Psychologist Receives Compensation for Unreasonable Cessation of Income Protection Benefits

Published 17 Mar 2015

This is a matter which involved a person from Central Coast New South Wales who was an integral part of a family business. Owing to success of the business, she was on an exceptionally high wage. In accordance with the financial adviser’s advice, she took out income protection insurance which was not specific to her then employment.

A few months thereafter, following a domestic incident, she suffered psychological injuries which had various diagnosis. Initially, the insurance company made payments to her and these payments were indexed in accordance with the consumer price index.

As per advice of her psychiatrist, she engaged in a Diploma in Psychology to better understand her condition. She later commenced a doctorate in psychology. Although she was successful in obtaining this doctorate, it took her 8 years to complete.

The insurer had paid for approximately 17 years of income protection on a partial and at times total disability basis. In 2009, after she completed her doctorate and received membership and rents and registration as a psychologist, the insurance company made the decision to cease her benefits due to increase in her work potential. This then led to the dispute for unreasonable cessation of payments which this matter related to.

We are instructed in this matter in 2009 and it has been a long battle of paper. The insurer continuously, under the disguise of procedural fairness, continued time and time again to request documents. Between 2009 and the eventual hearing of this matter, the file was so voluminous that it was contained in 33 lever arch binders and 8 boxes.

It was only through the tenacity and commitment given by Gerard Malouf and Partners that this matter was eventually heard in the Supreme Court of New South Wales.

The matter was listed for a five day hearing in Supreme Court Equity Division. The case had progressed to its third day before the defendant finally made a reasonable offer to resolve this matter.

It should be noted that this case had progressed through a mediation and two informal settlement conferences. Upon each occasion Gerard Malouf and Partners stood firm in the belief of our client’s income protection insurance claim with an outright refusal to settle this matter for an amount less than amicable.

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