The High Court has overturned a decision by the Financial Services and Pensions Ombudsman to order the reinstatement of payments under an income protection insurance policy for an Irish Rail locomotive driver.
Mr Justice Barry O’Donnell said the decision requiring Utmost Paneurope DAC to reinstate the benefits was flawed “by serious and significant errors”. He said it should be set aside and sent back to the ombudsman for fresh consideration.
Utmost claimed the cost of paying up under the insurance policy could run to around €730,000 until the driver’s retirement date in 2041.
The driver, who is not named, was a member of a group income protection policy provided by Utmost to Irish Rail.
He made a claim under the scheme in November, 2014 after he encountered mental health difficulties following a back injury. The claim was accepted and he was paid from December, 2014.
The policy provided that after 24 months of payments, the definition of a disability changes and Utmost would only continue to pay the benefit if the illness or injury also prevented the person from performing “the duties of any rail operative occupation” within Irish Rail.
Just before the 24 months ran out, Utmost initiated a review and asked the Irish Rail chief medical officer doctor if the driver was able to perform the duties “of any rail operative occupation”.
The doctor replied he was unfit to carry out locomotive driving duties and this was likely to be a permanent situation. The doctor also noted he was unfit for “any role within a railway setting, due to the nature and severity of his symptoms and the psychotropic medicine required to treat same”.
Utmost got its own doctor to examine him. That doctor noted he had attended a psychotherapist, had been admitted to hospital for psychiatric treatment, and was attending an outpatient clinic. He was also prescribed antipsychotic and antidepressant medication.
The doctor diagnosed him as suffering from personality disorder with paranoid narcissistic traits. He expressed the view that there was no reason, from a work mental health perspective, “that he would not be able to engage in other work as a railway operative”.
He also noted that because of the driver’s propensity to anger there was a reasonable likelihood he would have difficulties with management, but that this behaviour should be managed similar to every other employee.
Utmost informed the driver his payments would cease at the end of February, 2017. The driver then lodged a complaint with the ombudsman.
In October, 2019 the ombudsman issued a preliminary decision in which he found the ceasing of payments was wrongful.
This, the ombudsman found, was largely because of the absence of a more comprehensive assessment of the driver’s ongoing symptoms and a detailed consideration of the duties of any alternative rail operative occupations which he might be in a position to perform.
As well as recommending reinstatement of payments, the ombudsman required Utmost to make up for any loss to the driver for the time he was not being paid the benefits and taking account of any taxation changes which might affect that.
The ombudsman also said once his decision was implemented, Utmost was still entitled to conduct a fresh review of his medical condition in order to confirm whether or not he continued to satisfy the definition of disability within the policy.
Utmost disagreed with the decision and made submissions including that without moving the focus from ability to perform safety-critical roles to non-safety critical roles, the provision of insurance of this type would become unfeasible for most employers.
In January, 2020 the ombudsman made a final decision upholding his preliminary finding.
Utmost appealed the decision to the High Court. The ombudsman opposed the appeal.
In his ruling, Mr Justice O’Donnell said that in the ombudsman’s decision there was no reference to or reliance on any code of conduct, best practice or other reliable objective measure for the finding that the conduct was unreasonable, particularly where the ombudsman did not appear to make a finding on the contractual obligations.
While recognising the ombudsman’s expertise in the conduct of financial service providers, where a finding of unreasonableness is made without reference to any objective criteria, it potentially transforms the analysis from an objective assessment into a “because I say so” assessment.
He did not accept that this is what the jurisprudence to date on the ombudsman authorises.
He was also satisfied that the remedies directed by the ombudsman were disproportionate and illogical.
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