DEC-S2008-054 - Full Case Report

Jordan v Marsh Ireland Ltd

Complaint ES/2005/0229

Dec-S2008-054

FULL CASE REPORT

Key words

Equal Status Acts 2000 to 2004 – Disability, section 2(1) - Discrimination, section 3(1)(c)  - Disability ground, section 3(2)(g) – Provision of goods and services 5(1) and 5(2)(d) - Vicarious liability, section 42(2)

1. Delegation under the Equal Status Acts 2000 to 2008

1.1. Mr. Andrew Jordan referred a claim to the Director of the Equality Tribunal under the Equal Status Acts 2000 to 2004 on 14 July 2005. In accordance with her powers under section 75 of the Employment Equality Act, 1998, the Director then delegated the case to me, Tara Coogan, an Equality Officer, for investigation, hearing and decision and for the exercise of other relevant functions of the Director under part III of the Equal Status Acts. The investigation under section 25(1) of the Acts commenced on 29 February 2008. An oral hearing as part of the investigation was held on 12 May 2008.

2. Dispute

2.1. The dispute concerns a complaint by the complainant, Mr. Andrew Jordan, that he was discriminated against by the respondent, Marsh Ireland Ltd, when he sought to cash in an insurance policy after an accident. The complainant was told by the respondent that he was disqualified from the Payment Protection Scheme because he was not in good health when the insurance commenced two years previously. The respondent was notified of the complaint 23 May 2005.

3. Case for the Complainant

3.1. The complainant broke his wrist on 1 July 2005. At the end of July, the complainant was informed that he would require a second cast for his wrist and that he would not be fit for work until 31 January 2006 (6 months). He contacted his insurance company to claim under a Payment Protection scheme that he had taken out earlier to cover a personal loan.

3.2. The complainant received a letter from the respondent dated 8 April 2005 that stated that: “We regret to advise the medical information available to us indicate that you were not in good health when this insurance commenced on 29 April 2003 and therefore, you were not eligible for inclusion in the Plan”.

3.3. The complainant’s premiums for the previous two years were returned to him despite his objections.  

3.4. The complainant states that he has an on-going back problem as a result of a car accident several years ago. It has taken him a long to time to come to terms with this condition and he takes exception to his condition being referred to as an “illness”.

3.5. He maintains that he used his disability allowance book as assurance of his ability to repay the loan. He also uses a crutch to move around. The complainant maintains that the person in Permanent TSB who sold him the insurance was satisfied that he was eligible to sign up for the Voluntary Payment Protection scheme. The complainant objects to the fact that the respondent refers to him having an “illness”. He states that he has lived with his disability as a result of a car crash and that it has taken him quite a long time to come to terms with his condition.  

3.6. The complainant works part-time (over 18 hours a week), is over 18 years of age and will be under 65 years of age at the expiry of the loan. He considers himself to be in good health regardless of his on-going back problem. 

4. Case for the Respondent

4.1. The respondent, Marsh Ireland Ltd., acts as a third party administrator for the Payment Protection Insurance on behalf of the insurers, Cigna Europe Insurance Company. This means that the insurers delegate authority to Marsh Ireland Ltd. to assess claims on their behalf based on the criteria set by them.

4.2. As the respondent understands the situation, the complainant took out a Payment Protection Insurance Policy with Cigna Europe Insurance Company (Cigna) in conjunction with his Permanent TSB loan.

4.3. In a written submission received from the respondent, they claim that in order for a borrower to join such a scheme they must meet the insurer’s eligibility criteria, namely that the applicant is:

• Over 18 years of age and under 65 years at the expiry of the loan agreement;
• In good health, and not receiving any medical treatment or advice or aware of any impending hospitalisation or redundancy; and
• In full or part-time employment or self-employed for a minimum of 18 hours per week or more.

4.4. The respondent submits that Permanent TSB, as the sellers of these policies on behalf of the insurers, provide a sales brochure to the borrower, which further explains the eligibility criteria, policy terms and conditions and policy exclusions. The borrower then signs a separate application form for the payment protection insurance confirming that she/he meets these eligibility criteria and therefore can join the scheme. The respondent submits that the complainant signed a copy to that effect.

4.5. During the term of an insured loan, according to the respondent, the borrower can claim for the following situations:

• hospitalisation for more than three days;
• absent from work for longer than 30 days due to medical condition;
• compulsory redundancy.

In the event of a claim, the borrower must complete a claim form and forward same to the respondent.

4.6. As part of the claim assessment, the respondent verifies the borrower’s eligibility to join the scheme at the policy inception date.

4.7. The complainant completed a disability claim form on 1 February 2005 for an injury (broken wrist) which occurred on 1 July 2004. The form was received by the respondents on 25 February 2005.

4.8. The respondent then checked the complainant’s eligibility to join the scheme. The respondents received a letter from the complainant’s Consultant Orthopaedic Surgeon dated 31 January 2005 which states that the complainant “has had longstanding back problems for which he does suffer ongoing disablement”.

4.9. Based on the above information, the respondent was satisfied that the complainant has failed to satisfy the eligibility criteria set out by the insurers. This decision was subsequently approved by Cigna Europe Insurance Company (the insurer).

4.10. The respondent submits that any claim made by the complainant would have been declined as the complainant was not eligible for the scheme at the inception of the policy. This includes claims that are not specifically related to the complainant’s current condition.      

4.11. The respondent maintains – if the complainant’s events of what happened when he took out the insurance are to be accepted - that the policy may have been miss-sold to the complainant by Permanent TSB. The respondent denies any discrimination on the disability ground in relation to the Payment Protection scheme.

5. Conclusion of the Equality Officer

5.1. Section 38A (1) of the Equal Status Acts 2000 to 2004 sets out the burden of proof which applies to claims of discrimination. It requires the complainant to establish, in the first instance, facts upon which he can rely in asserting that the he suffered discriminatory treatment. It is only where such a prima facie case has been established that the onus shifts to the respondent to rebut the inference of discrimination raised.

5.2. In making my decision I have taken cognisance of both written and oral submissions.

5.3. The issue of whether Marsh Ireland Ltd. is the correct respondent to defend the any allegation of discrimination needs to be decided. It was argued by the respondent that Cigna Europe Insurance Company - as the provider of the insurance - is the correct respondent. Marsh Ireland Ltd. submits that they only act as third party administrators to any claims made by insured persons for payment. That is, the respondent is not responsible for the selling of the insurance nor does it collect monies in relation to the premiums. They have no responsibility when it comes to the design of the insurance forms, terms and conditions, etc.

5.4. I had referred to section 42(2) in correspondence prior to the hearing and referred to it again at the hearing. Section 42(2) – which defines vicarious liability – states:

“Anything done by a person as agent for another person, with the authority (whether express and implied and whether precedent and subsequent) of that other person shall, in any proceedings brought under this Act, be treated for the purposes of this Act as done also by that other person”.

It is clear that the respondent were acting as an agent for Cigna International on 8 April 2005 when they wrote to Mr. Jordan informing him that, based on information they had received from the complainants doctor, he was eligible for inclusion in the insurance plan. It is clear that the respondent had the authority to make decisions concerning the policy holder and was willing to implement the conditions albeit subsequent to the policy having been sold to the complainant. While I accept that Cigna is the actual insurer and, as such, the complainant could have, subject to notification requirements set out in section 21(2), named them as co-respondents in this complaint, I am, having considered the relevant section of the legislation, satisfied that Marsh Ireland Ltd. is a correct respondent for the purposes of this complaint.  

5.5. The respondent maintains that the complainant was not in good health as he had an on-going back problem. Having examined the form I note that it does not allow for any disclosure of any material facts. The declaration is designed in such a way that a person must work over 18 hours a week and be of “good health”. I note that in Keating v New Ireland Assurance Company Plc (1989), the Supreme Court found that there are certain principles which should be applied when constructing a contract of insurance. These principles are;-

1. Parties of full age and competence are, subject to any statutory impediment, entitled to contract as they wish.
2. Whilst acknowledging the right of parties to express the pre-contract representations as being the basis of the contract, same must be read in the light of the actual terms of the contract subsequently executed. The contract, so to speak, takes over from the proposal.
3. If insurers desire to found the contract upon any particular warranty, it must be expressed in clear terms without any ambiguity.
4. If there is any ambiguity it must be read against the persons who prepared it.
5. Like any commercial contract, such a policy must be given a reasonable interpretation.

5.6. The application by insured person signed by the complainant simply asks that the insured person declares that:

“I confirm that I am over 18 and will be under 65 at the expiry of the loan and I am in good health and actively employed on a full time basis, or part time basis for 18 hours per week or more. I note that if I am opting for cover under Plan A, in order to qualify for Compulsory Redundancy Benefit, there is an additional requirement to be continuously employed on a full time or part time basis for 18 hours per week or more, for at least six months prior to the claim (italics mine).”

I note that the respondent has separated the above criterion into three distinct criteria as outlined in section 4.3. above. I have been presented with no evidence to indicate that the complainant was aware of the more precise definition as outlined in section 4.3.

5.7. I am, however, satisfied that the complainant had read and seen the above more general statement. It is clear that the insurer considers ‘good health’ to be a definition that is unambiguous as there is no elaboration on what this means on the policy form

5.8. I note that the complainant stated that he had shown his disability book to the Permanent TSB official as proof of his ability to repay his loan. He also stated that he is known in the bank and that he always uses the support of a crutch to get around. I appreciate that this is not something the respondent can dispute as the policy was sold to the complainant by another party. I therefore accept that the complainant was not attempting to hide the fact that he had an on-going disability and that he was entitled to assume that the insurer was aware of his condition.

5.9. I accept that the complainant considered himself to be in “good health” in line with the general statement indicated on the form. I accept that the complainant who lives with a chronic back condition can subjectively define himself as being in “good health”. He, like many other people with disabilities, manages his condition and goes about his everyday life.

5.10. Disability is defined in section 2(1) of The Equal Status Acts 2000 to 2004 as:

a)     the total or partial absence of a person’s bodily or mental functions, including the absence of a part of a person’s body,

b)     the presence in the body of organisms causing, or likely to cause, chronic disease or illness,

c)     the malfunction, malformation or disfigurement of a part of a person’s body,

d)     a condition or malfunction which results in a person learning differently from a person without the condition or malfunction, or

e)     a condition, disease, or illness which affects a person’s thought processes, perception of reality, emotions or judgment or which results in disturbed behaviour.

I accept that the complainant’s condition constitutes a disability within the meaning of section 2(1).

5.11. The Equal Status Acts 2000 to 2004 impose a statutory duty on insurers to ensure non-discrimination in the provision of goods and services (with exemptions).

5.12. Indirect discrimination is defined in section 3(1)(c) of  the Acts as:

“Where an apparently neural provision puts a person referred to in any paragraph of section 3(2) at a particular disadvantage compared with other persons, unless the provision is objectively justified by a legitimate aim and the necessary means of achieving that aim are appropriate and necessary”.

5.13. The word ‘provision’ is defined under section 2 of the Acts as “a term in contract or a requirement, criterion, practice, regime, policy or condition affecting a person” belonging to, in this case, the disability ground. This broad definition is not concerned with intent but whether any such provision has a discriminatory effect in practice. The Acts provide that the provider of the goods and services shall be treated as discriminating against, in this case, the disability ground, unless the provision is objectively justified by a legitimate aim, and that the means of achieving that aim are appropriate and necessary.

5.14. In such a case, a respondent must show that such a provision, justification or criterion is objectively justified by a legitimate aim and that the means of achieving such an aim are appropriate and necessary. ECJ in Bilka – Kaufhaus establishes the three tier test for objective justification used in employment equality cases. According to it, the employer must satisfy the Court that the impugned provision:

            1) corresponds to a real need on the part of the undertaking,

2) are appropriate with a view to achieving the objective pursued, and

3) is necessary to that end[1].

When applying the following test to the circumstances of this case, the following emerge as the facts:

1. Insurers do have a real need to make commercially advantageous decisions when taking on customers;
2. The insurer, and an agent acting on their behalf, has a right to treat people differently in relation to the assessment of risk in accordance with the defences set out in section 5(2)(d) of the Acts;
3. It may be essential to limit insurance cover or the conditions of the insurance where reliable actuarial data, statistical data, relevant underwriting or commercial factors effect the commercially advantageous decisions.

While I have not been presented with any evidence of actuarial or statistical data nor of any relevant underwriting or commercial factors, I note that the complainant had a history of an on-going back problem and that his claim for the purposes of this insurance was in relation to a broken wrist. I have been presented with no evidence that the on-going back problem was in any way linked with the acquired injury. Therefore, I cannot find that it is essential for the insurer to exclude the complainant from this insurance plan in the manner in which it has.     

5.15. The respondent, as an agent for the insurer, has failed to demonstrate that there were no alternative means, having less discriminatory effect, in which the objective in view could have been achieved. It is clear that no consideration has been given to alternative ways of selling the insurance, although an obvious one immediately presents itself. I cannot therefore be said that there were no alternative less discriminatory means by which the respondent’s objective of making commercially advantageous decisions when taking on customers could have been achieved.

5.16. The respondent in this case clearly states that any pre-existing condition would exclude a person from this insurance. I find that this imposes a blanket ban on any person who lives with a disability as defined under section 2(1) of the Acts. While section 5(2)(d) defences may apply to some of these disabilities I find that the current conditions under which this insurance cover is sold are a step too far. If I were to accept the current wording, and the respondent’s interpretation of them, I would be accepting a condition that excludes any person who lives with a chronic condition, that is, a health related concern that can be managed from any insurance at all. This condition, which may appear to be neutral, puts a person, such as the complainant, at a particular disadvantage compared with persons who live without his condition. I do not find that the provision is objectively justified by a legitimate aim as the insurer has clearly indicated that it refuses to insure any person, regardless of data or any other relevant factors, with any health issues at all.

6. Decision

6.1. Under section 25(4) of the Equal Status Acts I conclude this investigation and issue the following decision:

I find that the complainant has established a prima facie case of indirect discrimination on the disability ground. In accordance of section 27(1)(a) of the Acts I order the respondent to pay the complainant €1000 as redress for the effects of the discrimination.

_____________

Tara Coogan

Equality Officer

September 2008