Case 1

This case discusses whether a member’s ill health meets the definition of Total Permanent Disability (TPD). Particularly, it involves discussion on whether the member could perform what is known as ‘Everyday Working Activities’, and whether that criteria should be assessed in isolation or in conjunction to the rest of the medical evidence.

In this case, the member ceased work on 24 February 2017 as a result of cost-cutting measures by his employer. He remained unemployed but continued to have disablement insurance under the trustee’s policy. His TPD insurance benefit amounted to $72,000.

On 18 May 2017, the member suffered a significant stroke and sought a TPD benefit from the fund but the insurer denied the member’s claim on the grounds he failed to meet the eligibility criteria under either of the two TPD definitions in the policy.

The trustee had originally accepted the insurer’s denial of claim but later reversed its decision when new medical evidence was submitted, instead approving the claim from its point of view. However, as is usually the case, the trust deed provided the trustee was only required to pay the insured TPD benefit to the member when it received the actual dollars from the insurer.

There were two definitions under the policy to assess whether an insured person was entitled to a TPD benefit. Under the first definition for TPD (TPD Definition 1), the member needed to be employed at the time the TPD event occurred. However, the member had ceased employment on 24 February 2017. This effectively meant he could only be assessed under the second definition of TPD (TPD Definition 2).

The issue was whether the decision of the insurer to deny the claim was fair and reasonable in relation to the second TPD definition.

TPD Definition 2 had four parts:

  1. Part A required the member to regularly attend and undergo appropriate care and treatment of a doctor;
  2. Part B required the member to have exhausted all reasonable treatment options and not expect to have any further improvements or recovery;
  3. Part C required the member to be permanently and irreversibly unable to perform at least three of the six specified ‘Everyday Working Activities’ without another person’s physical assistance. These were defined as:
    1. Mobility – the ability to walk more than 200 metres on a level surface without stopping due to breathlessness or severe pain;
    2. Rising/Sitting – the ability to rise and sit in chairs;
    3. Communicating – the ability to hear and speak with clarity and hold a conversation;
    4. Vision – measured at greater than 6/60 in the better eye using the Snellen eye chart;
    5. Lifting and carrying – the ability to lift and carry at least a 2kg weight for 10 metres; and
    6. Manual dexterity – the ability to use hands and fingers to hold and manipulate small objects with a degree of precision.

    These needed to be measured after the permanent liability has lasted for, at least, six uninterrupted consecutive months; and

  4. Part D required the member to be ‘Permanently Incapacitated’ (as defined).

Based on the available medical evidence provided, the insurer did not dispute the fact that the member satisfied Parts A, B and D of TPD Definition 2. Nevertheless, the insurer decided the member did not satisfy the ‘Everyday Working Activities’ test in Part C. In doing so, the insurer relied heavily on a single medical report completed by a general practitioner. In the general practitioner’s report it was held that the member was able to perform a total of five out of the six specified activities independently.

However, the panel established that the report by the general practitioner (who was not the member’s regular general practitioner) was not conclusive. In particular, the report consisted of single word responses of ‘able/unable’ against each of the six activities. There were also no further notes or explanations as to how the member executed each of the activities.

Further medical evidence was obtained from the member’s regular general practitioner which established that he was unable to perform three of the six ‘Everyday Working Activities’. It was at this point that the trustee revised its position, but the insurer continued to deny the claim.

The Panel concluded that the insurer did not act in a fair and reasonable manner because it did not consider all of the medical evidence, including separate reports that indicated the member needed 24-hour supervision. Under the Panel’s view, a fair assessment of the TPD Definition 2 required a reading of ‘Everyday Work Activities’ to be assessed in context with the entire medical evidence rather than in isolation. It would be inconceivable to expect the member to be able to perform at least three of the six activities when he also required 24-hour supervision. AFCA’s decision was that the complainant’s TPD claim was payable with interest added in accordance with the Insurance Contracts Act 1987 (Cth).

Case numbers: 627858 & 621692

Case 2

This case is about the denial of the member’s claim for TPD due to not meeting the non-working TPD definitions. The member joined the fund on The TPD cover commenced once she began working for the employer which was on 10 August 2015. She ceased work on 11 August and this was confirmed by her resignation email sent on 12 August 2015.

The member suffers from Sjogren’s syndrome and was certified by her doctor to be unfit for work from October 2015. The member had not worked since. A claim was submitted for TPD benefit on 13 February 2017. The claim was denied because the member did not meet the definition of the ‘non-working’ TPD definitions in the policy. It is this decision that was under review.

Under the policy there were four different definitions of TPD that needed to be met, with the applicable combination of the definitions being the one that applied just before the member’s date of disablement. Given that the member was not working on the date she was first certified as unfit for work, the non-working TPD definitions of TPD applied to her.

There were three parts to the non-working TPD definitions (Parts A, C and D) that needed to be met for the claim to be successful:

  • Under Part A the member needed to have suffered the loss of limbs or sight in both eyes. However, whilst she has had treatment for severely dry eyes due to her condition, she was able to see.
  • Under Part C the member needed to be continually and totally unable of performing at least two out of the five ‘Daily living’ activities. These activities were: bathing, dressing, feeding, toileting or sitting herself. The medical evidence showed that although she stated that some of the activities were painful due to her condition, there was no evidence indicating she could not perform the activities independently.
  • Under Part D of the TPD definition she needed to have suffered cognitive loss. The medical evidence, although supporting a conclusion that there was memory loss, stated that there was no indication or suggestion that her intellectual capacity had diminished to the point of requiring ongoing care or supervision by another person.

Based on the above failure to meet the non-working TPD definition, and having regard to the medical evidence as a whole, AFCA held that the member was not entitled to the TPD claim under the policy. AFCA affirmed the decision of the insurer to deny the member’s TPD claim and the trustee’s decision to accept the insurer’s denial.

Case numbers: 621501 & 614243