Pauline’s surgery in New Zealand
Pauline came to study in New Zealand in early 2014. By paying her university fees she benefitted from a group international student travel insurance policy, covering her for medical treatment she required in New Zealand.
On 30 March 2015, Pauline was admitted to hospital with severe abdominal pain and on 31 March 2015 she underwent surgery to remove pelvic adhesions (scar tissue) that had formed around her small intestine, causing a small bowel obstruction. Pauline then received a bill from the hospital for $15,675.22. Pauline claimed for this amount from her insurance company on 4 May 2015.
The insurance company declined Pauline’s claim because it said she had an undisclosed pre-existing medical condition (PEMC). Unhappy with her claim being declined, Pauline complained to FSCL.
We sought Pauline’s medical records from her doctor in the United States. The medical records showed that in 2005, Pauline underwent a hysterectomy. Also, on 6 February 2014, (14 days before Pauline travelled to New Zealand to begin her study on 20 February 2014), Pauline had a surgery to investigate an issue in relation to her ovaries. While carrying out the surgery, her surgeon saw Pauline had abdominal adhesions, and removed these. Pauline’s records also showed that prior to her February 2014 surgery she had a history of severe pelvic pain and dense adhesions of her sigmoid colon.
Pauline’s doctor said that, in his opinion, declining a claim on the basis that pelvic adhesions are a PEMC made no sense. He said that every person who has ever had surgery has the potential to have adhesions, and on rare occasions, these can cause bowel obstructions.
The insurance company’s view on the medical evidence
After having its medical team review the medical evidence, the insurance company said that Pauline’s doctor in the United States was correct that any abdominal surgery can predispose a patient to abdominal adhesions. However, in Pauline’s case she had already developed adhesions and bowel obstruction which required surgery prior to the policy start date, meaning Pauline had a known PEMC prior to the start of the policy. The insurance company said Pauline’s surgery on 31 March 2015 was a recurrence of a known PEMC.
The insurance company said that if Pauline had not had the adhesions and obstruction in February 2014, and presented in March 2015 with adhesions for the first time, it would agree that Pauline would not have had a PEMC, but that was not the case here. It also said that it is highly probable that Pauline’s initial and subsequent adhesions causing the bowel obstructions were caused by her previous abdominal surgery. Because the February 2014 surgery was so close to her travelling to New Zealand she should have declared it.
Application for cover – disclosure
The insurance company explained that the process for the group student policy was that the broker for the policy sends out a ‘pack’ of information to students, which includes information about insurance. The student is required to send back a form to advise whether they have any PEMCs. If the form is not received back, the insurance company assumes that the student has no PEMCs, or any other material information to disclose.
We asked the insurance company what it would have done if Pauline had disclosed the 2005 hysterectomy and the 2014 surgery. It said it would have asked Pauline to fill out a medical risk assessment and it would likely have either accepted her PEMCs for an additional premium, or, the conditions would have been excluded.
We asked Pauline for further information about her symptoms leading up to her February 2014 surgery. She could not really recall, but the issue she was complaining of was an issue with her ovaries and she was in pain for a few months prior to the surgery. Pauline also said the discussion she had with her doctor following the February 2014 surgery was that he had cleared out all the scarring and he gave her the all clear to leave for New Zealand two weeks later. Pauline felt great after the surgery. There was no discussion with her doctor about whether the adhesions were likely to come back.
Pauline said it just did not occur to her to disclose the 2014 surgery because she thought the surgery had essentially resolved everything. Pauline said she would never have left to study on the other side of the world and away from her husband if she thought something was going to happen to her.
The 10 December 2013 letter
A key piece of correspondence on file was a letter mailed to Pauline dated 10 December 2013. The letter had a specific section about health insurance and said that all international students needed to have health cover. It also included a link to a website with further information.
The website says that PEMCs are not covered and explains that PEMCS are medical or physical conditions a student has before they enrol. The website also said that PEMCs can be covered depending on the outcome of a medical risk assessment. If Pauline had filled out a risk assessment form, she would have disclosed her recent medical history, including her February 2014 surgery because of the nature of questions, such as, ‘have you been treated by a specialist or hospital in the last 12 months’.
Further medical evidence sought
The surgeons who carried out Pauline’s New Zealand surgery said that it was entirely possible that due to Pauline’s previous surgeries and history of adhesions, the 2015 adhesions formed as a result of Pauline’s previous conditions, and Pauline certainly had an increased chance of developing adhesions.
Independent insurer’s view
In an opinion obtained from independent insurance company, the company said Pauline should have disclosed the 6 February 2014 surgery, particularly as it was so close to her departure date. Also, if she had disclosed it, the independent insurance company would not have provided any cover.
Did Pauline’s claim arise from a PEMC?
We reviewed all of the medical evidence and found that the adhesions removed in the 6 February 2014 surgery were the same type of adhesions that had to be removed in New Zealand in March 2015. The evidence also supported a finding that it was more likely than not that Pauline’s 2015 adhesions arose from the 2014 adhesion condition / her previous surgeries.
The definition of a PEMC in the policy was very wide. It included ‘medical circumstances’ which the insured is aware of and which they have received treatment for. In our view, the adhesions were a medical circumstance Pauline was aware of in February 2014, and which she had treatment for (surgery). Also, the 2014 adhesions could be classed as a sickness, or illness or disease being a ‘condition’ Pauline was aware of.
We decided Pauline should have disclosed at least the 6 February 2014 surgery. It was clear from the questions asked on the medical risk assessment form that if a person has had recent medical events, it is likely this will affect whether the insurer is prepared to provide cover, and if so, on what terms.
We thought it was reasonable to expect Pauline to have looked at the information about insurance by following the link in the 10 December 2013 letter. This was because she was in pain a few months before her 6 February 2014 surgery, and knowing she had some health issues and that she was coming to study in New Zealand for a long period, it would have been prudent for her to take all reasonable steps to ensure she had the cover she required.
The duty of disclosure paragraph on the medical risk assessment form also noted that the duty was on her up until cover commenced. Under the insurance policy, cover commenced on the day Pauline left the United States for New Zealand (20 February 2014). There was a duty on Pauline to disclose the surgery she had 14 days before on 6 February 2014.
By not disclosing her full medical history, Pauline had not given the insurance company the ability to assess the risk of her falling ill in New Zealand. If she had disclosed, she would likely not have had cover for adhesions. We could understand why Pauline had not disclosed the 6 February surgery (because she thought the surgery had resolved all issues).
Unfortunately, Pauline was simply unaware that the policy she was going to be covered under had a wide definition of a PEMC, and she was also unaware of her duty of disclosure. However, it was correct for the insurance company to decline Pauline’s claim.
We did not uphold Pauline’s complaint.
This case shows the importance of understanding the duty of disclosure and what you should disclose.