In the case of Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd and MetLife Insurance Limited, the Supreme Court of New South Wales delivered a judgment which considered, among other things, whether an insured’s unsuccessful job applications demonstrated Total and Permanent Disablement (TPD) under a group life insurance policy. TurksLegal Senior Associate, Ros Wicks, looks at this case in detail and examines the implications for insurers.
At a Glance
Source: Ros Wicks and Bonnie Elena, TurksLegal
Topics covered: disability claims, occupation definition, claims evidence
On 7 May 2009, Mr Birdsall suffered an injury to his right wrist when attempting to lift a heavy gearbox at work. At the time of the injury Mr Birdsall was working as a motor vehicle mechanic with OTS Gas Mechanical (the Employer). Mr Birdsall suffered an exacerbation of this injury in May 2009 and ceased work.
Mr Birdsall subsequently returned to work with the Employer on a part-time basis performing administrative work until the end of 2010. The Employer terminated Mr Birdsall’s employment on the basis that it was unable to continue to offer him alternative duties.
In April 2011 Mr Birdsall made a claim for a TPD benefit to Motor Trades Association of Australia Superannuation Fund Pty Ltd (the Trustee) and MetLife Insurance Limited (‘MetLife’), the trustee and insurer respectively of the Motor Trades Association of Australia Superannuation Fund (the Fund). MetLife and the Trustee both considered Mr Birdsall’s claim for a TPD benefit and declined to pay a benefit in 2012.
Mr Birdsall commenced proceedings against the Trustee and MetLife in the Equity Division of the Supreme Court of New South Wales. The matter was heard by Justice Hallen. His Honour noted that TPD was relevantly defined in the Policy to mean:Where the Insured Person has been employed at any time during the six months prior to the Date of Disablement:
…as a result of Injury or Illness, he/she has been unable to work for an initial period of six consecutive months and in our opinion is incapacitated to such an extent as to render the Insured Person unlikely ever to engage in or work for reward in any occupation or work for which the Insured Person is reasonably capable of performing by reason of education, training or experience.
His Honour noted that TPD was defined in the Trust Deed to have the same meaning as TPD or an equivalent term as defined in the relevant Policy.
It was not in dispute that the evidence supported Mr Birdsall’s contention that he was unable to return to his usual occupation as a motor mechanic. However, Mr Birdsall disputed MetLife and the Trustee’s decision that he was not TPD as the evidence indicated that he was fit for an alternative occupation within his education, training or experience.
MetLife obtained a vocational assessment report and a functional capacity assessment report from Advanced Personnel Management (APM) which assessed Mr Birdsall as being capable of sustaining work at the sedentary demand level for an eight hour day. As at March 2011 Mr Birdsall was certified fit for suitable duties lifting up to five kilograms, no twisting and no repetitive right wrist movements by his general practitioner Dr Ho. Labour market research was conducted to ascertain the training requirements, current and forecast job availability of the occupations identified of customer service assistant, sales assistant and sales representative.
MetLife also obtained a copy of the worker’s compensation file from Allianz. The Allianz file included a copy of between 50 and 60 job applications made by Mr Birdsall which identified the party to whom the application for work had been made, the source of the job advertised, the date of the application, and the contact name at the organisation to which the application was made.
MetLife declined Mr Birdsall’s claim by letter to the Trustee in April 2012 on the basis that in MetLife’s opinion Mr Birdsall was fit to return to an occupation within his education, training and experience as the evidence confirmed that Mr Birdsall had the capacity to perform the occupations of a sales assistant, sales representative, and customer service assistant on a full time basis. The Trustee carried out its own assessment of Mr Birdsall’s claim and informed Mr Birdsall’s solicitors of its decision to decline the claim in June 2012.
Stage 1 – Was the decision to decline unreasonable?
His Honour noted that the first stage of his determination was to decide whether the decision of MetLife and the Trustee to decline Mr Birdsall’s claim were decisions that no reasonable person could come to on the evidence before them.
His Honour noted that no submission was made that MetLife or the Trustee acted unreasonably by considering material without giving Mr Birdsall an adequate opportunity to respond to that material. Nor was there any submission that either acted unreasonably by failing to obtain additional material or by addressing the wrong question. What was submitted by Mr Birdsall was that MetLife and the Trustee acted unreasonably by failing to consider and analyse relevant material.
MetLife and the Trustee did not take into account that Mr Birdsall had applied for many different positions without success
His Honour found that neither MetLife nor the Trustee acted unreasonably in the way in which they analysed the material considered. In particular, each was entitled to take into consideration that a number of medical practitioners had concluded that Mr Birdsall’s medical condition did not prevent him engaging in work of the type that had been suggested in the vocational evidence.
However, His Honour found that in making the decisions to decline the claim, MetLife and the Trustee did not take into account that Mr Birdsall had applied for many different positions without success as there was no reference in either of the letters declining the claim to those applications or to Mr Birdsall’s many attempts to obtain alternative employment. MetLife and the Trustee submitted that a reference in the decline letters to the Allianz file led to the inference that each did consider the applications that were included in that file. His Honour rejected this submission.
Stage 2 – Was Mr Birdsall TPD?
His Honour went on to determine whether as at April 2011, six months after Mr Birdsall ceased employment with the Employer, he was TPD as defined in the policy.
His Honour noted that in making this determination, Mr Birdsall’s age (28 as at the date of hearing) was a relevant consideration. His Honour stated that the use of the word “ever” in the TPD definition should not be forgotten, as it allows the insurer to look well into the future. His Honour found that the language “unlikely ever” focuses on the duration of the occupational incapacity or inability to engage in or work for reward.
His Honour accepted, as had the Trustee and MetLife, that Mr Birdsall was unable to return to his pre-injury role as a mechanic. However, His Honour found that a number of the medical reports confirmed that Mr Birdsall was fit for his pre-injury hours and for suitable duties with restrictions, namely no pulling or pushing of more than 2 to 3 kilograms, no forceful gripping with the right hand or repetitive flexion or extension of the right wrist.
His Honour confirmed that the Court was required to consider not just the theory that a person is physically fit to carry out particular work that was regarded as suitable, but also the actual likelihood of obtaining regular employment for reward other than casual work, or other work of an intermittent nature.
His Honour noted that it was not necessary for the work to be work that Mr Birdsall had engaged in prior to his injury. His Honour was also of the view that the TPD definition did not exclude further training that it was reasonable for Mr Birdsall to undertake. His Honour stated there was nothing to suggest that as at the date Mr Birdsall’s disability fell to be assessed, he was not capable of completing any necessary training course likely to be required to enable him to use his transferrable skills and such a training course did not place this work outside the scope of work he was already reasonably fitted for by his existing education, or training, or experience.
His Honour found that Mr Birdsall was reasonably capable to carry out the work suggested
His Honour found that Mr Birdsall was reasonably capable to carry out the work suggested on a full time basis at the relevant time. His Honour noted that the evidence suggested that if any retraining was required, it would have been minimal and Mr Birdsall would have had the capacity to undertake it.
His Honour noted that he had considered carefully the applications made by Mr Birdsall for work, but came to the view that the mere failure to obtain a job that had been advertised by reference only to having made an application sent by email or facsimile transmission to a proposed employer, when one does not know what steps, if any, Mr Birdsall took, apart from submitting the application, did not lead to the conclusion that he would not ever obtain work which he was reasonably capable of performing by reason of education, training or experience.
After analysing the whole of the evidence, His Honour concluded that there were specific areas of work available that Mr Birdsall was reasonably capable of performing by reason of education, training or experience. In his view, Mr Birdsall had the ability to engage in such work for reward in an intellectual sense, as well as by reference to his education, training or experience and by reference to his medical condition and he dismissed Mr Birdsall’s claim.
His Honour’s decision is important in a number of respects. Firstly, this case is consistent with the decision in Dargan (2013) NSW CA 57, that the requirement of some reasonable retraining does not necessarily preclude a person from being reasonably fitted for a particular occupation.
This decision also demonstrates that in determining a claim for TPD, it is also relevant for the insurer to consider the claimant’s age. His Honour noted that the words “unlikely ever” in the definition focuses on the duration of the occupational incapacity or inability to engage in or work for reward and allows the insurer to look well into the future.
His Honour’s decision is also important in that it reflects a growing trend in the Supreme Court of New South Wales to subject insurer’s reasons to a high level of scrutiny, notwithstanding the warnings in cases such as Webber v Tiss (2005) NSW SC 67 at  that the reasons are intended to be read as practical commercial documents and are not to be overzealously scrutinised.
In this case His Honour found that a reference to the worker’s compensation file was not sufficient to infer that the insurer and Trustee had considered all of the documents included that were relevant to the definition and assessment of the claim.
When determining a claim for TPD and drafting a decline letter, insurers should be diligent in considering every relevant issue and document and ensuring that each of these are referred to and discussed in its decline letter. This will reduce the likelihood of the insurer’s decision making process being open to attack.
TurksLegal has been established for over 30 years and provides specialist advice in the insurance, commercial and banking sectors. TurksLegal has the deep industry knowledge and expertise its clients rely on in overcoming the often technical and complex issues facing their businesses. TurksLegal is absolutely dedicated to providing its clients astute, effective and commercial solutions that support them in managing their daily business challenges.
The firm regularly produces ‘TurkAlerts’, which discuss recent court decisions and their impact on the insurance and advice industries.