In a recent judgement, the Federal Court reviewed AFCA’s jurisdiction when dealing with TPD insurance and superannuation complaints. The unique matter illustrates the complex nature of TPD claims and the legal and jurisdictional issues that can arise when a claim is denied by an insurer. The decision involved complex statutory interpretation and analysis of jurisdictional limitations. Attwood Marshall Lawyers Compensation Law Partner and QLD Law Society Accredited Specialist in Personal Injury Law, Jeremy Roche, explains how this decision may impact superannuation insurance disputes in the future.
Mr Brian Edgecombe was a police officer in New South Wales who suffered a significant foot injury. From 2008, he was absent from work for an extended period, and in 2012 his employment as a senior constable ended. He claimed to be totally and permanently disabled within the terms of two policies of insurance arranged by the trustee of the superannuation scheme of which he was a member. The insurance policies were taken out by the trustee of the Superannuation Fund with MetLife Insurance Limited (MetLife).
Mr Edgecombe made a TPD claim under both his insurance policies, which were ultimately declined by MetLife. Upon the claims being rejected, Mr Edgecombe lodged a complaint with the Australian Financial Complaints Authority (AFCA) about MetLife’s decision in respect of the second policy he held in 2018. Notably, Mr Edgecombe directed his complaint towards the insurer, not the superannuation fund trustee. AFCA accepted the complaint, notwithstanding that the complaint had exceeded the time limitation under the AFCA Rules for a superannuation complaint to be made.
AFCA Rules stipulate that a complaint about an insurer’s decision under an insurance policy held by a trustee will be considered as a ‘Superannuation Complaint’ if the time limits have been met, by joining the insurer to a complaint against the trustee’s decision. Alternatively, if the time limits have not been met, the complaint will be considered a “Non-Superannuation Complaint” against the insurer.
In this instance, the time limits had not been met.
As the complaint was taken as a Non-Superannuation Complaint, AFCA determined that the matter was of a contractual nature and fell within AFCA’s general jurisdiction.
AFCA went on to find in favour of Mr Edgecombe and upheld his cover under the policy.
Metlife’s Federal Court Challenge
MetLife disagreed with AFCA’s decision and subsequently challenged AFCA’s authority to determine the complaint in the case of MetLife Insurance Limited v Australian Financial Complaints Authority  FCA 23. MetLife sought declarations in the Federal Court of Australia that the AFCA determinations did not bind MetLife in respect of the complaint.
The Court found in favour of AFCA, affirming that AFCA does have jurisdiction to deal with a complaint about an insurer’s decision under a group policy held by a trustee by dealing with the complaint as a Non-Superannuation Complaint that is lodged out of time.
MetLife appealed the Federal Court’s decision challenging AFCA’s authority to determine the complaints in the case of MetLife Insurance Limited v Australian Financial Complaints Authority Limited  FCAFC 173,. This was not the first time AFCA’s jurisdiction to determine a dispute has been challenged.
Metlife asserted that AFCA did not have jurisdiction to determine the complaint.
Metlife considered that Mr Edgecombe’s 2018 complaint was precluded by the time limitation for superannuation complaints pursuant to AFCA Rules and that AFCA did not have the jurisdiction to deem otherwise. Metlife alleged that by applying statutory interpretation principles to Section 1053 of the Corporations Act, the complaint was not one that could be adjudicated upon by AFCA.
AFCA asserted that the dispute resolution service that predated AFCA had jurisdiction to determine the 2018 complaint and that AFCA was intended to have the same jurisdiction as its predecessor, thereby enabling AFCA to determine the complaint. Further, a superannuation complaint is to be confined to the 10 types of complaints listed in s1053(1). For that reason, the 2018 complaint was not a superannuation complaint for the purposes of s1053(1) and AFCA was therefore able to determine the complaint under its Non-Superannuation Complaint jurisdiction instead of its Superannuation Complaint jurisdiction. This would mean that, irrespective of s1053(1), when the complaint was made, the AFCA rules formed a contract binding the parties, and AFCA was permitted to determine the complaint under that contract.
The Full Court of the Federal Court determined that Metlife was correct in its assertions and that proper statutory interpretation of s1053 was such that AFCA did not have authority to determine the 2018 complaint. The Full Court held that a superannuation complaint can only be dealt with by AFCA if it falls within the 10 types of complaints specified in s1053(1). Proper statutory interpretation requires a finding that a superannuation complaint that falls outside the 10 types listed in s1053(1) cannot be made to AFCA as a Non-Superannuation Complaint rather than a Superannuation Complaint.
Crucial considerations in the judgment include:
- If a complaint relates to superannuation, it only falls into the AFCA jurisdiction if it falls within a category of complaint listed in sections 1053(1)(a)-(j) of the Corporations Act. It cannot be brought as a different category of complaint, such as a complaint directly against an insurer.
- But for the breach of the time limitation, the complaint could have been made against the trustee under s1053 and then Metlife could have been joined by AFCA to the complaint.
- AFCA Rules contain a definition of Superannuation Complaint that differs from that defined in the Corporations Act. However, the AFCA Rules cannot operate inconsistently with the Corporations Act.
When a claimant is dissatisfied with an insurer’s decision under their superannuation fund, the complaint should not be brought directly against the insurer. Instead, the insurer would have to be joined to a complaint against the superannuation trustee.
The judgement precludes the ability of a complainant to go directly against the insurer where the complaint is otherwise time-barred according to the AFCA Rules.
In this case, AFCA now has a right to seek special leave to appeal the decision to the High Court.
The benefits of having an experienced compensation lawyer make a TPD claim
This case demonstrates that TPD claims can be complex and involve intricate legal analysis. Lawyers specialising in compensation law and TPD claims can assist claimants avoid making critical mistakes.
Professionals such as financial advisors, accountants and insurance brokers often receive a client inquiry seeking advice on the lodgement of a Total and Permanent Disablement (TPD) claim, and some practices have dedicated claims teams to deal with these types of matters.
However, it is important to remember that TPD claims can be complex, and the claim process lengthy. It is common for TPD claims to be unfairly rejected by the Insurer and for appeals to be made. It is much easier to utilise a TPD legal expert prior to the claim being denied at first instance. It can save a lot of stress, costs and heartache for the client if the initial application is done properly and thoroughly so that it complies with all legal requirements of the policy involved and meets the definitions, supported by appropriate medical evidence.
Accountants and financial planners should also be careful not to be seen to be giving any ‘legal advice’ with respect to these claims. Not only may this be an offence to do so, but they may also not be covered by their professional indemnity policy if they make a mistake, and something goes wrong. This could be catastrophic for the business if a large policy amount was involved.
We offer a free initial consultation to all professional advisors for these claims, as well as the client. In most cases, we accept instructions on a ‘no win, no fee’ basis and cover the costs of any additional medical reports by specialists.
Attwood Marshall Lawyers – experts in TPD and superannuation claims
Attwood Marshall Lawyers are experts in TPD and superannuation claims. We have been helping injured people for over 75 years to obtain successful compensation for their injuries and medical conditions. We understand that when someone is at a stage where they are applying for TPD benefits, they have already gone through significant turmoil and life changes.
We want to ensure that our clients can access their full entitlements as quickly as possible so that they can move on with their life and focus on what matters most, their health, their family, and their financial security. After all, no one wants to spend days, weeks, or months dealing with insurance companies who ultimately do everything they can to reject valid claims.
TPD claims gone wrong: You may face serious consequences if you do not seek the right advice when applying for life insurance and TPD cover