David Callow successful in High Court Permanent Health Insurance claim

Charles Thomas Miley-v-Friends Life Limited [2017] EWHC 2415 (QB)

 

Following a seven-day trial before Mr Justice Turner the Defendant has been ordered to pay damages to Mr Miley arising out of its failure to pay benefit under a policy of permanent health insurance.

In an earlier Judgment (Miley –v- Friends Life [2017] EWHC 1583 QB) The Judge gave guidance on the proper procedure and approach to applications to recuse following the conclusion of evidence and primary oral and written submissions, after the Defendant’s unsuccessful application.

 

David acted for the Claimant instructed by Mark Rondel of EMW LLP.

 

Background

Mr Miley had worked for an investment bank as Head of Institutional Equity Sales.  In this capacity, he became entitled to the cover provided by a group policy under a Permanent Health Insurance Scheme operated by the Defendant. Under the terms of the policy, benefits were payable if he became “unable because of illness or injury to perform the Material and Substantial Duties of [his] Employment“.

In late 2008 the claimant contracted a chest infection. By January 2009 he was diagnosed with glandular fever. The claimant struggled thereafter to work to his earlier level and he was repeatedly signed off sick because of debilitating fatigue. In due course, the claimant filled out a personal details questionnaire for the defendant as a precursor to his making a claim under the policy. The claimant stated that he was unable to do his job as a result of chronic fatigue syndrome (CFS). His claim under the policy was allowed, but four years later the defendant stopped his payments, asserting that he had significantly misrepresented or overstated his symptoms. The claimant appealed through the Defendant’s contractual appeal procedure but was unsuccessful.

The Claimant commenced proceedings to recover the monies he alleged ought to have been paid under the policy since September 2013. The defendant counterclaimed for the return of all the monies already paid either under the “fraudulent insurance claim” principal or in unjust enrichment. It did so on the basis that the Claimant’s account was entirely fraudulent or significantly overstated.

The court heard evidence from the claimant, his wife, mother and friends and the Defendant called evidence from functional assessors whom it had engaged to assess the Claimant at different stages of the claim under the policy. It also heard from medical and functional capacity experts for both parties.

The defendant relied upon a substantial amount of surveillance evidence obtained between December 2010 and August 2013.  It relied upon a number of specific examples drawn from the Claimant’s medical, benefits, personnel and financial records where it alleged that the claimant had been caught out telling lies with respect to his condition and income.

The Court was required to determine a number of issues relating to the diagnosis of CFS and the assessment of large volumes of documentary and other evidence where fraud and dishonesty had been alleged. Further, the Defendant ran an alternative argument based upon the proper construction of certain clauses of the policy which it said gave rise to an entitlement to recover sums paid and avoid the policy even were any untrue statement was not dishonest.

 

Judgment

Turner J made a number of important observations about proving fraud, and about the assessment of evidence in cases where substantial volumes of documents and other material are relied upon, the assessment of credibility of Claimants and supporting witnesses, and in particular of surveillance evidence as well as the nature and diagnosis of CFS.

 

He held that:

The central issue was whether the claimant’s presentation was indicative of genuine fluctuations in the level of his symptoms or of inconsistencies arising from exaggeration. In the case of CFS, presentation was paramount and diagnosis involved the exclusion of all alternative diagnoses and, therefore, attaching the label of CFS to what remained.

The defendant had sought to rely upon alleged discrepancies between broad descriptions of what the claimant said he could do and specific examples of activity revealed by objective evidence. Such discrepancies were not irrelevant, but the court would be hesitant to conclude, without more, that the claimant was a fraudster. The defendant also claimed that the claimant had lied about other forms of income on his financial review form. However, sums he received under a restricted stock agreement comprised income from investments, which he was entitled to ignore when filling in the form. In any event, he had not provided deliberately fraudulent information. The defendant had listed a number of alleged examples of the claimant being able to do more than he claimed. However, the court was not satisfied that those or any other alleged discrepancies sustained the contention that the claimant’s evidence was dishonest.

The claimant was not unduly influenced by the rewards of claiming under the policy so as to give rise to an exaggerated presentation of his condition. A ceiling placed on his benefits under the policy, amounting to 75% of his base salary, operated as a disincentive to giving up on work. He was only 42 when he became ill and had a wife and young daughter. He was a successful and intelligent man who had a long career in the city ahead of him. Such a motivation would have led to him spending the remainder of his working life with a greatly reduced and uncertain level of income.

It was improbable that the claimant’s witnesses were victims of any persistent deceit on his part. Even the most callid performer would struggle to fool all of those people all of the time. Although the claimant’s wife was not an independent witness, that did not make her a liar. She was genuinely trying to avoid misleading the court even when she was under the clear temptation to advocate her husband’s case. As for the other witnesses, the defendant was unable to point to any specific lies. They were doing their best to help the court notwithstanding their feelings of loyalty to the claimant.

The surveillance evidence, whether taken on its own or in combination with all the other evidence, fell very far short of undermining the claimant’s case that he was telling the truth about his levels of disability. There was a lack of unequivocal contradiction between what the surveillance evidence revealed and what the claimant said he had done.

Judges should exercise some caution when seeking to determine the credibility of a witness wholly or mainly on the basis of an assessment of their demeanour. However, in the instant case it was advantageous to observe the claimant giving evidence and watching the proceedings. His demeanour throughout the trial was consistent with his reported condition and limitations.

The issue of whether the claimant was lying was inextricably bound up with the issue of which expert’s evidence to prefer. The evidence of the claimant’s expert was, on the whole, more persuasive. The defendant’s expert was hesitant about making prompt concessions where he thought that they might have lent some credence to the claimant’s case.

Accordingly, the claimant had discharged the burden of demonstrating that he suffered from CFS at a level sufficiently debilitating to entitle him to the benefits under the policy. He was entitled to judgment in respect of the payments which he had not received since September 2013 together with interest. The defendant’s counterclaim was dismissed.