Case Study – Page 4 – OLHI – Free, impartial help with your life & health insurance complaints

Mistaken application (critical illness)

Posted on: February 2, 2016

Mr. F. applied for Critical Illness insurance through and submitted his application with the help of his insurance advisor. The insurer rescinded coverage, saying that he had misrepresented his medical history on his application.

Mr. F. contacted OLHI after receiving the insurer’s final position letter. He told the Dispute Resolution Officer (DRO) that although he understood his insurance policy could not be reinstated because of his medical history, what he wanted from the insurer was a written apology for alleging that he had misrepresented himself. Mr. F. was concerned that this allegation could impact his ability to purchase insurance products in future.

The DRO recommended the complaint be escalated to an OmbudService Officer (OSO) for further investigation. The OSO learned from Mr. F. that, when he applied for insurance, he had told his advisor about some upcoming medical tests scheduled for a later date – but the advisor told him not to worry about it because these were post-application. Mr. F. also noted to the OSO that his advisor had put the wrong date on the application and had not asked Mr. F. one of the questions. Instead, the “no” box was selected – something Mr. F. asserts he would have never said “no” to. He explained that, when he was reviewing a copy of the application submission that was sent to him, he noticed the error and reached out to his advisor immediately to revise it.

Mr. F., however, did not hear back from his advisor. Instead, he received a letter from the insurer, rescinding his insurance coverage because some medical information had not been disclosed.

In its final position letter, the insurer outlined that it’s the applicant’s duty to review all the questions and answers on an application, for accuracy, before signing. A signature indicates that the review was completed and the information provided is accurate. The insurer stated that Mr. F.’s upcoming medical tests should have been noted on the application and also advised that the reason for the underwriting decision would remain confidential within the insurer’s files – and that they would review their application process with the advisor.

After conversations with the consumer and the insurer, the OSO determined that without documentation to corroborate Mr. F.’s position that the advisor had incorrectly filled in the questionnaire, OLHI could not pursue an exoneration or apology. A signed application, as a legal document, implies that the applicant has reviewed and agreed with all the contents. Whether intentional or an innocent mistake, the misrepresentation occurred.

The OSO did however reiterate to Mr. F. that while his future efforts to obtain insurance would reveal his medical history, the reason for a rescission would not be revealed – but that Mr. F. will have to share this detail nonetheless in the interest of full disclosure.

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.

Missing policy updates (health)

Posted on: February 2, 2016

Mrs. Q. began to see an acupuncturist, paying in advance for a package deal that would reduce the price of each individual treatment. In order to receive reimbursement through her group health plan, she had to have a prescription from her family doctor and had to select an acupuncturist certified by a governing board. Mrs. Q. had the prescription but her province did not have a governing board for these practitioners. She selected a certified acupuncturist but, when she submitted her claim, the insurer denied it based on the fact that his credentials were not recognized by them.

As a goodwill gesture, the insurer agreed to cover the costs of the sessions Mrs. Q. went to up to the date of their denial (approximately half of the sessions she’d bought) but would not absorb any costs going forward. She appealed the decision, stating that she had paid for the sessions up front and could not cancel the rest. She also claimed that there was no way for her to know whether or not her acupuncturist’s credentials were recognized by the insurer.

Mrs. Q. contacted OLHI and our Dispute Resolution Officer (DRO) learned that Mrs. Q. had not yet received a final position letter from her insurer. He recommended that she contact the insurer’s Ombudsman and request a final position letter, at which point OLHI could become involved. A couple of weeks following this conversation, Mrs. Q. received this letter and called back the DRO.

The DRO learned that Mrs. Q.’s coverage booklet from her employer did not outline that services would only be covered if the acupuncturist was recognized by certain associations, of which this particular acupuncturist was not a part of. Mrs. Q. could not cancel her future sessions, having paid up front. She asserted that the full package should be covered by the insurer.

With this information, the DRO recommended the case be escalated to the OmbudService Officer (OSO) level to see if there was any room for negotiation with the insurer and to further investigate the reasoning behind their claim denial.

OLHI’s OSO reached out to the insurer’s Ombudsman’s office to further discuss the case, indicating that he felt Mrs. Q. had some valid arguments, based on preliminary findings. It was over the course of the OSO’s exchanges of information that he discovered Mrs. Q.’s employer had received a notice from the insurer the year prior – long before Mrs. Q. arranged for acupuncture treatments. This notice outlined the insurer’s criteria for acceptance of an acupuncturist and a list of recognized associations. Additionally, the notice recommended that employees should submit an estimate to the insurer before going to any expense, so the insurer could review that specific acupuncturist’s credentials.

The insurer acknowledged that it’s possible Mrs. Q. did not see this notice, for any host of reasons – but that it’s the responsibility of employers to ensure such information is properly passed on to employees.

The OSO agreed that the insurer’s decision be maintained, believing it was fair that half the claim had been paid despite the fact that others were responsible for the unfortunate turn of events.

Chronic pain and disability (disability)

Posted on: February 2, 2016

When Ms. W. went on long-term disability after suffering degenerative disease in her knees, both her individual disability benefit plan provider and the Canada Pension Plan accepted her disability and began paying out her claim. However, when she submitted her claim to her group plan provider, through her employer, she was declined, much to her surprise and confusion.

The insurer explained that definitions of disability differ between insurers and between policies; as a result, an insurer could not base a decision on that of another. Ms. W.’s insurer stated, in its final position letter, that although medical notes indicated inability to deep knee bend, kneel or run, they did not mention any difficulty with sitting or complete intolerance to any driving, walking or standing. For this reason, the insurer noted that their claim denial decision was made based on the level of information provided.

When Ms. W. contacted OLHI, a Dispute Resolution Officer (DRO) learned from Ms. W. that she did in fact have trouble sitting for long periods of time and as such could not work full time – and any part time income would not equal what she was earning either in a job or through disability payments. Jobs in her field required a lot of manual labor, which she could no longer perform.

The DRO also discovered, when going through Ms. W.’s file, the insurer’s medical consultant had suggested that more tests be undertaken – none of which were run or requested by the insurer. Additionally, all medical notes from Ms. W.’s doctors noted that her condition would likely worsen over time, making it increasingly difficult to perform physical tasks.

Based on this information, the DRO recommended the case be escalated to an OmbudService Officer (OSO). The OSO’s investigation revealed reports from the family doctor, written after the claim period in question. The doctor wrote that Ms. W. could not spend time in any particular position (sitting/standing) for more than a few minutes at a time, making it impossible for her to drive to a job and work. The insurer had also noted in its file that, given her relatively young age, she be assessed to determine whether any jobs would be best suited for her. The insurer suggested Ms. W. could be capable of certain jobs in her industry that are sedentary with the ability to change her body’s position frequently, from sitting to standing. This belief was further confirmed by a medical note in Ms. W.’s file, written by her doctor, where he suggested she be trained to perform a sedentary job.

Resulting from our OSO’s extensive research into the case, where he spoke with the consumer, her doctors and the insurer, he concluded that the medical records available for the specific time period at hand did not support complete inability to perform work. The OSO advised that it was his recommendation that the insurer’s decision be upheld.

Disclosing a change in health (travel)

Posted on: February 2, 2016

Mr. S. decided to take advantage of the lower premium rates and purchase travel health insurance several months ahead of a trip to the U.S. While in the U.S., he went to a clinic and was diagnosed with bronchitis and then went back to the clinic because of side-effects from the medications prescribed for the bronchitis.

Mr. S.’s insurer rejected his claim because his application did not disclose his gastro-intestinal problems and because he did not notify the insurer of treatment he had received since buying the insurance. After getting his travel insurance coverage, but before going on the trip, Mr. S. had a colonoscopy and removal of a polyp. The insurer denied the claim and subsequent appeals due to material non-disclosure.

After Mr. S. received the insurer’s final position letter, he called OLHI and submitted his complaint for our review.

A Dispute Resolution Officer (DRO) found that call recordings at the time of purchase supported that Mr. S. had disclosed his medical information, including past findings of diverticulitis. As explained by Mr. S., he had not checked the box on the policy application asking if he had been treated or taken medication for any gastro-intestinal condition, as he was not taking any medication for diverticulitis. Neither he nor his doctor felt that regular colonoscopies should be deemed “treatment.”

The policy said that the duty to disclose pre-existing conditions at the time of the application was based on the definition of “treatment,” whereas after policy issue, the eligibility for coverage was based on a change in health condition or medication.

OLHI advised the insurer that Mr. S.’s complaint had merit and would therefore be escalated to our investigation level. Before this investigation was started, the insurer advised that, upon further consideration, they would fully reimburse Mr. S. for his expenses.

When’s a medical condition pre-existing? (travel)

Posted on: February 2, 2016

Mr. O.’s travel insurance application declared that he was suffering from chronic lower back pain from a fall in 2008. His insurance application was approved, with the pre-existing condition noted. While on holiday, he suffered acute hip pain and, as advised by the insurer, was taken by ambulance to a hospital where he was tested, treated with pain killers and released.

The insurer denied Mr. O.’s claim on the grounds of his pre-existing condition and that he had not reported a steroid injection treatment he received days before his vacation.

Mr. O. appealed the denial, following the insurer’s complaint process. The insurer upheld its’ decision so Mr. O. submitted his complaint to OLHI for review.

Through a review of both the consumer’s and insurer’s documents, the Dispute Resolution Officer (DRO) narrowed the issue down to the insurer’s position that the hip pain was directly related to the steroid injection before his trip. Although the DRO agreed that Mr. O. should have reported the treatment before his trip, she also agreed with his doctor’s view that, given the time between the treatment and the hip pain, there was no direct cause and effect. She suggested that the complaint be escalated to an OmbudService Officer (OSO) for further investigation.

The OSO reviewed the file and also spoke with the consumer. He raised two issues: 1.) Was the hip pain that triggered the hospitalization a pre-existing condition, as defined by the policy; and 2.) Did the injection just before travelling directly contribute to the hip pain? The OSO found that, although Mr. O.’s doctor challenged that the injection caused the hip pain, clinical notes from both the doctor and the hospital’s attending physician supported the insurer’s position that the hip pain was most likely due to the consumer’s chronic lower back pain.

The OSO felt it was unlikely that he could argue that the hip pain was not part of the defined pre-existing condition. He also determined that Mr. O.’s failure to notify the insurer of the injection had deprived the insurer of the opportunity to determine if the injection was a material change to the assumed risk – thereby potentially permitting the insurer to decline coverage.

The insurer’s claim denial was maintained.

Benefits coordination (disability)

Posted on: February 2, 2016

Mr. Y. had been receiving long term disability (LTD) benefits from his insurer for two years. He applied for and was accepted by Canada Pension Plan (CPP) for disability benefits. Since Mr. Y. had received retroactive amounts from CPP, the insurer followed up with a request for the overpayments they had made to him.

At question was whether the calculations were accurate. Mr. Y. disputed the insurer’s calculations and, after receiving a final position letter, called OLHI for help.

OLHI’s Dispute Resolution Officer (DRO) reviewed the consumer’s documents and the insurer’s file. She read the policy contract section on coordination of benefits, which refers to a combination of benefits coverage from more than one extended health plan. The DRO also reviewed how the insurer applied the indexations, which are adjustments to income payments to protect against inflation. She agreed with the consumer’s claim that the insurer may have erred in applying the indexations. She recommended that the complaint be escalated to an OmbudService Officer (OSO) for further investigation.

The OSO confirmed with Mr. Y. that he was receiving his LTD and CPP benefits, and that he had repaid to the insurer the overpayment requested. The issue remaining was if and how indexation should be applied in the re-calculation of his LTD benefits.

The OSO wrote to the insurer, suggesting that their business unit had focused on the correctness of the calculation but not on the correctness of the overall formula. The OSO also suggested that it might be helpful if the interpretation of the policy contract could be reviewed by the insurer’s legal department.

The insurer’s counsel reviewed both the OSO’s recommendation and the policy contract wording. Although they identified additional areas in the contract that would affect the calculation of the benefit in their favour, they agreed that the section on coordination of benefits supported Mr. Y.’s position. In good faith, the insurer proposed a compromise, which was accepted by the consumer.

An illness or a symptom? (disability)

Posted on: February 2, 2016

Ms. C. had been suffering from chronic migraines and headaches for years, exacerbated by depression and anxiety. She was being actively treated for her conditions. When her loss of concentration began to negatively impact her work product, coupled with her inability to physically sit in front of a computer, she went on short term disability (STD). The insurer denied her claim, citing insufficient clinical medical evidence to support an ongoing condition. The insurer felt that Ms. C. was well enough to work and, upon her appeal, upheld its decision to deny STD.

Ms. C. approached OLHI for an independent, impartial review. The Dispute Resolution Officer (DRO) went through Ms. C.’s records, medical notes from various doctors and specialists, as well as the insurer’s file. He also read a letter from her employer, who verified that Ms. C.’s inability to work and cope with her migraines had negatively impacted the business – and precluded her from performing her regular duties.

The DRO recommended that an OmbudService Officer (OSO) investigate Ms. C.’s case. Upon further review, the OSO focused on a statement the insurer made in its final decision, classifying Ms. C.’s migraines, headaches and depression as “symptoms” lacking a specific medical condition. Ms. C. and her doctors stressed to the insurer and to the OSO that her diagnostic tests (x-rays, CT scans, blood work) were normal/negative to rule out symptoms of a secondary illness, such as tumours – not to rule out her condition.

The OSO agreed that migraines and depression are an illness and not symptoms of another unknown, unsupported condition. Her doctor provided examples from various credible sources, including the World Health Organization, confirming that migraines and depression are illnesses.

OLHI recommended that the insurer reconsider their position and pay Ms. C.’s STD claim.

The insurer, upon further reflection, agreed and provided payment of Ms. C.’s STD benefits.

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.

A critical date (critical illness)

Posted on: February 2, 2016

Mr. F., diagnosed with cancer, made a claim on a Critical Illness insurance policy. If his claim was accepted, the insurance would have paid off a $10,000 loan he had taken out with his bank. His claim was denied on the basis that he did not have Critical Illness insurance coverage on the loan.

Mr. F. received his insurer’s final position letter and contacted an OLHI Dispute resolution Officer (“DRO”), seeking an independent review of his complaint.

During several conversations and exchanges of emails, our DRO learned that Mr. F., who had a prior line of credit that covered him for Critical Illness, converted this into a new loan a short time before making the claim. The bank denied his claim because this new loan was not insured for Critical Illness and he was diagnosed with cancer after the new loan was made.

Mr. F. claimed that he was diagnosed in early April and that the new loan was not taken out until later that month. Therefore, the coverage from the previous line of credit should be applied to pay out his claim. Meanwhile, the insurer stated that its denial was based on medical reports indicating that the cancer was not diagnosed until June, long after the line had been closed and replaced with a loan that did not provide Critical Illness coverage.

During his review, the DRO assessed that there were conflicting dates in the medical reports relating to the diagnosis date. He also questioned why Mr. F. would have taken out a new loan when he was ill, since that would result in him becoming ineligible for Critical Illness coverage under the new loan. As a result of this, the DRO recommended that the complaint be escalated for further investigation by an OLHI OmbudService Officer (“OSO”).

The OSO poured over medical records, as well as the insurer’s file and the consumer’s documents, and had several conversations with all parties. The focus of his review was to determine whether a diagnosis had been made before the cancellation of the Critical Illness insurance coverage on the prior line of credit. Medical records showed that the confirmed date of diagnosis was in fact in June, two months after the old line of credit was closed and the new loan opened.

While written communications in early April between Mr. F.’s doctors showed mention of cancer, it was referred to as a suspected illness requiring further investigation and formal confirmation. Because insurers pay Critical Illness benefits based on clear diagnoses, not suspected conditions, his insurer would not have paid out the claim in April.

The OSO, through his investigation, also learned why Mr. F. took on a loan that wouldn’t provide critical illness coverage at a time when he needed this coverage most: Mr. F. admitted that, when speaking with the bank to set up the new loan, he did not advise that he might have cancer.

Because the bank did not have this information, they could not advise him to keep his current lines of credit, which provided Critical Illness, rather than taking on a loan that did not provide this coverage.

As a result, the OSO recommended to Mr. F. and the insurer that the original claim denial should be upheld.