An Insurer can Choose its own IME By Alph Edwards and Melissa Godfrey | June 2011 Area of Expertise | Insurance & Financial Services
Summary The Supreme Court of New South Wales recently determined that a life insurer is entitled to have a claimant insured medically examined by a suitably qualified doctor of the insurer’s choice in order to determine whether the claimant insured is totally and permanently disabled (TPD). 1 This decision should deter claimant insureds from refusing to attend independent medical examinations (IME) arranged by insurers, absent compelling reasons why they should not attend. Specifically, this decision demonstrates that there is no legal basis for a common assertion made in recent times by plaintiff solicitors, that a doctor chosen for an IME should predominantly work treating patients as opposed to providing expert reports.
Who Does This Impact? Claims and legal teams of life insurers and superannuation trustees.
Background The claimant was an insured member of a superannuation fund and the insurer insured fund members in respect of TPD. The claimant, an electrician, resigned from his employment in December 2007 alleging a psychiatric illness. He subsequently submitted a TPD claim to the trustee in April 2009. The claim was submitted to the insurer in July 2009. In January 2010, the insurer arranged an IME for the claimant with a psychiatrist. The claimant, through his lawyer, refused to attend. Unable to obtain an IME report, the insurer was unable to complete its assessment of the claim. In September 2010, the claimant commenced proceedings in the Supreme Court of New South Wales against the trustee and the insurer, seeking payment of the TPD benefit together with costs and interest. The claimant alleged that by failing to make a decision in relation to his TPD claim, the trustee and the insurer had constructively declined the claim. During the course of the litigation, the insurer again requested that the claimant attend an IME. The claimant however maintained his refusal unless the insurer answered the following three questions about the chosen doctor: 1. On how many occasions had the insurer referred claimants to the doctor before? 2. Were the previous referrals for income protection, TPD, retail claims and/or group life claims? 3. What advice did the doctor provide in relation to each previous referral? The insurer declined to answer the above questions on the basis that they were irrelevant and made an application to the Court to order the plaintiff to attend the proposed IME.
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An Insurer can Choose its Own IME by Alph Edwards & Melissa Godfrey
The application was heard by Senior Deputy Registrar Howard who delivered an unreported judgment dated 27 May 2011 in favour of the insurer and ordered the claimant to attend an IME. The claimant was also ordered to pay the insurer’s costs of the application.
The Decision The claimant alleged that in failing to answer the above three questions, the insurer had breached its duty of good faith owed to the claimant and in those circumstances, the claimant was entitled not to attend the IME. The insurer’s response was that there being no allegation of bias by the claimant against the selected doctor (this point having been conceded by the claimant), the questions asked by the claimant were irrelevant. The Court found that absent an allegation (founded on identifiable facts) of bias or that the doctor was not qualified, there was no factual basis to cause the above three questions to be asked and there was therefore no breach by the insurer of its duty of good faith by failing to answer those questions. Furthermore, it was held that given the nature of the three questions, the information they sought to obtain would be meaningless unless considered in comparison to the remainder of the doctor’s practice. In respect of the insurer’s right to select its own doctor to conduct the IME, the Court also held that there are in any event sufficient safeguards in place to protect against doctors (or other experts) who may be biased. For instance, the Court rules pertaining to the Expert Witness Code of Conduct, the appointment of joint experts and expert witness conferences.
Implications In recent times, life insurers have experienced an increase in claimant insureds objecting to IMEs arranged for them on the basis of supposed “unsuitability” of doctors chosen by the insurers. Typically, such objections are not based on the qualifications or experience of the doctor (they are all highly qualified) but rather on the basis of whether or not the doctor actually treats patients as opposed to only providing medico-legal opinions. This decision demonstrates that an objection to an IME on such a basis is unfounded and when confronted with such objections in future, life insurers would do well to quote this decision.
Endnotes
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An interlocutory application in Perry Summerhayes v AustralianSuper Pty Limited & The Colonial Mutual Life Assurance Society Limited (unreported, 27 May 2011).
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An Insurer can Choose its Own IME by Alph Edwards & Melissa Godfrey
For more information, please contact: Alph Edwards Partner T: 02 8257 5703 alph.edwards@turkslegal.com.au
Melissa Godfrey Lawyer T: 02 8257 5752 melissa.godfrey@turkslegal.com.au
Sydney | Level 29, Angel Place, 123 Pitt Street, Sydney, NSW 2000 | T: 02 8257 5700 | F: 02 9239 0922 Melbourne | Level 10 (North Tower) 459 Collins Street , Melbourne, VIC 3000 | T: 03 8600 5000 | F: 03 8600 5099 Insurance & Financial Services | Commercial Disputes | Workers Compensation | Business & Property
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