In November 2014 Anna and Colin booked a bus tour of the South Island for October 2015. Anna and Colin paid the $150 deposit, with the $8,000 balance due in September 2015.
Osteoarthritis diagnosed
Also in November 2014 Colin began experiencing pain in his right hip and went to his doctor. An x-ray revealed osteoarthritis in both hips. Colin had a steroid injection in his right hip, but by June 2015 the pain had worsened.
Surgery on right hip recommended
Colin went back to his doctor, and the notes recorded severe osteoarthritis in both hips. Colin’s surgeon recommended surgery on Colin’s right hip. The surgeon also said that Colin’s left hip may need ‘attention’ in the future, but not to worry, they would just operate on his right hip for the moment.
The right hip operation in July was successful and both the surgeon and Colin’s doctor encouraged him to go on the October bus trip. Anna paid the balance owing for the bus trip in September and Colin arranged travel insurance.
Left hip becomes painful
Unexpectedly, in early October, Colin’s left hip became extremely painful. Colin’s doctor prescribed morphine. Unfortunately, Colin had a rare reaction to the morphine, becoming extremely anxious and distressed. Colin felt unable to leave home and cancelled the bus trip.
The tour company refunded half the tour costs, and Colin made a travel insurance claim for the balance.
Dispute
Colin’s insurer declined the claim saying the osteoarthritis in his left hip was a pre-existing medical condition and excluded from cover. Colin did not accept his insurer’s decision saying he did not know he had osteoarthritis in his left hip, and even if he did it was the reaction to the morphine that prevented the trip. If the morphine had worked as it should he would have continued with the trip, regardless of the osteoarthritis.
Review
Osteoarthritis a pre-existing medical condition
We reviewed Colin’s complaint in the light of his travel insurance policy. The policy excluded cover for loss arising from, related to or associated with a pre-existing medical condition. The policy defined ‘arising from’ as ‘directly or indirectly arising or in any way connected with’ and a ‘pre-existing medical condition’ as ‘an ongoing medical … condition of which you are aware…’.
Although Colin had not experienced severe pain in his left hip before October, we considered he must have known he had osteoarthritis in both hips. Colin’s doctor’s notes referred to severe osteoarthritis in both hips. We considered it unlikely the doctor would not have mentioned this to Colin. Colin also said the surgeon told him his left hip may need attention in the future. While Colin may not have wanted to accept it, the surgeon was telling Colin he had osteoarthritis in his left hip and may need surgery in the future.
Proximate cause does not apply
We also considered Colin’s submission that he only cancelled the trip because he had experienced an unexpected severe reaction to morphine prescribed to treat the left hip pain. Colin’s argument is recognised in insurance law as the ‘doctrine of proximate cause’. The doctrine of proximate cause asks us to consider what actually caused the loss. In Colin’s situation he knew he had osteoarthritis and could expect treatment in the future, including pain relief. What Colin could not know was that the pain relief would cause him to experience anxiety to the point where he was unable to travel.
After careful consideration we decided the doctrine of proximate cause did not apply to Colin’s situation because the policy defined ‘arising’ as ‘directly or indirectly arising or in any way connected with’. This very wide definition excluded from cover not only the pre-existing medical condition, but also any adverse reaction to prescribed treatment.
Outcome
It was our view the adverse reaction to morphine prescribed to treat a pre-existing medical condition was excluded from cover under the policy. The insurer was entitled to decline Colin’s claim. We recommended the complaint be discontinued.
Insight
An insurer’s liability to pay an insurance claim turns on the wording of the policy. In this case the wording was so wide the insurer’s intention to exclude cover for any situation connected in any way to a PEMC was clear.
