The Hayne royal commission spent almost all day on Thursday hearing the saga of life insurer TAL’s treatment of a mentally ill customer over more than five years, in what was one of the inquiry’s most compelling case studies to date.
TAL hired a private investigator to conduct detailed surveillance of the customer’s daily life and used medical professionals to find evidence that would allow it to discontinue an expensive income protection life insurance claim.
The insurer’s drive to, in the words of a TAL case manager, “close this one down”, drew in a range of professionals from both sides – insurer and claimant – with the effect of magnifying the anxiety and depression that justified the claim in the first place, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry heard.
TAL Group’s general manager of claims, Loraine van Eeden, acknowledged at the commission that a chain of events occurred between 2009 and 2014 – years before she was employed with the group.
As documented by counsel assisting Rowena Orr, the commission heard of one instance in which a TAL-commissioned private investigator provided details about the customer “removing her clothing to reveal her swimwear at the pool”.
In another instance, a psychiatrist TAL tasked with reviewing the customer’s claim sent a TAL case manager an email containing a link to a photo of the customer on the internet, with the title “A picture of your favourite claimant” and the message, “I thought this would make your day”.
TAL is the group insurer for AustralianSuper and Cbus Super. At the time of the customer’s claim, the business was known as Tower Australia Group. In 2011, Japan’s Dai-ichi Life acquired the insurer and it became known as TAL.
The story began with the insured – a registered nurse who was not named at the hearing – applying for income protection in February 2009. Her medical history detailed to the insurer included a knee reconstruction but no history of mental illness.
In May 2010, she submitted a claim form describing stress-induced depression and anxiety. She had ceased work in January that year and had been denied a workers compensation claim. Her doctor of five years attested she was “honest and conscientious” in her work, and her mental illness was a new development.
Orr dubbed what followed a “fishing expedition”, after displaying as evidence internal documents that instructed TAL employees to “ensure a thorough review is undertaken” when cases involved large payouts or payments for a long duration.
“So a guiding principle in determining the extent of the investigations to be undertaken was TAL’s bottom line?” Orr asked van Eeden.
“In relation to this, yes,” van Eeden replied.
The insured ultimately took the matter to the Financial Ombudsman.
In June 2011, TAL submitted to the ombudsman a version of events that claimed a “history of anxiety and depression” – the first instance of these conditions that differed from the “workplace induced stress” line TAL had taken previously.
The insured collated statements from her workplace’s employee assistance program and four separate doctors who had dealt with her over the years, all of them verifying her version of events.
TAL rejected the ombudsman’s recommendation that it re-commence payments and reinstate the insured’s policy.
The life insurer then took the case to the ombudsman’s determination process, in which a panel found in favour of the insured. The panel also required TAL to pay interest on benefits thus far withheld, and to deduct the costs of the premiums it had refunded from her payout.
In May 2013, more than two months after the Ombudsman’s determination, and just over three years after the claim was first lodged, TAL told the insured it had accepted her claim – but only partially.
She would be paid $89,000 which was what she was owed up to July 2012, plus interest. But TAL required more information to assess her claim for the period from July 2012 to May 2013. When this process was over, it paid her another $35,000 in July 2013 for the remaining period, but it took another intervention from the Ombudsman for TAL to hand over the interest it owed the insured for this period.
‘Close this one down’
The Hayne inquiry also heard that a December 2013 email between a TAL case manager and a psychiatrist at health information provider UHG noted the case manager saying she would like to “close this one down before Christmas, if it could get pushed through”.
“If not, that’s OK, too,” the email read.
The psychiatrist asked to see the surveillance DVD, not just the surveillance report, which TAL provided, breaching its privacy commitments.
A psychiatrist at UHG later provided strategic advice on how to frame the insured’s anxiety to cease paying her.
“I would suggest that any attempt by TAL to suggest that anxiety is other than persistent would be met with significant opinions to the contrary,” the psychiatrist wrote to the case manager. “Therefore, the tack I suggest is that we are not looking at the persistence of the underlying anxiety, but its effect on work capacity.”
In March 2014, TAL sent the insured two letters advising it would not be making further payments to her because she no longer met the definition for total disability or partial disablement. The letter set out for the first time the extensive list of surveillance TAL had conducted. It was the first the insured had heard about the surveillance program.
“We believe that TAL has been more than reasonable with your income protection claim,” the letter concluded. “However, due to the evidence available to us, we will now look to recovery of benefits paid from at least 1 June 2012.”
It asked her to “arrange for the recovery” of benefits totalling $68,890.
Said Orr: “Do you accept, Ms van Eeden, that this letter would have caused considerable distress to the insured?”
“Do you have any further observations to make about this communication from TAL to the insured?”
“No. It’s just, once again, I, I was shocked when I saw this.”
The insured’s story ultimately dragged into 2016, when TAL devised a strategy to advise the claimant she was in breach of tax laws for not declaring her TAL benefits in her tax return.
Questioning of van Eeden will continue today.