Wheeler v FSS Trustee Corporation as trustee for the First State Superannuation Scheme

In the matter of Wheeler v FSS Trustee Corporation as trustee for the First State Superannuation Scheme, the Federal Court of Australia was tasked with determining whether the insurer, who had been appointed by the trustee of a superannuation fund to effect insurance policies on behalf of the members, had constructively denied the plaintiff's claim for total and permanent disability (TPD) benefits. The plaintiff alleged that she was totally and permanently incapacitated, rendering her unlikely ever to return to employment for which she was reasonably qualified. The insurer had conducted investigations and commissioned medical reports but did not provide the plaintiff with access to the materials until a procedural fairness letter was sent. The plaintiff argued that the insurer had not made any decision on her claims until certain dates and that the decisions themselves were void and of no effect.

The court had to determine whether the rejection of the plaintiff's claim was reasonable and whether the insurer had breached the principle of good faith and fair dealing. The court considered the insurer's refusal to share the materials gathered on the plaintiff with her, the unnecessary delay in determining the claim, and the inadequate opportunity for the plaintiff to put her case forward despite the onus being on her to prove satisfaction of the TPD definitions. The court concluded that the insurer had failed to act reasonably, establishing constructive denial by the insurer. The court also had to determine whether the plaintiff was entitled to the TPD claim. It assessed the varied opinions in multiple expert medical reports regarding the significance of the plaintiff's disabilities and considered alcohol abuse and marital breakdown as potential intervening factors, ultimately concluding that neither were intervening factors.

The court found that the plaintiff satisfied the definition of TPD in the policies and was entitled to receive TPD benefits. The court's decision hinged on the proper construction of the words "unlikely ever" and whether the plaintiff's disabilities met this criterion. The court held that the plaintiff's disabilities did indeed meet the criterion, and the insurer's failure to act reasonably and in good faith meant that the rejection of the claim was invalid. The court ordered that the insurer was to pay the plaintiff the TPD benefits owed under the policy.