Insurance
TAL hired private investigator to follow claimant: Royal Commission

TAL went to great lengths to get out of paying insurance claims to a nurse which involved hiring a private investigator who followed her around the country, the Royal Commission heard today.

Newly-appointed TAL general manager of claims Loraine van Eeden fronted the Royal Commission starting about midday. She was presented with the case study of a nurse who made an income protection claim to TAL after facing medical health conditions.

The Royal Commission labelled TAL's treatment of the claimant as bullying.

About half of TAL's policies sold through its super, direct and retail channels were bought with income protection.

The registered nurse took out an income protection insurance policy with TAL in 2009 through the retail channel. She answered in the negative to having any mental health conditions; to having missed work for more than five days due to injury or illness in the last five years; and to having any symptoms of an illness. She was entitled to a $2750 per month benefit after a 30-day initial period.

In 2010, she made a claim on "stress-induced depression and anxiety" for six-months leave to take care of her anxiety. It was signed by her GP.

The GP noted she had taken six single days off in previous years, where the nurse had taken time off to deal with work and home-related stresses - however, these were discrete events and not an ongoing condition. Therefore, the note she was presenting now was for a new illness, the GP noted.

On receiving the claim request, TAL went on what senior counsel assisting Rowena Orr called a "fishing expedition". The nurse was asked to produce a large number of documents including her tax records, GP's medical records, psychiatrist's records, Medicare history, private health insurance claims history, workers compensation file and employee assistance program.

TAL then said the nurse had breached her duty of disclosure by failing to report the six single days taken off for anxiety and stress. It cancelled the policy without any additional communication, which TAL's van Eeden agreed was "not the way we should be doing business."

The nurse filed for an internal review but the internal dispute resolution team gave the same verdict. She then hired a lawyer and went to the Financial Services Ombudsman, armed with more information including letters from her GP and psychiatrists who reinforced she had no ongoing conditions and sought treatments for gastro or isolated distressing events.

The ombudsman ruled in the nurse's favour. TAL rejected the recommendations then ultimately conceded to pay the claim after an ombudsman determination came out in the nurse's favour again.

It renewed her policy but asked her to pay refunded premiums before it would move to processing her claims, and dropped the premium demands after another intervention.

By the time the nurse was paid the claims, it had been three years since she filed them.  TAL estimated the liability would be close to $800,000 if it kept paying out claims to the nurse.

The nurse had written a book and did public speaking on weight loss. This caught the attention of a case manager. A decision to do surveillance on her for three days was reached.

TAL hired a private investigator who ended up following her intermittently over four months, including in potentially personal settings, around the country on a speaking trip, with a male friend and in social settings.

The detective's report concluded she "showed no outward signs of her alleged psychological condition" and looked happy. The detective was paid $20,000.

Sometime later, a TAL case manager reached out to an independent psychiatrist asking for opinion. By this time, the nurse's doctor says writing a "daily diary" is bad for her anxiety.  The case manager wanted to keep receiving the diary despite knowing her diary includes references of "self-harm" in response to the requirement.

When she complained through the ombudsman and went before a TAL decisions committee, she found her case manager was on it. TAL used private investigators and photos and data to halt claim payments and set out to recover about $70,000 already paid out.

Orr suggested TAL did this to find a non-disclosure in the claim. Since 2013, TAL used non-disclosure as basis to refuse about 500 (physical health) and 100 (mental health) income protection claims.

TAL said its internal disputes review was improved and sits under its legal team now. Until about 2013, a TAL customer who made an income protection claim was asked to submit every type of medical report.

Read more: TALRoyal CommissionLoraine van EedenRowena Orrlife insuranceFOS - Financial Services OmbudsmanMedicare
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