SCT Quarterly - Q4 2017

Chairperson's welcome

Welcome to SCT Quarterly, and welcome to 2018.

We have a busy year ahead as we work to resolve all our complaints, prepare for the introduction of a new complaints body, and contribute to reviews and discussions concerning the superannuation industry.

On 30 November 2017, the Turnbull Government announced the establishment of a Royal Commission into the alleged misconduct of Australia's banks and other financial services entities. When announcing the Royal Commission, Prime Minister Malcolm Turnbull issued the following statement: 'We will ensure that the Inquiry will not defer, delay or limit, in any way, any proposed or announced policy, legislation or regulation that we are currently implementing'.

The government continues working toward the introduction of the Australian Financial Complaints Authority. The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 (AFCA Bill) passed the Senate with amendments in December, and the House of Representatives is expected to resume the second reading debate next week.

In the meantime, it is business as usual at the Superannuation Complaints Tribunal. Or perhaps it's business better than usual: in Q4 2017, we saw a 15.9% increase in the number of complaints resolved over the previous quarter. I'd like to thank and congratulate all the staff of the SCT for continuing to focus on the important work that we do.

However, there remains more to do, as the volume of complaints received again exceeded the number resolved. This was acknowledged when, in December, MYEFO announced an additional $9.5 million in funding for the SCT through to 2020. The funding will enable us to boost our base resourcing levels, and continue to improve the rate of complaint resolution.

In this edition of SCT Quarterly, we are focusing on a complaint category that received quite a bit of media attention in 2017: total and permanent disablement claims that are rejected on the basis of medical evidence. The recent release of the Insurance in Superannuation Voluntary Code of Practice reflects the interest in these types of complaints, and we draw on that document and our examples to share information with you this quarter.

We hope you enjoy this edition of SCT Quarterly. If you have any feedback, suggestions or queries, please send them through to us at info@sct.gov.au.

Helen Davis, Chairperson

 

Q4 2017 focus: TPD claims
(denied based on medical evidence)

At the SCT, we categorise our complaints, enabling us to analyse trends. Our open complaints are currently spread across 53 complaint categories, which fall under three broad headings: death complaints; disability complaints; and administration complaints.

This quarter, we will focus on a topical category: total and permanent disablement (TPD) claims that are rejected on the basis of medical evidence. In Q4 2017, 2.6% of the complaints received fell into this category.

Total and permanent disablement claims

TPD claims are made at times of difficulty. Real people with real feelings and real emotions make insurance claims when they are at their most vulnerable, and the rejection of a claim can hit hard. Compounding this difficulty and vulnerability is the perceived complexity of insurance and superannuation.  

Trustees can support their members by clearly communicating what documents need to be submitted with a claim, and the policy terms against which it will be assessed.  

At the SCT, we see complaints from members who not only question why their claim has not been admitted, but how their claim was handled and the experience they had during the process. We hear from members who have had to repeat themselves to multiple assessors and trustee representatives, and feel that they're not being heard. Providing a single point of contact can make a big difference to the member experience.

A common area of confusion regarding TPD complaints is the receipt of some disability payments and not others. For example, if a member is in receipt of a Centrelink disability pension or a workers' compensation benefit, or has received a payment from another fund or insurer, they may not understand that a new claim with a different provider might still be rejected. We also see members who may not meet technical definitions outlined in policies, but who are nonetheless unwell. The best 'rejection' letters we have seen are those that are understanding and empathetic. They clearly set out the policy terms and explain why the claim did not meet the criteria, and they do so in plain language.

It is also important to ensure that the correct definition has been applied, and that, in the case of changes of insurer, the correct insurer is identified as being on risk. Some of the case studies in the final section below highlight the importance of getting this first distinction correct.

Insurance in Superannuation Voluntary Code of Practice

In December, the Australian Institute of Superannuation Trustees (AIST), the Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council (FSC) released the Insurance in Superannuation Voluntary Code of Practice (Code), which touches on some of the points raised above.

The Code makes particular mention of vulnerable consumers and the processes that need to be in place, including the provision of specific training on engaging with members who have mental health conditions. It also outlines a commitment to have appropriately skilled and trained staff to make objective decisions.

The Code acknowledges the importance of clear communication, stating that 'our communications to you will be clear, timely and in plain language' and committing to deadlines for the handling of claims and for any subsequent handling of complaints. You can find some more tips for clear communication with members in SCT Quarterly Q3 2017.

While it is not explicitly stated, the Code also acknowledges that the claim starts long before the form is sent in. Expectations are set with product disclosure statements, annual statements and other communication pieces. Issues at claim stage can sometimes be traced back to these earlier representations.

 

SCT by the numbers Q4 2017

In Q4 2017, we resolved 504 complaints, 15.9% more than in the previous quarter. 4.0% of these complaints related to TPD benefits declined on medical evidence.

Types of complaints resolved Q4 2017 – top ten

Type of complaint

Percentage

Death benefit distribution

21.2

Deduction of insurance premiums

9.3

Account balance

5.4

Fees and charges

5.4

Delay in transfer/rollover of benefit

5.4

TPD benefit – declined on medical evidence

4.0

TPD benefit – delay in making a decision

3.8

TTD benefit – amount in dispute

3.4

Insurance cover in dispute

3.0

Disclosure of information

2.8

11.3% of the complaints were finalised at review stage (in other words, with a determination by the Tribunal). The remaining 88.7% of the complaints were finalised and/or resolved by our staff at various stages of the investigation and conciliation process.

21.2% of finalised complaints were withdrawn by the Tribunal after satisfying that the complainant didn't wish to proceed. 13.2% were resolved prior to the holding of a conciliation conference, and 36.7% of finalised complaints were found to be out of jurisdiction.

In Q4 2017, we received 572 complaints, 7.3% more than in the previous quarter. 2.6% of these complaints related to TPD benefits declined on medical evidence.

Types of complaints received Q4 2017 – top ten

Type of complaint

Percentage

Death benefit distribution

26.4

Deduction of insurance premiums

10.0

Fees and charges

6.1

Account balance

4.7

Delay in transfer/rollover of benefit

4.7

Failure to provide information or to respond

2.8

Insurance cover in dispute

2.8

TPD benefit – declined on medical evidence

2.6

TPD benefit – delay in making a decision

2.6

Disclosure of information

2.1

In Q4 2017, the SCT received a further 5,450 enquiries by telephone and email.

 

Case study 1: Post-polio problems

(reviewed by the Tribunal, D17-18\035 [2017] SCTA 121 (5 September 2017))

Background: The member had suffered from poliomyelitis (polio) since childhood, and was employed as a contractor as a consultant solicitor. She slipped on 18 October 2009, injuring her right ankle and aggravating her underlying polio symptoms.

The member last worked in April 2010 and resigned in August 2010. She made a claim for total and permanent disablement (TPD) in July 2011. The insurer rejected the claim, and the trustee affirmed the insurer's rejection of the claim.

Complaint: The member brought a complaint to the SCT, seeking payment of the TPD benefit. She stated that she was chronically and permanently disabled due to post-polio syndrome and depression, and that the insurer had given undue weight to the opinions of health workers with no formal qualifications.

She advised that the description of work as 'sitting at a desk and reading' was not a fair description of the role of a solicitor, and stated that the insurer had failed to consider her 'real world' employment prospects.

Further details: The insurer advised that medical reports had been conflicting. While some assessments reported that the member would not return to work in her normal occupation, others advised that there was no orthopaedic reason that the member could not return to her work, nor was there sufficient evidence of clinical depression.

The insurer was of the opinion, based on all the evidence, that the member did not meet the policy definition of TPD and had the capacity to return to her previous work. The trustee agreed.

Decision: The Tribunal acknowledged that there was much conflicting evidence provided by the parties. It was clear from the medical reports and records that the member had a long history of symptoms relating to polio, and that she had developed some symptoms of depression and anxiety.

The Tribunal considered that there was sufficient evidence supplied that the member was not permanently physically disabled from performing her previous role, and that it was fair and reasonable for the trustee and insurer to determine that she had capacity to return to that role or to another role for which she was reasonably qualified by education, training or experience.

The Tribunal affirmed the decisions of the insurer and the trustee.

 

Case study 2: Differing definitions

(reviewed by the Tribunal, D17-18\066 [2017] SCTA 152 (24 October 2017))

Background: The member was employed as a freight handler when he sustained an injury to his left ankle in September 2011. He subsequently underwent surgery and returned to modified duties, but last physically worked with the employer in March 2013.

The member commenced employment with a second employer on a casual basis in December 2012, but ended that employment shortly thereafter.

In May 2015, the member lodged a total and permanent disablement (TPD) claim with the trustee. The insurer rejected the claim, and the trustee affirmed the insurer's rejection of the claim.

Complaint: The member brought a complaint to the SCT, seeking payment of the TPD benefit. He stated that he satisfied the definitions of TPD outlined in the policy, and that the benefit should be paid.

The member had completed high school in the Australian schooling system, and his previous work experience included commercial cleaning, operating machinery and loading and unloading trucks.

Further details: The insurer and trustee originally assessed the member's claim against the activities of daily living and activities of daily work (ADL) definition. The insurer noted that, upon review, it should have been assessed against his education, training and experience (ETE).

However, the insurer held that the member was not TPD with reference to this definition, quoting a WorkCover medical certificate that stated the member was fit for pre-injury duties. The insurer also stated that alternative vocational options had been identified. One doctor's report listed that the member would be fit for occupations such as truck driver, bus driver or 'other semi-sedentary work'. The member noted that he had never held a truck driver's licence and had no computer skills, having held only manual labour positions until the date of the injury.

Decision: The Tribunal was not satisfied that the evidence suggested there was any likelihood of the member returning to work in an occupation for which he was suited by education, training or experience.

The Tribunal set aside the decisions of the trustee and the insurer, substituting its own decision that the member was TPD by reference to the relevant terms of the policy.

 

Case study 3: Insufficient information

(reviewed by the Tribunal, D17-18\042 [2017] SCTA 128 (20 September 2017))

Background: The member commenced employment with the employer in 2008, where he encountered difficulties including long hours, discrimination and unfair management practices. He last physically worked as a warehouse supervisor in December 2011.

He lodged a total and permanent disablement (TPD) claim with the trustee in 2012, listing his disabling illness as anxiety/depression (adjustment disorder) which arose from the difficulties at work.

The insurer rejected the claim, and the trustee affirmed the insurer's rejection of the claim.

Complaint: The member brought a complaint to the SCT, seeking payment of the TPD benefit. He stated that he satisfied the definition of TPD and that the diagnoses of a number of medical practitioners as having a psychiatric illness supported this. The member submitted that claims on other TPD policies had been paid, and that he was in receipt of a disability support pension.

He acknowledged that the medical evidence was conflicting, and suggested the reports of the medical practitioner most familiar with his condition should be given the greatest weight in assessing his claim.

Further details: The insurer submitted that the medical evidence did not lend itself to a finding of TPD. The medical practitioners had conflicting views, and those who viewed the member as meeting the definition of TPD were either not qualified to do so, did not relate the opinions back to the date of assessment or neglected to give reasons for their findings.

The member had previously worked as an operations supervisor, office clerk, warehouse manager, storeperson, dealer/gaming supervisor, customer service officer and barman/waiter. The insurer noted that the complainant had 22 years of potential working life still available to him.

Decision: The Tribunal formed the view that the medical evidence provided was equivocal at best, and that there was no evidence before the Tribunal as to what work the member could do if he did in fact have capacity for work.

The Tribunal remitted the complaint for reconsideration by the trustee and insurer, directing them to arrange an independent medical evaluation and, depending on the outcome, an employability assessment, before reassessing the claim.

 

Feedback and contact us

We are constantly seeking to improve our services and the information we provide to consumers, trustees and industry, and we need your feedback to do it.

If you have any feedback on this edition of SCT Quarterly, or any queries or suggestions, please email info@sct.gov.au with 'SCT Quarterly – Q4 2017' in the subject line.

Superannuation Complaints Tribunal
Level 7, 120 Collins Street
Melbourne VIC 3000

1300 884 114
http://www.sct.gov.au/
info@sct.gov.au