to comprehend or communicate language symbols or 85% speech impairment or able to perform ≤ 4 basic activities of daily living or destruction of an optic nerve or monoplegia or < 20/125 Snellen rating bilaterally or > 75% binaural hearing impairment”. It seems the complainant did not meet any of these requirements – but the insurer repudiated the claim specifically on the basis that the neurologist had recorded a score of 5/6 on the Activities of Daily Living score sheet. In the last category, “Advanced activities”, he scored the complainant as “poor/cannot” in almost every sub-category, specifically memory, problem solving and stress adaptation.

The Ombudsman’s office commented that if one read the policy as a whole, it could not be interpreted as restrictively as the insurer had done. The wording in the policy was reminiscent of a classic disability policy.

The insurer recognises that some illnesses could be assessed only through strict screening tests. The policy stated that in cases where objective criteria were insufficient a more subjective test, the Activities of Daily Living score sheet, had to be used “to assess incapacity to work, for example, the inability to communicate, loss of memory, impaired locomotion, etc.” The score sheet tests activities in six basic activity categories: self care; communication; physical activity; sensory function; hand functions; and advanced functions.

We pointed out to the insurer that, in interpreting the contract to determine the common or constructive intention of the parties, and having regard to the contract as a whole, one needs to reconcile the policy provision that “this benefit pays a capital amount in the event of you being medically impaired and hence unable to work”, with an exclusion simply on the basis of medical screening tests that do not specifically measure an ability to work. The quoted statement indicated the nature and purpose of the contract: to provide cover if you were medically impaired and unable to work. The link between the criteria and the purpose was in fact explicitly acknowledged in the policy document: “these criteria are designed to establish whether your disability prevents you from working at all”. We suggested that the criteria should be seen, in the context of the contract as a whole, as guidelines to gauge whether an insured is able to work. They should not therefore be applied mechanistically but to help the insurer form an opinion as to the claimant’s ability to work, the insurer retaining a discretion to override the strict application of the criteria to give effect to the policy provision that the benefit is payable if you are “medically impaired and hence unable to work”, if indeed it is clear that the person cannot work.

The complainant’s case provided a good example of someone who was fully functional in most respects allowed for on the score sheet (5 out of the 6 categories), but who utterly failed the 6th category (Advanced Activities), which happened to contain most of the abilities one would immediately recognise as being necessary to enable one to work as a mechanic: social interaction, understanding concepts, memory, problem solving.

The insurer responded to our input by conceding that reliance solely on the Activities of Daily Living tool had led to an unfair result. It agreed to pay the 50% benefit immediately and indicated that it would consider payment of the remaining 50% after the complainant had had a further neuropsychological assessment to determine whether his cognitive impairment was moderate or severe. We accepted the reasonableness of this stance.