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Determination
Case number | 913464 |
Financial firm | Zurich Australian Insurance Limited |
Case number: 913464 31 May 2024
The complainant held a travel insurance policy with the financial firm (insurer). The policy covered her for an overseas trip from 26 January 2019 to 1 March 2019.
When overseas, the complainant was required to seek medical treatment. She lodged a claim for medical expenses she incurred overseas.
The insurer declined the claim. It says the complainant was hospitalised and incurred medical expenses because of an existing medical condition which is excluded under the terms of the policy.
Yes. The complainant’s condition is excluded under the terms and conditions of the policy.
No, the complainant is not entitled to non-financial loss compensation.
While I sympathise with the complainant for her loss, the outcome is fair because the complainant has not established a claimable loss under the policy. This is because the evidence available shows the cause of her multiple hospitalisations in the USA were directly or indirectly related to her pre-existing medical condition.
Therefore, the insurer is entitled to decline the claim. It would not be fair for the insurer to have to pay the claim, when the policy does not respond.
The determination is in favour of the insurer. The insurer is not required to take any further action.
Yes. The complainant’s condition is excluded under the terms and conditions of the policy.
It is established insurance law that the complainant has the initial onus to establish, on the balance of probabilities, that she suffered a loss covered by the policy.
If established, the onus then shifts to the insurer to prove an exclusion or limitation applies if it seeks to deny or limit its liability for the loss.
The terms of the complainant’s policy are set out in the product disclosure statement (PDS). The policy provides cover for medical expenses incurred overseas. The policy excludes cover for claims directly or indirectly arising from or exacerbated from existing medical conditions.
See section 3.2 below for relevant sections of the PDS.
It is not in dispute that the complainant required medical attention and incurred expenses when she was overseas. On that basis, I accept that the complainant has made a valid claim.
On 14 January 2019, the complainant purchased an online comprehensive travel insurance policy for a trip to the United States of America (USA) between 26 January 2019 to 1 March 2019.
On 28 January 2019, after the complainant arrived in the USA she began to experience difficulties walking due to swelling in her legs, which she thought was due to the long flight from Australia.
The complainant’s condition did not improve and on 4 February 2019, the complainant arranged for a consultation with Dr IP based on the hotel’s recommendation. Dr IP conducted a urine dipstick analysis which showed the complainant had a ‘urinary tract infection and swelling/edema of both legs’. She was prescribed medication and no additional follow up instructions.
Following this, on 27 February 2019, the complainant went to board her flight home but the airline did not have adequate disability access (presumably a ramp or aerobridge) for her to board the flight. The airline rebooked her flight for the next day and provided hotel accommodation. The complainant did not sleep at the hotel overnight but slept on a bench at the airport due to the compounding complication of her swelling legs.
The complainant could not stand up the next day (28 February 2019) and required the assistance of the airport emergency medical technicians (airport EMT), following which she was transported to Cedars-Sinai Marina Del Ray hospital for treatment.
The complainant was treated at the hospital the same day for her swollen legs. She was discharged and transported back to the airport to board her flight. Once the complainant returned to the airport to board her flight she was not able to mobilise to her seat using crutches. On that basis, she was medically assisted to de-board the flight and was taken back to the Cedars-Sinai Marina Del Ray hospital, where she was hospitalised between 28 February 2019 to 10 March 2019.
On 10 March 2019, the complainant was medically cleared to be able to fly home to Australia. Between 10 and 15 March 2019, the complainant remained in hospital because the insurer had not made a claim decision.
On 15 March 2019, the insurer declined the claim. The insurer did this on the basis that the complainant’s medial conditions suffered overseas (being lower limb oedema secondary to her obesity) were existing medical conditions excluded under the policy.
The complainant says she was to be discharged by the hospital into a homeless shelter. After negotiations with the hospital, the complainant remained in hospital until 27 March 2019, when she was able to board a flight from the USA to Australia. She required a travel companion to accompany her and was required by the airline to purchase a business class ticket because she had a catheter inserted.
As part of the claim assessment process, the insurer requested relevant records from the complainant’s treating doctor and sought specialist medical advice from third parties.
The clinical notes show the complainant has previously been diagnosed with:
The report of Dr WK (Consultant Geriatrician and Medical Oncologist) dated 20 December 2019 says:
Dr WK concluded that the complainant has the following medical conditions:
Dr IP’s urine analysis shows the complainant had a urinary tract infection and swelling/edema of both legs. The report from Cedars-Sinai Marina Del Ray hospital says the cause of the complainant’s hospitalisation was due to obesity and venous insufficiency.
The policy contains an extremely broad definition of ‘existing medical condition’. It includes a disease, illness, or medical condition that at the time the policy was taken out can mean any of the following:
See section 3.2 below for the relevant policy terms.
The policy does not contain a blanket exclusion for claims associated with pre-existing medical conditions.
Page 16 of the PDS says the insurer:
It is not in dispute the insurer agreed to cover the complainant’s hypertension and osteoarthritis. The complainant disclosed these conditions before the policy was incepted.
The insurer says the complainant also had the following pre-existing medical conditions, which she did not disclose and are therefore not covered:
During the course of the AFCA process, the insurer confirmed that the claim was declined on the basis of the complainant’s obesity.
Section 47 of the Insurance Contracts Act (ICA) stops an insurer from relying on a pre-existing condition exclusion if the insured was not aware of the pre-existing condition (or a reasonable person in the circumstances could not be expected to be aware of it) when they entered into the contract.
The question of whether ‘awareness’ merely requires knowledge of any symptom or if it requires that the sickness or disability be diagnosed is contentious. AFCA’s view is that the answer lies between the two.
In considering ‘awareness’ for the purposes of section 47, AFCA takes into account various matters, including:
The complainant says that she disclosed all her existing medical conditions at the time she applied for cover. She says that she had not been diagnosed with lower limb oedema or OSA prior to applying for cover or traveling overseas. She says upon return to Australia, her doctors have indicated that these were the conditions leading to her requiring medical treatment when overseas.
In addition, the complainant disputes that obesity is an existing medical condition. She says that she was not required to answer any questions about her height and weight at the time of her application and couldn’t have known that this would be excluded.
The insurer says that the complainant’s medical conditions that led to her hospitalisation were pre-existing. The insurer requested three years of clinical notes preceding the issue date of the policy. The insurer says the clinical notes set out previous similar medical concerns as follows:
In addition, the insurer appointed a medical expert, Dr HK, to review the complainant’s medical record and provide an expert opinion on pre-existing issues.
Relevantly, Dr HK’s report of 12 October 2020 states the complainant suffered from and was treated for the following conditions:
Chronic Leg Ulcers – The general practitioner’s notes clarify that chronic leg ulcers thought to be due to chronic venous insufficiency dated back to 2007. On 6 July 2009 her general practitioner referred her to the Austin Hospital Wound Clinic for management of these leg ulcers. Previous swabs had shown bacteria including Pseudomonas requiring oral antibiotics and topical antibacterial cream (silver sulfadiazine) since 2010.
…
Morbid Obesity – In November 2016, a reference to [complainant’s] weight was made, at which point an estimation of 220 kg was made. In February 2009, Ms Smith was referred for a General Practitioner Management Plan and Team Care Arrangement, at which point morbid obesity was mentioned as one of her health conditions. In November 2017, [complainant] underwent an Occupational Therapy/Physiotherapy and Dietician assessment, at which point her weight was estimated to be between 220-230 kg. [complainant’s] mobility was also limited and she was using an electric scooter.
…
Restless Legs – [complainant] had been treated with pramipexole 0.125 mg for several years.
Severely Impaired Mobility – Medical notes from her general practitioner indicate that there was an application for a Disability Pension made on 26 October 2018 and, in that application, her general practitioner referred to the fact that she was “severely disabled” and “unable to mobilise because of her medical conditions”. Furthermore, … Return to Work Assessment was completed on 23 May 2017 and this referred to the fact that [the complainant] had “severely impaired mobility”.
Dr HK further states that a review of the medical notes from her admission at Cedars-Sinai Marina Del Ray hospital shows the medical condition that gave rise to her hospitalisation were:
1. Morbid Obesity.
2. Chronic Venous Insufficiency.
3. Leg Oedema secondary to (1) and (2).
Dr HK also noted the complainant’s diagnosis of lymphoedema made by Dr WK in December 2020 is directly related to her existing medical conditions as noted above - in particular, morbid obesity and chronic venous insufficiency.
Accordingly, the insurer declined the claim on the basis that the complainant’s medical condition is pre-existing, which the policy excludes.
The insurer says when the complainant purchased the policy she was asked to disclose pre-existing medical conditions. The complainant only disclosed that she suffered from hypertension and osteoarthritis. The insurer says it provided cover for these disclosed conditions.
However, it says had the complainant disclosed her morbid obesity and chronic lower limb venous ulcers, cover would not have been provided, especially due to her morbid obesity condition.
The complainant disagrees with the insurer’s findings and said that the cause of her hospitalisation in the United States was not related to any pre-existing medical condition.
In addition, she said:
Further, the complainant said the insurer’s medical expert:
The complainant says that the primary cause of her hospitalisation in the United States was because of OSA which was diagnosed in July 2020.
I acknowledge all of the arguments and information put forward by the parties in this complaint which has taken some time. I am satisfied that the insurer can rely on the pre-existing condition exclusion, for these reasons:
With respect to section 47 of the Act, obesity may not ordinarily fall under an existing medical condition that the complainant would be aware of. However, in this matter, the complainant’s morbid obesity had been a condition that she had repeatedly received treatment for over the years. It led to the complainant suffering from a number of subsequent health conditions. These health conditions were often severe and at times required medication and hospitalisation. On that basis, I am not satisfied a reasonable person in the complainant’s circumstances would not have been aware of her obesity.
I accept the complainant has subsequently been diagnosed with OSA. However, the relevant contemporaneous medical information supports that the complainant’s complications at the time she was in the USA were caused by her obesity.
Given the scope of exclusion I am satisfied the insurer is entitled to rely on the terms of the policy to deny the claim.
No, the complainant is not entitled to non-financial loss compensation.
Under paragraph D.3 of the AFCA Rules, AFCA may award compensation for non-financial loss (capped at $5,400) where the insurer’s actions have caused an unusual amount of physical inconvenience, time taken to resolve the situation or interference with the complainant’s expectation of enjoyment or peace of mind.
The complainant says after the insurer declined the claim on 15 March 2019, it attempted to discharge her from hospital to a homeless shelter. She says this was in circumstances where she was not in a position to fund additional motel accommodation and was not required to be in hospital any longer. She also says that it was the hospital that provided her with special dispensation to remain there until her family member arrived who assisted her in flying home.
The insurer disputes the complainant’s allegations. It says that although the claim was declined, it attempted to provide assistance to the complainant to get home. In support of its position, the insurer has provided contact notes which show that the insurer attempted to make contact with the complainant without success.
I acknowledge it must have been very stressful and challenging for the complainant when her claim was declined and she was in hospital overseas. I also acknowledge that she was uncertain how she was going to be able to get home when she had a catheter in place. I have no information other than the complainant’s submission that she was going to be discharged to a homeless shelter. Whilst this is important information, the insurer’s contemporaneous contact notes show that it attempted to make contact with her to assist her in getting home. I am only able to make a decision based on the information that I have. I accept that on balance the insurer did not tell the complainant it would discharge her to a homeless shelter. On that basis, I do not accept the complainant is entitled to compensation for non-financial loss.
While I sympathise with the complainant for her loss, the outcome is fair because the complainant has not established a claimable loss under the policy. This is because the evidence available shows the cause of her multiple hospitalisations in the USA were directly or indirectly related to her pre-existing medical condition.
Therefore, the insurer is entitled to decline the claim. It would not be fair for the insurer to have to pay the claim, when the policy does not respond.
AFCA has determined this complaint based on what is fair in all the circumstances, having regard to:
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.
AFCA is not a court of law. We do not have the power to take or test evidence on oath, or to require third parties to give evidence.
When we assess complaints, we consider:
We give more weight to documents created at the time the events occurred. If there are no relevant documents, we will decide what most likely occurred based on the available information.
If there are conflicting recollections and these are evenly weighted, we may find that a claim cannot be established.
Page 15:
Do You have an Existing Medical Condition?
Claims directly or indirectly arising from or exacerbated by an Existing Medical Condition or related new infections are specifically excluded from this policy unless Your Existing Medical Condition is approved by Us.
What does this mean?
If You have an Existing Medical Condition and for example take medication to keep that condition in check, it doesn’t mean You can’t purchase travel insurance.
It does however, mean that You should tell Us about all Your Existing Medical Conditions including anything for which medication is prescribed so We can complete an online health assessment and, if We approve, offer You cover.
If You choose to declare some conditions and not others or choose not to declare any conditions, You run the risk of a claim being denied. See Existing Medical Conditions for more information.
Assessing Your health
So We can assess the risk, We may also require You to answer some questions about Your general health as well as completing an online health assessment at the time of applying for travel insurance.
Existing Medical Conditions
(Of You or Your travelling companion)
Cover for claims directly or indirectly arising from or exacerbated by an Existing Medical Condition or related new infections are specifically excluded from this policy. However, We may separately provide cover for an Existing Medical Condition. If additional cover is applied for and approved, an additional premium may apply.
What is an Existing Medical Condition?
Existing Medical Condition means a disease, illness, medical or dental condition or physical defect that, at the Relevant Time, meets any one of the following:
Relevant Time in respect of:
a) Single Trip policies means the time of issue of the policy…
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Existing Medical Conditions We need to assess
If Your condition:
• does not meet the criteria above;
• You have one or more conditions which are not listed in the table of conditions we automatically include; or
• a combination of both the above points
You will need to complete an online health assessment by declaring all Your Existing Medical Conditions to Us.
To be clear, the conditions We automatically include only apply if You do not have other Existing Medical Conditions beyond those on this list.
Page 30:
Your duty of disclosure
Before You enter into this contract of insurance, You have a duty of disclosure under the Insurance Contracts Act 1984 (Cth). The duty applies until (as applicable) We first enter into the policy with You, or We agree to a variation, extension or reinstatement with You.
Answering Our questions
In all cases, if We ask You questions that are relevant to Our decision to insure You and on what terms, You must tell Us anything that You know and that a reasonable person in the circumstances would include in answering the questions. It is important that You understand You are answering Our questions in this way for Yourself and anyone else that You want to be covered by the contract.
Variations, extensions and reinstatements
For variations, extensions and reinstatements You have a broader duty to tell Us anything that You know, or could reasonably be expected to know, may affect Our decision to insure You and on what terms.
If You do not tell Us something
If You do not tell Us anything You are required to tell Us, We may cancel Your contract or reduce the amount We will pay You if You make a claim, or both. If Your failure to tell Us is fraudulent, We may refuse to pay a claim and treat the contract as if it never existed.
Page 59:
Unless otherwise indicated these exclusions apply to all sections of the policy.
We Will Not Pay For: …
13. claims which in any way relate to, or are exacerbated by, any Existing Medical Condition You or Your travelling companion has
