Hart v MetLife Insurance Limited

Whether MetLife breached its duty in failing to "reconsider" Ms Hart's claims since 15 November 2021

Ms Hart in turn pleads that, on 15 November 2021, her solicitors wrote to MetLife enclosing further medical evidence in support of her claims and asking MetLife to "reconsider" her claims and (SOC [32]) that, to date, MetLife has failed or refused to reconsider her claims. MetLife accepts in its Defence that it has not "reconsidered" the claim lodged by Ms Hart on 18 February 2018.
The second of the separate questions posed by Hammerschlag CJ in Eq's orders made on 25 July 2022 is: 2. Did [MetLife] breach any duty or obligation to Ms Hart in failing since 15 November 2021 to reconsider Ms Hart's claims? (See Statement of Claim [35]).
This question derives from Ms Hart's Statement of Claim at [35], where Ms Hart alleges that: "35. Further or in the alternative, by failing or refusing since 15 November 2021 to reconsider [Ms Hart's] claims, [MetLife] breached its duty and obligations to [Ms Hart]. Particulars of breach (a) Failing to act with utmost good faith (b) Failing to reconsider the plaintiff's claim, within a reasonable time or at all (c) Failing to, within a reasonable time or at all, form an opinion in relation to the plaintiff's claims (d) Failing to act fairly, reasonably and in good faith by failing to form an opinion at a time when [MetLife] was in receipt of further information relevant to [Ms Hart's] claims such as to cause [MetLife], acting fairly, reasonably, in good faith and with due regard to [Ms Hart's] interests, to reconsider whether it should form an opinion as to whether the plaintiff has suffered "Total and Permanent Disablement" for the purposes of each of the PBR Policy and the FSS Policy (e) Failing to, within a reasonable time or at all, consider and determine whether, in light of its receipt of fresh evidence relevant to the plaintiff's claims, it should form an opinion on the question of whether the plaintiff has suffered "Total and Permanent Disablement" for the purposes of each of the PBR Policy and the FSS Policy.
The term "reconsider" here is ambiguous, since it could be directed an allegation that MetLife did not address its mind to that question, or an allegation that MetLife did not reverse the view it had previously held, which would only be established if that view was previously incorrect. Mr Coombes preferred the former construction of the claim in oral submissions. It is again appropriate and convenient to determine this claim by reference to Ms Hart's particularised case, although here submissions were again not organised in that manner.
I first address the relevant correspondence, to which Mr Coombes refers. On 15 November 2021, Ms Hart's solicitors wrote to MetLife enclosing new reports of A/Prof Robertson and Dr David Lewington (a spine and rehabilitation physician), along with a further detailed statement of Ms Hart and requesting MetLife reconsider and accept Ms Hart's claim within 28 days. On 2 December 2021, MetLife's solicitors wrote to Ms Hart's solicitors taking issue with the 28 day period within which Ms Hart's solicitors had suggested the reconsideration should occur. On 8 December 2021, Ms Hart's solicitors wrote to MetLife's solicitors raising MetLife's duty of utmost good faith in the context of the reconsideration request, seeking confirmation whether MetLife would reconsider the claim and confirming that Ms Hart was willing to reach agreement with MetLife as to a reasonable time period within which reconsideration could occur. It appears that MetLife and its solicitors did not respond to that letter.
Mr Coombes submitted that MetLife's duty of good faith required it to reconsider Ms Hart's claims once it was presented with new evidence pertinent to the question of MetLife's liability under each of the PBR and FSS policies. He further submitted that: "The question of whether an insurer has a duty or obligation to reconsider a decision to decline liability when presented with fresh evidence relevant to the question of its liability has not been the subject of extensive judicial consideration. There are a number of decisions to the effect that a superannuation trustee has a duty to reconsider a claim when presented with fresh evidence indicative of the possibility of a different outcome for a claim [here citing Tonkin v Western Mining Corporation Ltd [1998] WASCA 101, (1998) 10 ANZ Insurance Cases 61-397 at 74,268; Gilberg v Maritime Super Pty Ltd [2009] NSWCA 325 at [28] and Board of Trustees of the State Public Sector Superannuation Scheme v Gomez [2018] QCA 67 at [27]]. It is acknowledged that each of those decisions turn, to some extent, on the construction of the terms of the relevant trust deeds. It is further acknowledged that the relationship between a superannuation fund member and a superannuation trustee is not identical to that between a superannuation fund member and the group life insurer on risk in respect of the members of that fund. However, the duties and obligations of a superannuation trustee and a group life insurer are sufficiently analogous as to suggest that a similar duty or obligation to reconsider exists on the part of an insurer. The existence of a duty or obligation to that effect appears to have been accepted by Franklyn J in Heitman v Guardian Assurance Co Ltd [(1992) 7 ANZ Insurance Cases 61-107 at 77,491 - 2] and was accepted by the parties and Brownie J in Nile v Club Plus Superannuation Pty Ltd [[2005] NSWSC 55 at [36]]. In the present instance, the terms of each of the PBR Policy and the FSS Policy interpose the formation of an opinion by MetLife as a condition of liability, thus rendering MetLife a judge in its own cause. The plaintiff (or any other claimant under those policies) must present evidence to MetLife to cause it to form the opinion necessary to trigger liability under each policy. It is implicit in the requirement that a claimant present evidence substantiating a claim to MetLife that, on presentation by a claimant of such evidence, MetLife will consider that evidence. Moreover, in circumstances where MetLife has elected to make the formation of its opinion a condition of liability and requires a claimant to present evidence to it to enable the formation of that opinion, it would be acting other than with utmost good faith if it then refused or failed to consider evidence presented to it by a claimant, including in a context where it is presented with new evidence and asked to reconsider its initial decision."
Mr Coombes did not put the suggested duty as a freestanding duty, or as an implied term of the PBR Policy or the FSS Policy, where it would likely have been difficult to satisfy any requirement that it be so obvious that it go without saying or necessary to give business efficacy to the policies, which could readily operate on the basis that decisions were made once on a final basis. Mr Coombes instead put that the relevant duty or obligation arose as an incident of MetLife's duty of utmost good faith, in the context that cl 7.3 of the PBR Policy and the corresponding term in the FSS Policy which required the insured to provide MetLife with "such evidence to substantiate the claim as we may reasonably require" as a condition to payment of any benefit.
Mr Lloyd responds that the PBR Policy and the FSS Policy did not impose an express obligation to "reconsider" a decided claim, and refers to Ziogos at [66] in that regard. Mr Lloyd also points to possible difficulties with the suggested duty, observing that: "[Ms Hart] does not articulate the deceivingly complicated nature of the alleged duty. Does the duty require MetLife to reconsider all claims indefinitely? If not, what are the alleged deciding factors as to why not? What if, as here, the new material does not properly address MetLife's analysis that Ms Hart's claim must fail because the first limb of the definition of TPD was not satisfied by a condition for which MetLife has remained on risk? What commercial objectives of the parties (intended to be secured by the policies) are served by opening the floodgates in this way? This is not a case where the request for reconsideration was supported by some breakthrough evidence or the revelation of a material mistake in MetLife's analysis. This is not a case where, notwithstanding the great volume of documents already gathered as at the date of the decline, the claimant provided never before seen cogent or contemporaneous medical evidence to the effect that the medical condition that caused the insured member to be not at work on the working day immediately preceding the takeover date was PTSD. Nor such evidence to the effect that the Insured Member was absent from their Occupation because of the back (or related) injury during the first limb period."
I first address Mr Coombes' submission that such a duty should be applied to an insurer (or at least a TPD insurer) by analogy to the position of a superannuation trustee, recognising the differences between the two roles that he fairly acknowledged. In Gilberg v Maritime Super Pty Ltd [2009] NSWCA 325, Hodgson JA (with whom Allsop P and Campbell JA agreed) referred to the circumstances in which reconsideration by a trustee would be "appropriate", in the context of a rule of a fund dealing with total and permanent disablement. Under a heading which referred to a "duty" of the trustee, his Honour observed (at [25]-[27]) that: "In the case of an application to reconsider, it is relevant for the trustee to take into account the trouble and expense to the Trust involved in obtaining medical reports under par (c), and to the circumstance that the previous determination was a final determination of the previous application. If the Trustee did not consider that the material provided in support of the new application indicated a reasonable possibility of a different result by reason of circumstances occurring since the previous application or by reason of evidence not reasonably available at the time of the previous application, it would, in my opinion, be appropriate for the Trustee to decline to obtain further reports under par (c) for the purposes of the new application and to refuse the application. However, if the Trustee considered that the material provided in support of the new application did indicate a reasonable possibility of a different result, by reason of circumstances occurring since the previous application or by reason of evidence not reasonably available at the time of the previous application, and that, having regard to the interests of the applicant and the interests of other members, that possibility justified the expense of appointing medical practitioners to make further reports under par (c), then it would be appropriate for the Trustee to take that course."
The decision in Gilberg was approved in Board of Trustees of the State Public Sector Superannuation Scheme v Gomez [2018] QCA 67 ("Gomez"), where Henry J (with whom Sofronoff P and Fraser JA agreed) observed (at [27]-[28]) that: "Subject to provision to the contrary, a member's entitlement to payment of a TPD benefit is not lost irrevocably if the member applies once and fails. The circumstances in which the emergence of further information may warrant reconsideration of a previously unsuccessful application was explained in Gilberg v Maritime Super Pty Ltd, a decision of the New South Wales Court of Appeal. Hodgson JA, with whom Allsop P and Campbell JA agreed, observed that in an application to reconsider it is relevant for the Trustee to take into account the trouble and expense involved in obtaining further reports and the circumstance that the previous determination was a purportedly final determination. However, he explained that if the further material provided in support of an application did indicate "a reasonable possibility of a different result", then that would justify the expense of seeking further reports. That decision related to a different statutory scheme than the present, with more specific requirements regarding the receipt of reports. However, the test it propounds for determining whether to reconsider an application - a reasonable possibility of a different result - should be applied here. That is because it derives logically from the duty to give properly informed consideration to an application. If the further information indicates a reasonable possibility of a different result then, until such time as it is considered in addition to the earlier considered information, it can no longer be said the Board has met its duty of giving properly informed consideration to the application."
Mr Lloyd points out, and I accept, that there are obvious differences between the position of a trustee and the position of an insurer, and he refers to the observation of Leeming JA in Shuetrim at [187] that: "… different considerations apply to the formation of an opinion by an insurer as opposed to a trustee. A trustee is a fiduciary, and is required to make decisions leading to payments of money none of which is owned beneficially by the trustee. An insurer is not a fiduciary, but may (as in the present case) be operating a business with a view to making a profit, and every decision it makes to grant or refuse a claim will go directly to its profitability. As Mr Rayment emphasised, by reference to what Malcolm CJ had said in Beverley at 331, "in the assessment of the claim under a policy, the insurer is [in] a very real sense acting as a judge in the insurer's own cause".
I am not persuaded that any duty in respect of reopening applicable to superannuation trustees should be extended to insurers generally, or TPD insurers specifically. First, there are extensive statutory regimes for the regulation of insurers and superannuation; the legislature has had ample opportunity to introduce such a duty, if it considered it should exist; and the Court extending that duty to insurers, or TPD insurers, will necessarily impact on the balancing of policy and economic issues in that legislative structure. It is not self-evident that such a duty would promote public policy, where there is a countervailing public benefit in finality in determination of claims. Second, the recognition of such a duty, unbounded by any identified limitation as to the number of times that matters should be reconsidered (which Mr Coombes suggests should be left to future cases), would have significant economic implications in imposing the additional costs of such reconsiderations on insurers (and superannuation trustees or policyholders who pay their premiums), limited only by the appetite of policyholders whose claims were denied to reagitate issues by submitting additional materials and requesting reconsideration. That duty would have wider impacts, because additional decisions made by an insurer in a "reconsideration" of a claim could then potentially be referred to the Australian Financial Complaints Authority or challenged in the Courts as involving a breach of a duty of utmost good faith or to act fairly and reasonably. An insurer could not bring that process to an end by deciding, even reasonably, that enough was enough, because that decision could itself be challenged as a breach of those duties. The question whether the benefit of that duty outweighs its costs cannot be assessed by a Court, which has no empirical basis for an assessment of whether reconsideration applications would be largely meritorious or largely unmeritorious. A Court also has no ability to address transitional issues, where the recognition of such a duty now would potentially require reconsideration of decisions previously made, where a Court's decision does not only have a prospective effect.
Mr Lloyd also submits that the documents provided with the 15 November 2021 letter from Ms Hart's solicitors would not satisfy the requirements for reopening recognised in Gilberg and Gomez. It seems to me that ,there was were real issues as to the weight to be given to those documents. As Mr Lloyd points out, Ms Hart's statement dated 21 September 2021 was created 11 years after the FSS Policy terminated, 10 years after the PBR Policy terminated, 6 years after the first limb period ended, although only 15 weeks after the 9 June 2021 letter was issued and six weeks after the 9 August 2021 letter was issued. It is inevitable that Ms Hart's perception would have been affected by the time that had passed and the disputes as to liability which had intervened. There is a real inconsistency between the emphasis placed by Ms Hart in this statement upon the effect of traumatic events upon her mental condition and her ability to work, and the position which she had put in earlier statements which had emphasised the impact of her physical condition upon her psychological condition and not mentioned "flashbacks and nightmares" arising from traumatic events; and the position put in that statement is also inconsistent with the earlier contemporaneous assessments of her psychological condition, including by Dr George in late 2012 and early 2013 and by Dr Balanza in February 2013 (Ex J1, 718), to which I referred above.
The further report of A/Prof Robertson presumably assumed the correctness of Ms Hart's 21 September 2021 statement, which was briefed to him with a letter of instruction, and expressed views which were plainly outside his expertise without exposing any underlying reasoning process, including as to the consistency of the position now put by Ms Hart with the position that she had previously advised to him in the course of her treatment. A/Prof Robertson expressed a view as to Ms Hart's condition in mid-2010 although he had not treated her until 2014, and without reference to inconsistent contemporaneous assessments of her medical condition, including that of Dr George (Ex J1, 679). Dr Lewington, who had conducted a single video assessment of Ms Hart, also expressed a view as to her physical condition more than 10 years before that assessment, again without reference to the contemporaneous assessments of her physical condition.
However, with considerable hesitation, and notwithstanding the several previous accounts given by Ms Hart of her medical condition at times that are closer to the dates in issue, and the earlier assessments of her medical condition, it seems to me that MetLife could not have reasonably concluded that those documents could be dismissed without further inquiry, or at least without a full assessment of the inconsistencies between them and the evidence it already held, and I could not conclude that those documents did not meet the threshold set in these cases for a reopening, by giving rise to a "reasonable possibility of a different result", if (contrary to the view that I hold) this approach could or should be extended to an insurer as distinct from a trustee.
Second, I address the question of a recognition of such a duty in the insurance cases to which Mr Coombes refers, Heitman v Guardian Assurance Co Ltd (1992) 7 ANZ Insurance Cases 61-107 at 77,491-2 ("Heitman") and Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55 ("Nile"). Mr Lloyd submits that neither Heitman nor Nile established the existence of a "duty" on an insurer to reconsider, and points to Robb J's reference to an insurer's agreement to reconsider in Hellessey without any suggestion that the insurer was there obliged to do so. It seems to me that neither Heitman nor Nile provides any reasoned basis for the recognition of such a duty, or identifies any previous English or Australian authority in respect of insurers that has recognised such a duty. I do not consider that I should now recognise such a duty, as an aspect of the duty of utmost good faith, for the same reasons that I have held above that I should not extend any such duty applicable to superannuation trustees to insurers generally or TPD insurers specifically.
I should also briefly note the alleged breaches arising from the failure to "reconsider", for completeness, although it is not necessary to determine them, where the duty has not been established. The first particularised claim, of a failure to act with utmost good faith, is a bare assertion, without identification of any material facts to support it. The second is conclusory, and depends upon the proposition that MetLife should have "reconsidered" the claim, in whatever sense that term is used. The third particularised claim is consequential, since MetLife had already formed an opinion as to Ms Hart's claim, and this claim cannot succeed unless it was obliged to and had failed to form a new opinion as to that claim. The fourth particularised claim turns on the proposition that MetLife was, at the relevant times, in receipt of further information relevant to Ms Hart's claims such as to cause it, acting fairly, reasonably, in good faith and with due regard to Ms Hart's interests, "to reconsider whether it should form an opinion as to whether Ms Hart has suffered "Total and Permanent Disablement" for the purposes of each of the PBR Policy and the FSS Policy." This appears to be a claim that MetLife should have considered that question, as distinct from a claim that it should have reversed its existing view on doing so. The fifth particularised claim turns on the premise that MetLife should have considered and determined whether, in light of its receipt of fresh evidence relevant to Ms Hart's claims, it should form an opinion on the question of whether she had suffered "Total and Permanent Disablement" for the purposes of each of the PBR Policy and the FSS Policy. As I noted above, MetLife had already formed an opinion as to Ms Hart's claim, and this claim cannot succeed unless it was obliged to and had failed to form a new opinion as to that claim.

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