Case Study – Page 2 – OLHI – Free, impartial help with your life & health insurance complaints

Automatic renewal (life)

Posted on: June 26, 2017

Mrs. U. purchased life insurance in 2006. She explained to her agent that she only wanted a policy that would cover her for 10 years and that she planned to cancel when the term expired. She said she would not be able to afford the new premiums, which would rise dramatically after 10 years.

Mrs. U.’s agent explained that a renewal notice would arrive in the mail but that she would call her before the policy was up for renewal, to confirm her intention to cancel.

In 2016, the policy’s 10-year term expired. Mrs. U. did not receive a phone call. Instead, her policy automatically renewed and higher premiums were taken out of her bank account. She contacted the insurance company and asked to cancel her life insurance policy and be reimbursed the cost of the new premiums.

Mrs. U.’s insurance company declined her request to be reimbursed. Its final position letter outlined that a renewal notice had been sent to her and she did not respond, so the policy was automatically renewed.

Mrs. U. brought this letter to OLHI for a review of her complaint. OLHI’s Dispute Resolution Officer (DRO) asked her and the insurance company to send all their documents relevant to this case. In his review, the DRO studied the policy contract and also learned from Mrs. U. that she had not expected the policy to automatically renew. She thought that if she did not renew, it would lapse.

OLHI’s DRO recommended that an OmbudService Officer (OSO) further review the contract language in Mrs. U.’s policy. The OSO discovered unclear wording about policy renewal. It implied that consumers had a choice – leading them to believe their approval was required ahead of renewal. The legal principle of contra proferentem dictates that unclear language allows for consumers’ interpretations of the contract.

The OSO recommended that Mrs. U. be reimbursed the majority of the premiums. Because the renewed policy was in force and would have paid out had she died, he recommended it was not possible to reimburse 100%. Mrs. U. and the insurance company agreed.

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.

Contra proferentem (life)

Posted on: June 26, 2017

When Mr. N. purchased life insurance in 2000, he explained to his agent that he wanted to pay the same monthly premium for the lifetime of the policy. His agent helped him fill out an application and also provided him with illustrations to show how his premium would never change.

Fifteen years later, Mr. N.’s premiums increased. He contacted the insurance company, asking that his previous premium be reinstated and that he be reimbursed the difference. In the final position letter, Mr. N.’s request was denied. The company pointed to the wording in the contract, which stated the level premium was for the first 10 years of the policy, after which time the cost of insurance could be increased. Mr. N. was given the option to reduce the sum insured, in order to bring his premiums back down to the original cost.

Mr. N. decided to bring this letter to OLHI. OLHI’s Dispute Resolution Officer (DRO) reviewed the contract and spoke with Mr. N., who told her that his insurance agent recently told him that he wholly believed he had sold him a level policy for its lifetime. The DRO also saw that the agent’s illustrations clearly indicated a monthly premium for life. She recommended that an OmbudService Officer (OSO) investigate further.

The OSO spoke with both Mr. N. and the insurance company to better understand their positions. She also delved deeper into the contract language, finding multiple examples of conflicting, ambiguous statements. In some instances, the policy stated the cost would be level for the duration of the policy. In others, it stated the cost could be adjusted.

The OSO approached the insurance company, pointing to the legal principle of contra proferentem. This principle states that, where there is unclear language in an insurance contract, consumers’ interpretations of the meaning of the contract are permitted. For this reason, she recommended that Mr. N.’s previous premium be reinstated and that he be reimbursed the difference in price. The insurance company agreed.

Payouts for life (annuity)

Posted on: March 2, 2017

In the 1980s, Mr. A. purchased an annuity so that he and his wife would have a monthly income over the course of their lives. When one passed away, the annuity would continue to provide income to the surviving spouse.

Mr. A. passed away in 2015 and, after this, payments stopped. The insurance company’s final position letter to Mrs. A. explained that it was a single life annuity, which terminated upon the annuitant’s death. Mr. A. was the annuitant.

Mrs. A. asked OLHI to become involved. Our Dispute Resolution Officer (DRO) received all relevant documents from her and the insurance company. He learned from Mrs. A. that, over the years, their advisor had consistently confirmed to them in conversations that they had a joint annuity policy. The insurance company had also sent them a letter confirming that payments would be made to Mr. A. for the rest of his life and, should he die before his wife, the payments would roll over to her.

The DRO recommended that the complaint be escalated to an OmbudService Officer (OSO) for additional investigation. The OSO’s review revealed that the policy was in fact referred to as a single life policy in the contract. It outlined a 15-year payment guarantee to Mr. A. If he died within that period, the remaining payments would transfer to his wife. However, if he died after 15 years, no further payments would be made. The insurance company had honoured its guarantee, making payments for three decades before Mr. A. died.

The OSO agreed that the contract clearly stated that this was a single life policy. However, he also felt that it was reasonable for Mr. and Mrs. A. to believe they had a joint annuity for several reasons: First, it was what they intended to buy. Second, their agent had confirmed to them that it was a joint annuity. And, third, the insurance company had also confirmed in a letter to them that payments would be made to Mrs. A. for the rest of her life, upon Mr. A.’s death.

After the OSO and the insurance company discussed all the facts, the company agreed to reconsider. They compensated Mrs. A. for the lost income and also resumed monthly payments.

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.

Revisiting an old claim (disability)

Posted on: March 2, 2017

Ms. H. was injured in a work-related accident. For around 10 years, she received long-term disability (LTD) payments through her employer’s group benefits plan. After this time, the insurance company revisited her case, asking a doctor to perform an independent medical evaluation. The doctor found no functional impairment so Ms. H.’s benefits were terminated.

Ms. H. brought the insurance company’s final position letter to OLHI, asking a Dispute Resolution Officer (DRO) to review her case. The DRO asked her and the company for all their relevant documents. In his review, he read that the insurance company had conducted a transferable skills analysis several years earlier and they found she could not perform any jobs identified. In their file, they noted that they expected to make payments until Ms. H. turned 65 – but she was several years younger when the LTD benefits stopped.

The DRO recommended an OmbudService Officer (OSO) further investigate.

The OSO learned from the insurance company that it was their practice to review its cases over time. If necessary, they revised their findings based on new information, regardless of original predictions. In Ms. H.’s case, the insurance company followed up with her because she had been on a waiting list for surgery for many years. It turned out that the surgeon had lost her contact information and she was no longer on a waiting list. Ms. H. had never followed up with this surgeon since seeing him several years earlier, so she did not know that she was no longer on a list.

The insurance company requested a new evaluation by an independent doctor, who did not find any medical evidence supporting severe disability. She recommended that Ms. H. could work at a job that matched her abilities, experience and education – but required less physical activity.

OLHI’s OSO carefully reviewed all these facts from Ms. H. and from the insurance company. It was his recommendation that the insurance company’s decision be maintained.

Submitting claims after you leave a job (health)

Posted on: March 2, 2017

Ms. P. stopped working for her employer in April. For the next 90 days (until July), her employee benefits plan would accept any health expenses incurred before her last day of employment.

Before she stopped working, Ms. P. saw a health practitioner. He sent a claim submission to the insurance company twice: once in April and, when she didn’t get her claim paid, he sent it again in May at her request.

In August, the insurance company received the expense claim. It was declined because more than three months had passed since Ms. P. stopped working. They suggested that, if dissatisfied, she could seek an independent, free review of her case from OLHI.

Ms. P. explained to OLHI’s Dispute Resolution Officer (DRO) that she had spoken with the insurance company’s call centre in August. She was told that so long as she submitted her paperwork that month, she would get paid. Based on this information, the DRO recommended the case be escalated to an OmbudService Officer (OSO).

Investigating records from Ms. P. and the insurance company, the OSO found some discrepancies: the health practitioner said he sent documents in April and May but there was no evidence that the company received anything until August. The call centre recording revealed that the agent had incorrectly assumed that Ms. P. stopped working in May and that, based on this date, she had until August to submit her claim. Ms. P. did not correct the date, nor did the agent promise she would be paid.

The OSO determined that there was no hard evidence that the health practitioner had submitted a claim to the insurance company before the three months had ended. He also found that the call centre agent had provided the correct advice about the three-month period after an employee stops working – but he just used the wrong timeline, which was not corrected by Ms. P. Details about the claim period were also clearly outlined in the benefits booklet that Ms. P. received when she was hired.

For these reasons, OLHI’s OSO recommended that the insurance company’s decision be maintained.

Conversion confusion (life)

Posted on: March 2, 2017

Mr. F. had a term life insurance policy through this former employer, which also covered his wife as a dependent. On his 75th birthday, his coverage ended. He confirmed with the insurance company’s call centre that his wife’s coverage would continue because she was not yet 75. Not long thereafter, the company clarified that this particular policy had ended – but that there was an option to convert Mrs. F.’s coverage to an individual policy.

The insurance company explained that his wife’s policy had to be for a minimum of $50,000. However, Mr. F. wanted his terminated policy for $5,000 extended to his wife since she was not yet 75. When the insurance company denied his request, he brought the final position letter to OLHI and requested an independent review of his case.

OLHI’s Dispute Resolution Officer (DRO) read the insurance policy contract, which did outline that once coverage ended, the insurance company could issue an individual policy for an amount that did not exceed the old policy. For this reason, the DRO recommended the case be escalated to an OmbudService Officer (OSO) for further investigation.

After careful, thorough review, the OSO discovered that Mr. F. was confused about what a policy conversion entailed. He explained to Mr. F. that insurance coverage through an employer is known as “temporary insurance.” Once temporary insurance terminates, the policyholder has the option to convert that policy into an individual insurance policy. However, this conversion is not what Mr. F. was looking for; instead, he wanted his temporary insurance to continue until his wife turned 75. However, his policy stated that once the policyholder turned 75, all coverage for himself as well as his dependents would end.

As a result, the OSO maintained the insurance company’s decision.

Sufficient evidence (disability)

Posted on: October 11, 2016

Mr. K. was a mechanic with chronic lower back pain. Eventually, he had to stop working. His employer’s group benefits plan covered his long-term disability (LTD) for two years on the basis that he was unable to perform the duties of his “own occupation” during this time.

To continue his disability benefits, Mr. K. would need to prove that he was unable to perform “any occupation” and unable to earn at least half of his pre-disability salary. The insurance company determined that he did not meet the criteria and denied his LTD claim.

Mr. K. came to OLHI with a final position letter from the insurance company. Our Dispute Resolution Officer (DRO) went through all the supporting documents from Mr. K. and the company. It appeared that the company may have declined the claim prematurely. For this reason, he recommended an OmbudService Officer (OSO) investigate further.

Through his review, the OSO learned that the insurance company based its assessment on medical records that were nearly a year old. Also, its own medical expert stated that more information was needed before making a recommendation on LTD benefits. Specifically, she suggested that the insurance company better understand Mr. K.’s current limitations and look into whether his doctor thought it was possible to work at a sedentary job. Our OSO also wondered why the insurance company had suggested alternate jobs for Mr. K. without fully understanding his current abilities and how much these alternate jobs paid.

OLHI contacted the insurance company and suggested that the decision to deny Mr. K.’s claim appeared to be based on insufficient evidence. He recommended that the insurance company reconsider its position. It agreed to do so and provided Mr. K. with a significant lump sum payment to settle his disability claim.

Going the distance (health)

Posted on: October 11, 2016

Mrs. O. had lung cancer and lived in a small, remote area. She needed radiation and chemo therapy and chose to go to a city about 400 kilometres away. Her provincial health care plan would reimburse her for travel and lodging expenses if she had to consult a specialist outside her region. Her group health insurance policy, through her employer, would reimburse her for the rest of what the provincial plan did not cover.

When Mrs. O. submitted her claim, her employer’s insurance company declined it. They said she should have gone instead to a hospital that was closer to her home by 30 kilometres. The insurance policy required that she travel to the closest hospital.

Mrs. O. brought the final position letter to OLHI for a free, independent review of the case. She told our Dispute Resolution Officer (DRO) that traveling to the other hospital would have taken longer in travel time, even if it seemed closer from a distance perspective. She also said she chose the hospital she went to because her specialist was affiliated with it.

OLHI’s DRO reviewed all the information provided by Mrs. O. and by the insurance company. He discovered that the insurance policy carefully outlined reimbursement if a specialist was located more than 200 kilometres away from the person’s home, so long as the specialist was as close as possible to the person. Proximity was based on kilometres, not travel time. The DRO also learned that the provincial plan had declined reimbursement for the same reason.

After thorough review of the policy and discussions with Mrs. O., OLHI explained what the policy said and why Mrs. O. was not able to be reimbursed. The DRO also explained that, for this reason, OLHI believed that the insurance company had made the proper decision.

Information lapse (life)

Posted on: October 11, 2016

After Mr. J.’s father died, he claimed the benefits under several term life policies with the same insurance company. All were paid out, except one, which had lapsed several years prior for non payment of premiums. The insurance company denied the claim because they had mailed Mr. J.’s father a Notice of Premium Due before the policy lapsed.

Mr. J. brought his final position letter to OLHI. He explained to our Dispute Resolution Officer (DRO) that his father did not receive the Notice. Acting as his father’s Power of Attorney, Mr. J. had contacted the insurance company to set up automatic payments for the premiums. At the same time, he asked the customer representative about the status of all the policies. The representative assured Mr. J. that all were in good standing.

OLHI’s DRO reviewed information from Mr. J. and the insurance company. She recommended an OmbudService Officer (OSO) investigate further. In his review, the OSO noted two key details: First, not only was Mr. J. told in a phone call that all policies were in good standing, he also received a letter two years later, confirming that all the insurance policies were in force – including the lapsed policy. Second, the insurance company’s Notice was sent to the wrong address. When the mail was returned to the company, it did not check its records for the accurate address. The correct address was in fact on file with the insurance company.

The OSO contacted Mr. J.’s insurance company to discuss the situation. He explained that Mr. J. had called the insurance company during the period of time when the policy could have been reinstated. Had he been told about the lapse then, it was reasonable to believe he would have reinstated the policy since he already had several other policies with the company. Because he was given wrong information, the window to exercise the right to reinstate had passed.

The insurance company agreed with OLHI’s recommendation to pay the insurance benefit on the remaining policy.

Side effects of medications (health)

Posted on: August 27, 2016

Ms. E. had extended health insurance through her employer. She disclosed that she suffered from seizures. This insurance also covered out-of-country emergency medical expenses. While on vacation, Ms. E. became ill and was hospitalized. Doctors determined that she had a bad reaction to a drug she was taking to treat a pre-existing condition. While in hospital, Ms. E. became worse due to an unrelated illness and had to return to Canada immediately.

The insurance company covered the costs of Ms. E.’s transportation back home to continue her care. However, in their final position letter, they stated they would not cover treatment for her reaction to the drug. The company decided that Ms. E.’s pre-existing condition extended to any side effects from medications taken for this condition.

Ms. E. asked OLHI to become involved. She told our Dispute Resolution Officer (DRO) that she believed her insurance company was setting a bad precedent. She said their decision could lead to denying coverage to any person on medication who suffers a side effect. For example, Ms. E. questioned what would happen if a person has a bad side effect from an over-the-counter pain reliever. Could the insurance company refuse to cover treatment, if this pain reliever treats a pre-existing condition?

The DRO recommended that an OmbudService Officer (OSO) investigate Ms. E.’s case. The OSO learned that a doctor saw Ms. E. when she returned to Canada. The doctor felt that it could not be proven with certainty that the Ms. E.’s problems were side effects of her medication. He suggested that her problems could have been caused by the unrelated illness she had after she was hospitalized.

The OSO contacted the insurance company’s Ombuds office. He advised that Ms. E.’s policy did not specify that it would not cover side effects from a medication. He also reinforced the fact that there was uncertainty around what caused Ms. E.’s illness. This made it impossible to tell, conclusively, that her treatment was for her pre-existing condition. He recommended that the insurer reconsider its position and pay Ms. E.’s claim.

The insurer, upon further reflection, agreed and provided payment on the out-of-country medical expenses.