High Court Decides Failure By Ms Sufferer To Disclose Previous Medical History On Proposal Form Does Not Invalidate Benefit Of Critical Illness Policy

Caroline Coleman, a nurse who was diagnosed with Multiple Sclerosis (MS) has won a High Court Case against New Ireland Assurance plc relating to their refusal to pay Ms. Coleman the sum of €95,231.00, representing the proceeds of her critical illness policy.

The policy terms provided for this payment in the event of Ms. Coleman coming to suffer from various specified illnesses, including MS.  New Ireland sought to avoid the terms of the policy on the basis that they claimed that there had been a failure on Ms. Coleman’s part to adequately disclose material matters at the time when the insurance policy was first put in place.

In the late 1990’s Ms. Coleman bought a house which involved obtaining a mortgage from Bank of Ireland, who required her to take out life protection cover.  At that time Ms. Coleman was referred to her local Bank of Ireland branch to see a representative of New Ireland for the purposes of seeking to put the relevant cover in place.

Following advice from New Ireland’s representative it was decided that Ms. Coleman would apply for what was called “living cover”.  That form of cover included both a standard life cover which would result in the sum of €60,000.00 being paid on Ms. Coleman’s death and also critical illness cover in the same sum, which would result in Ms. Coleman being paid the sum in question, in the event that she should suffer from one of the specified illnesses contained in the policy.

Ms. Coleman signed the proposal form which contained various questions concerning her health history.  It was agreed that the representatives concerned explained to Ms. Coleman, in advance of going through the specific questions, the importance of making full disclosure of any material matters concerning her health.  Ms. Coleman had disclosed in an answer to one of the relevant questions that she had some difficulties with her back in the past.  The policy then contained, by agreement, an exclusion in relation to critical illness cover by reference to that back trouble.  A year later Ms. Coleman wished to increase the level of her cover from €60,000.00 to €75,000.00.  A further application in the form of a questionnaire was filled out.  The same type of form was used as in the original proposal.  The form was completed in a way which disclosed no medical difficulties.

An important section of a proposal form which deals with medical history contained a section where the proposer is invited to identify the name and address of the proposer’s doctor and to “give the date and reasons for any visits you have made including the results of any check up’s“.  The answer given by Ms. Coleman to that question in the original proposal form was simply flu’s/colds.  In addition, the form asked “have you seen any doctors/specialists?“.  The answer to this question was no.  Both of these answers were incorrect.

A further part of the proposal form posed a question as to whether the proposer had “any other tests or suffered any other illness?”.  There was a disclosure in relation to tests being carried out for suspected gallstones which were negative and which had not given rise to any subsequent problems.  There was no other disclosure by Ms. Coleman in respect of any other tests carried out or illnesses suffered.

When Ms. Coleman was 19 years of age, having just commenced studying as a trainee nurse before Christmas 1990, she began to suffer some problems with her eyesight, which ultimately let her being referred to her GP for tests to Cork Regional Hospital.  At that stage her GP gave evidence to the affect that he was concerned the symptoms which she displayed might be indicative of MS.  However, her GP did not inform Ms. Coleman of his concerns as he was worried as to the affect it might have on her.  Ms. Coleman did have some further tests but was discharged within a few days of being treated and from that period on she had no neurological or other relevant symptoms.  No formal diagnosis of MS was made at that stage and none of the doctors who treated her informed of this fact.  Ms. Coleman suffered no other symptoms or any other matters that required medical attention relevant to her diagnosis of MS prior to filling in the proposal form some 8 years later.

Due to the fact that these investigations and the attendant tests and consultations with doctors (including a specialist) were not disclosed, New Ireland sought to avoid paying out on the policy.

Ms. Coleman told the High Court that at the time she completed the proposal form she had completely put the incident some 8 years earlier out of her mind.  Mr. Justice Clarke stated that an insurer can avoid a policy insurance where either:-

1. The insured failed to disclose a material fact;

1. The proposer makes a positive misrepresentation in the course of the negations;

1. Where there has been a breach by the proposer of a term of the contract of insurance warranting that a certain set of facts is the case.

The Judge stated that so far as a failure to disclose is concerned, it seems clear that a party can only be subject to having his or her policy of insurance voided by an insurance company if there is a failure to disclose a material fact of which the proposer was aware.  Furthermore insofar as the answers to questions raised in a proposal form is concerned, a party will only be exposed to the risk of the contract of insurance being voided where the party fails to answer such questions to the best of the party’s ability and truthfully.  This would even be so where an answer is inaccurate as a result of ignorance or even “obtuseness which may be sometimes due to a mental block on matters affecting ones health“.

Judge Clarke stated in his Judgement that any material non-disclosure on the proposal form was pre-judged by reference to the knowledge of the proposer at the time and whether answers given were to the best of that persons ability and truthful.  He held that there wasn’t a material failure to disclose matters which were within the knowledge of the proposer so as to lead to the answer or failure to disclose being properly described as untruthful.  He said that even though there was no doubt the answer to at least two of the questions raised on the proposal form were inaccurate, given the fact that the proposal form came 8 years later and it was clear that the only relevant information that was communicated at the time to Ms. Coleman was to the effect that she suffered from an inflammation of the eye.  The medical evidence advanced on behalf of Ms. Coleman was to the effect that while her medical advisers at the time explained to her that there was a possibility that she may be troubled by neurological symptoms in the future, they had told her that this would hopefully not be the case.

The Judge said that Ms. Coleman had put the entire incident regarding the tests out of her mind on the basis that it did not appear to have been significant and that the symptoms had not recurred.  He went on to say that this had occurred in this view as a matter of probability due to something along the lines of a mental block.  The Judge said that he was satisfied that at the date of the proposal that Ms. Coleman had answered the questions raised truthfully and to the best of her knowledge as it then was.  It was not a case of wilful ignorance or deliberate or culpable forgetfulness.  In conclusion he held as follows, that:-

1. Ms. Coleman was not guilty of any material non-disclosure of a fact which she knew at the relevant time;

1. She did not fail to answer any question truthfully or to the best of her knowledge at that time or;

1. Was in breach of any warranty or condition contained within the contract of insurance.

He granted Judgement in favour of Ms. Coleman for €95,230.76 and on the basis that her application for payment of that sum was made towards the end of 2003, he awarded her Courts interest from the 1st July 2004.  He held that had New Ireland not come to an incorrect view as to it’s entitlement to avoid the policy, the payment should have been made by that date.

This is an interesting decision by the High Court in a case where clearly two of the questions raised on a proposal form were answered incorrectly by the proposed policy holder.

In this case, the Plaintiff was subsequently diagnosed with MS and, on the evidence of some of her own doctors, when in 1990 they referred her to Cork University Hospital for tests she was exhibiting some symptoms possibly consistent with MS.  The crucial fact appears to be that they did not advise her of their concerns.

Judge Clarke looked behind the proposal form to look at the entire circumstances surrounding the answers given by Ms. Coleman at the time the form was completed in holding that she was not guilty of any material non-disclosure of facts which she knew at the relevant time.  Insurance companies will not be happy with this decision which appears to give a considerable amount of discretion to the Courts in determining what is or is not material disclosure.

In this case had Ms. Coleman disclosed the previous tests and medical investigations carried out there is no doubt that New Ireland would have sought to exclude the critical illness cover by reference to those investigations or would have sought independent medical verification of the views expressed by her medical advisors at that time.