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Determination
Case number | 12-00-1045176 |
Financial firm | TAL Life Limited |
Case number: 12-00-1045176 5 September 2024
The complainant has Behcet’s disease. She stopped working as a paediatrician in Australia, made a claim on her income protection insurance, and later moved to Slovakia. The insurer accepted the claim and began to pay benefits.
On 28 April 2022, the insurer cancelled the policy and refused to pay further benefits, saying that the complainant had fraudulently claimed not to be working when she was in fact working as a paediatrician in Slovakia.
The complainant says:
she was entitled to benefits despite her work in Slovakia
she did not commit fraud because she was so disabled by her condition that she was incapable of forming the intention to commit fraud
even if she did commit fraud, the insurer should pay some of her benefits.
Yes. For many months, the complainant was doing paid work as a paediatrician but repeatedly told the insurer she was not doing paid work. That dishonesty is fundamental to her claim, and constitutes fraud.
The panel does not accept the complainant was incapable of forming the intention to commit fraud.
The panel is not satisfied the complainant was entitled to total disability benefits despite her work as a paediatrician in Slovakia.
No. The complainant’s fraud was not minimal or insignificant. The insurer is entitled to refuse to pay the claim.
Fairness requires the reasonable expectations of the parties to be met. The complainant engaged in serious and protracted fraud against the insurer. She cannot reasonably expect to escape the consequences of that fraud.
This determination is in favour of the insurer. The insurer was entitled to cancel the policy for fraud. It is not required to pay benefits, interest, compensation or any other amounts, or to take any further action.
Yes. For many months, the complainant was doing paid work as a paediatrician but repeatedly told the insurer she was not doing paid work. That dishonesty is fundamental to her claim, and constitutes fraud.
The panel does not accept the complainant was incapable of forming the intention to commit fraud.
The panel is not satisfied the complainant was entitled to benefits despite her work as a paediatrician in Slovakia.
The insurer paid total disability benefits from 12 January 2018 to 31 December 2020.
The complainant started work as a paediatrician in Slovakia on around 15 July 2019. The employment contract says:
the start date is 15 July 2019
the type of work is paediatrician
the working time 37.5 hours per week
the gross monthly salary was 2,200 euros.
The contract was amended effective 1 November 2020 to reduce the working hours to 30 hours per week.
The complainant continued to work until at least March 2022.
The complainant told the insurer she was not doing paid work:
on 8 October 2019, the complainant told the insurer she intended to return to work as soon as her health allowed
on 19 November 2019, the complainant emailed the insurer, saying:
As I explained in my previous email, my plan is to return to work as soon as my condition allows. As of my last appointment (last July), [Dr C] did not believe I was in a condition to do so. My next appointment is at the end of this month. After this I will be in a better position to update you on my condition and the plan to return to work.
On 16 December 2019, the Complainant emailed the insurer, saying:
At this point I feel that a return to work in any capacity would be better than my current situation. [Dr C] thinks that when I return to work it should be in a reduced capacity. My next follow up will be in February and I can provide you more information then.
On 8 April 2020, the Complainant emailed the insurer a Progress Claim Form dated 7 April 2020 (the April 2020 Progress Claim Form). The covering email said:
I also wanted to let you know that I am currently working in a children’s outpatients service. The Slovak Government has issued a State of Emergency and recalled all Doctors and Nurses to support the health care system during the COVID-19 pandemic. I’m hoping that this will be a good indication of my ability to return to work in a part time capacity and I will try to continue once the situation has settled.
The April 2020 Progress Claim form said
> The complainant had returned to work part time
> The work was unpaid
> “I would like to take this opportunity to see whether I would be able to cope in the real part time employment after the COVID-19 crisis”
On 15 June 2020, the Complainant emailed the insurer saying:
With regards to the COVID-19 situation as I mention in my previous email, I have been working in the local children’s outpatient service, it has been ad hoc and typically only a couple of hours a few times a week. It has been good for me and I’m beginning to feel stronger. I think that this may be the right time to try to return to work on a part time basis.
With this in mind could you please tell me how returning to part time work would affect my income protection? And what would happen if I was to get worse and had to stop again?
The Complainant submitted a Progress Claim Form to the insurer dated 14 October 2020 (the October 2020 Progress Claim Form). The October 2020 Progress Claim Form said:
> The Complainant had returned to unpaid part-time work from 23 March 2020 until 14 June 2020.
> ‘due to the COVID-19 pandemic and State of Emergency, I was called to help as a health care worker. I was working 4 hours a day approx. 2 days a week. However, due to deterioration in my health, I was not able to continue since mid June 2020.’
> If the Complainant had a positive response to treatment, she would ‘love to start working in the outpatient pediatric department at least one day a week.’
On 21 February 2021, the complainant spoke to the insurer by phone:
> she said that since 2021 she had been regularly going one day per week to a local paediatric practice to supervise, observe and to learn, and to ‘get back into practicing paediatrics’
> she said there was ‘a chance of employment there as well’
> she said she was helping out in the vaccination centres on compulsion from the government because of the COVID crisis
> she had re-registered as a doctor during the COVID crisis
> “I can’t do too much [of work in vaccination centres], half a day is OK, the rest of the day I am out. But half a day work is fine now absolutely…’
> she had done about three days since January in the vaccination centres
> the insurer asked the complainant to confirm that her work as unpaid and that she was hoping to return to employment, and the complainant confirmed that
> the insurer told the complainant that when she returned to paid work it would impact her benefit
> the complainant confirmed that she understood
> the complainant did not say she had any cognitive impairment
The Complainant provided a progress claim form dated 25 February 2021 (the February 2021 Progress Claim Form). The February 2021 Progress Claim Form said:
> She returned to part time unpaid work on three occasions from 18 January 2021.
> The part time work was due to the COVID-19 crisis.
> The Complainant would like to start working part time one day per week in the pediatric outpatient clinic. The Complainant noted that she had started to visit the clinic one day per week to observe.
On 20 May 2021, the complainant spoke to the insurer on the phone again:
> she said ‘I am still not working any paid work or any work actually at the moment’
> her health had deteriorated since a COVID vaccination
> the insurer said the complainant could look to some part time work in the future, and the complainant said she kept in touch with some doctors about a possible future position:
> “there’s a really lovely paediatrician, here in town, that I used to visit in preparation, to see if there would be a position … there might be a position coming up in October, its my goal to get ready… I need to stay awake for at least 8 hours per day.’
> the complainant said she had been too unwell to do the observation she had previously been doing
> the complainant said she would need to re-register if she was to return to work as a paediatrician
> the insurer said that when the complainant returned to part-time work she would need to provide payslips, a work diary and a description of her duties.
On 14 September 2021, the complainant sent the insurer tax returns for the period 1 January 2019 to 31 December 2020. Those tax returns showed income from a Slovakian employer.
The panel is comfortably satisfied that the complainant, at least between 8 October 2019 and mid 2021, was telling the insurer she was not doing paid work when she in fact was doing paid work as a paediatrician.
In the context of an insurance claim, fraud means a false statement, made in connection with the claim, with the intention of inducing the insurer to pay. All of those elements are present in this case:
The complainant says that her condition was so disabling that she lacked capacity to form an intention to defraud the insurer. The complainant relies on a medical report by Dr SH, a neuropsychiatrist.
In a report dated 3 October 2023, Dr SH says:
The described neurological brain involvement (Headaches, concentration difficulties) also resulted in psychiatric symptoms mimicking a bipolar disorder. Nevertheless the symptoms are directly associated with Behcet disease and have been aggravated due a side effect of the use of prednisolone. The neuropsychiatric symptoms are NOT part of a separate psychiatric disease…
In conclusion, Behcet's disease can have a significant impact on the brain and can present with a variety of neuropsychiatric symptoms and in [the complainant’s] medical history the progression of the neurological involvement over time is obvious.
Considering her medical history and the recent examination [the complainant’s] judgment was and is definitly affected by a neurological involvement of the behcet disease resulting in neuropsychiatric symptoms such as mimicking bipolar disorder. The condition was triggered by a combination of interpersonal and professional stress, as well as side effect of the ongoing treatment with prednisolon. Her judgment was also affected by her husbands behaviour and motivations, since her anxiety led to unnatural need to obey to her husbands needs. She actually was not aware and not capable of forming an intention to mislead the insurer in 2019, when her Husband asked her to sign the insurance papers 2019 [all sic].
There are several problems with this opinion.
First, Dr SH was not treating the complainant at the time of her false statements. Her opinion on the complainant’s capacity at the time of those false statements is based on records and later reporting to her. That makes her opinion about the complainant’s capacity at the time of those statements less reliable. The panel notes that the call recordings of conversations between the complainant and the insurer in 2021 do not show any signs of impaired cognition. The complainant speaks fluently, rationally and reasonably throughout those calls. The panel also notes that the complainant describes her cognitive problems as only ‘moderate’ in the October 2020 progress claim form.
Secondly, it appears that Dr SH has not been given a full account of the complainant’s false statements. The false statements were not limited to ‘when her Husband asked her to sign the insurance papers in 2019.’ They extended over 2020 and 2021, and included instances where the complainant made false statements in conversation and in emails, as well as claim forms. Dr SH has also recorded an incorrect history of the complainant’s work in Slovakia. She says that the complainant only worked ‘part time’, when she in fact worked full-time for more than a year. This suggests that the complainant did not give a full and truthful history to Dr SH, which in turn undermines the reliability of Dr SH’s report.
Third, it is not clear from Dr SH’s report that she has performed testing which demonstrated a significant cognitive deficit, even at the date of assessment, in 2023.
Fourth, and most importantly, Dr SH does not explain how the complainant could be so cognitively impaired that she was incapable of forming the intention to mislead the insurer, but simultaneously fit to work as a doctor, for many hours per week and for many months, apparently successfully, and certainly without being dismissed for incapacity or sub-standard practice. Even if the panel were inclined to accept that the complainant’s work in Slovakia was less demanding than her work in Australia, the panel is comfortably satisfied that any work as a medical doctor is cognitively demanding, requiring technical expertise, discernment, judgement and with a high level of responsibility. The panel does not accept that a person fit to work, and in fact working as a medical doctor, can be so cognitively impaired that they are incapable of forming the intention to defraud an insurer. The panel does not accept Dr SH’s opinion.
The panel notes that a psychiatrist, Dr MK, provided a report dated 1 August 2023 which says:
Personality without disturbance of contact with reality.
That the complainant’s claim might be undermined, or at least threatened, by the revelation that she was working as a paediatrician is obvious. The panel is satisfied that the complainant repeatedly lied about her work in Slovakia because she was worried it might interfere with her income protection benefits.
The complainant says that there was no fraud because she was entitled to the full benefit despite her work in Slovakia.
The policy pays a total disability benefit if:
- the complainant is unable to perform [her] important income-producing duties for more than 10 hours per week… and
- her Monthly Earnings are less than [her] Pre-Disability Earnings
The complainant says that despite her work as a paediatrician in Slovakia from July 2019, she was unfit for the important income producing duties of her pre-disability own occupation.
She says her pre-disability own occupation in Australia was specialist neurodevelopmental paediatrician. She says her work was as
a medical specialist working on complex cases of sick and or abused children
She says was not fit for that work, but only for her work in Slovakia, which she says was in ‘a reduced capacity’
as a general doctor seeing healthy children
At first she also said she could not even prescribe Ventolin for asthma. She now says she could prescribe from a list of 241 medications (including Ventolin).
The complainant’s initial claim form dated 18 January 2018 said her job titled was ‘specialist paediatrician’. It said her duties were ‘assessment and clinical care of children with developmental disorders’.
The Slovakian employment contract says the job is ‘paediatrician’.
The complainant has not given a detailed account of her day-to-day work in Slovakia. Instead, she has provided a document from 1994, titled ‘Concept of Paediatric Care in Slovakia’.
That document says that in ‘Regional Primary Health Care Centres’, staffing is a ‘general practitioner for children and adolescents’ and two children’s nurses.
The complainant says she worked in such a centre, and that her role was ‘general practitioner for children and adolescents.
The panel does not accept that account. First, the employment contract says the complainant was employed as a ‘paediatrician’, not a ‘general practitioner for children and adolescents’. Second, the complainant herself described her position as ‘Rural General Paediatrician’ in an email dated 30 March 2022, and the doctors refer to her work as work as a paediatrician.
Second, the document is from 1994. That is a long time ago. It would be surprising if the system of paediatric care was unchanged around thirty years later. The document itself is forward-looking, anticipating the development of new treatment centres. For example, it says:
Highly specialised centres with a national or regional remit should be set up to ensure the detection of serious diseases in children and to deal with the most serious selected diseases. Highly specialised centres with a national or regional remit should be set up to ensure the detection of serious diseases in children and to deal with the most serious selected diseases.
The panel is satisfied that that complainant worked as a paediatrician in Slovakia, as described in her employment contract, not as a ‘general practitioner for children and adolescents’.
Even if the panel were prepared to accept that the complainant worked as a ‘general practitioner for children and adolescents’, it does not accept that work was not demanding or that it involved only seeing healthy children. The 1994 document makes it clear that the role involved examination, assessment and treatment of chronically sick and disabled children:
The [general practitioner for children and adolescents] is providing primary dispensary care of children with chronic illness or disability in close collaboration with the relevant paediatric specialists and specialist health providers…
6. Healthcare for children with chronic illness and/or disability
The primary goal of paediatric care is to ensure the optimal psycho-somatic-social development of children. In addition to preventative measures (vaccination, nutrition, lifestyle modification, parental education, etc.), preventative periodic examinations aimed at detecting any newly found deviations from normal health and/or development and referring these children for the appropriate investigations, treatment and ongoing follow-up, play an important role. These tasks constitute the core activity of the [general practitioner for children and adolescents], who is the dispensary primary care provider for children with chronic illness and/or disability and coordinator of the various specialist diagnostic, therapeutic and rehabilitation paediatric health services, together with the district child health nurse.
It is difficult to understand why the complainant could at first claim she could not prescribe even Ventolin, given she was responsible for providing ‘dispensary care’, and given she now accepts she could prescribe 241 different medicines.
The 1994 document also says the role involved some work that appears very close to the complainant’s pre-disability work in neurodevelopment:
The [general practitioner for children and adolescents] is a consultant to the family and to the school /institution in solving problems of the chronically ill child…
The [general practitioner for children and adolescents] uses the classification of the affected children to dispensary groups (3). In addition, the [general practitioner for children and adolescents] with the guidance of the paediatric specialists, states the degree (extent) of the child's disability regarding the prognosis of health deviations as follows:
a) Impairment - expresses a deviation from a physiological state that does not yet imply chronic disability but could lead to it without appropriate measures. E.g., incorrect body posture, repeated respiratory infections, etc.
b) Disability - means a chronic disease associated with impairment of the function of the organ or system concerned, which can be eliminated or mitigated to an asymptomatic form by therapeutic and rehabilitative care. In this group, it is exceptionally necessary to comment on future employment in order· to prevent the manifestation of an asymptomatic disorder. This includes, for example, unfixed scoliosis, asthmatic bronchitis without functional impairment, and others.
c) Handicap - a chronic disease associated with a permanent or severe disorder of one or more organs, systems, requiring special or special care, change of work ability, or classification, or social assistance. E.g., fixed severe scoliosis, bronchial asthma, neurological deficit, etc.
The [general practitioner for children and adolescents] together with [children’s nurses] coordinate comprehensive multidisciplinary care for this group of children in order to minimize disability and contribute to quality of life not only in childhood but also in adulthood. [our emphasis]
The panel is not satisfied the complainant was unfit for her own occupation, for these reasons:
the complainant demonstrated that she was fit for work as a paediatrician in Slovakia by getting a job as a paediatrician and working in it for an extended period of time
many of the complainant’s alleged symptoms were physical symptoms, and there is nothing to suggest that the work in Slovakia was more physically demanding than the complainant’s pre-disability occupation
to the extent that the complainant had cognitive impairments, the complainant has not shown that her work in Slovakia was so much less cognitively demanding than her pre-injury work that she was fit for that, but not her pre-injury work:
> The complainant lied about working. She has also changed her story about her ability to prescribe medicines. That undermines her credibility and means that the panel is wary of accepting what she says about her work unless there is independent evidence which corroborates her account.
> There is no account of the complainant’s work in Slovakia from her employer.
> The panel is not satisfied that the 1994 document is a reliable description of the complainant’s work in Slovakia.
> Even if the 1994 document is accepted as an accurate account of the complainant’s duties, it shows that the duties involved more responsibility than the complainant has admitted to.
> The panel is satisfied that any work as a medical doctor, including work as a paediatrician in Slovakia, is cognitively demanding.
> To the extent that the complainant relies on the reports by Dr SH, the panel is not satisfied that the reports are reliable because
‒ as set out above the panel is not satisfied Dr SH has been given an accurate account by the complainant
‒ Dr SH does not give a history of the complainant’s work in Slovakia
‒ Dr SH does not explain what the differences are between the work done by the complainant in Slovakia and her pre-disability duties
‒ Dr SH does not explain why the complainant might be fit for one and not for the other.
> to the extent that the complainant relies on a report by the psychiatrist Dr MK dated 1 August 2023, the panel notes
‒ Dr MK does not give a history of the complainant’s work in Slovakia
‒ Dr MK does not explain what the differences are between the work done by the complainant in Slovakia and her pre-disability duties
‒ Dr MK does not explain why the complainant might be fit for one and not for the other.
To the extent that the complainant relies on the medical certificates of Dr C dated 16 July 2019 and 30 March 2020, the panel is satisfied that no weight should be given to those certificates
> the report dated 16 July 2019
‒ says the complainant was not performing any work, when in truth she was working full time as a paediatrician
‒ says the complainant had a ‘full limitation’ for ‘attention/concentration’ and ‘memory’, which cannot be reconciled with her working full time as a paediatrician
> the report dated 31 March 2020
‒ says that the complainant was performing some work, namely ‘out-patient department – paediatrist’
‒ but also says that the complainant had a ‘full limitation’ for ‘attention/concentration’, ‘memory’, and ‘decision-making’, which cannot be reconciled with the complainant working full time as a paediatrician.
For the reasons set out above, the panel is not satisfied that the complainant was unfit to perform any of the important income-producing duties of her pre-disability occupation. She has not established that she was totally disabled within the meaning of the policy.
For the reasons set out above, the panel is satisfied that the complainant made a fraudulent claim.
No. The complainant’s fraud was not minimal or insignificant. The insurer is entitled to refuse to pay the claim.
Section 56 of the Insurance Contracts Act allows a Court to require a payment to a claimant even where they have made a fraudulent claim. However, a court can only do that where only as minimal or insignificant part of the claim is made fraudulently.
AFCA is not a court, but is required to have regard to legal principles , including the principles in s56.
The panel is satisfied that the part of the claim that was fraudulent is not minimal or insignificant, for these reasons:
When a person makes a claim on an income protection policy, they are asking an insurer to pay a benefit because due to sickness or injury they have lost some or all of their ability to work. When a claimant lies about whether they can work, or are working, it is a lie which is absolutely fundamental to the claim.
The claimant’s lies were not trifling, or of a short duration. She was working full time as a paediatrician for well over a year, and then part time, and kept telling the insurer she was only doing small amounts of unpaid work.
The complainant has not established that she was entitled to benefits despite her work in Slovakia. The fraud caused the insurer to pay many months of benefits when it had no obligation to do so.
The legal principles in s56 of the Insurance Contracts Act do not assist the complainant.
Section 59A of the Insurance Contracts Act says that an insurer may cancel a policy if a person makes a fraudulent claim.
Again, AFCA is not a court, but is required to have regard to legal principles , including the principles in s59A.
We have found that the complainant made a fraudulent claim, and so it follows that the insurer was entitled to cancel the policy. The policy provided income protection, critical illness and TPD cover. The effect of the cancellation is that all that cover is cancelled.
However, s59A also says that a Court may require an insurer to reinstate a policy cancelled for fraud, if it would be harsh and unjust not to do so. It says that a court must take into account ‘the need to deter fraudulent conduct in relation to insurance’ and any other relevant matter.
The panel has taken into account that the complainant has a long term medical condition. Were it not for her fraud, she might be able to make claims in the future. If the policy was reinstated the insurer would be obliged to continue to assess her claims. However, the complainant engaged in a protracted and serious fraud against the insurer. As a result, she has no right to expect the insurer to trust her statements. She is living overseas, which would make it much more difficult for the insurer to check whether she is telling the truth. These are problems of the complainant’s own making. It is not harsh or unfair to require her to bear the consequences of her fraud.
On balance, the panel is not satisfied that it would be harsh or unfair not to reinstate the policy.
The complainant’s representative says that the insurer has badly mistreated the complainant in the course of the claim.
It is not necessary to go over each of the alleged instances of mistreatment in detail. It is sufficient to say that the panel is satisfied that while there were some delays and errors in the assessment of the claim, the insurer did not seriously mishandle the claim or the complaint at AFCA. Some of the delays were caused by the complainant’s failure to provide in a timely way some information which the insurer had reasonably requested. To the extent that the complainant was disadvantaged by the insurer’s actions, the panel is satisfied that her receiving many months of benefits (none of which has been repaid) as a result of her fraud means that it would be unfair and inappropriate to require the insurer to pay her any compensation.
Fairness requires the reasonable expectations of the parties to be met. The complainant engaged in a serious and protracted fraud against the insurer. She cannot reasonably expect to escape the consequences of that fraud.
The complainant’s representative says that the insurer should pay a total and permanent disablement (TPD) benefit. The complainant has never made a TPD claim on the insurer. The insurer has not assessed or made a decision on a TPD claim. The panel makes no findings about whether the insurer should pay a TPD benefit.
In particular, AFCA makes no finding about:
whether the complainant is already, or might become, TPD under any of the available definitions
whether the cancellation of the policy prejudices a TPD claim under the policy
if the complainant makes a TPD claim under the cancelled policy, whether the insurer should pay a claim under the cancelled policy because of the principles in s56 of the Act
whether the insurer is entitled to cancel the policy held in the complainant’s superannuation fund
whether any benefits are payable under the policy held in the complainant’s superannuation fund.
AFCA has determined this complaint based on what is fair in all the circumstances, having regard to:
the legal principles
applicable industry codes or guidance
good industry practice
previous decisions of AFCA or its predecessor schemes (which are not binding).
The respective parties have completed a full exchange of the relevant information, and each party has had the opportunity to address any issues raised. We have reviewed and considered all of the information the parties have provided.
While the parties have raised a number of issues in their submissions, we have restricted this determination to the issues that are relevant to the outcome.
Due to the nature of this complaint, we referred it to a panel for determination. The panel includes:
an ombudsman
a member with significant experience in consumer and small business advocacy
a member with extensive experience in the insurance industry.
