CR343 Equity Disability claim declined; complaint lodged eight years later

CR343
Equity

Disability claim declined; complaint lodged eight years later; insurer defending on basis of prescription; whether our office could come to complainant’s assistance on grounds of equity.

Background

1. The complainant, a member of the SAPS, submitted a claim on 29 January 2002 for the disability cash benefit (R30 000) on his universal policy. The definition read as follows:

“The expressions “disability” and “disablement” mean the total inability of the assured, due to bodily sickness or injury, to follow his own occupation or any other gainful occupation for which he is reasonably qualified by his status, education, training or experience and the expression “disabled” shall be construed accordingly”.

The benefit was payable if the assured has become and remained disabled continuously for a period of not less than six months.

2. The insurer repudiated the claim on 27 August 2003, briefly stating that according to the medical information the complainant had responded well to treatment and “further improvement is likely with the use of regular treatment”.

3. The medical information (which the insurer supplied to our office) indicated the following:

● The complainant’s severe stress disorder and depression appeared to have started in about 1996/7 and he was admitted to hospital in 1998 with major depression and psychotic symptoms.

● Alcohol abuse was occasionally mentioned as being an additional feature.

● Psychiatrist A’s 2000 reports mentioned a history of stress after being stabbed multiple times in 1987, admission to a psychiatric clinic for assessment, normal EEG but mild generalised atrophy on MRI brain scan, impaired cognitive functioning and high free-floating anxiety and hostility levels on psychometric testing, diagnosis of organic brain syndrome with associated depression, and recommendation: “Patient quite clearly is dysfunctional in the open labour market and in my opinion must be medically boarded as permanently unfit for further duty”.

● Psychiatrist B in his claim form report dated 25/06/2003 diagnosed major depression complicating post-traumatic stress disorder, chronic and severe with acute exacerbations and a poor prognosis.

● Psychiatrist C in her report dated 9/03/2001 diagnosed possible episodes of psychosis and organic brain syndrome, and states that his functioning is deteriorated and his prognosis poor due to the organic nature of his illness, and that he is not fit to continue work in the SAPS.

● Claim form medical report completed by a clinical psychologist stated his opinion that Mr Selikane was totally and permanently disabled to follow his occupation or another similar occupation, and would not at any stage in the future be able to do so.

● Medical and other documentation regarding Mr Selikane’s medical boarding process indicated that a SAPS examining doctor recommended permanent boarding because of “organic brain syndrome with episodes of pyschosis. His coping skills are very limited and he has suicide ideation”. He was discharged as a result of medical unfitness on 29 August 2001 (as a consequence of which he also lost his medical aid coverage).

4. The complainant stated in his complaint to our office that when, after he had waited 19 months, his claim was repudiated in August 2003,

“this circumstances boggled my mind and aggravated my condition even further and thus I could not function as a normal person because everything was sent to [the insurer] and the reason for the non-payment is/was unjustified”.

This was as much of an explanation as he gave for the delay in taking the matter further.

5. In mid-2010 he tried again, sending all his old documentation to the insurer. The insurer treated this as a new claim and asked for up to date information, which he provided and which included letters dated May and June 2010 from psychiatrists at a mental health clinic, certifying that he suffered from schizophrenia and was receiving chronic medication from the clinic. On 24/01/2011 the insurer told him that because his policy had been made paid up in June 2002 the disability benefits were since then inactive and they could not assess a disability claim. He tried to argue with the insurer but they then raised prescription. Eventually someone told him about the Ombudsman office and he lodged a complaint with us in February 2011, some eight years after the claim was repudiated.

Discussion

6. The claim had clearly prescribed but we put it to the insurer that they should nevertheless consider payment on equitable grounds. It was stated that, in our view, the decision to repudiate the claim in 2003 had not been correct. We pointed out that most of the evidence, ranging over a period from 2000 to 2003, indicated that the complainant was dysfunctional in the open labour market, that his prognosis was poor due to the organic nature of his illness, that he was not in a position to perform any work, and that he was permanently disabled. We could not find any evidence supporting the insurer’s view at the time that his condition was well managed or that further improvement was likely. We also suggested that the complainant might fall within the ambit of section 13(1)(a) of the Prescription Act (completion of prescription delayed if the creditor is insane).

7. The insurer then decided to pay the cash value of the policy, in the amount of R12 108. The complainant was not happy as he was hoping for the full R30 000. The insurer refused to consider a further payment, stating that the complainant would not have had a valid claim in 2003, “based on the policy wording ‘to follow his own occupation or any other gainful occupation’”.

Result

8. The matter was referred to an adjudicators meeting for discussion. The unanimous view of the meeting was that there could be no doubt that the complainant was disabled, in terms of the definition in the policy, at the time when he submitted his claim in January 2002. It was also pointed out that the insurer had misconstrued the definition, failing to take into account that the words “or any other gainful occupation” were qualified by the further words “for which he is reasonably qualified by his status, education, training or experience”.

9. The insurer was then asked to state what prejudice, if any, it would suffer if the complainant’s claim were to be admitted at this stage.

10. The insurer responded stating that it had discussed the matter with its directors, and had decided to pay the claim in full.

SM
February 2013

CR343
Prescription

Disability claim declined; complaint lodged eight years later; insurer defending on basis of prescription; whether our office could come to complainant’s assistance on grounds of equity.

Background

11. The complainant, a member of the SAPS, submitted a claim on 29 January 2002 for the disability cash benefit (R30 000) on his universal policy. The definition read as follows:

“The expressions “disability” and “disablement” mean the total inability of the assured, due to bodily sickness or injury, to follow his own occupation or any other gainful occupation for which he is reasonably qualified by his status, education, training or experience and the expression “disabled” shall be construed accordingly”.

The benefit was payable if the assured has become and remained disabled continuously for a period of not less than six months.

12. The insurer repudiated the claim on 27 August 2003, briefly stating that according to the medical information the complainant had responded well to treatment and “further improvement is likely with the use of regular treatment”.

13. The medical information (which the insurer supplied to our office) indicated the following:

● The complainant’s severe stress disorder and depression appeared to have started in about 1996/7 and he was admitted to hospital in 1998 with major depression and psychotic symptoms.

● Alcohol abuse was occasionally mentioned as being an additional feature.

● Psychiatrist A’s 2000 reports mentioned a history of stress after being stabbed multiple times in 1987, admission to a psychiatric clinic for assessment, normal EEG but mild generalised atrophy on MRI brain scan, impaired cognitive functioning and high free-floating anxiety and hostility levels on psychometric testing, diagnosis of organic brain syndrome with associated depression, and recommendation: “Patient quite clearly is dysfunctional in the open labour market and in my opinion must be medically boarded as permanently unfit for further duty”.

● Psychiatrist B in his claim form report dated 25/06/2003 diagnosed major depression complicating post-traumatic stress disorder, chronic and severe with acute exacerbations and a poor prognosis.

● Psychiatrist C in her report dated 9/03/2001 diagnosed possible episodes of psychosis and organic brain syndrome, and states that his functioning is deteriorated and his prognosis poor due to the organic nature of his illness, and that he is not fit to continue work in the SAPS.

● Claim form medical report completed by a clinical psychologist stated his opinion that Mr Selikane was totally and permanently disabled to follow his occupation or another similar occupation, and would not at any stage in the future be able to do so.

● Medical and other documentation regarding Mr Selikane’s medical boarding process indicated that a SAPS examining doctor recommended permanent boarding because of “organic brain syndrome with episodes of pyschosis. His coping skills are very limited and he has suicide ideation”. He was discharged as a result of medical unfitness on 29 August 2001 (as a consequence of which he also lost his medical aid coverage).

14. The complainant stated in his complaint to our office that when, after he had waited 19 months, his claim was repudiated in August 2003,

“this circumstances boggled my mind and aggravated my condition even further and thus I could not function as a normal person because everything was sent to [the insurer] and the reason for the non-payment is/was unjustified”.

This was as much of an explanation as he gave for the delay in taking the matter further.

15. In mid-2010 he tried again, sending all his old documentation to the insurer. The insurer treated this as a new claim and asked for up to date information, which he provided and which included letters dated May and June 2010 from psychiatrists at a mental health clinic, certifying that he suffered from schizophrenia and was receiving chronic medication from the clinic. On 24/01/2011 the insurer told him that because his policy had been made paid up in June 2002 the disability benefits were since then inactive and they could not assess a disability claim. He tried to argue with the insurer but they then raised prescription. Eventually someone told him about the Ombudsman office and he lodged a complaint with us in February 2011, some eight years after the claim was repudiated.

Discussion

16. The claim had clearly prescribed but we put it to the insurer that they should nevertheless consider payment on equitable grounds. It was stated that, in our view, the decision to repudiate the claim in 2003 had not been correct. We pointed out that most of the evidence, ranging over a period from 2000 to 2003, indicated that the complainant was dysfunctional in the open labour market, that his prognosis was poor due to the organic nature of his illness, that he was not in a position to perform any work, and that he was permanently disabled. We could not find any evidence supporting the insurer’s view at the time that his condition was well managed or that further improvement was likely. We also suggested that the complainant might fall within the ambit of section 13(1)(a) of the Prescription Act (completion of prescription delayed if the creditor is insane).

17. The insurer then decided to pay the cash value of the policy, in the amount of R12 108. The complainant was not happy as he was hoping for the full R30 000. The insurer refused to consider a further payment, stating that the complainant would not have had a valid claim in 2003, “based on the policy wording ‘to follow his own occupation or any other gainful occupation’”.

Result

18. The matter was referred to an adjudicators meeting for discussion. The unanimous view of the meeting was that there could be no doubt that the complainant was disabled, in terms of the definition in the policy, at the time when he submitted his claim in January 2002. It was also pointed out that the insurer had misconstrued the definition, failing to take into account that the words “or any other gainful occupation” were qualified by the further words “for which he is reasonably qualified by his status, education, training or experience”.

19. The insurer was then asked to state what prejudice, if any, it would suffer if the complainant’s claim were to be admitted at this stage.

20. The insurer responded stating that it had discussed the matter with its directors, and had decided to pay the claim in full.

SM
February 2013

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