When Is a Heart Attack a Heart Attack? Diagnostic Criteria Must Be Met to Qualify For Trauma Benefit by Alph Edwards, Partner | July 2006
Introduction The Supreme Court of Victoria1 has ruled that where diagnostic criteria is specified as being required before an entitlement to an insured trauma benefit arises, that criteria must be met before the entitlement arises. In coming to this decision, the Court adopted the reasoning of the NSW Court of Appeal in MLC v O’Neil2 which dealt with an identical issue.
The Facts The plaintiff sued the life insurer in respect of a $300,000 trauma benefit which the insurer had refused to pay on the life of the life insured. The trauma event was a heart attack. “Heart Attack” was defined in the policy as: “C.14 Heart Attack Means death of a portion of heart muscle as a result of inadequate blood supply to relevant area. The basis for diagnosis shall include: (i) Electrocardiographic changes associated with the Myocardial Infarction, and (ii) Elevation of cardiac enzymes consistent with the Myocardial Infarction. If in the policyowners (sic) opinion the above tests are inconclusive we will, at our discretion, consider other appropriate tests.” The policy also required that in relation to any condition claimed for: “D3”(ii) The Insured Event is diagnosed by a medical practitioner and is supported by clinical, histological and laboratory evidence as appropriate. The benefit is not payable if you do not have the condition which has been diagnosed.” The life insured had sustained a death of a portion of his heart muscle as a result of inadequate blood supply which was diagnosed by the presence of elevated cardiac enzyme levels consistent with a heart attack. An electrocardiogram, however, failed to show any associated electrocardiographic changes. The insurer declined the claim on the basis that the plaintiff could not qualify for the benefit in the absence of electrocardiographic changes.
1
T U R KSLEGAL
The Issues The issue was whether a heart attack must be diagnosed on the basis of both electrocardiographic changes and the elevation of cardiac enzymes in order to fall within the description of the defined event. The plaintiff argued that the final sentence of the definition meant that any properly diagnosed heart attack should be covered, not just heart attacks diagnosed by the listed criteria. Any other interpretation would deprive the clause of “practical sense”. It was also argued that the list of two bases for diagnosis in the definition was not exhaustive and that the purpose of the policy was to offer cover for a heart attack which was clearly diagnosed. The plaintiff asserted that the definition should be given an operation consistent with that purpose. The plaintiff also submitted that other trauma definitions in the policy used the word “must’ instead of “shall” and that “must” would have been used in the definition of “Heart Attack” if the intent had been that it should have imperative force. Finally, it was argued that the clause requiring any claimed condition to be supported by “histological and laboratory evidence as appropriate” contemplated a diagnosis for heart attack based on the outcome of other tests. The insurer argued that the expression “shall include” had imperative force and that any other construction would mean that the definition could be met in the absence of the specified criteria, which would have been an extraordinary result. It was also argued by the defendant that O’Neil supported the proposition that the policy contained a composite requirement as to the bases upon which a heart attack is diagnosed.
The Decision The Court agreed with the defendant and dismissed the claim. It found the following:
2
•
The “Heart Attack” definition, like the one in O’Neil, is a composite one. It includes the requirements as to the basis for a diagnosis listed in the definition as well as the outcome of any exercise of the insurer’s discretion contemplated by the last sentence of the clause.
•
The words “shall include” were imperative despite “must” being used in other parts of the policy.
•
The reference in another part of the policy to “appropriate” evidence of a heart attack is a reference to the evidence of the two diagnostic criteria set out in the “Heart Attack” definition.
•
Contra proferentum does not apply because the insuring clause was not ambiguous.
•
The insurer’s construction of the definition does not lead to an extraordinary, absurd or unjust result. The policy simply limits the type of heart attacks to those which meet the two diagnostic criteria or where the insurer exercises it discretion in favour of considering other tests.
•
To accept the plaintiff’s construction of the definition would be to render all but the first sentence of the definition redundant. This was reason enough to conclude that the word “shall” should be given imperative force.
T U R KSLEGAL
Implications The consensus amongst life underwriters is that both electrocardiographic changes and elevated cardiac enzymes are necessary before one can be satisfied that an insured has sustained a heart attack. The definition in this policy, as in most trauma policies, reflected this view. This decision reinforces the view outlined in O’Neil that where a trauma definition specifies with imperative force that certain diagnostic criteria are to be met, the meeting of those criteria is a mandatory rather than optional requirement. Industry wide, it is likely that most “Heart Attack” definitions which require certain diagnostic criteria to be met, would contain the appropriate imperative language i.e. “must” or “shall” sufficient to withstand a challenge similar to the one brought in these proceedings. Nonetheless, in light of this challenge and bearing in mind new developments in diagnostic science, it would be prudent for insurers to review their trauma definitions to ensure that where meeting certain diagnostic criteria is an essential element of meeting a definition, the language of the definition accurately reflects this requirement. The judgment can be found at: http://www.austlii.edu.au//cgi-bin/disp.pl/au/cases/vic/VSC/2006/187.html?query=larwint
End Notes 1 2
Larwint Pty Ltd v Norwich Union Life Australia Ltd [2006] VSC 187 [2001] NSW CA 161
For More Information Please Contact: Alph Edwards Partner T: 02 8257 5703 alph.edwards@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
Business & Property | Commercial Disputes & Insolvency | Insurance & Financial Services Workers Compensation | Workplace Relations www.turkslegal.com.au �������� ������ �������� �������������������������� ����������������� � �� � �� �� � � �� � � � �� � � � � �� � �� � � �� �� � � ��� � � � �� � �� � � � ��� � � ��� � � � �� � �� � � � �� � � ��� � � � � � � �� �� � � � � � ������� ���� ������� ���� � �� ������� �� ��� ���� ����� ��� � ����� �� ��� � � � � � � � � � � � �� � �� � � � � � � � � � � � � � � � �� � � � � � � � � � � � � � � � � �� �� � ��� �� � � � �� � � � � � � � � � � � � � � � �� � � � ���� ��������� ������������ ���������������������������������� ����� � ���� � � ��� � � �� � � � �� � ��� �� � � � �� �� � � �� � �� � � � �� �� �� � ��� � �� � � �� � �� � �� �� ��� � � �� � � � � � � �� � � � � �� �������������� ����������������������� ������������������ ���� � � � � � � � � � � � � � � � � ��� � � �� � � � �