…
What happens next?
Your dedicated case manager will start assessing your claim once they receive the requested items. We may need to ask for more information and you may need to assist us in the ongoing assessment of your claim, by:
• undergoing medical examinations with the doctor of our choice
• providing information about your income before you took out this insurance and/or before you made a claim
• giving us the authority to gather further information about your claim, for example, from other companies, employers, government bodies and/or other relevant bodies
• meeting with a TAL representative so they can gather further information about your claim.
32 The authority referred to above for Medicare records that was enclosed was the standard form issued by Medicare Australia. The authority was for Medicare claims history from 1 February 1984 to an unspecified time and for Pharmaceutical Benefits Scheme (PBS) claims history from 1 May 2002.
33 The claim form commenced with a box headed "IMPORTANT INFORMATION" which contained the following (CB2 tab 25 p…1296):
• Please answer all questions fully to ensure that your claim is assessed as quickly as possible. Answers left blank or not fully completed may delay the assessment of your entitlements to benefits.
• False or fraudulent statements or failure to advise TAL Life Limited (TAL) of any relevant information may lead to TAL refusing to pay your claim.
• If you have any questions regarding the completion of this form, please contact either your Financial Adviser or us via our Claims Toll Free Number on 1800 101 016.
34 The claim form contained the following authority for medical records (CB2 tab 25 p…1302):
MEDICAL AUTHORITY
I, ____________________________ (full name) hereby authorise any doctor, hospital, therapist or other medical professional who has attended me, to release to TAL Life Limited, or its representatives, information relevant to my policy and/or claim, with respect to any sickness or injury, medical history, consultations, medications or treatment, received by me, together with copies of any and all medical records. I consent to TAL Life Limited collecting this sensitive information. A copy of this authority is to be regarded as if it were the original signed authority. This medical authority will only be used for the purpose of assessing initial and ongoing entitlements to a claim.
Name
Signature Date
35 Just above the medical authority was a privacy disclosure which stated the following (CB2 tab 25 p…1302):
PRIVACY DISCLOSURE
Personal information is collected from or in respect of you to enable TAL Life Limited to provide or arrange for the provision of the product or service requested. Further personal information may be requested from you at a later time, such as if you want to make alterations to the policy or at claim time. If you do not supply the required information, we may not be able to provide the product or services requested or pay the claim.
In processing and administering your insurance (including at the time of a claim) we may disclose your personal information (excluding health information) to a number of parties such as organisations to whom we outsource our mailing and information technology, the Insurance Reference Service, Government regulatory bodies, and other companies within the TAL group and accountants (if applicable).
We may also disclose your personal (including health) information to other bodies such as reinsurers, your adviser, health professionals, investigators, the administrator, lawyers, the trustee of any superannuation fund through which the policy is effected, external complaints resolution bodies and as required by law.
By signing this form you agree to our collection, use and disclosure of your personal information.
(Emphasis added.)
36 At the end of the initial claim form was the following declaration (CB2 tab 25 p…1302):
DECLARATION
I hereby declare that the information in this claim form is true, correct and complete. I understand and agree that if I make any false or fraudulent statements or fail to advise TAL or [sic: of] any relevant information regarding my claim, TAL may refuse to pay, and cancel my claim.
Name
Signature Date
37 The initial claim form also had a question about what professionals the Second Insured had consulted. The question (numbered 11) was in the following terms (CB2 tab 25 p…1298-1299):
Have you consulted a doctor, physiotherapist, psychologist, chiropractor or any other health care provider for this or any OTHER condition in the last 5 years?
Yes 󠆶󠆶 No
If yes, please give details
Reason for consultation/condition(s) treated
Date of treatment
Name & address of treatment provider
Name
Address
Suburb State Postcode
38 The Second Insured completed and signed the initial claim form including the medical authority on 23 December 2013. She executed the form from Medicare Australia authorising the release of Medicare and PBS information. She answered question 11 by referring only to the whiplash injury and the practitioners who treated her for that injury. The Second Insured also provided medical, hospital and pathology reports concerning her present condition of cervical cancer. All these documents were received by TAL on 3 January 2014.
39 Shortly thereafter a TAL case manager commenced assessment of the claim. In a document created at this time the TAL manager wrote the following under the heading "Strategy and decision" (CB2 tab 27 p…2152):
At application the insured disclosed that she had mid cycle menstrual bleeding and was awaiting blood test results. It does not appear that u/w requested a copy of the insured's clinical notes, they have only obtained a spinal questionnaire which was directed to the insured and not the GP. The insured has also provided her investigation results which show that she had clear results and ultra sounds prior to policy application. We will need to investigate the full history to confirm that there were no earlier abnormalities which were not disclosed. Suggest we accept the claim at this stage
40 Three comments can be made about the attitude of TAL reflected here: First, the documents provided revealed no non-disclosure as to the cancer. Secondly, the Second Insured had disclosed the blood test which the underwriter did not follow up. Thirdly, the question of future investigation as to misrepresentation or non-disclosure and thus possible avoidance was to the mind of the officer; but, subject to that, the claim was accepted: "at this stage".
41 By letter of 8 January 2014, TAL sought from Medicare Australia all the Second Insured's Medicare and PBS records from 23 December 2008 to 23 December 2013. The terms of the letter are instructive. It stated (CB2 tab 30 p…0373):
[Redacted] medical records
We're currently investigating [Redacted] claim for DI (Accident) benefits.
To ensure we make a fair and accurate assessment of their claim, please provide us with a copy of their Medicare and PBS history for the period 23/12/2008 to 23/12/2013.
42 The letter says that TAL was investigating the Second Insured's claim and the medical records (for five years) were needed to make a fair and accurate assessment of her claim. There was, however, no doubt that the Second Insured had cervical cancer. She was, to the knowledge of TAL, undergoing, or about to undergo, chemotherapy. What was being sought was five years' medical records in order that TAL could investigate whether there had been a non-disclosure or misrepresentation (implicitly about the cancer of the cervix) and so, implicitly, as to whether it could reject the claim or avoid the policy. The case is not about whether TAL misled Medicare Australia. It is, however, in part about whether TAL misled the Second Insured in the Claims Pack documents sent on 17 December 2013 about her obligation to sign a medical authority. The author of this letter (and it may well have been systemically authored as a standard form) recognised that the legitimate limits to seeking personal medical information were the "fair and accurate assessment of the claim". Such is related to, but different in kind and quality from, an assessment as to whether TAL has rights to reject an otherwise valid claim or avoid the policy by reason of misrepresentation or non-disclosure.
43 On the same day, 8 January 2014, TAL requested United Healthcare Group (UHG) to obtain on its behalf the Second Insured's clinical records from her GP, Dr D, and from her private health insurer. In the TAL file note concerning the request to UHG to obtain Dr D's clinical notes there was an entry: "Do not contact applicant." This reflects the lack of notice to the Second Insured about the investigation as to the validity of her policy.
44 The following day, 9 January 2014, TAL wrote to the Second Insured informing her that her claim was accepted, explaining how benefits were calculated, waiving continuing premiums and asking to be kept up to date on progress. In this latter respect the letter stated (CB2 tab 31 p…0370-0371):
Keeping us up to date with your progress
During the period that you're receiving benefit payments, we need regular updates on your progress. To help us with the assessment for your next benefit payment, please:
- complete the enclosed progress claim form,
- ask your doctor to complete the enclosed Attending Doctor's Statement,
- return both to us by in the enclosed reply paid 1 March 2014
We may also ask you to:
- undergo medical examinations with the doctor of our choice
- provide information about your income before you took out this insurance and before you made a claim
- give us the authority to gather further information about your claim, for example from other companies, employers, government bodies and/or other relevant bodies
- provide your monthly profit and loss statement and tax returns
- meet with a TAL representative so they can gather further information about your claim.
45 The letter was expressed in reassuring terms. The last two headings were "Support when you need it most" and "We're here to help". There was no information given that TAL was seeking prior medical information to assess whether there had been misrepresentation or non-disclosure. The author of the letter to whom I will refer as Ms KR was the case manager who had recommended investigation to ascertain whether there had been non-disclosure.
46 On about 17 January 2014, UHG provided TAL with copies of the Second Insured's Medibank Private health records.
47 On about 22 January 2014, UHG provided TAL with copies of the clinical records of the Second Insured's GP, Dr D. These documents included mental health assessments and plans and reviews at various dates in 2007 and 2009.
48 On 29 January 2014, Ms KR, the TAL case manager, wrote a file note about the record which contained the following (CB2 tab 4 p…1544):
5 January 2009 mental health assessment ended relationship depression [Redacted]
used marijuana 18-22 unstable relationship
18 January 2008 referral to psychologist
Assessment: Following receipt of Medicare hx the case will require referral to u/w. The insured did not disclose any mental health issues. This appears only to be as a result of a marriage break up it may have altered policy terms and conditions given the insured's other disclosures made at policy application
49 This entry was under the headings (CB2 tab 4 p…1544):
Comments
Medical Information
…
Policy validity investigation
50 On 6 March 2014, TAL received a progress claim form from the Second Insured. The form contained another competed medical authority. The interim claim was paid by TAL on 10 March 2014.
51 In late March, TAL received from Medicare Australia a copy of the Medicare and PBS records of the Second Insured from 1 March 2009 to 23 December 2013. Earlier records were not made available. Exceptional circumstances were said to be required for their production.
52 On 2 April 2014, TAL received a progress claim form from the Second Insured. The form contained another completed medical authority. The interim claim was paid by TAL on 3 April 2014.
53 Meanwhile, on 24 March 2014, Ms KR, the case manager, spoke with the Second Insured on the telephone and was told by her that she would like to return to part-time work in April, having decided not to sell the business. Discussion took place as to financial information that was necessary for a partial claim.
54 On 5 May 2014, TAL asked UHG to obtain on TAL's behalf copies of the clinical notes of another treating doctor, Dr M, at the same practice where Dr D practised.
55 On 7 May 2014, TAL informed the Second Insured by letter of payment of benefits from April to May 2014.
56 On 4 June 2014, UHG provided to TAL the medical records of Dr M. They contained further records concerned with the Second Insured's mental health.
57 The file notes of the case manager, Ms KR, reveal regular contact with the Second Insured and discussion as to her condition. The view of Dr D on or prior to 22 May 2014 was that she would return to work, though it was not clear when this would occur. In the file notes of Ms KR that reviewed Dr D's records it was noted that the insured had been referred to a psychiatrist. (This was incorrect. The Second Insured had been referred to a psychologist.)
58 On 11 June 2014, Ms KR made a file note that all clinical notes had now been received and "the case requires re-u/w referral." This is a reference to the need to "re-underwrite" the risk. This was a retrospective underwriting opinion to review the records. Ms KR prepared a referral on 11 June 2014. It annexed the Second Insured's Medibank Private records and those of Dr M, and probably those of Dr D. Parts of these records were redacted.
59 On 26 June 2014, Mr Bird provided his retrospective underwriting opinion. He stated in the report that the application would have been declined, referring, amongst other things, to "Depression - recurrent depressive disorder." Adjacent to the heading "Overall Decision" he wrote "Decline" and below it he wrote (CB2 tab 42 p…0241):
Significant depression with specialist referral, suicidal ideation would be a decline minimum of 5 years since last episode and then RMO
60 The report contained extracts from Dr M's clinical notes which included references in 2007, 2008 and 2009 to depression, suicidality, "doing well with psychologist", reduced suicidality, a mental health assessment, "reaction to ending relationship", and "seeing a psychologist".
61 On 27 June 2014, the case manager, Ms KR, sent a referral to TAL's Claims Decision Committee recommending avoidance of the policy. The full terms of the recommendation were as follows (CB2 tab 44 p…2163):
The insured applied for cover 29/09/2013 at application she disclosed bronchitis less than once a year and whip lash due to a high speed MVA last symptoms within 6 months an MRI in 2010 all clear of serious injuries and she required 2 weeks in hospital. A family history of [Redacted] was disclosed. Insured also disclosed drug use of marijuana last used more than 3 years ago.
Cover was issued with a cervical spine exclusion.
Policy validity investigation was undertaken and clinical notes were referred for re-underwriting.
Clinical notes indicated that the insured had pre-existing depression in 2007, 2008, 2009. Based on the medical evidence obtained underwriting would have declined cover due to the insured's prior history of depression.
Based on the cervical spine exclusion and depression decline the overall decision would have resulted in the application being declined.
TAL would not have entered into a policy on any terms therefore the recommendation is to avoid the policy based on the remedy (29)3 of the insurance contracts act.
62 The Claims Decision Committee was set up under guidelines that were in evidence. The Committee was independent of the claims and case managers, although these persons attended to present the claim and contribute to the discussion.
63 On 30 June 2014, the Committee accepted the recommendation of Ms KR.
64 On that day, 30 June 2014, the case manager, Ms KR, telephoned the Second Insured with the bad news. The transcript and recording of this telephone call reveal the distress and concern caused to the Second Insured (albeit she expressed herself in polite terms) by the decision. I will return to the relevance of this in due course in discussing the content and operation of the implied term of the utmost good faith. But it is appropriate to say at this point in the chronology that policies of this kind providing income protection are very important to the economic and human wellbeing of people. The content of the term implied by s 13(1) of the Insurance Contracts Act and its application in individual cases are not subjects limited to the exercise or discharge of legal rights, abstractedly analysed, though that is, of course, relevant. It involves consideration of the human context of the people concerned. It is the acting towards each other (with commercial standards of decency and fairness) that is expected of both the insurer and insured by the terms of s 13. The policy was, obviously, of the utmost importance to the Second Insured: a 39 year old woman of modest means, self-reliantly self-employed experiencing cancer of the most serious kind. From the circumstances of the disclosures that were made and from the content of TAL's file there was not the slightest evidence of dishonesty or sharp practice in the conduct of the Second Insured. She was given this news over the phone (a letter was to follow) after not the slightest intimation of the undertaking of a "policy validity investigation" or the slightest opportunity to explain the circumstances of her treatment in 2007, 2008 and 2009 (four to six years before taking out the policy) or to explain why she had not disclosed those matters.
65 In the conversation with Ms KR, the Second Insured said, amongst other things: that she did not deliberately not disclose anything; and that she did not believe that (at the time of this conversation) TAL would not have given her any policy at all. When asked whether there was a reason that those matters had not been disclosed, she said "because I so don't feel that I had an ongoing depressive issue … I disclosed everything that I remembered." She then referred to some of the highly personal and family matters that she had disclosed. When asked whether she recalled (that is at the time of this conversation) seeking treatment for depression the Second Insured said: "I remember going to my doctor and crying and being sad, sure. I would not call what I had as ongoing … I try not to remember bad bits of my life … I absolutely did not deliberately exclude something. So, I'm … stunned, shocked, incredibly sad and distressed." She was then effectively told that she might owe TAL about $15,000, which caused her audible distress. She was told that there was a process of internal review and that she would be sent a letter with all relevant information.
66 The conversation had begun with Ms KR saying the following (CB2 tab 45 p…0001):
KR: Excuse me. Look I'm just calling you today, unfortunately in relation to some bad news. I'm not sure if I had advised you or not. But essentially, when you lodge a claim, we look into your past medical history to ensure that everything that was disclosed at application was correct.
There certainly had been no intimation in any of their communications (written or aural) that TAL would look into her past medical history to ensure everything that was disclosed at application was correct, in effect that there was a "policy validity investigation" being undertaken. Indeed, it can be inferred from the notes and the nature of the conversations that did occur from January to June that there was a deliberate decision or policy not to tell the Second Insured or someone in her position of such an investigation.
67 At the time of this conversation on 30 June 2014, TAL was aware of the Second Insured's difficult emotional and physical state. On 22 May, Ms KR read a medical report of Dr D describing pelvic pain, mood instability, and other chronic pain. The content was described in the report (transcribed in Ms KR's notes) (CB2 tab 4 p…1535):
Prognosis: Cervical carcinoma serious and potentially lethal condition. Once she recovers from her tx she is likley [sic] to RTW [I infer: return to work]. Long term prognosis remains gaurded [sic] due to the relatibely [sic] short time that has passed from time of tx
No additional factors prevent RTW
68 On the same day, 30 June 2014, the Second Insured requested an internal review. She renewed this on 1 July 2014, saying she had taken legal advice and was in "financial crisis".
69 By letter dated 3 July 2014, signed by Ms KR, TAL avoided the policy. The letter included the following (CB2 tab 50 p…0175-0176):
Information received throughout claim assessment
It has now come to our attention that your responses to the questions asked in the application were not accurate. In particular the following medical information was not disclosed:
- Clinical notes from Dr [M] which indicated the following relevant consults
- 16.1.07 referral re depression, declining anti-depressants
- 14.12.07 - Depression - suicidality, sleep disturbance. FH of mental illness
- 22.04.08 doing well with psychologist. Reduced suicidality
- 05.01.09 Mental Health Assessment reaction to ending relationship
- 11.11.09 Lethargic 4-5/12
- 10.02.10 fatigue
The details of your medical history set out above were relevant to our decision as to whether to accept your application and if so, on what terms. If we had been aware of the above stated information we would not have entered into an agreement to offer a policy on any terms.
…
Misrepresenting or failing to disclosure relevant information
In failing to correctly and completely provide your medical history in the application, you failed to disclose and/or misrepresented your medical history thereby breaching your duty of disclosure pursuant to s21 of the Insurance Contracts Act 1984 (the Act). We are also of the opinion that you also breached your duty of good faith as set out under s13 of the Act.
As such, pursuant to s29(3) of the Act, TAL Life Limited (formerly TOWER Australia) hereby avoids the policy/policies from inception on the basis that had the non-disclosure and/or misrepresentation not occurred, TAL Life Limited would not have entered into a Policy.
Benefits paid under your claim
As we would have not offered a policy on any terms, you were not eligible for any benefit payment made under the Policy/Policies. As such, we are entitled to recover any benefit payments made to you. In this instance, we are prepared to refund of [sic] all premiums that you have paid (minus any premiums already refunded to you during the claim). We have listed these amounts below:
Total premiums paid: $1,027.44
Total benefits paid: $25,000.00
Premiums already refunded to you: $677.35
Amount to be recovered: $24,649.91
At this stage, we won't be requesting the payment of this amount; however we reserve any right to request recovery in the future.
If you have new relevant information
We've made this decision based on the information currently available. If you have any new relevant information, you're welcome to submit it to us for review and consideration.
If you're dissatisfied with how we've made our decision, you can submit your feedback in writing to:
The Manager, Complaints Resolution
TAL Life Limited
GPO BOX 5380
Sydney NSW 2001
(Emphasis added, other than headings which were bold in the original.)
70 A number of things should be said about the above letter. First, as to the heading above the recited medical information, it was disingenuous. The information was not received "throughout [the] claim assessment". At least in respect of Dr M's records, it was sought and produced as part of a "policy validity investigation" that was separate from assessing her claim for cancer of the cervix. Secondly, TAL not only asserted non-disclosure and misrepresentation, but accused the Second Insured of a lack of utmost good faith. Thirdly, as must have been evident from any application of common sense and human experience, the contents of a doctor's clinical notes may not be an accurate reflection of what the patient knows, understands or is aware of, either contemporaneously or four to six years later. Fourthly, the letter threatened the Second Insured with further action to recover over $24,000, though "reserving its position" in this regard.
71 At no time prior to avoiding the policy did TAL:
(a) tell the Second Insured it was considering her medical history;
(b) tell her that it was examining her medical history to undertake a "policy validity investigation", that is ascertaining whether it had rights under the Insurance Contracts Act, including the right to avoid the policy ab initio with the consequent possible consequence not only of a refusal of the claim, but also of a possible liability to repay all moneys paid hitherto under interim claims;
(c) ask her to address any concerns as to non-disclosure or misrepresentation in her answers;
(d) make any additional enquiries of Dr D, Dr M or the psychologist to whom the Second Insured had been referred about the contents of the medical records and about her condition.
72 On 13 July 2014, the Second Insured again sought to take advantage of TAL's internal review. In the document seeking review she stated (CB2 tab 52 p…0290):
I'm writing to request an internal review of the decision to void my insurance policy on these points:
It was an accidental omission of medical history, certainly not a deliberate misrepresentation.
I've been running a successful solo [Redacted] for seven years now. The only time away from work (aside from study breaks) was following my car accident, when I had two weeks off with a [Redacted] in 2010.
As such, with no time required away from work, it didn't feature prominently in my mind.
I wait to hear of your decision.
73 By letter dated 28 August 2014, TAL refused to change either its decision or its position on potential recovery of payments, saying (CB2 tab 55 p…0179):
Background
We understand that you have previously been informed of your Duty of Disclosure and the impact of breaches in TAL's letter to you dated 3 July 2014. Whilst we acknowledge that you have stated that this was unintentional, the medical information we received indicates that had full disclosure been made cover would not have been offered.
Benefits Paid
As you would therefore not have had insurance cover with TAL, we are entitled to recover all benefits paid to you prior to discovery of the undisclosed medical history.
TAL will not at this point in time be requesting payment of the amount of $24,649.91. However we do reserve any right to request recovery in the future.
74 With the assistance of the Public Interest Advocacy Centre, on 5 September 2014, the Second Insured lodged a dispute with the Financial Ombudsman Service. The terms of the complaint were as follows (with aspects redacted to avoid any chance of identification of the Second Insured) (CB2 tab 57 p…0191-0192):
Summary of Dispute:
I have an ongoing claim on my income protection insurance policy as I had cervical cancer diagnosed in dec 2013, and received both radiotherapy and chemotherapy in jan and feb 2014. I was very ill and could not work, I'm still suffering side effects of treatment and haven't returned to work. TAL was paying me $5000/mth until I received a phone call on 30/06/2014 to inform me they have cancelled my policy as I didn't disclose depression from 2006/07.
I was so shocked, this was an accidental omission! I told them about my mothers history of illness, my bronchitis, whiplash and pot smoking 20 yrs ago! I told them I had some blood tests outstanding at the time. I simply didn't recall depression the day I did the phone application! I'm an [Redacted] and have run a successful solo practice in Canberra for 8 years now, the only time off I've taken was for whiplash after my MVA in June 2010. Never have I been depressed enough to require medication or time off work, as such it didn't come to mind at the time of application. TAL is claiming that if I'd disclosed depression that they would not have offered me cover under any circumstance! I find this to be absurd and have spoken to legal aid who advised me that it would actually be discriminatory of them to not offer me some cover even if they included a rider or exclusion! I believe that with full disclosure they absolutely would have offered me cover, with some rider attached as they did for my whiplash injury.
Outcome Sought:
I believe they can now add a rider to my cover, as they did for my whiplash injury, to exclude me from claims until I haven't sought any help over a ??year period. I want my cover reinstated, and them to drop the threats of recovering $24649.91 from me, my benefits back paid for the months of June, July and August 2014, as well as my cervical cancer claim honoured and continued a legitimate illness with absolutely nothing to do with depression from 2006!!
TAL continues to threaten me with 'the right to recover $24649.91 at any time in the future.' I want this to stop.
TAL ceased to pay my monthly benefits and as such I want June, July and Augusts $5000 backpaid as $15000 to me.
And I want me [sic] cover resumed so that I am still covered until I can resume my normal trading, reach the figure of $5000 income a month.
75 By deed of release dated 19 May 2015, TAL and the Second Insured settled the dispute. The settlement was without admission of liability of either party: that is, TAL maintained its rights to avoid; and the Second Insured maintained the position she set out in the terms of her complaint. The parties settled by a payment of another $25,000 by TAL, inclusive of interest and legal costs. The Second Insured kept the benefits hitherto paid. The parties agreed that the policy remained void ab initio and that the Second Insured was no longer an insured. Releases were given.
76 The evidence did not disclose the temporal extent of the disablement from working of the Second Insured caused by the cancer.
77 The Second Insured's experience became a case study at the Royal Commission. Statements of senior employees were filed pursuant to request by the Commissioner. I admitted these statements into evidence over the objection of TAL that they were irrelevant as opinions of persons who had no personal involvement in the matter. The evidence was of people who had authority to speak on behalf of TAL and who made themselves familiar with the affairs of TAL about which they gave evidence.
78 Ms van Eeden was the general manager of claims for the TAL group. She based her statement on her enquiries and experience. In relation to the approach taken Ms van Eeden said at paras 105 and 106 of her statement (CB2 tab 61 p…0257-0258):
105. On reflection, when viewed against TAL's current practices, [Redacted] claim assessment could have been and, were [Redacted] claim assessment to be undertaken today in accordance with TAL's current practices would have been, assisted by:
a. seeking a report from the treating psychologist at TAL's cost to better understand her mental health status and treatment; and
b. TAL notifying [Redacted] that we were undertaking enquiries in relation to the validity of her policy.
106. In my opinion, it would also have been appropriate to have written to [Redacted] setting out the relevant medical evidence obtained and the preliminary findings of TAL and providing her with an opportunity to respond before a decision was made. I would like to see this process implemented, at least in appropriate circumstances.
79 In relation to the notification to the Second Insured of the avoidance, Ms van Eeden said at paras 108, 110 and 111 of her statement (CB2 tab 61 p…0258):
108. Some of the communication with [Redacted] was not of the standard that TAL would consider appropriate. In particular, I do not believe there was sufficient empathy shown to [Redacted], given the lack of notice to her that the claim was being investigated, the manner in which the unwelcome news that her benefits would cease was conveyed, and leaving her with the impression that she may need to refund the benefits already paid to her by TAL.
…
110. Decline and avoidance letters continue to be reviewed. It was not appropriate to inform [Redacted] that she had breached her duty of good faith in the declinature letter.
111. TAL's current practice is not to seek recovery of benefits paid to a customer in these circumstances. TAL's policy is to commence payment of an income protection claim, prior to finalising any investigation into the policy. TAL accepts that this should not result in a request for payment of benefits paid, except possibly in claims involving fraudulent conduct by the insured. TAL accepts there was no fraudulent conduct by [Redacted] in relation to her policy or claim.
80 As to the systemic nature of these matters, Ms van Eeden said the following at para 113 of her statement (CB2 tab 61 p…0259):
113. As to whether the conduct outlined above in response to this question is a representative example of, or is symptomatic of, a continuing or systemic issue that has occurred or continues to occur, as I have stated above, historically, in contrast to TAL's current practices, there were deficiencies:
(a) in TAL's prior practice of referring in declinature letters to the breach of the duty of good faith;
(b) in TAL's communications with the claimants, both in terms of insufficient empathy and keeping the customer informed;
(c) in TAL generally not providing the policyholder an opportunity to provide additional information prior to avoiding a policy when investigating a non-disclosure.
81 In her cross-examination by senior counsel assisting the Royal Commission, Ms van Eeden accepted the following propositions:
(a) TAL's failure to tell the Second Insured that it was investigating the validity of her policy was unacceptable and fell below community standards.
(b) At the time in June 2014 the failure to give the Second Insured an opportunity to provide information was a general practice and a systemic deficiency which had been rectified.
(c) The Second Insured was given no procedural fairness before the decision to avoid the policy.
(d) It was inappropriate to have told the Second Insured that she had breached her duty of good faith, because they could not have known (as was not the case) that she had done it intentionally.
82 Ms Phillips was the "General Manager, Health Services" for the TAL Group. She described her responsibilities as (CB2 tab 62 p…0133):
My responsibilities in this role include leading a team to develop and support a customer health proposition in addition to providing various areas of the business with expert medical and forensic accounting support.
83 She based her statement on enquiries of relevant employees. Her evidence was as to the procedure for pre-existing conditions (CB2 tab 62 p…0138):
In assessing an application which involves a pre-existing condition, the TAL underwriter considers the information disclosed by the applicant. If there is insufficient information to make an assessment to offer, decline or exclude insurance cover, the TAL underwriter will seek additional information in respect of the condition. The TAL underwriter will assess the applicant's information, and any relevant additional information, against the Reinsurance Guidelines and/or the TAL Guidelines (where appropriate) to determine whether to accept the application, apply an exclusion, or decline the application, or a particular benefit for which the applicant has applied.
84 In submissions to the Royal Commission senior and junior counsel on behalf of TAL made the following submissions and admissions, I infer on clear instructions:
(a) Counsel accepted, based on Ms van Eeden's evidence, that the accusation in the letter of 3 July 2014 that the Second Insured had breached her obligation of good faith was itself a breach of the implied term of good faith by TAL.
(b) Counsel accepted that the general practice up to mid-2017 that was exhibited in the case of the Second Insured of failing to afford a policyholder an opportunity to address TAL and any material it was relying on prior to deciding to avoid a policy was inappropriate and conduct which fell below community standards and expectations.
85 Further, counsel accepted, based on Ms van Eeden's evidence, that two other aspects of TAL's conduct fell below community standards and expectations:
(a) leaving her with the impression that she may be liable to repay the benefits that she had received in circumstances where her claim and any non-disclosure was not fraudulent;
(b) failing to afford her any procedural fairness.
86 I have referred above at [59] to the retrospective underwriting exercise undertaken by Mr Bird. It is necessary to deal with this procedure, and Dr Phillips' criticism of it, in some more detail. Mr Bird gave evidence.