Life insured ordered to attend medical examination
The Supreme Court has made orders regarding the attendance by a life insured (who was not a party to the proceedings) at a medical examination.
An interlocutory application in Magda de Berg v Westpac Life Insurance Services Limited (Unreported Judgment, 20 September 2013) Supreme Court of New South Wales (Equity Division)
The plaintiff is the wife of the life insured, and the beneficiary under a policy of life insurance issued by the defendant. The plaintiff claimed a significant Total and Permanent Disability (the TPD benefit) of $1,500,000.
The life insured claimed the TPD benefit due to injury to his lumbar spine.
The life insured was medically assessed at the request of the insurer by an orthopaedic surgeon and a psychiatrist in May 2012, prior to the commencement of proceedings.
An examination by a vocational assessor was arranged, which the life insured refused to attend. At the same time, however, the life insured attended medical examinations with an occupational physician and an orthopaedic surgeon, in support of his claim for the benefit.
After proceedings were commenced, the insurer arranged a re-examination by the same orthopaedic surgeon that had seen him in May 2012, as well as a neuropsychologist and an occupational physician.
However the plaintiff advised that the life insured would not attend the re-examination with the orthopaedic surgeon.
The plaintiff relied on a term of the policy that provided:
At any time after we receive the claim forms, we may ask you or the Insured Person for more information. You, or the Insured, Person, must give us that information. We may also choose a registered medical practitioner to examine the Insured Person. (Our emphasis).
The plaintiff suggested that the policy should be interpreted as providing that the life insured could only be examined by a single medical practitioner, and as the life insured had already been reviewed by the insurer’s medical practitioners, had complied with his obligations under the policy.
The insurer filed a motion seeking orders that that the life insured attend the examination by the orthopaedic surgeon, alternatively, that the plaintiff compel the life insured to attend the examination, alternatively that the proceedings be stayed until the life insured attend the examination.
The motion was heard by Registrar Musgrave who delivered an oral judgment on 20 September 2013 in favour of the insurer and ordered the plaintiff to direct and/or make all efforts to ensure that the life insured attend the appointment with the orthopaedic surgeon.
The arguments and decision
The Courts’ specific power to order attendance at medical examination (under UCPR, Part 23) is limited to parties to the proceedings. The life insured is not a party.
The Court thus considered its power under UCPR, Part 2, Reg 2.1, to give such directions and make such orders for the conduct of any proceedings as appear convenient (whether or not inconsistent with these rules or any other rules of court) for the just, quick and cheap disposal of the proceedings.
The Court opined that the powers under Part 2 provided the Court with a necessary adjunct where the Rules had not contemplated a particular scenario, and would yield an undesirable result if they were to be applied literally.
In considering whether to apply Part 2, Reg 2.1, the Court considered the insurer’s submission that arrangements whereby the beneficiary under a policy of life insurance is not necessarily the person insured, are becoming more commonplace. The insurer successfully argued that should Part 23, Reg 23.4 be applied to prevent a life insured being medically examined simply because it is not a party to the proceedings, it could have a potentially deleterious effect on the handling of insurance claims, and the litigation of contested matters.
The plaintiff submitted that the insurer had sufficient information to make a decision on the claim. However as the insurer had not served its evidence at the time of the motion, the Court held that this was an inference it could not make, and in any event was not a relevant consideration. The Court accepted the insurer’s submission that it was not conventional for life insurers to release medical reports as they receive them, but rather to make a decision on the totality of the evidence before them and to then provide to the claimant all information that has been taken into account (when TPD benefits are claimed).
The Court noted the insurer’s submissions that the general rights and obligations of the parties to a contract of life insurance are not simply limited to the terms and conditions of the policy, but also by the duty of good faith and an obligation on the part of the insurer to act reasonably in coming to a considered opinion on whether an insured is entitled to a benefit. The Court held that there were valid and reasonable reasons for the re-examination of the life-insured, and ordered that the plaintiff direct and/or make all efforts to ensure that the life insured attend the appointment with the orthopaedic surgeon.
It is becoming increasingly common that the policy owner and/or beneficiary under the Policy are not the life insured.
The decision will be helpful for life insurers who are placed in a position where they are unable to compel a life insured to comply with investigations including medical examinations because the NSW rules do not yet expressly contemplate situations where the life insured is not a party to proceedings. This decision confirms that the Court does have the power to compel examinations of individuals who are not a party to proceedings under under Part 2, Reg 2.1.
Future applications to compel a life insured to be medically examined will have to be dealt with on their individual facts and circumstances. The Court said there must reasonable grounds for compelling the life-insured to attend medical examinations, and that the Court would not allow insurers to defer their determinations indefinitely by scheduling repeated medical examinations.