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An important conversation (life)

Posted on: October 10, 2017

Mr. and Mrs. H. applied for life insurance and were approved. When her husband died several months later, Mrs. H. claimed the benefits under the policy. The insurance company denied the claim for failing to disclose information about Mr. H.’s health.

Mrs. H. brought her final position letter to OLHI. She explained to our Dispute Resolution Officer (DRO) that a nurse had come to their home on behalf of the insurance company to collect blood and urine samples and fill out a questionnaire. During their conversation, Mr. H. told her about his high iron levels and his visits to a hematologist. The nurse noted “blood work normal” in her report despite his disclosure. Mrs. H. and her husband gathered the high iron was not important since the nurse did not take it into account, nor did the insurance company analyze his blood for this.

After his review of the information from Mrs. H. and the insurance company, the DRO recommended an OmbudService Officer (OSO) investigate further.

The OSO discovered that the company had not contacted the nurse to find out more about her visit with Mr. and Mrs. H. He recommended Mrs. H. contact this nurse, to see if she could validate their conversation. The nurse was unable to recall the specifics of their meeting.

While Mr. H.’s medical records showed he had been diagnosed with a blood condition, it was not disclosed in his insurance application. However, Mr. H. had signed this application, along with the report that the nurse prepared, confirming that all information provided was accurate. For this reason, the OSO recommended that there was no reason to further pursue this complaint.

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.

Precautionary treatments (critical illness)

Posted on: June 16, 2016

Ms. K. adopted her daughter and enrolled her in a child development program (CDP), as recommended by the adoption agency.

At the CDP, an assessment showed motor problems, including an irregular gait. The next month, Ms. K. applied for critical illness for her daughter. In the telephone interview portion of the application, she said that her child had not been diagnosed or treated for development delays or bone, joint or muscle disorders. Ms. K. also said that her daughter did not have any other illnesses or conditions, and received no consultations or treatment from alternative health care providers.

Four days later, the physiotherapist at the CDP told Ms. K. that the child’s motor skills were of concern. Later that month, as a part of the insurance application, Ms. K. signed a declaration of good health. She confirmed, again, that since beginning the application, her daughter had not consulted with doctors or any other health care providers, nor had she undergone any diagnostic tests or investigations. Ms. K.’s daughter was approved for a $100,000 critical illness policy.

Two years later, a pediatrician outside the CDP diagnosed the daughter with cerebral palsy and Ms. K. applied for the policy benefit. The insurance company denied her claim for failing to disclose material facts during the application and in the declaration of good health. They provided a full refund of the premium.

When Ms. K. contacted OLHI, a Dispute Resolution Officer (DRO) carefully reviewed all the files sent by her and the insurance company. The DRO spoke with her to better understand her position. Ms. K. felt the CDP did not provide medical diagnoses – and the daughter was diagnosed long after the policy was issued.

OLHI agreed that the insurance company’s decision was sound. Although Ms. K. may have honestly believed that her daughter was in good health until long after she applied for the insurance, she incorrectly answered questions related to evaluations, investigations or consultations with health care providers or practitioners. These evaluations and consultations did take place at the CDP.

What is a “pre-existing” condition? (travel)

Posted on: February 2, 2016

Mr. Z. purchased out-of-Canada emergency medical expense insurance in connection with a trip to the U.S. While there, he needed medical treatment for a kidney stone and, afterward, submitted a claim to the insurer for the expenses he incurred.

The claim was denied because his U.S. hospital records noted that he had experienced flank/back pain a week before his departure and he had not disclosed this to his insurer before traveling.

The exclusions section of his policy denied coverage for any sickness, injury or medical condition, occurring before the date he left on his trip, which was expected to lead to treatment or hospitalization. In sum, the insurer believed that Mr. Z. had a “pre-existing medical condition” that he was required to tell them about before traveling. All travel insurance contracts contain a clause of this nature; however, the exact disclosure requirements vary from contract to contract.

Mr. Z. appealed the denial and followed the insurer’s complaint process, where the decision was upheld by the insurer. He then submitted his complaint to OLHI for review.

With both the details provided by the consumer and the insurer’s file in hand, OLHI’s Dispute Resolution Officer (“DRO”) reviewed the case and concluded that the denial was entirely based on statements contained in the U.S. hospital records regarding prior back/flank pain. The DRO found that there had been no contact initiated by the insurer with either the U.S. hospital or the consumer. He also observed that the U.S. hospital notes stated that the consumer had experienced pain one week prior, that went away, and, in direct contradiction, that Mr. Z. had experienced “unremitting flank/back pain” for the entire week prior to his departure.

Although the insurer’s Ombudsman had suggested that the claim be paid, the business unit declined the claim.

OLHI’s DRO expressed doubt about the accuracy of the U.S. hospital records and suggested that this could be the basis for OLHI to approach the insurer. It was recommended that the complaint be escalated to an OLHI OmbudService Officer (“OSO”) for further investigation.

The OSO spoke with the consumer directly and learned that he had made no mention whatsoever of any “flank pain” but that the back pain he had experienced one week prior to departure went away on its own with over-the-counter pain relief and a warm bath. Our OSO also reviewed the documents provided by the insurer, including the insurer’s claims review process documents. His findings echoed those of the insurer’s Ombudsman.

In his submission to the insurer, the OSO highlighted the incongruities in the U.S. hospital records. He suggested that the policy exclusion could not be fairly invoked given the fact that Mr. Z.’s prior back pain had gone away with a warm bath and an over-the-counter pain reliever. He also suggested that it was improbable that anyone with constant, severe pain leading up to this trip could travel anywhere and hence the unreliability of the U.S. hospital admission record. The OSO recommended that the insurer reconsider its’ decision.

The insurer thanked the OSO for his comprehensive review and supported OLHI’s recommendation to pay this claim. The consumer‘s claim was paid shortly thereafter.

A key disclosure form (life)

Posted on: February 2, 2016

Mr. M. had a $25,000 term life insurance policy. As the premium rates were about to increase dramatically and affordability was an issue, his insurance agent, who had originally sold him the policy, offered to research more affordable options.

This search proved a challenge. Mr. M. had health issues and, given the risks, few insurers would offer alternative coverage on a single life basis – at least, none that the consumer found affordable. At the end of the exercise, the agent proposed a joint last-to-die policy and wrote up an application for Mr. M. and his common-law partner, Ms. L.

The new policy was delivered and Mr. M. cancelled the previous one. He paid the premiums for just over two years before passing away. Ms. L. made a claim in order to pay final expenses and was surprised to have the claim denied because it was a joint-last-to-die policy. In such a policy, no proceeds are paid out until the death of the second spouse.

Ms. L. followed the insurer’s complaint process, where the insurer upheld its decision to deny the claim. She then brought her complaint to OLHI.

The Dispute Resolution Officer (“DRO”) reviewed the consumers’ documents and found anomalies in the application. The consumers’ statements in the application clearly indicated their intent to use the coverage for final expenses upon Mr. M.’s death and they designated Ms. L. and their daughter as beneficiaries – requirements that could not be met under a joint-last-to-die policy. The DRO recommended that the complaint be escalated to an OmbudService Officer (“OSO”) for further investigation.

The OSO reviewed both the file documents and the analysis from the DRO, and concurred that there were discrepancies in the sales process. He noted a lengthy delay in issuing of the policy and that there was no copy of a Life Insurance Replacement Disclosure form in the file. This disclosure form is required to be provided whenever a consumer replaces one life insurance policy with another. It provides a side-by-side comparison between the old and the new policies and serves to demonstrate that consumers understand the differences between the two policies.

Since recollections from the consumers and the agent differed, this missing form proved to be the crux of the issue.

In his detailed submission to the insurer, the OSO suggested that the lack of a properly completed replacement declaration form deprived Ms. L. and Mr. M. of the full and plain disclosure they were entitled to, and that their decision to purchase the new policy and cancel the previous one was not a fully informed one.

The OSO recommended that the insurer compensate the consumer for the loss of the $25,000 coverage provided by the original policy.

The insurer agreed to do so and the proposed payment was issued to the consumer.

Full disclosure (travel)

Posted on: February 2, 2016

Mr. M. called OLHI after he received a letter from his wife’s insurer turning down her travel insurance claim. He and his wife had purchased out- of- country emergency medical and hospital insurance to cover them for an upcoming trip to the U.S. The insurance was bought over the phone and medical questions answered orally by both Mr. M. and his wife.

Unfortunately, Mrs. M was admitted to hospital and underwent emergency heart surgery while on vacation. When she returned home, she submitted a claim to the insurer for her U.S. medical and hospital expenses. These expenses were significant as Mrs. M. had spent over two weeks in hospital. The insurer denied payment for the claim on the basis that Mrs. M. had failed to fully disclose her medical history. Mr. M. contended that his wife had disclosed all necessary medical issues.

Since the insurer had issued its final position letter, our Dispute Resolution Officer (DRO) advised Mr. M. that OLHI could open a complaint file to determine if there were grounds to review the insurer’s decision. To start the process, Mrs. M. was asked to sign and submit OLHI’s standard Authorization form and all relevant documents, including a copy of the insurer’s final position letter.

During the initial call to OLHI, Mr. M. asked if his wife’s claim was subject to a “limitation period” – that is whether there was a time limit to start a legal action against the insurer to recover his wife’s expenses. He was told that the running of the limitation period was suspended while his complaint was under review by OLHI. He was advised to consult a lawyer if he had any concerns about what limitation period applied to his wife’s claim since OLHI could not provide legal advice.

In accordance with industry standard practice, once Mrs. M. filed a claim, her insurer obtained copies of her medical records. These records were provided to the insurer pursuant to a written consent signed by Mrs. M. at the time she filed her claim. The insurer forwarded copies of these medical records to OLHI once Mrs. M.’s complaint file was opened.

Upon reviewing Mrs. M.’s medical records, our DRO learned that Mrs. M. had seen her family doctor on three occasions just before she bought her travel insurance. These visits were made to address complaints of chest pain. A follow up test booked by her physician to investigate the symptoms was cancelled by Mrs. M. until she returned from her vacation. However, when she bought her travel insurance, Mrs. M. had told the insurer that she had not seen a doctor for “any reason that was not routine within the last 12 months”. In sum, the insurer had turned down Mrs. M.’s claim for reimbursement of expenses because she was under investigation for a pre-existing medical condition within that period.

Mrs. M.’s position was that the three visits she made to her doctor were in connection with a “minor ailment”, which was permitted under the policy. She argued that she had no “pre-existing medical condition” nor were her visits to the doctor made in connection with such a condition. The policy defined “minor ailment” as one that did not require more than one follow-up visit with her physician.

OLHI’s DRO concluded that Mrs. M. did not have a minor aliment because her condition required two follow up visits. As a result, the “pre-existing conditions” clause of the policy applied. This meant that she was required to disclose her full medical history to her insurer, including any and all consultations with doctors for “non routine reasons” within 12 months.

In the final analysis, Mrs. M. did not disclose her full medical/health history when applying for travel insurance and the insurer had legitimately turned down her claim for payment. Mrs. M. was advised that there were no grounds for OLHI to review her complaint with the insurer and her OLHI complaint was closed.