A medical report does not automatically qualify an employee for disability insurance. Although medical reports are crucial evidence, the employer’s medical boarding policy could differ from the criteria used by the insurer for determining eligibility for disability benefits.
The medical evidence is part of a comprehensive application process about the nature and extent of the disability that also includes the individual’s ability to perform his or her duties in his or her own occupation or any other occupation.
The National Financial Ombud Scheme (NFO) frequently receives complaints where an employee has been dismissed because of incapacity or is medically boarded by their employer.
“The employee and the employer operate under the assumption that if the employer’s doctor has declared the employee disabled for work, the insurer would pay his disability benefit. This is not correct.
“The employer’s boarding or incapacity process and an application for disability benefits from an insurer in terms of the policy contract are two distinct processes,” says Denise Gabriels, Lead Ombud of the Life Insurance Division at the NFO.
Gabriels cited two cases that came before her recently where complainants were boarded by their employers. The insurers declined their disability claims because they did not meet the criteria of the policy. In one case, the insurer agreed to pay the claim after intervention by the NFO.
Case 1
A Code 14 truck driver started to lose sight in his right eye and underwent medical procedures.
He submitted a claim for income disability benefits to the insurer, which was the underwriter of the group scheme. The claim was declined on the basis that it was not medically valid according to the policy definition.
While undergoing further treatment with a specialist, his employment was terminated by the employer a year later because of ill health. The employer provided no further assistance with the claim process but suggested that he appeal against the insurer’s refusal of his claim.
In this case, the criterion of the policy required the complainant to be disabled for his Own Occupation as a truck driver.
“Own Occupation” in the context of disability insurance refers to a type of cover where benefits are paid if a person is unable to perform the duties of their current job, regardless of whether they can do another job.
However, the policy also stated that if a member practises a certain type of occupation, such as a driver, pilot, diver, seaman, security person, sportsperson, or performing artist “… a reference to Own Occupation in this policy will be a reference to Any Occupation”. Any Occupation “means … any other occupation with any employer in the open labour market which the employee could reasonably be expected to follow…”
In assessing the claim for “Any Occupation”, the insurer acknowledged the complainant’s limitations, and he was restricted in terms of driving the heavy-duty truck. However, the insurer was of the view that he was still able to perform other duties, including driving a light motor vehicle.
The insurer considered the claim again when the complainant submitted his appeal. The claim was again turned down on the basis that although the employee was not able to perform his regular job, he was able to perform other work.
Meanwhile, the employer terminated the complainant’s services before the claim was finalised and without considering redeployment to an alternative occupation.
The NFO considered the medical facts of the case and questioned whether it was reasonable to expect the complainant, who worked as a Code 14 truck driver for 13 years, to re-enter the open labour market at the age 57 years and seek alternative employment with severely impaired vision in the right eye, even though he had functional vision in the left eye, which was also affected by the disease.
The NFO asked the insurer to reconsider its decision, based on fairness and equity. Following further consideration, the insurer agreed to pay the claim.
“In deciding on disability claims, insurers have a responsibility to be fair and unbiased. The insurer should consider the individual’s specific circumstances and attributes when assessing the risk,” said Gabriels.
Case 2
In the other complaint, the insurer was found to be correct in declining a claim for a disability benefit on the ground that the assessment for a disability claim is not a medical decision but is based on the terms and conditions of the contract entered between the policyholder and the insurer.
The complainant was deemed disabled from his job as an underground load driver on a mine by the occupational medical practitioner (OMP) because of a respiratory condition.
He lodged a complaint with the NFO when the insurer declined his claim. He argued that he did not meet the mine’s minimum standards of fitness, and he was entitled to disability benefits. The employer could not offer him an alternative position, and he was declared permanently disabled and his services were terminated.
The policy criteria required the complainant to be “continuously, permanently, and totally” incapable of engaging in his “own occupation or a suitable alternative occupation” with his current employer, or unable to “fulfil the minimum standards of fitness to perform work at a mine as per the mandatory code of practice”.
The insurer noted that his respiratory pathology was mild, and the complainant was deemed unfit from working underground. No restrictions were placed on him in terms of operating the load driver vehicle. His condition improved with further treatment, and his prognosis was considered good. His claim was, therefore, declined.
The complainant argued that he was declared unfit for work by the mine doctor, and he was, therefore, entitled to the lump-sum disability benefit. The insurer was willing to reconsider the claim on receipt of the test results and the special investigations on which the OMP relied when he declared the complainant disabled.
The medical evidence in relation to the policy criteria and the minimum standards of fitness to work on a mine were considered.
The medical evidence showed that he met the minimum standards of fitness for working on the mine. Furthermore, during a follow-up assessment with a pulmonologist, five months later, the complainant’s medical condition was reported as stable, his respiratory examination was normal, his effort tolerance was good, he was not on any chronic treatment, and he had no negative effects in his daily life and functional ability. His prognosis was good.
“In spite of this, the OMP declared the complainant permanently incapacitated, and he was deemed unfit for underground work but fit for surface work. The employer could not offer him an alternative position on the surface due to unavailability of work and proceeded to terminate the complainant’s services.
“The availability of work within the mine and/or in the open labour market is not a relevant factor in determining whether a person is disabled in terms of the policy. In this instance, the medical evidence did not support that the complainant was permanently unfit to work as a load driver or take up suitable alternative occupation.
“The NFO could not assist this complainant, and the complaint was therefore dismissed,” said Gabriels.
