In issue 51 of ombudsman news (January/February 2006) we reported on an informal seminar we hosted on complaints about private medical insurance.
The seminar involved our insurance ombudsmen and an audience made up of representatives from around 30 insurance companies and intermediary firms, as well as officials from the Association of British Insurers (ABI) and the Association of Medical Insurance Intermediaries. Discussions at the seminar covered a range of issues including:
Since the seminar, the number of complaints we have received about private medical insurance has remained at a low level - under 1% of the total number of complaints received. Last year (the financial year 2008/09), out of the total of 127,471 new cases we received overall, 514 involved disputes over private medical insurance. The selection of case studies below covers the types of issue we see in these cases - and illustrates the themes and general approach we outlined at the seminar.
While she was working temporarily in Portugal, Mrs J was referred to a medical consultant as she had been suffering from a persistent sore throat. Concerned that she might have a form of cancer, the consultant recommended that she should undergo a biopsy "as soon as possible".
This procedure was carried out ten days later, in Portugal, and Mrs J put in a claim to her medical insurer. However, the insurer refused to pay out. It said she was only covered for medical treatment outside the UK if it was required as a result of a "medical emergency". The insurer did not consider this case to have been a medical emergency.
Mrs J thought this was unfair. She complained to the insurer, saying it had failed to take into account the consultant's "expert opinion that immediate action was required".
In response, the insurer pointed to the fact that the biopsy had not taken place until ten days after she had seen the consultant. The insurer added that, in its view, it would not have been particularly difficult for Mrs J to have returned home, so that the biopsy could be carried out in the UK. Flights could be arranged at short notice and at a relatively low cost.
Mrs J then referred her complaint to us.
complaint upheld in part
We noted that the policy terms and conditions clearly excluded medical treatment that was undertaken outside the UK, except in an emergency. The exact meaning of "emergency" was not defined, but (as is normal in such circumstances) could be taken to have its ordinary, everyday meaning.
We noted the Portuguese consultant's opinion that Mrs J needed a biopsy in order to establish whether or not she had cancer. There was clearly some urgency about carrying out the procedure. However, we noted that the consultant had said that action was required "as soon as possible", not immediately.
The biopsy had taken place ten days after Mrs J had first consulted him. Given the timescale involved, we concluded on balance that the situation had not been a "medical emergency".
However, we noted that if Mrs J had returned to the UK to have the biopsy, the insurer would have been obliged to pay for it, under the terms of the policy.
We said that the fair and reasonable outcome in this case was for the insurer to pay Mrs J the amount she would have been charged for the biopsy in the UK. This was, in fact, considerably less than the amount she had actually paid.
Mrs C, who was in her 60s, was experiencing increasing problems with mobility. She had private medical insurance and her GP decided to refer her to Mr Q, a consultant at the local hospital.
Before confirming the date of her appointment, Mrs C contacted her insurer to get authorisation. She was taken aback when the insurer said it would not pay for her to see Mr Q. The insurer explained that although her policy covered the costs of a consultation with a specialist, that specialist would have to be chosen from those on its approved list.
The insurer sent her its list of approved consultants and suggested she should ask her GP to refer her to one of them. However, Mrs C discovered that none of these consultants were based in her home town - or even within what she felt was reasonable travelling distance. She therefore contacted the insurer again.
Mrs C explained that visiting any of the consultants on its list would entail a lengthy journey for her. She said she would find this difficult - not only because of her mobility problems but also because she suffered from incontinence.
The insurer told Mrs C that it appreciated the particular problems she faced. However, it said that Mr Q's fees were higher than those of the consultants on its list.
The insurer offered to pay her an additional amount, in recognition of any distress or inconvenience caused by its handling of the matter. However, it insisted that it was unable to meet the cost of a consultation with Mr Q. Mrs C then referred her complaint to us.
We noted that over that past year or so, the insurer had been gradually reducing its list of approved consultants. In our view, this left Mrs C in a position where she was unable to receive the full benefit of her policy. Her medical condition was covered, but none of the consultants on the insurer's list were within reasonable travelling distance for her.
Our enquiries suggested that Mr Q's fees were not particularly high, when compared to the fees charged by other consultants in the area. So we said that in these particular circumstances, the insurer should pay her the amount it would cost to see one of its approved consultants. She could then use that sum to see Mr Q at her local hospital.
After being diagnosed with cancer in 2004, Mr J successfully underwent a course of chemotherapy. Within a year he was in remission and able to return full-time to his job as a draftsman for a large construction firm.
Unfortunately, in April 2008 he suffered a relapse. His specialist recommended a further course of chemotherapy, using a different drug, and Mr J's private medical insurer agreed to meet the cost of this treatment.
By August of that year, Mr J was again in remission. However, his consultant recommended that "in order to achieve complete remission... to remove residual disease ..." he should continue receiving infusions of the same drug, at three-monthly intervals, for an initial period of 12 months.
Before undertaking this treatment, Mr J contacted his insurer. It had not crossed his mind that there would be any difficulty in obtaining the insurer's authorisation. However, the insurer said it was unable to pay for the proposed treatment. It told him it did not think the use of this particular drug would have any impact on his underlying condition, which had now become "chronic".
It also said that it considered the use of the drug in question for treatment after remission was "experimental". And it reminded him that it had written to all its policyholders in May 2005, saying it was withdrawing funding for "experimental" treatment.
Mr J told the insurer he thought its attitude was "unreasonable". He pointed out that his consultant had told him the proposed treatment was "effective, recognised and authorised for use" in treating his particular condition. However, the insurer still insisted that it was unable to fund the treatment. Mr J then brought his complaint to us.
We noted that the policy explicitly covered treatment, "intended to stabilise and bring under control a chronic condition". However, there was also an exclusion that clearly stated the insurer would not pay for "the use of a drug or treatment which has not been established as being effective or which is experimental".
The insurer was committed to reimburse the cost of medical treatment covered by the policy and it was for the policyholder's consultant, not the insurer, to decide the appropriate treatment. What we needed to do was to determine whether the insurer had applied the policy exclusion fairly and reasonably, in all the circumstances of this particular case.
We noted that the drug in question was one that the insurer mentioned in its letter to policyholders of May 2005, when it said it was withdrawing funding for treatment using certain types of drug. However, the insurer had authorised and paid for Mr J's treatment using that same drug in April 2008.
We looked at medical evidence, provided by both the insurer and by Mr J's consultant, concerning the use of the drug in question. We found the drug was widely considered to be a well-established and effective treatment for patients in a similar situation to Mr J. The evidence suggested that the chance of complete remission after treatment was up to 10%, while there was a 60% chance of partial remission.
We took the view that, on the balance of the evidence, the insurer should authorise the use of the drug in this case. The evidence on its use and potential effectiveness indicated that it was no longer experimental - and that it could improve, or at least stabilise, Mr J's condition.
We told the insurer that it should pay for the proposed course of treatment, if Mr J decided to proceed with it. We also said the insurer could exclude the cost of any treatment, medical attention or surgery that might arise in any future claims from Mr J, if they came about as a consequence of his undergoing treatment with this drug.
After being referred to a consultant surgeon, Mr E was told he needed prostate surgery. He rang his insurer to obtain authorisation and was told the procedure was covered by his policy. A few days later, Mr E received a letter confirming the insurer's authorisation.
The exact procedure that Mr E's surgeon planned to carry out was to be undertaken as a robot-assisted operation. The surgeon was aware that some insurers had declined to cover this particular procedure in the past. So even though he knew Mr E had already obtained authorisation, the surgeon told him he would contact the insurer. He wanted to be certain it was fully aware of what was proposed.
Mr E then decided he ought to phone the insurer again himself, just to check the position. Initially, he was told that the exact procedure he was having was covered by his policy. Later the same day, however, the insurer rang Mr E to say it would not be able to pay the full cost of the procedure.
The insurer told Mr E that the proposed treatment was considered to be "experimental or unproven", so it was not covered by the policy. The insurer was prepared to pay an amount "equivalent to the cost of the procedure based on conventional treatment". But it pointed out that there would probably still be a shortfall, which would be Mr E's responsibility.
Very unhappy with this outcome, Mr E complained to the insurer that it had "reneged" on its agreement. He disagreed with the insurer's view that the robot-assisted procedure was "experimental", and he said he understood the procedure was widely used in many NHS hospitals.
In its response, the insurer said it accepted it "could have been more clear about exactly what costs were covered". It said it would therefore increase the sum it had already agreed to pay towards the cost of his surgery. However, it still insisted that it was unable to cover the full cost of a robot-assisted procedure.
Mr E thought it unacceptable that he would still have to pay a certain amount towards a procedure that - in his view - should be fully covered by his policy. He therefore brought his complaint to us.
complaint not upheld
To decide the complaint, we needed to determine whether the robot-assisted procedure was "experimental and/or unproven", and whether the insurer had acted fairly and reasonably by offering to pay no more than the cost of an equivalent conventional procedure.
We noted that the policy wording clearly set out that it would not pay for "treatment which has not been established as being effective or which is experimental."
In assessing the claim, the insurer had referred to guidance issued by NICE (The National Institute for Health and Clinical Excellence). This suggested it was not yet clear whether a robot-assisted procedure offered any advantage over a conventional procedure.
NICE is an independent organisation providing national guidance on areas such as public health, treatment regimes, procedures within the NHS, and clinical practice.
Given the status of NICE, we thought it reasonable for the insurer to take its findings into account.
The insurer had offered to pay Mr E an amount equivalent to the cost of undergoing a conventional procedure, together with an additional sum in recognition of the confusion it had caused by its poor handling of the claim. We told him we thought this was fair and reasonable, in all the circumstances of the case.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.