AFCA has ruled that AIG Australia is not entitled to recover more than $31,000 in income protection benefits paid to a claimant, finding the insurer did not establish a proper basis to seek repayment.
In a determination published on 29 May, AFCA found in favour of the complainant, who had received IP benefits under a group personal accident and sickness policy after ceasing work in August 2023 due to Paget-Schroetter Disease and deep vein thrombosis affecting his right upper limb.
AIG sought to recover $31,766.31 in benefits paid between March and November 2024 after concluding the complainant was fit to return to work from 5 March 2024.
The insurer relied on a hospital attendance record stating a vascular surgeon had indicated the complainant could return to work at full capacity, and on a later report from the complainant’s GP stating he would have certified the complainant fit for work from that date had he been aware of the surgeon’s opinion.
…it was not reasonable for the insurer to pursue recovery of benefits…
The complainant disputed the insurer’s position, maintaining he remained unable to perform the manual duties of his pre-disability occupation during the relevant period. He also said he continued to consult his GP and remained under medical care.
AFCA said the issue was not simply whether the complainant was fit or unfit for work from March 2024, but whether the available information supported the insurer’s decision to recover paid benefits.
AFCA found that in the absence of fraud or clear evidence of dishonesty, it was not reasonable for the insurer to pursue recovery of benefits. The firm had passed the debt to a collection agency.
The authority also identified what it described as significant evidentiary gaps in the insurer’s case, including:
- The absence of the treating GP’s clinical notes
- Incomplete public hospital records
- Missing employer records relating to the complainant’s termination
- Return-to-work assessment, and
- A lack of medical evidence assessing the complainant’s capacity against the physical demands of his pre-injury occupation
AFCA also noted there was no information suggesting the complainant had returned to work during the relevant period.
…It is not fair and reasonable to pursue recovery in the circumstances…
While the authority said AIG was entitled to suspend benefit payments and investigate the complainant’s ongoing eligibility, it found the available information did not support recovery of benefits already paid or the decision to engage external debt collectors.
AFCA ordered that the complainant is not required to repay the $31,766.31 received during the relevant period and directed the insurer to cease recovery action.
The authority also awarded the complainant $1,000 in compensation for non-financial loss.
“Fairness requires the reasonable expectations of the parties be met,” stated AFCA in its published decision.
“The insurer cannot reasonably expect that it can recover benefits paid if it does not have a proper basis to do so, either under the policy or more broadly when considering the available information.
“It is not fair and reasonable to pursue recovery in the circumstances and its conduct, particularly by engaging external debt collectors, understandably caused the complainant undue distress.”
