Julie, 78, planned a 24-day trip to the United States (15 July – 5 August) with her good friends, Trevor and Elaine. In January, Julie did her medical assessment for her travel insurer, during which she declared she had pre-existing medical conditions, including congestive heart failure and high blood pressure.
Because Julie had declared her congestive heart failure, having a stent put in in 2005, the insurer asked a number of supplementary questions to determine the scope of the issue. Julie answered “no” to the question “have you ever had angina or a heart attack?” Although she had previous heart issues, Julie felt she had never suffered from angina. The stent was, in her eyes, attributable to high blood pressure.
The insurer accepted cover for Julie, and charged a higher premium.
During her trip, on 31 July, Julie was admitted to hospital with a ‘tight chest.’ Julie was found to have pneumonia and a urinary tract infection. The hospital also found that Julie had a ‘restriction problem’ with her heart. Julie was diagnosed with atrial fibrillation and progressive coronary artery disease. These conditions required an angiogram and stenting before Julie could fly home.
On 4 August the hospital was ready to do the required angioplasty. The hospital said that it was their practice, before doing the procedure, to confirm with the insurer that there was cover that would pay for the surgery, or to take the payment from the patient. Julie believed that the insurer had confirmed there would be cover because the procedure went ahead.
Realising that Julie would not be ready to fly on their scheduled departure date the next day, Trevor was worried about Julie’s policy lapsing and called the insurer. The insurer extended the policy and told Trevor that he and Elaine would be put down as Julie’s caregivers. Trevor’s policy did not have a ‘caregiver’ extension.
The insurer accepted it would pay medical costs relating to Julie’s treatment overseas for pneumonia and UTI. However, it declined to cover the medical costs relating to Julie’s heart condition because she had failed to declare she had ‘angina’ during the medical assessment. The insurer found, after examining Julie’s medical records, that Julie had been treated for angina in 2005. The insurer also stated that it had not confirmed to the hospital that it would cover Julie’s costs.
Julie’s medical bills amounted to more than $97,000 USD. When the insurer asked for a breakdown of the specific costs of treating each of Julie’s illnesses it was determined that $47,000 USD was associated with treating pneumonia and the UTI, and $50,000 USD was spent treating Julie’s heart condition.
Trevor believed that the insurer had approved his application for ‘caregiver’ cover under Julie’s policy over the phone. As a result, he believed that the extra costs associated with the rearrangement of flights and the extra week’s accommodation until Julie was fit to fly again, should have been paid by Julie’s insurer.
Julie believed, as she had declared her congestive cardiac failure, and paid a higher premium, she would receive cover for all heart issues. Julie also said the hospital would not have proceeded without receiving confirmation that someone would pay for her treatment. Julie reasoned that, because she had not paid the lump sum at the time, the insurer must have said that it would.
Julie also believed that the insurer should pay the extra costs incurred by Trevor and Elaine, staying with Julie until she was fit to fly. Her policy allowed over for the expenses of travelling companions related to an unforeseen event.
Julie complained to FSCL.
The insurer maintained that Julie had not accurately disclosed the nature of her heart condition. As a result, it could not accurately assess the risk. The insurer argued that if it had known the full extent of Julie’s heart condition, it would not have offered Julie insurance at any rate.
Although the combined hospital bill for all services was $97,000, the insurer was able to negotiate the bill to $53,000. Because the insurer recognised that Julie had made a complaint to FSCL, the insurer covered the entire cost of treatment before it lost its rights of negotiation with the hospital.
Although it disputed responsibility for the heart issues, the insurer agreed to cover the $6,000 difference (between UTI/pneumonia treatments and the total) without any admission of liability.
While the policy allowed for a travelling companion if Julie suffered from an ‘unforeseen event,’ the insurer believed cover was excluded because Julie had failed to accurately disclose the nature of her pre-existing medical condition. The insurer also noted that because Julie’s heart condition was the reason she could not fly on her scheduled date of departure, rather than the UTI or pneumonia which the insurer provided cover for. Because of this, it refused to cover companion costs.
Upon review, we found that while Julie had disclosed her congestive heart failure she had not disclosed her previous angina and angioplasty. Julie’s medical records clearly stated that she had received treatment for angina in 2005. It was immaterial that Julie herself was not aware of this fact.
We believed that if Julie had correctly disclosed all her pre-exiting medical conditions it would have been unlikely that any cover would have been provided for her heart issues. Because the insurer was only obligated to pay expenses relating to Julie’s UTI and pneumonia, and these conditions did not cause Julie to stay in the US longer than her original planned departure, the conditions for which cover was provided did not contribute to Trevor and Elaine’s higher travel costs.
We also listened to the conversations which Trevor and Julie had with the insurer’s claims consultants while overseas. Nothing in those phone calls indicated the insurer led Julie and Trevor to believe it would provide cover for the additional expenses.
The policy excluded claims relating directly or indirectly to a pre-existing medical condition. It was clear from Julie’s medical history that she had wrongly answered a question about whether she had suffered from angina (albeit unknowingly.)
The insurer was only required to cover costs relating to UTI and pneumonia treatment. However, the insurer’s cost containment meant the insurer decided to cover all medical expenses on an ex-gratia basis.
We agreed with the insurer that it was not required to pay for Trevor and Julie’s higher travel costs.
‘Companion cover’ will be contingent on whether there is cover for the event which caused the need for a companion.