December 2020


Injured motorcyclist wins TPD claim

by Stanley Drummond*

The NSW Supreme Court has found a qualifying period for a total and permanent disablement (TPD) benefit did not have to start immediately an insured left work.

In 2008, Aaron Standley took out a sickness and accident insurance policy, which included own occupation TPD cover.

The policy defined own occupation TPD as:

Own occupation TPD means that, as a result of illness or injury, the life insured:

1. a. has been absent from and unable to engage in their ‘own occupation’ for three consecutive months; and
    b. is disabled at the end of the period of three consecutive months to such an extent that they are unlikely ever again to be able to engage in their ‘own occupation’.

On 2 August 2015, Mr Standley was injured while riding his motorcycle, which collided with a motor vehicle. He sustained injuries to his left wrist and two fractures to his right leg. The wrist injury involved a fracture and was put in a cast. There was a comminuted fracture of the right tibia. He had surgery and was in hospital for about five days.

At the time of the accident, Mr Standley was employed as a call centre manager for DHL Supply Chain, a parcel delivery service. DHL referred to the position as a customer experience manager (CEM). Mr Standley had worked at DHL only since June 2015.

Before joining DHL, Mr Standley had worked in a similar role with Fastway Courier (from July 2013 to February 2015); as national service centre manager for AAPT Telecommunications (February 2012 to July 2013); as an operations manager for Tom-Tom Sales BV (October 2007 to January 2012); and as national service centre manager for Chubb Security Services (2004 to 2007).

Mr Standley had served four years in the United States Navy conducting inspections of aircraft and maintenance. In 2003 he had obtained a Certificate IV in Business Management from Meadowbank TAFE. According to his resume, he had other qualifications, including a Bachelor of Science and Business Management from the University of Phoenix.

In late October or early November 2015, Mr Standley returned to work at DHL, but was viewed by DHL as having insufficiently recovered from the accident. His direct supervisor's view was that, although he had made an enthusiastic and genuine effort to return, he was not, at February 2016, coping with the work. On 2 February 2016, Mr Standley resigned from DHL.

He lodged a claim form dated 30 August 2016 which was lodged in early September 2016. The reason he gave for stopping work was “constant pain in leg and wrist”.

In the claim form, Mr Standley made no reference to being unable to walk, to any back condition, or to any psychological condition.

Mr Standley also brought a workers’ compensation claim for the accident. Dr Ash Takyar, a psychiatrist and independent Medical Assessment Service assessor, gave a Motor Accident MAS Certificate dated 14 September 2017 about Mr Standley’s psychological injuries.

Dr Takyar assessed him as suffering from “an adjustment disorder with mixed anxiety and depressed mood”, and as having 9% whole person impairment. Dr Takyar noted that “from a psychiatric perspective, his capacity is reduced to being able to work one or two days per week”.

Onepath accepted that by September 2017 at the latest, Mr Standley had developed a psychological condition.

But the insurer’s position was that Mr Standley could only succeed in his claim if he could establish that, at May 2016 – ie at the end of the three-month period since he left work in February 2016 – he was unlikely to ever be able to work as a full-time CEM at DHL or elsewhere

Onepath contended the only relevant date for the assessment was May 2016 – so the only question was, in May 2016, was Mr Standley unlikely to ever work again full time as a CEM.

In a letter dated 15 November 2017, the insurer denied the claim, saying: “The assessment of Mr Standley's TPD claim is based on whether he meets the TPD definition as at the date of assessment. According to the relevant TPD definition, the date of assessment has been determined as 2 May 2016, being three months after Mr Standley ceased work.

“The medical evidence we have obtained shows Mr Standley's psychological illness was not present at the date of assessment and appears to have emerged as a secondary condition much later. This means we [cannot] consider Mr Standley's psychological illness as part of our assessment of his TPD claim until reasonable time to respond to treatment has passed.

“Our assessment of Mr Standley's claim has therefore been based on his physical disabilities. The weight of the evidence obtained ... shows that, while Mr Standley has some physical limitations and a certain degree of permanent impairment, it ... is not at a level that would render him totally and permanently disabled in performing his ‘own occupation’.

“Having regard to all the evidence available to us, we are not satisfied Mr Standley meets the definition of TPD.”

In December 2017, Mr Standley  launched proceedings in the NSW Supreme Court against the insurer.

The court’s decision

The court held that Mr Standley satisfied the definition of TPD, but used the period from July to September 2017 as the three-month qualifying period.

The court was not persuaded Mr Standley was precluded, for all the period from February to May 2016, because of the physical injuries sustained in the accident and sequelae, from performing as a CEM on a full-time basis and that he was unlikely ever to return to work as a CEM. The court was also not persuaded that, during that period, psychological sequelae had developed. So his claim, based on that qualifying period, was not made out.

The court found the TPD definition required that, as a result of illness or injury:

  1. the insured be absent from and unable to engage in their own occupation for a period of three consecutive months; and
  2. the insured is, at the end of the period of three consecutive months referred to in (1), disabled to such an extent that [they are] unlikely ever again to engage in their own occupation.

Mr Standley argued the TPD definition did not require an assessment of whether he  was unlikely to ever return to work to be as at May 2016. Rather, that assessment could occur at a later time.

The court accepted this submission, Justice Nigel Rein said: “The words ‘at the end of the period of three consecutive months’ have a precise focus – that is to say, the relevant date for assessment is at the end of thethree months during which the insured has been absent from his own occupation as a result of illness or injury.

“It does not permit a date for assessment to be chosen long after the expiry of the three months. Indeed, ‘after’ is not the word used but, rather, ‘at the end of’. I do not think there is any ambiguity about the clause or how it is to operate and, accordingly, I do not think the contra proferentem principle has any role to play in this matter.”

Justice Rein then had to consider the contention the three-month period did not have to start on 2 February 2016. That argument was based on the following propositions:

  1. Mr Standley had in April 2017 and September 2017 been diagnosed with a psychological condition that prevented him from working full time in his own occupation.
  2. Mr Standley had not, at September 2017, been working for three months.
  3. He was not, at September 2017, ever likely to return to his own occupation on a full-time basis, having regard to his psychological and physical conditions.
  4. He had presented to Onepath reports which supported the contentions in (1) and (3) above.

The insurer’s position was that Mr Standley’s condition in 2017 was irrelevant to the court’s determination, as the only possible date for assessment was 2 May 2016. Justice Rein said it appeared the vocational experts called by the insurer had not been asked to consider the psychological aspect because Onepath argued that, in September 2016 when Mr Standley lodged his claim, he was not claiming to be suffering from a psychological condition, and its position at the hearing was that the only focus of the court should be on May 2016.

The final issue in the case thus narrowed itself to the question of whether the only date for assessment was May 2016, as the insurer contended, or whether Mr Standley could rely on a later date before the insurer’s determination of the claim in November 2017 (or the start of the proceedings in December 2017).

Justice Rein found in Mr Standley’s favour: “Although the TPD clause requires that the assessment of likelihood of return to work must focus on a date that is at the end of a three-month period of the insured not having worked due to illness or injury, the clause does not in its terms limit the three months of inability to work to any particular period, and I am not persuaded there is any reason to read into the clause any limitation on its scope.”

The insurer had not challenged Mr Standley’s psychological condition as at September 2017 and his entitlement to the TPD benefit was made out: “Having regard to Onepath’s position and the absence of any challenge at the hearing to the insured’s psychological condition as at September 2017 (and beyond) and its impact on his ability to ever return to work full time as a CEM, as well as the medical reports ... which support his claims, [the insured] has made out his entitlement to the benefit under the policy from September 2017.”

Take away point

Do not assume that, in a TPD definition, the qualifying period starts immediately an insured person goes off work. The wording of the TPD definition actually has to say that.

Standley v Onepath Life Ltd [2020] NSWSC 848

* Stanley Drummond is Adjunct Head of Superannuation and Wealth Management at Thomson Geer.

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