Supreme Court Reporters
A decision by the Financial Services and Pensions Ombudsman to restore income protection insurance benefits to an Irish railway driver has been overturned by the High Court.
Judge Barry O’Donnell said the decision to order Utmost Paneurope DAC to restore benefits was flawed “by serious and significant errors”. He said it should be set aside and sent back to the ombudsman for reconsideration.
Utmost claimed that insurance costs could amount to around €730,000 up to the driver’s retirement date in 2041.
The driver, who has not been named, was a member of a group income protection insurance scheme provided by Utmost to Irish Rail.
He filed a claim under the scheme in November 2014 after experiencing mental health problems following a back injury. The claim was accepted and he was paid from December 2014.
The policy stated that after 24 months of payments the definition of disability changed and Utmost would only continue to pay the benefit if the illness or injury also prevented the person from performing ‘the duties of a railway occupation’ within Irish Rail.
Just before the 24-month period expired, Utmost launched an investigation and asked the Chief Medical Officer of Irish Railways whether the driver was fit to perform the duties “inherent in employment with a railway company”.
The doctor replied that he was not fit to drive a locomotive as an engineer and that this would probably be a permanent situation.
The doctor also noted that he was unsuitable for “any role within a railway environment, due to the nature and severity of his symptoms and the psychotropic medications required to manage them”.
Utmost had his own doctor examine him. The doctor noted that he had seen a psychotherapist, had been admitted to the hospital for psychiatric treatment, and attended an outpatient clinic.
He was also prescribed antipsychotic and antidepressant medications.
The doctor diagnosed him as suffering from a personality disorder with paranoid narcissistic traits. He indicated that from a work mental health perspective there was no reason “that he could not do other work than a railway worker”.
He also noted that the driver had a tendency to anger and that there was a reasonable chance that he would get into trouble with management, but he indicated that this behavior should be dealt with in the same way as all other employees.
Utmost informed the driver that his payments would stop at the end of February 2017. The driver subsequently filed a complaint with the ombudsman.
In October 2019, the Ombudsman issued an interim decision finding that the suspension of payments was unlawful.
The Ombudsman found that this was largely due to the lack of a more comprehensive assessment of the driver’s ongoing symptoms and a detailed consideration of the duties of any alternative railway occupations he might be able to perform.
In addition to recommending that the payments be reinstated, the ombudsman also ordered Utmost to compensate the driver for the loss he had suffered during the period he had not received the benefit, taking into account any tax changes that could affect this.
The ombudsman also said that after his decision was implemented, Utmost still had the right to have his medical condition reassessed to confirm whether he still met the policy’s definition of disability.
Utmost disagreed with the decision, arguing, among other things, that offering such insurance would become unfeasible for most employers unless the focus shifted from the ability to perform safety-related functions to functions that are not safety-related.
In January 2020, the Ombudsman issued a final decision confirming his preliminary finding.
Utmost appealed the decision to the High Court. The Ombudsman opposed the appeal.
In his ruling, Judge O’Donnell found that the Ombudsman’s decision contained no reference to, or reliance on, a code of conduct, best practice or other reliable objective standard in finding that the conduct was unreasonable, particularly as the Ombudsman had apparently made no finding as to contractual obligations.
While the Ombudsman’s expertise in the conduct of financial services providers is recognised, where a finding of unreasonableness is made without reference to objective criteria, it can potentially transform the analysis from an objective assessment to a “because I say so” assessment.
He did not accept that this is what the case law to date regarding the ombudsman allows.
He was also convinced that the measures proposed by the Ombudsman were disproportionate and illogical.
