Savelberg v United Super Pty Ltd
[2011] NSWSC 1482
•05 December 2011
Supreme Court
New South Wales
Medium Neutral Citation: Savelberg v United Super Pty Ltd trading as Cbus Superannuation Fund & Anor [2011] NSWSC 1482 Hearing dates: 14.10.11, 10.11.11 Decision date: 05 December 2011 Before: Nicholas J Decision: Par 76
Catchwords: SUPERANNUATION - total and permanent disablement - claims for benefit - whether incapacity of the insured person satisfied the definition of "total and permanent disablement" under the policy - whether decisions of insurer to refuse the claims were unreasonable and invalid - whether interest payable under s 57 Insurance Contracts Act 1984 (Cth) Cases Cited: Dargan v United Super Pty Ltd & Anor [2011] NSWSC 1316
Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214
Paul Weber v Tiss Pty Ltd [2005] NSWSC 67
Sayseng v Kellogg Superannuation Pty Ltd & Anor [2007] NSWSC 583
Szuster v Hest Aust Ltd & Anor [2000] SADC 2Category: Principal judgment Parties: John Savelberg - plaintiff
United Super Pty Ltd trading as Cbus Superannuation Fund - first defendant
Hannover Life Re of Australasia Ltd - second defendantRepresentation: Counsel:
R Johnson - plaintiff
S J Walsh - defendants
Solicitors:
Byrdens Law Office - plaintiff
TurksLegal - defendants
File Number(s): 10/321183
Judgment
Mr John Savelberg, the plaintiff, claimed entitlement to superannuation benefits for total and permanent disablement (TPD) on 9 May 2007 resulting from injuries to his head and legs suffered when he was struck by falling steel components at his place of work. United Super Pty Ltd, the first defendant (the trustee) was the trustee of the superannuation fund, Construction and Building Union's Superannuation Fund (Cbus). Hannover Life Re of Australasia Ltd, the second defendant (the insurer) insured the fund with respect to obligations to pay total and permanent disablement benefits.
The benefit payable to the plaintiff under the policy was a lump sum benefit of $100,000 in the event he suffered TPD as defined in the policy.
The plaintiff has not worked since the accident. He first applied for the benefit on 28 February 2008. On 23 September 2009 the insurer informed the trustee that the claim was declined. On 26 October 2009 the trustee informed the plaintiff's solicitors of this decision. On 8 December 2009 the plaintiff's solicitors sent further medical evidence to the insurer and requested it review its determination to deny the claim. On 14 December 2009 the insurer informed the trustee that, having considered the additional material, the claim was declined.
On 24 June 2011, following a review of further medical evidence, the insurer accepted the claim. On 7 September 2011 payment of the TPD benefit was made to the plaintiff's solicitors.
The primary question for determination in these proceedings is whether each of the decisions of the insurer of 23 September 2009 and 14 December 2009 was invalid in that it was unreasonable. The plaintiff claims interest on the amount of $100,000 for the period 29 September 2009, alternatively 14 December 2009, to 20 June 2011 when liability was admitted. He also seeks an order for the costs of the proceedings, which were commenced by statement of claim filed on 28 September 2010.
The claims for interests and costs were opposed. The defendants sought an order for costs in their favour if it is found that the insurer acted reasonably in declining the claim prior to acceptance of liability.
By cl 5.12, the trust deed provided for the payment of the amount of any insured benefit to a member who had suffered TPD and who had ceased to be gainfully employed prior to attaining the age of 65. It is common ground that the plaintiff had ceased to be gainfully employed prior to age 65.
Clause 7.2 of the trust deed provided that the term "total and permanent disablement" should be given the meaning ascribed to it in the relevant policy.
Relevantly, cl 1.3.1 of the Group Life Policy (the policy) contained the definition of "Total and Permanent Disablement" as follows:
"Total and Permanent Disablement in respect of an Insured Person who was gainfully employed within the six months prior to the Date of Disablement is where:
1.3.1 The Insured Person is unable to follow their usual occupation by reason of accident or illness for six consecutive months and in our opinion, after consideration of medical evidence satisfactory to us, is unlikely ever to be able to engage in any Regular Remuneration Work for which the Insured Person is reasonably fitted by education, training or experience;"
The term "Regular Remuneration Work" was defined in the policy as follows:
"An Insured Person is engaged in regular remunerative work if they [sic] are doing work in any employment, business, or occupation. They [sic] must be doing it for reward - or the hope of reward - of any type."
It was common ground that the plaintiff was an "Insured Person" who was gainfully employed within the six months prior to the date of disablement and was unable to follow his usual occupation for six consecutive months.
The principles
It was common ground that the principles to which I referred in Paul Weber v Tiss Pty Ltd [2005] NSWSC 67 should apply. I said:
"7 It was accepted on both sides that the court should approach the matter in accordance with the principles stated in Edwards v The Hunter Valley Co-op Dairy Co Limited (1992) 7 ANZIC 61-113 at p 77,536. There it was held that in forming an opinion relevant to its liability under a contract of insurance the insurer is obliged to act reasonably in considering and determining the matter. It also held that unless the view taken by the insurer can be shown to have been unreasonable on the material then before it, the decision of the insurer cannot be successfully attacked on this ground. (See also e.g. Heitman v Guardian Assurance Co. (1992) 7 ANZIC 77-483).
8 It was also accepted that the insurer is not required to undertake the detailed consideration required of a court hearing ( Chammas v Harwood Nominees (1993) 7 ANZIC 61-175 at p 78,001); and that the insurer's statement of reasons for declining a claim should be understood as a practical document intended to inform the claimant of the basis of the decision rather than detailed reasons with reference to the evidence relied upon comparable to a judgment of a court or tribunal. The reality must be recognised "... that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed". ( Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at p 272)."
The question of whether there is a reasonable basis for the opinion that the insured is within the definition of TPD turns on what the evidence, taken as a whole, conveys to the decision-maker at the time. The hypothetical reasonable decision maker owes a duty of good faith and fair dealing towards both the trustee and the claimant employee taking account of their respective positions ( Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214, pars 64, 70). The obligation to act reasonably in forming an opinion requires the decision-maker to give an objective, even handed, and realistic consideration to the whole of the evidence, uninfluenced by personal beliefs, prejudice, suspicion, or speculation.
The definition of "total and permanent disablement", and the phrase "reasonably fitted by education, training or experience" has been considered in many cases. The construction of the phrase in a similar policy was considered by Gzell J in Dargan v United Super Pty Ltd & Anor [2011] NSWSC 1316. I respectfully agree with his Honour's conclusion that the consideration is whether, by reason of education, training or experience an insured person is reasonably fitted to engage in the work in question (par 43). His Honour said:
"44 The words describe a capacity to undertake a new job based on education, training or experience. They constitute a link between the job and past education, training or experience."
The definition relates to disability to obtain future employment. It requires consideration of whether or not, on the evidence, it is probable that the insured would actually obtain paid employment for which he is qualified by education, training or experience, and whether his condition has disabled him from doing what he is qualified to do. The application of the definition is directed to the realities affecting the capacity of the insured under consideration. It is not about theory ( Sayseng v Kellogg Superannuation Pty Ltd & Anor [2007] NSWSC 583, par 64).
In Szuster v Hest Aust Ltd & Anor [2000] SADC 2 Judge Herriman considered the effect of a definition of TPD which was in substantially similar terms to the definition in this case. He held (par 73) that in considering its opinion the insurer should have undertaken the following steps, assuming the plaintiff's absence for six consecutive months:
"(1) it should have ensured the plaintiff understood the nature of the material she should obtain in support of her claim, that she was provided with copies of all relevant materials held by it and that she was aware of and afforded the opportunity to put submissions to it;
(2) it should have then considered:
(a) the medical evidence that was satisfactory to it;
(b) any evidence before it as to the likely availability of work to a person with the plaintiff's physical restrictions, and having regard to her education, training or experience;
(c) if such work was available, whether it was likely the plaintiff could access it;
(3) it should then, on the basis of the matters set out in paragraph 2, have formed an opinion, fairly, reasonably and in good faith, as to whether the plaintiff was likely to ever "engage in or work for reward in any occupation or work for which (she) is reasonably qualified by education, training or experience".
Background
The plaintiff was born on 10 July 1966. He left school in third form aged about 14. Thereafter he worked for various employers, usually as a labourer. He is dyslexic with reading difficulties. He holds a C class driver's licence and a forklift driver's licence. He is married and has two children.
At the time of the accident he was employed by Pacific Steel Constructions Pty Ltd and was working in the yard as a dogman or labourer loading and unloading structural steel. He was severely injured when a load of steel shifted and rolled onto his legs. He has not returned to any work since.
The decision of 23 September 2009
Documents in support of the claim were sent to the trustees by the plaintiff's solicitors on 28 February and 13 May 2008 and 5 May 2009. By letter of 26 August 2009 to the plaintiff's solicitors the trustee listed the material obtained by the insurer for the purpose of deciding whether the plaintiff satisfied the definition of TPD under the policy. It invited submission of any additional material by 20 September 2009, after which it would proceed to make a decision. The claim was rejected on 23 September 2009.
On 4 September 2007 Konekt Australia Pty Ltd (Konekt) reported to the insurer on a case conference with the plaintiff and Dr Alan Hayden, the nominated treating doctor. Dr Hayden advised that he believed that, with appropriate treatment and management, the plaintiff would be able to return to this pre-injury duties, and that the same job with the same employer would be the vocational goal. However he was unable to confirm appropriate timeframes for return to pre-injury duties. An outcome of the conference was described as follows:
"* Dr Hayden advised Konekt he would be happy to upgrade Mr Savelberg to suitable duties should suitable duties be identified. Konekt recommend a workplace assessment be conducted in order to determine availability of suitable duties and development of appropriate return to work plan."
On 19 October 2007, Konekt reported to the trustee and the insurer on the plaintiff's prospects for return to work, and submitted a return to work plan. The plaintiff said that he had been unable to return to work because he was unable to put on a shoe or mobilise unaided. He advised that he was attending physiotherapy and hydrotherapy on a regular basis. The report recorded that Dr Hayden was uncertain as to whether the plaintiff would ever return to his pre-injury duties and whether the injuries would progress with further treatment. Konekt noted that until the plaintiff was able to put on shoes he would be unable to meet the safety requirements of any work place. The long term return to work goal was to return the plaintiff to different duties with a different employer completing "pre-injury hours". The plaintiff was said to be continuing to experience pins, needles and numbness in his right foot and numbness and sharp pains in his left foot, and was unable to tolerate anything touching his legs.
Konekt reported that a vocational goal could not be established until the injuries had been adequately treated. It was unknown when a return to work programme could be commenced. It was recommended that the file be closed, and reopened when the plaintiff became fit for suitable duties.
On 28 November 2007, Dr D T Fraser, orthopaedic surgeon, reported to the insurer that the plaintiff's condition had stabilised. He said:
"Fractures have united, he has been left with a permanent disability and will never be able to return to his previous manual type work, including climbing and scaffolding.
Please note he is also dyslexic which will make it difficult for him to do any office type work.
He needs no further follow up from me. He will continue to walk with an antalgic limp and need the use of a walking stick."
In his report of 22 January 2008 to the insurer, Dr Hayden answered "No" to the question:
"10. If you do NOT expect the claimant to EVER return to his/her normal work do you think he/she will EVER be able to do a job for which he/she is reasonably fitted by education, training or experience?"
His reason was that the plaintiff was functionally dyslexic so could only do physical work.
In his report of 7 February 2008 to the insurer, Dr Hayden noted that the plaintiff had constant disabling pain in both lower limbs, and walked in considerable discomfort with the aid of a stick. He expressed the opinion that he was unfit to return to pre-injury duty, and was unfit for any duties. He said:
"In my opinion he has suffered permanent damage and will be unfit for work indefinitely. His previous injury has been aggravated entirely as a result of the accident. In my opinion he has suffered permanent disablement as a result of the accident on 9 May 2007."
On 8 February 2008 Dr Peter Giblin, orthopaedic surgeon, reported to the plaintiff's solicitors on the hypersensitivity of areas around the scars on his ankles. There appeared to be marked dysesthesae around the right ankle, and light finger touch over the right ankle area produced a marked withdrawal response. He found his condition was stable, with a guarded prognosis. He said:
"His legs will never come back to normal and there will always be a degree of nerve damage in the right ankle and arthritis in the left ankle ...
I would assess him as permanently unfit for his pre-injury job and permanently unfit for heavy labouring duties. Specifically he will have to avoid long periods of standing, stair or ladder climbing, working at heights, or using either leg in a repetitive impact labouring fashion. These restrictions will also apply indefinitely to his domestic and recreational activities ...
Whilst he remains permanently unfit for his pre-injury heavy labouring duties, he would be fit for a sedentary work environment, preceded by the appropriate vocational rehabilitation ...
It is my view that this gentleman's condition has stabilised and reached maximum medical improvement pursuant to current WorkCover guides."
On 7 April 2008 Dr Grant Walker, consultant neurologist, reported to Dr Hayden that the plaintiff continued to suffer from pain in both ankles with tenderness to touch in the region of the scars and fractures. He could not find any convincing evidence of significant nerve injury, and thought the problem was largely of orthopaedic origin and that the plaintiff had probably become deconditioned because of the chronic pain.
On 21 May 2008 Konekt sent a functional assessment report to the insurer. It repeated, in terms, the statement in the earlier report that the plaintiff was unable to put on a shoe or mobilise unaided. The plaintiff's symptoms included a constant ache in each malleolus with associated stinging in the dorsum of the right foot. The report listed physical constraints upon the plaintiff's ability to work which included an inability to push or pull, and to squat, due to bilateral ankle symptoms. It was anticipated that if the plaintiff was able to obtain suitable employment, taking into account his physical abilities, he would be capable of completing a graded return to work programme.
On 18 June 2008 Konekt made a vocational assessment report for the purpose of identifying transferable skills and suitable vocational options for the plaintiff. Again, it included the plaintiff's information noted in the reports of 19 October 2007 and 21 May 2008 of the inability to wear shoes or mobilise unaided, and that the plaintiff attended regularly physiotherapy and hydrotherapy sessions. It stated he was unfit for work.
Included were the results of an aptitude test which involved the plaintiff completing a questionnaire to assist in identifying suitable work options in line with his interests and skills. The following jobs were deemed most suitable:
* Fork lift operator
* Process worker
* Mobile plant operator
* Retail sales assistant.
Attached to the report was a description of each of these job options. The plaintiff's suitability for each was described in similar terms as being:
"... contingent to [sic] the outcome of his ability to wear shoes pending a podiatrist appointment on 26/06/2008. With an appreciation of this information and anticipating that his injury can be accommodated ..."
It was said that work as a mobile plant operator or retail sales assistant would require the plaintiff being trained to accommodate dyslexia. Issues impacting on the return to work programme were that the plaintiff:
"* ... is currently unfit for work and therefore his medical restrictions are unknown at this time.
* ... has dyslexia which may restrict his capacity to job seek and ability to perform duties requiring reading and/or writing.
* ... is unable to wear closed in footwear which will be a barrier for all types of employment and all working environments.
* ... has a number of restrictions to his functional tolerances."
On 8 July 2008 Dr Richard Deveridge, an assessor of permanent impairment, reported to the plaintiff's solicitors that he had developed a very profound neuropathy or neuralgia. He said:
"... However both feet and particularly the right one have remained extremely sensitive to light touch, any pressure and temperature change. He cannot tolerate shoes and socks or bedclothes on his feet. He has been unable to return to any form of employment. The physiotherapist wanted him to attend a gym programme, but he can't do so due to his inability to wear closed shoes. He gets around in thongs. The rehabilitation provider has been unable to arrange any retraining or light duty work trials. In the past he has only worked in labouring or construction type jobs. The work always involves climbing ladders and scaffolds as well as lifting and carrying equipment. He had limited education and suffers from dyslexia, so office type work was out of the question.
Currently he continues to experience fairly constant pain and marked stiffness in both ankles worse on the left side (although pain is worse on the left, the neuralgia is considerably worse on the right side). He can only stand or walk for brief periods ..."
His opinion was that the plaintiff had quite disabling secondary neuropathic pain, and said:
"He is permanently unfit for his pre accident employment as a labourer, rigger and steel fixer. He can only tolerate limited periods of weight bearing. He cannot cope with more than a few stairs and scaffolds, and he should avoid inclines, rough and uneven surfaces. He cannot crouch or work in awkward leg positions and confined spaces. His requirement for regular strong medication would act against him finding more sedentary employment such as operating machinery from a seated position. His dyslexia will act against him obtaining office type employment. He is not expected to return to gainful employment for which he would otherwise be suited by way of education and experience.
...
Future treatment will involve ongoing medication indefinitely.
...
His condition is chronic and stabilised. He has reached a point of maximal medical improvement. The condition has been medically stable for the previous three months and it is unlikely to change by more than 3% WPI in the next 12 months with or without further medical treatment. The prognosis generally is rather poor."
In her report of 25 August 2008 to Konekt, Miss Jenny Thompson, podiatrist, noted the plaintiff's complaints of pain heightened by any pressure or touch to the feet so that it was impossible even to put socks on, let alone a pair of shoes. She found that his injuries had changed his gait and ability to walk with any comfort, and that a rocker bottom shoe might be required when he was again able to wear shoes. She thought the plaintiff might be suffering from reflex sympathetic dystrophy syndrome (RSDS) and suggested that her diagnosis be further investigated and confirmed.
By letter of 11 September 2008 to the insurer, Konekt advised that its rehabilitation file on the plaintiff had been closed, and would be reopened when he was fit for suitable duties.
In his report of 15 December 2008 to the plaintiff's solicitors, Dr Clive Sun, a consultant in rehabilitation and pain medicine, noted the plaintiff's hypersensitivity in the right foot, and irritation to the dorsum from footwear. His opinion was:
"As a result of the work injury to the lower limbs he has impaired mobility. As a result of the cervicolumbar sprain he has reduced lifting and bending capacity. A further barrier to redeployment or participating in any training programme would be the psychological status from the post traumatic stress disorder. With the history of dyslexia and work history of mainly labouring manual work, his vocational retraining capacity is limited. I therefore agree with his general practitioner that he remains unfit for work. He has been unfit for work since the work injury in May 2007 and unlikely to be able to work for at least a further 12 months. It may be possible in the future for him to return to selected sedentary duties with no lifting over 8kg, no prolonged standing, no sustained work above should level and no repetitive bending, squatting, kneeling or twisting, limit walking and use of stairs, 20-30 hours a week."
He believed the plaintiff's condition "... has again reached maximal medical improvement".
On 12 February 2009 Dr P L Harvey-Sutton, consultant occupational physician, reported to the trustee on her assessment of the plaintiff in response to questions as to his condition and prospects. She noted the plaintiff had not undergone a desensitisation programme on the feet, and that he drove a car with automatic transmission to and from his children's schools, and to visit friends. Upon examination she found hypersensitivity to the lateral aspect and dorsum of the right foot, but did not grade it as exquisite. She said:
"He reports that he cannot wear shoes because of the hypersensitivity of the feet, particularly the right foot but on clinical examination, there was no evidence of Chronic Regional Pain Syndrome (Reflex Sympathetic Dystrophy), or significant atrophy of the musculature of the legs that show the hypersensitivity on clinical examination, hypersensitivity is temporary and will settle in the fullness of time. The hypersensitivity may settle earlier with a formal desensitisation programme but the success of the programme will depend, to a significant degree, on motivational factors".
Questioned as to the plaintiff's current fitness to work in his own occupation as a labourer she answered:
"No.
The reason he is not fit to work in his own occupation as a labourer is that he lacks overall agility and more likely than not, will lack overall agility in the longer term."
As to the plaintiff's current fitness to work in another occupation for which he would be reasonably suited given his education, training and experience she answered:
"He is fit to work in another occupation for which is suited by reason of his education, training and experience, namely security work, as security work is an intrinsic requirement of working as a labourer on building sites.
Also, he is fit to work where he performs mechanical work at a bench, such as repair work.
Whilst I appreciate his current reported hypersensitivity of the feet and reported inability to wear shoes, based on the clinical examination, there were no objective findings, such as Chronic Regional Pain Syndrome/Reflex Sympathetic Dystrophy or wasting or other signs to indicate that this is permanent and/or significant."
As for the plaintiff's return to work prospects she said:
"In the circumstances of litigation, including a negligence case pending, the prospects of returning to work in his own occupation, or another occupation, are unlikely until the litigation is resolved."
Her report included:
"15. Do you believe that our member will ever return to work in either their own occupation or another occupation for which he is reasonably suited to given their education, training and experience. If Yes, please provide details of the occupations, duties and hours that may be suitable. If No, please provide the reasons for your opinion.
Based on the nature of his medical condition, the nature of his injury, and the clinical findings, there are no reasons to indicate that he will not be able to return to return to [sic] other occupations. (other than labourer/rigger), for which he is reasonably suited, given his education, training and experience.
He holds a green card and a driver's licence and can work in jobs such as security - security is an essential duty working on a building site. Also he could do mechanical repairs at a bench -he said he has always learned by being shown and being able to do manual activities.
Whilst I appreciate his reported hypersensitivity of the feet, there is no indication that this is a permanent, objective condition.
16. Any other comments that you view as relevant:
In conclusion, I cannot identify medical reason(s) in relation to the nature of the injury, his medical management, or clinical condition which indicates that he is totally and permanently disabled and never to work again in jobs for which he is reasonably suited by reason of his education, training and experience."
By letter of 5 May 2009 the plaintiff's solicitors informed the trustee of details of his duties and physical requirements in past employment as a customer service technician and as an allocator. They pointed out that the proposed positions for the plaintiff in Konekt's vocational assessment report of 18 June 2008 were contingent on his ability to wear shoes. They also confirmed that the plaintiff was still unable to tolerate the required footwear to permit him returning to the workforce and as a result of his medical condition all rehabilitation had ceased as he continued to be totally unfit for any form of work to date. In requesting expedition, it was noted that the plaintiff had been out of work for the two years since the accident.
On 9 July 2009 Dr Harvey-Sutton provided a supplementary report in which she reviewed and commented upon the medical reports and the assessments of Konekt earlier referred to.
With respect to the statement and the Konekt report of 18 June 2008 that the plaintiff's inability to wear enclosed footwear would be a barrier for all types of employment and all work environments, she said she could not identify a medical reason for this condition.
With respect to Dr Sun's opinion in his report of 15 December 2008 (par 37) that "... It may be possible in the future for him to return to selective sedentary duties with no (restrictions stated)" Dr Harvey-Sutton said "I would confirm the vocational assessment of Dr Sun, that it is now possible for him to return to selective sedentary duties with no (the restrictions repeated)".
Asked whether she agreed with the jobs identified by Konekt in its report of 18 June 2008 (pars 28, 29, 30) she said:
"In relation to forklift operator, this would depend on the nature of the particular employment, as forklift operators may be required to "picking and pack" and this was noted on page 14 of their report.
In relation to process work, because of the diverse nature of process work, not all types of process work are physically demanding and process work is a valid option for Mr Savelberg, for example, light component assembly-type work or checking that all component parts are present and working, prior to the dispatch of goods which have been imported.
In relation to Option 3, Mobile Plant Operator, I would note that some of these machines do not require the use of foot pedals/foot control and in fact I have examined people who, for example, have had a motor vehicle accident with pre-existing lower limbs impairments and they advised me that they were fully functional mobile plant operators prior to the subject motor vehicle accident with their lower limb condition/impairment.
In relation to Position 4, Retail Sales Assistant, he would be able to work on cash registers where he can sit and stand but is unlikely to be fully operational if he is required to stand and walk about in large supermarkets/warehouse-style store."
Dr Harvey-Sutton then stated her opinion that a job as a mobile plant operator and some jobs as a process worker, forklift operator, or as a hardware retail assistant were compatible with the restrictions identified by Dr Sun (par 37). In conclusion she confirmed the view stated in her report of 12 February 2009 (par 38).
In its letter of 23 September 2009 to Superpartners, the insurer stated its opinion that the plaintiff was not TPD within the policy definition. It acknowledged that he has sustained severe injuries in the accident, and that he was unable to return to work to his pre-injury occupation as a labourer. The reasons for declining the claim were as follows:
"However Mr Savelberg's employment history and experience consists of forklift driving and storeman duties. Medical opinion states that if not now, at sometime in the future, Mr Savelberg may be able to return to these duties and also work in roles such as process worker, mobile plant operator or retail sales assistant. Hannover Life Re notes that Mr Savelberg suffers from dyslexia and consequently the latter role may not be appropriate.
Accordingly, based on the totality of all medical evidence, Hannover Life Re has determined that Mr Savelberg cannot be deemed totally and permanently disabled, and accordingly the claim is declined."
By letter of 28 September 2009 to Superpartners, the insurers referred to matters raised by the plaintiff's solicitor in their letter to the trustee of 24 September 2009, and confirmed that "... based on the totality of all medical evidence, Mr Savelberg does have a capacity to work within his education, training and experience, and accordingly our decision to decline this claim remains unchanged."
Determination
The plaintiff submitted that in light of all of the information before it the insurer's decision was unreasonable on a number of grounds. It was put that the failure to consider the reality of whether the plaintiff, given his limitations, including dyslexia, was likely to become employable evidenced lack of good faith in the decision making process, particularly where it was accepted that he was incapable of returning to his pre-injury work. It was put that the opinion that the plaintiff may be able to return to work as a forklift driver, storeman, process worker, mobile plant operator or retail sales assistant lacked any evidentiary support. It was submitted that, absent evidence, as to the likely availability of any such work and, if such work was available, whether it was likely the plaintiff could access it, the claim was unreasonably declined. Under this issue, it was put that the insurer failed to consider the requirement of each type of work said to be suitable, and whether there was a likelihood of the plaintiff ever actually becoming capable of undertaking it, which amounted to a failure to take the steps described in Szuster, par 73.
For the defendants it was submitted, in short, that the decision to decline the claim was one reasonably open on the evidence, accepting that they would not have been entitled to do so if the plaintiff required further training to obtain work.
It was put that as the medical evidence indicated different explanations of the cause of the plaintiff's hypersensitivity, the defendants could not be satisfied as to whether the condition was temporary or permanent. In these circumstances, it was put, that it was reasonable to decide that the plaintiff had not established he was unlikely ever to be able to engage in the relevant work and, accordingly, to decline the claim. Thus it was argued that on the evidence at the time of the decision it was reasonably open for the insurer to conclude that it was likely in the future that the plaintiff would be able to engage in the relevant work being the occupations referred to in Dr Harvey-Sutton's reports of 12 February and 9 July 2009.
Evidence of the different views as to the cause of the hypersensitivity relied upon by the defendants in support of the submission, summarised, includes the following: Dr Walker found no neurogenic change, thought it was of orthopaedic origin, and that the plaintiff had become deconditioned from chronic pain; Miss Thompson suggested he may be suffering from RSDS, and invited confirmation of her diagnosis; Dr Deveridge referred to the development of a very profound neuropathy or neuralgia, noting that nerve conduction studies did not show major nerve damage. He referred to disabling neuropathic pain, without identifying a cause, and to a need for ongoing medication without specification; Dr Sun said that there were no scan features of reflex sympathetic dystrophy, but provided no diagnosis of the condition; Dr Harvey-Sutton found no objective signs that the condition was permanent or significant, and could not identify medical reasons in relation to the injury which indicated TPD. On clinical examination, her view was that the hypersensitivity was temporary, and would settle in time, and may settle earlier with a formal desensitisation programme.
The basis for the insurer's opinion of 23 September 2009 was as follows:
"Medical opinion states that if not now, at some time in the future Mr Savelberg may be able to return to these duties and also work in roles such as process worker, mobile plant operator or retail sales assistant."
The crucial question is whether its decision was unreasonable on the material then before it. In reaching the decision the insurer was required to evaluate the evidence of the prognosis for the hypersensitive condition, and the plaintiff's prospects of obtaining regular paid employment for which he is qualified by education, training, or experience.
On 28 November 2007 Dr Fraser said the plaintiff's condition had stabilised, and nothing further was required from him. In reports of 22 January and 7 February 2008 Dr Hayden expressed the view that the plaintiff was unfit for any duties indefinitely, and had suffered permanent disablement. On 8 February 2008 Dr Giblin reported that the condition had stabilised, and had reached maximum medical improvement. He thought there would always be a degree of nerve damage in the right ankle and arthritis in the left ankle. He said that whilst he remained unfit for this pre-injury labouring duties, he would be fit for a sedentary work environment preceded by appropriate vocational rehabilitation. Dr Walker's report of 7 April 2008 referred to continuing symptoms, and gave no indication of improvement. On 8 July 2008 Dr Deveridge reported on the plaintiff's permanent unfitness for pre-injury employment, and that the requirement for regular strong medication would act against him finding more sedentary employment such as operating machinery from a seated position, and his dyslexia would act against him obtaining office type employment. He did not expect the plaintiff to return to gainful employment for which he would be suited by way of education and experience, and noted that he would require ongoing medication indefinitely. He said that the condition was chronic and stabilised, and the plaintiff had reached a point of maximal medical improvement. On 15 December 2008 Dr Sun identified as a further barrier to redeployment or participating in any training programme the psychological status from post traumatic stress disorder, and that his vocational retraining capacity was limited having regard to his dyslexia and history of labouring manual work.
Konekt's reports concern functional and vocational assessment. On 19 October 2007 it reported that a vocational goal could not be established until the injuries had been adequately treated, and it was unknown when a return to work programme could be commenced. On 18 June 2008 it identified suitable work options as a forklift operator, process worker, mobile plant operator, and retail sales assistant. Suitability for each was contingent upon the plaintiff's ability to wear shoes, and training to accommodate dyslexia would be required to fit him for work as a mobile plant operator or retail sales assistant. Restrictions on the return to work programme included his dyslexia, and the inability to wear closed footwear which was a barrier for all types of employment and all working environments. On 11 September 2008 Konekt advised the insurer that it had closed its rehabilitation file.
It is noteworthy that the doctors and Konekt representatives expressed no doubt as to the genuineness of the plaintiff's symptoms, complaints, and restrictions upon his activities. Furthermore, no one gave any indication that there was, or was likely to be, any available treatment which would improve the hypersensitivity or that the condition would change over time.
Dr Harvey-Sutton's views were stated in her reports of 12 February and 9 July 2009. In summary, she found no medical reasons which indicated TPD. She said the hypersensitivity was "temporary and will settle in the fullness of time". She said there were no reasons to indicate that the plaintiff would be unable to return to occupations for which he is suited, e.g. security on a building site or repair work at a bench. She thought that the jobs considered by Konekt were within the plaintiff's restrictions as described by Dr Sun.
In my opinion, a fair evaluation of the whole of the evidence demonstrates that the decision of the insurer of 23 September 2009 was unreasonable and, accordingly, invalid. Its reasons indicate heavy reliance on Dr Harvey-Sutton's reports in concluding that the plaintiff might be able to engage in the types of work referred to. Her conclusions are unsupported by, and in some respects contradicted by, the other evidence. No reasons were given to support the statement that the hypersensitivity was temporary, or to explain its persistence for over two years after the accident. It may be supposed that the suggested work options were to be understood as predicated on the plaintiff eventually becoming able to use appropriate footwear, and that the work was reasonably available and accessible to him. Her conclusion that Dr Sun's assessment was that it was "now possible" for the plaintiff to return to some sedentary work is inconsistent with his statement that it "may be possible" for him to do so (pars 37, 46).
In my opinion the overwhelming weight of the evidence was that the plaintiff was unlikely ever to work in any regular job which he was reasonably fit to perform if he continued to suffer from hypersensitivity which rendered him unable to wear shoes. There was no evidence which showed the likelihood of amelioration of this condition. The fact that there was some difference in view between the doctors as to the explanation of the condition, including the fact that Dr Harvey-Sutton could not identify medical reasons for it, provides no rational basis for an opinion 28 months after the accident that the condition would so improve as to restore the plaintiff's capacity to engage in the work for which he was fitted. I am satisfied that there was no support for an opinion that there was a likelihood that the condition would improve in time so as to justify a "wait and see" approach.
As to the issue of work for which the plaintiff was reasonably fitted by education, training or experience the evidence, so far as it went, in my opinion entirely supported the plaintiff's claim. Konekt's report of 18 June 2008 concluded its investigation of the plaintiff's suitability for the identified types of work by stating it was contingent on his ability to wear shoes, without which all types of employment and all working environments were barred to him. It closed its rehabilitation file on 11 September 2008. The result was that there was no evidence before the insurer at the time of the decision 12 months later to enable consideration of questions concerning the plaintiff's ability to return to the several types of work referred to, including the likely availability and requirements of the work, and the realities affecting the capacity of the plaintiff to perform it. In my opinion, the conclusion that he may be able to return to these duties was without evidentiary support, and was the product of speculation. The absence of reference to these matters in its reasons supports the inference, which I make, that the decision-maker failed to consider them.
These considerations are sufficient to hold that the decision was unreasonable. In my opinion had a reasonable and realistic assessment been made of the whole of the evidence it would have concluded that the plaintiff had established TPD within the meaning of the policy.
The decision of 14 December 2009
In case my conclusion on the decision of 23 September 2009 be wrong, it is appropriate to determine the challenge to the decision of 14 December 2009.
By their letter of 8 December 2009 to the trustee, the plaintiff's solicitors enclosed further medical evidence being the reports of Dr Paul Teychenne, consultant neurologist, of 29 October and 18 November 2009, and requested a review of the determination to deny the claim.
In his report of 29 October 2009 Dr Teychenne reported his finding that the plaintiff had suffered traumatic brain injury, was depressed, and required psychiatric assessment. He continued:
"The patient also sustained peripheral nerve injuries to both lower legs and feet. If he touched the scars over the right leg or touched the dorsal aspect of the right foot he would experience a stinging pain and paraesthesiae into the right foot consistent with dysesthesiae. The whole of the right foot would go numb. If he touched around the medial aspect of the left lower leg he would develop a persistent sharp pain around the medial aspect of the left ankle. His feet would go white then blue and blotchy. Standing would induce a colour change in both feet. Pressure of the sheets on his feet was extremely painful consistent with bilateral dysesthesiae. He needed a frame over his feet when lying in bed. The pressure of the sheets on his feet was extremely painful consistent with dysesthesiae.
He noted jolts of electricity from the upper thighs down into the legs and this started three days after the injury. Because of the pain within both legs he needed to walk very slowly. He was unable to stand on his toes or stand of [sic] his heels because of pain in both feet. He was no longer able to dance or run. He couldn't walk for longer than ten to fifteen minutes because of pain within the feet. He couldn't walk on an uneven surface. Wearing socks and shoes was painful inducing painful tingling followed by persistent pain within both feet. He was unable to climb ladders or scaffolding because of severe pain in both feet.
When I examined the patient he had dysesthesiae to pain and touch sensation over the dorsal aspect of both feet and dysesthesiae to pain sensation over the soles of the feet as well as over the dorsal aspect of the feet. He had a smooth shiny skin over the dorsal aspect of both feet.
The history and clinical findings were consistent with complex regional pain syndrome I and complex regional pain syndrome II. The pain which he experienced in both feet particularly with stimulation by pain and touch was consistent with causalgia that is with complex regional pain syndrome II.
...
The patient's history indicated that he had had sensory nerve damage at the level of the ankles and this had produced marked dysesthesiae with pain consistent with causalgia or complex regional pain syndrome II.
I would agree with Dr Deveridge that this patient is no longer employable. In view of his dyslexia he is only suitable for construction type work and in view of his severe dysesthesiae and pain within both feet, he was not suitable for construction or labouring. He now had significant deficits in his ability to walk. He cannot wear socks or shoes to any great degree in view of severe dysesthesiae in both feet. Thus he is no longer employable in any form of employment suitable for his current cognitive state and education. His cognitive ability has been significantly restricted by the traumatic brain injury. His wife estimated a 30% loss in IQ and I would consider that was a reasonable estimate of his IQ loss. He has specific deficits in memory functions and a history consistent with the executive frontal lobe deficits as well as deficits in concentration and speed of thinking, that is he has slowness in thinking or psychomotor slowing. This would restrict him for any form of employment associated with intact cognitive function. He would be unable to multitask or handle a number of different tasks at the same time. His pre-existing dyslexia plus the cognitive deficits resulting from the traumatic brain injury made him totally unemployable in regard to any form of cognitive or clerical work."
In his report of 18 November 2009 Dr Teychenne advised that the plaintiff's Total Whole Person impairment would be 57%.
In its letter of 14 December 2009 to the trustee, the insurer stated that consideration of these reports did not cause it to alter its decision of 23 September 2009. Relevantly, the view was that the reports were inconsistent with all other reports. With reference to the job options identified by Konekt in its reports of 21 May and 18 June 2008 the insurer's reasons were as follows:
"... Based on the member's functional capacity and transferable skills, the following job options were identified as suitable:
* Forklift Operator
* Process Worker
* Mobile Plant Operator
* Retail Sales Assistant
Even if we discount work as a Forklift or Mobile Plant Operator, in consideration of Bryden's earlier submissions, on the basis that the member will not be able to wear steel capped boots required for these type [sic] of work. There remains that work as a Process Worker or Retails Sales Assistant as suitable options. It is also acknowledged that the member's suitability for these roles is contingent on his ability to wear shoes. In this regard, we note Ms Jennie Thompson, Podiatrist, recommended further treatment to reduce symptoms and footwear modifications in her report dated 25 August 2008.
Based on all available evidence, the member is not unlikely ever to engaged [sic] in a regular remunerative work for which he is reasonably fitted by education, training or experience. Accordingly, the claim is declined."
The plaintiff submitted that Dr Teychenne's reports, taken with the evidence considered on 23 September 2009, were sufficient to establish his claim. The defendants submitted that the doctor's evidence left it reasonably open for the insurer to conclude that his IQ loss affected only the plaintiff's suitability for cognitive or clerical work, and left open options for working in the occupations identified.
In my opinion, the decision was unreasonable for the reasons referable to the earlier decision. The insurer's decision indicates an unreasonable failure to appreciate the significance of the additional evidence.
There is a further matter in its reasons indicative of error by the decision-maker. Implicitly it conveys the finding that the plaintiff was likely to wear shoes again, support for which was said to be derived from the evidence of Miss Thompson which was understood to convey her recommendations for further treatment to reduce symptoms and for footwear modifications. Analysis of her report of 25 August 2008 shows that she made no unqualified recommendations at all, or provided any foundation for a conclusion that the hypersensitivity condition was likely to improve, or that treatment was in fact available to reduce symptoms to enable the wearing of shoes again. Her views were expressed to be conditional upon the confirmation of a tentative suggestion that Mr Savelberg may be suffering from symptoms associated with RSDS. In my opinion her evidence could not be reasonably understood as a recommendation for further treatment likely to have the effect of reducing symptoms to enable the plaintiff to again wear shoes.
Accordingly, I also uphold the plaintiff's challenge to the insurer's decision of 14 December 2009, and hold that the decision is invalid.
Interest
The plaintiff claimed an award of interest on the amount of $100,000 for the period 29 September 2009, alternatively 14 December 2009, to 20 June 2011 when liability was admitted.
It was agreed that a finding that the decision of 23 September 2009 was unreasonable entitled the plaintiff to an award of interest of $14,239.73, and that a similar finding in respect of the decision of 14 December 2009 entitled him to an award of interest in the amount of $12,521.91.
Accordingly, there is to be an award for the plaintiff in the amount of $14,239.73.
Conclusion
I direct the plaintiff to prepare short minutes to give effect to these reasons, and to deliver same to my associate by 4pm 12 December 2011.
Failing agreement on the question of costs, the parties have liberty to arrange with my associate by 4pm 12 December 2011 to re-list the matter for the purpose of submissions on costs.
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Decision last updated: 05 December 2011
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