Mental illness exclusion held to be discriminatory
Feb 2016 |
Ingram v QBE Insurance (Australia) Ltd (Human Rights) [2015] VCAT 1936
The Victorian Civil and Administrative Tribunal (VCAT) recently considered a claim of direct discrimination in respect of the provision of services based on the inclusion of a mental illness exclusion in a travel insurance policy.1
In reaching its decision, VCAT cautioned its decision does not automatically apply beyond the dispute between the parties to the claim and, in particular, sought to avoid any impression that it applies to all insurers.2 Accordingly, the findings and comments set out in the decision, and discussed in the summary below, ought to be treated cautiously.
Background facts
During the course of the applicant’s year 11 studies (late in 2011) a decision was made for her to join a school tour to New York, scheduled for March/April the following year. The applicant’s mother paid the relevant deposits and instalments required to fund the tour. Included in those payments was a sum applied to a travel insurance policy issued by the respondent.
Prior to the trip, in early 2012, the applicant experienced symptoms of depression and was subsequently diagnosed with and received treatment for the illness. In consultation with her treatment providers and family, the applicant withdrew from the school tour for health reasons.
Following her withdrawal from the trip, the applicant’s mother enquired about recovering the cost of the cancelled tour on the travel insurance policy and a claim in the sum of $4,292.48 was lodged with the respondent, in May 2012.3 In August 2012 coverage was declined and further confirmation of the declinature was notified by correspondence sent in early December 2012.4
The declinature was made in reliance upon a general exclusion for claims arising directly or indirectly due to mental illness.5 By its December correspondence, the respondent advised the applicant’s mother the decision to refuse the claim was based on detailed statistical modelling and analysis of claims arising from a range of causes including mental illness.6 Further, the respondent indicated mental illness was excluded from the policy because its statistics demonstrated that in travel polices there is a high risk of cancellation because of mental illness.7
Claim
The applicant’s claim alleged, by including the mental illness exclusion in the policy, the respondent treated her unfavourably because of her disability and directly discriminated against her in the terms on which it provided the service of travel insurance.8 This conduct was said to be in breach9 of the Equal Opportunity Act 2010 (Vic) (EOA).
Further, the applicant also claimed that, by refusing to indemnify her in August and December 2012 on the basis of her mental illness, the respondent treated her unfavourably because of her disability and so directly discriminated against her again in breach10 of the EOA.11
The respondent denied the alleged discrimination on the basis the declinature was not because of the applicant’s disability, but rather because of the exclusion in the policy wording and further, if it did discriminate against the applicant, the discrimination was lawful because a statutory exception in the EOA (of the Disability Discrimination Act 2004 (Cth) (DDA)) applied.12
As a result of the alleged discrimination, the applicant sought to recover from the respondent compensation for economic loss (i.e. the loss claimed for cost of the school tour) in the sum of $4,292.48, damages in the sum of $20,000.00 for the humiliation and hurt she suffered as a result of the declinature, and a declaration from VCAT that the respondent unlawfully discriminated against the applicant.
Findings
In consideration of various material and submissions put before VCAT by both parties, the following findings were made in response to the applicant’s claim:
- At the relevant points in time, the applicant had a disability within the meaning of that term in the EOA;13
- The respondent engaged in direct discrimination in breach of the EOA first, when it issued a policy which included the mental illness exclusion and second, when it refused the applicant indemnity relying on the terms of that exclusion;14
- The respondent was unable to rely on the statutory exceptions in the EOA to excuse the discrimination because it failed to adduce evidence which proved it was more probable than not that:
- the acts of discrimination by the respondent were based on actuarial or statistical data; or
- it would have suffered an unjustifiable hardship if it had not included the mental illness exclusion in the policy issued to the applicant.15
- In the absence of a valid statutory exception upon which to rely, the respondent had engaged in unlawful discrimination when it included the mental illness exclusion in the policy issued to the applicant and when it declined cover relying on that exclusion.16
In consequence of the four findings outlined above, VCAT held the applicant was entitled to recover from the respondent, economic loss as claimed (i.e. $4,292.48) and non-economic loss in the sum of $15,000 for hurt and humiliation.17
The applicant’s request for a declaration that the respondent had engaged in unlawful discrimination was declined so as to ensure that:
‘.... an impression was not given that the VCAT member’s decision automatically applies beyond the dispute between the parties to this matter, and in particular to avoid any impression that it applies broadly to all insurers.’18
Implications and issues arising from the VCAT decision
Evidence in defence of the claim
As we have outlined above, an actuarial or statistical data exception was available to the respondent in defence of the applicant’s claim. That exception required the respondent to prove:
‘.... that the act of discrimination was based on actuarial or statistical data on which it was reasonable for the insurer to rely and that the reliance was reasonable having regard to the data and other relevant factors.’19
In its defence of the claim, the only actuarial data produced to VCAT by the respondent, was a report prepared for the purpose of the litigation in late 2015.20 Data available to the respondent at the time it made decisions regarding the inclusion of the mental health exclusion in the policy or the applicant’s claim for policy coverage could not be adduced. The respondent asked VCAT to infer that statistical data21 was taken into account by it and did provide the basis for its decision to include the exclusion within the travel policy issued to the applicant.22
The VCAT member expressed the view that the respondent:
‘.... ought to have been in a position to produce actuarial, statistical or other evidence about the drafting and approval of the policy in issue instead of asking the member to infer that evidence of that kind existed.’23
The failure on the part of the respondent to do this was one of the factors which appears to have lead to its unsuccessful defence of the applicant’s claim.
In view of the above, we are cautious about the prospects of this decision being applied broadly to the insurance industry. Other insurers, or indeed the respondent itself, may well be in a position to adduce the requisite evidence required to invoke the EOA defence, particularly given VCAT has articulated its expectations in regards to the requisite material required successfully raised and support the exception in defence of any EOA claims.
Will this decision open the floodgates for further mental illness discrimination claims?
The VCAT decision has received wide media attention, both at the time when the applicant commenced her action and since the VCAT decision was handed down. The media reports to date give the impression the decision may well open the floodgates for further such discrimination claims however, while there is always potential for this to occur when a matter such as this receives significant press coverage, the VCAT member was in his reasons for judgement, very cautious about the applicability of the findings in this decision to the broader industry stating:
‘I accept that a declaration may have the important function described above.24 However, given that my findings on the question of the application of the exceptions relied upon have turned on the way the [respondent] prepared for and ran this case, I have decided not to make a declaration to ensure that an impression is not given that my decision automatically extends beyond the dispute between these parties and, in particular, to avoid an impression that it applies to all insurers.’25
In addition to the above, the VCAT member also emphasised that policy holders would need to be in a position to adduce proof of all relevant prerequisites (for example hospitalisation and confinement) and be subject to the impact of the pre-existing condition clause in the same way the applicant was in this case in order for the decision to have a similar impact in another case.26
For the reasons above, it strikes us as unlikely this decision will cause the floodgates to open for similar claims. It may however give insurers cause to revisit both the mental health exclusion in their policy (and to sure up the factual basis for same) as well as the wording of future correspondence declining cover for mental injury claims.
Finally, we understand this case is being considered by the Insurance Council of Australia27 who will likely provide the Australian insurance industry with additional feedback and commentary in response to the VCAT decision in due course. In the meantime, we will monitor developments ensuing from the decision, including both the floodgates issue and the industry response to same and will report further if necessary into the future.
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1 Ingram v QBE Insurance (Australia) Ltd (Human Rights) [2015] VCAT 1936 Headnote.
2 Ibid [11].
3 Ibid [3].
4 Ibid.
5 Ibid [4].
6 Ibid.
7 Ibid.
8 Ibid [5].
9 Section 44(1)(b).
10 Section 44(1)(a).
11 Ingram v QBE Insurance (Australia) Ltd (Human Rights) [2015] VCAT 1936 [5].
12 Ibid [7].
13 Ibid [10].
14 Ibid.
15 Ibid.
16 Ibid.
17 Ibid.
18 Ibid [11].
19 Ibid [89].
20 Ibid [90].
21 Including various public documents identified in paragraph 91 of the judgement; i.e. The National Survey of Mental Health and Wellbeing: Summary of Results based on a 2007 Australian Bureau of Statistics national survey; a December 2009 Access Economics Pty Ltd paper entitled ‘The economic impact of youth mental illness and the cost effectiveness of early intervention’.
22 Ingram v QBE Insurance (Australia) Ltd (Human Rights) [2015] VCAT 1936:[100]
23 Ibid [116].
24 Ibid [259].
25 Ibid [260].
26 Ibid [239].
27 Woman hopeful others with depression will be covered by travel insurance after landmark court win over QBE, Sarah Farnsworth, ABC News at: http://www.abc.net.au/news/2015-12-18/woman-wins-discrimination-case-against-qbe/7040414.
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