December 2017


Absent nurse defrauded insurer

By Kate Tilley and John Reynolds, KT Journalism

A former Brisbane nurse who continued to claim permanent disability payments despite working overseas has been ordered to reimburse AIA Australia for its investigation.

Federal Court Chief Justice James Allsop said Vincent Brian Richards had fraudulently claimed $37,629 and owed AIA $110,000 in investigation costs. CJ Allsop also ruled AIA was entitled to cancel Mr Richards's policy when it became aware of the fraud.

Apart from an initial response to AIA's policy cancelation and a written explanation to the court, Mr Richards did not file a defence or attend any hearings. The court heard he had taken out the policy in 2002 and was working as a nurse when he was injured later that year.

On 28 March 2003, Mr Richards made claims under the policy for payment of the total disablement benefit and 112 claims were made from that date until 6 January 2016. AIA made no allegations about those "first stage" claims.

The insurer continued paying eight further instalments, which it referred to as "second stage"  claims until October 2016.

The court heard AIA became suspicious of Mr Richards's condition in late 2015 and conducted a desktop investigation.

A "Vinny Richards" Facebook page showed Mr Richards was working for a business called "Holistic Health Riga" in Latvia. On 18 November 2015 a photograph had been added to the Holistic Health page which was the same as the Facebook profile picture for "Vinny Richards".

In January 2016, "Vinny" Richards added a post to Holistic Health's page that stated: "I am an Australian living in Latvia & Sweden from Nov 2011. I trained as a nurse, then became an Anaesthetist ... I currently work on EU Health Projects. I also have a clinic in Riga Latvia where I practice Acupuncture. In the clinic we also make Facial Rejuvenation with Botulium Injections and Dermal Fillers."

AIA paid investigators to receive acupuncture treatments from Mr Richards at clinics in Stockholm and Riga.

"Vinny" told one investigator whom he treated that he "had some hip pain due to a motorcycle accident", which happened "five years ago". He said he still rode a scooter in Stockholm and Riga.

AIA argued Mr Richards was "at least capable of performing, and intending to perform another occupation" from January 2016 and from at least August 2016 he was "actually performing the duties of another occupation and capable of performing his usual occupation".

When AIA wrote to Mr Richards to say his policy was cancelled for fraud, he emailed a response saying said his acupuncture work was not "a full career but as a step back into the workplace. I am only able to do maybe 10 or so treatments a month, which equates to around €300 [and] from this I have to pay commission for hire of room".

Mr Richards said: "I am currently under another specialist in Riga for my condition. Also may I add I really pushed myself to get back into work. As my psychological health was suffering and I was admitted to psychiatric hospital for suicide attempt.

"I may have been naive or just foolish but my goal was to get back to work full time in the future."

AIA argued the email proved Mr Richards had made fraudulent claims from when he started working in Sweden and Latvia.

On claim forms, Mr Richards had stated he was unable to perform all his usual work duties because of "pain, stiffness, depression". He said his daily activities were limited to studying languages, "light exercise (stretching)", "TV" and "reading".

AIA asked CJ Allsop to make a summary judgement in Mr Richards's absence, declaring he had made fraudulent claims; AIA was entitled to cancel his policy; and setting costs.

CJ Allsop agreed the investigation proved Mr Richards was capable of working in his former or a similar career from February 2016. He found Mr Richards had admitted working in his email to AIA and in a later letter to the Federal Court.

On 27 November 2016, he wrote to the court: "I have advertised acupuncture treatment since June 2016. My intention was to give treatments of maybe 10-12 clients per month as a test to see if I could make some sort of career from this and in time increase the work. I thought 10-12 a month would be ok as I am still suffering from my condition and taking medication. Medication consists of analgesia, sleeping medicine and anti-depressants."

In the letter he claimed he did not tell AIA about his overseas work because he "knew AIA would cause me problems and maybe threaten to stop the benefit". He said he was going to tell AIA of his new status when he felt capable of working longer hours.

Mr Richards said he was "stupid" to lie "but I really felt I had to take the chance as AIA are not sympathetic to their clients".

CJ Allsop said the emails to AIA and the court were sufficient evidence for a summary judgement. "Mr Richards admitted he lied in making the claims," CJ Allsop said. "These admissions are strong evidence he knowingly made statements he knew to be false, particularly when linked with other evidence obtained through surveillance."

CJ Allsop said Mr Richards could apply under Federal Court rules to have the judgement against him set aside if he chose to appear before the court.

William Roberts Lawyers, which acted for AIA, said the ruling clarified uncertainty over insurers' entitlement to cancel life policies because of fraud, contradicting previous NSW Supreme Court judgements.

"This is a significant decision for life insurers as it clarifies their recourse when fraudulent claims are lodged. [CJ Allsop ruled] life insurers should not just refuse payment of [fraudulent] claims but should also, in appropriate circumstances and if the evidence so establishes, cancel the contracts."

AIA Australia Ltd v Richards (No 3) [2017], FCA 1069, 11/09/2017

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