CR286 Late submission of claims [Cross reference from Interpretation; Disability; Equity]
Late submission of claims
[Cross reference from Interpretation; Disability; Equity]
Disability claim rejected on grounds of late submission – interpretation of contract – how to determine date of disability – claim subsequently repudiated on grounds that claimant no longer a member of scheme at date of disability – application of equity
1. The complainant, an electrician, suffered severe injuries when he received an electric shock of 66 000 volts at work on 10 July 2002. His dominant left hand was badly burnt and he also suffered from post-traumatic stress. He made serious attempts to rehabilitate himself with wide-ranging medical and related intervention, including reconstructive surgery, intensive physiotherapy, occupational therapy, dominance retraining of his right hand and psychiatric treatment. By mid-2003 it was however apparent that he was likely to remain disabled and in August 2003 his employer submitted a disability claim.
2. The merits of the claim were not disputed, but the claim was rejected on the grounds of late submission, the group scheme policy providing that no claim would be admitted unless the insurer received written notice within 6 months of the DATE OF DISABLEMENT, which the insurer assumed to be the date of the accident ie 10 July 2002.
3. The policy defined “DATE OF DISABLEMENT” as “the date from which the member has suffered DISABILTY as determined by [the insurer]”.
“DISABILITY” was in turn defined as
“a condition in which, in the opinion of [the insurer]
(a) the member totally and permanently and continuously cannot use both eyes, or both hands, or both feet, or 1 (one) hand and 1 (one) foot; or
(b) the member experiences loss of income and totally and permanently and continuously is unable, even with further in-service training to follow-
(i) the regular occupation which he/she practised immediately before; and
(ii) the occupations which he/she, in view of his/her training and experience, may reasonably be expected to follow.”
4. Our office pointed out that on a proper interpretation of the policy the date of the accident could not be equated with the date of disability; the date of disability was defined as the date from which the member “suffered DISABILITY” as defined.
5. The complainant’s case was that it could not be determined until he had been through the surgery and other treatment whether he would in fact at the end be able to work or not, and whether he was thus likely to qualify in terms of the definition of disability (paragraph (b) of the definition being applicable in this case). He had hoped that he would be able to recover from his injuries so that he could return to work until retirement. It could be speculated that if he had lodged a claim within six months after 10 July 2002 he would have been met with the response that he had not yet proved that he was totally, permanently and continuously disabled, as further surgery, treatment or rehabilitation might still have resolved his medical problems.
6. The office noted that a further requirement of paragraph (b) of the definition of “DISABILITY” was that the member should experience a loss of income. It appeared that the employer, a municipality, had continued to pay the complainant a salary until the end of May 2005, as it was still hoped that he would recover. He had not therefore experienced a loss of income until that date.
7. Our office made a provisional ruling that it would be reasonable in all the circumstances to determine the date of disability as 1 June 2005. As the claim was lodged in August 2003 it was thus not submitted late. The provisional ruling provided that the claim for a monthly benefit should be paid as from 1 June 2005, together with interest on each monthly benefit from date due to date of payment, and with the balance of payments to be made as and when they became due.
8. The insurer responded that if the date of disability was 1 June 2005 it would not pay any benefit, as the complainant’s membership of the scheme had ended by then. The policy provided that membership of the scheme ceased on the date of termination of employment, or on the date that premium deduction in respect of the member ceased, whichever occurred first. In this case termination of employment took place on 31 May 2005 and premiums were paid up until that date.
9. Our office pointed out that the wording of the policy was problematic. The definition of disability in paragraph (b) required not only a loss of income but also an inability to work, so in this case both requirements were only met on 1 June 2005. These dual requirements would make it difficult for anyone to qualify – losing income is only likely once employment is terminated, and termination of employment means an end to cover. We referred to our equity jurisdiction, which we exercise in circumstances where strict law does not produce just results. We pointed out that in our view this was an appropriate case for the application of equity, which the insurer accepted.