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ISO Case Studies - March 2012

This month's case studies look at pre-existing conditions and the differences in the wording of pre-existing condition exclusions in health insurance policies.

Monday, March 19th 2012, 12:55PM

by ISO

CASE STUDY 10:      ("P" is Participant insurer and "C" is Complainant)

  The definition of exclusions for pre-existing conditions in health insurance policies are not uniform and it is important the clients understand that in many instances pre-existing conditions will include undiagnosed conditions which they have had symptoms of prior to taking out the insurance.

  Complaint No:  117430

Year: 2010

Casebook Index: Exclusion - Health, Pre-existing condition

  What Happened?

In March 2009, C arranged health insurance with P. Later in March 2009, C consulted her doctor about "seizing" in certain areas of her body which had occurred over the last year. 

C made a claim to P for the costs of a neurological consultation to investigate the seizing.  That established that C had experienced Myotonia (the arbitrary stiffening in the body).   

P declined the claim, on the basis that C was suffering from a pre-existing condition.  P believed C had Myotonic Dystrophy (a genetic condition, making a person prone to Myotonia) and placed an exclusion on C's policy. Subsequently it was established by C's neurologist that C did, in fact, have Myotonic Dystrophy.

C disagreed with having an exclusion on the policy for Myotonic Dystrophy or Myotonia, because it had not been diagnosed prior to the commencement of the policy.

Was the insurer entitled to rely on the exclusion for pre-existing conditions?

The policy excluded any pre-existing condition which C "was aware, or ought reasonably to have been, aware", of any of its "signs" or "symptoms".  Therefore, because the medical evidence indicated that she "was aware, or ought reasonably to have been aware" of Myotonia as she had had symptoms of this prior to taking out the policy, any treatment related to it was excluded from cover by the policy. 

C did not have to know the cause of the Myotonia.  For the pre-existing condition exclusion to apply, she only had to be aware of the symptoms of it.  Consequently, in accordance with the policy, P was entitled to decline the claim and place an exclusion on the policy for Myotonia. 

However, in light of the diagnosis of Myotonic Dystrophy, the Case Manager believed that it would be more fair and reasonable if P restricted the Myotonia exclusion to Myotonic Dystrophy as the exclusion would exclude conditions that might not be related to the "Pre-existing Condition" which was at issue in this complaint. 

The Case Manager discussed this issue with P and it agreed to change the exclusion on the policy from Myotonia to Myotonic Dystrophy.


It is important that clients understand the scope of exclusions and that they may not be covered for every claim even if they have not had a clear diagnosis of a condition prior to taking out the policy.


CASE STUDY 11:      ("P" is Participant insurer and "C" is Complainant)


When changing policies clients may want pre-existing conditions covered under the old policy to continue to be covered. However, the differences in cover between the old and the new policies may mean an exclusion for pre-existing conditions will apply under the new policy.


Complaint No:  117723

Year: 2010

Casebook Index: Exclusion - Health, Replacement Policies, Pre-existing condition


What Happened?

In June 2008, C arranged to transfer her health insurance onto her partner's employer's group scheme policy ("the first policy").

In November 2008, C asked P for quotes to transfer her cover from the first policy onto a policy with a higher level of cover ("the policy"). P provided C with quotes and advised that pre-existing conditions would only be covered at the level of the first policy.   Cover under the policy commenced in on 31 December 2008.

In March 2009, C requested prior approval for oral surgery to extract 4 impacted wisdom teeth and 3 other teeth. P advised that there was no cover for the extraction of the other teeth, because orthodontic treatment was excluded under the policy. 

C's orthodontist advised P that the requirement to extract C's wisdom teeth and the other teeth "was a finding at an orthodontic consultation 23 December 2008" and C had first noticed the "crowding + centreline shift a few years ago".  

P declined cover for the oral surgery, because "it was evident that C's wisdom teeth were impacted prior to the start of cover on the policy".

C was unhappy with P's decision, because she was not aware she had impacted wisdom teeth until after she completed the application form for the policy and, therefore, she believed P should pay for the extraction of her wisdom teeth.

When did cover on the policy commence?

In December 2008, P advised C that "the day it received the form, the change of policy would take place". C signed and completed the application form on 16 December 2008. However, P did not receive the form until 31 December 2008. Therefore, the earliest date cover on the policy could be deemed to have commenced was 31 December 2008, the date on which P received the form. 

Were C's impacted wisdom teeth a "Pre-existing condition"?

The policy contained an exclusion for "Pre-existing conditions" which were defined as "any health condition occurring or existing, or any health condition which relates to a sign, symptom or event occurring or existing ..., before the date of upgrading; where the policyholder ... was aware, or ought reasonably to have been aware, of the health condition, sign, symptom or event".

C first became aware that her wisdom teeth were impacted on 23 December 2008 and cover under the policy did not commence until 31 December 2008. Therefore, C's impacted wisdom teeth were a "Pre-existing condition" in respect of the policy.

Was there any cover under the policy for C's impacted wisdom teeth?

In December 2008, P advised C that pre-existing conditions would continue to be covered at the level of the first policy. However, the first policy contained an exclusion for the "Extraction of teeth" therefore there would have been no cover for the removal of C's wisdom teeth under the first policy.


When changing policies clients' pre-existing conditions may continue to be covered to the same level as the orginal policy.  But they need to be aware that exclusions in the original policy may also apply and mean the original policy would not have covered the pre-existing condition.

« ISO Case Studies - ASSET Sep 2011ISO Case Studies - April 2012 »

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