Life insurers and general insurers who offer income protection products under their general insurance licences are breathing a collective sigh of relief following TAL Life Limited’s (TAL’s) recent successful defence of an income protection breach of contract claim brought in the New South Wales Supreme Court by insured member, Fred Fehmi Zahr  NSWSC 358.
In handing down his decision on 11 April this year, Justice Pembroke has significantly enlivened industry debate around the critical role insurers have seen that psychological evaluation plays in identifying false or exaggerated claims for a mental disorder. Zahr is one of the most significant cases in recent times lending much welcome support to an insurer’s ability to rely on the veracity of, and the vital role played by, these available objective mechanisms to identify potential malingerers.
Faking a mental disorder during a psychological evaluation is tempting for a potential malingerer because the rewards and benefits can be so high. The Zahr case is the most recent judicial pronouncement that an insured member had engaged in embellishment, exaggeration and deception in order to advance his own financial interests and that he was a malingerer.
The case concerned a challenge by Mr Zahr to TAL’s decision that he was able to work full time and was therefore not entitled to a partial disability benefit under the relevant policy. The threshold question, as properly identified by his Honour was one of fact, namely whether in truth he was partially disabled and could not work full time. Mr Zahr’s case was that by reason of his depression and anxiety, he was only able to work 3 days per week instead of 5 days per week at the Sydney Dental Hospital and that TAL was liable to pay his a partial disability benefit for 2 days per week. Mr Zahr relied heavily on the evidence of his treating psychiatrist, Dr Selwyn Smith, and on his own affidavit evidence as to the significance of his symptoms on his ability to work.
In a step which has proved crucial in the successful defence of this case, early in its assessment of the claim TAL engaged eminent neuropsychologist, George Haralambous, to undertake a series of psychometric tests designed to objectively measure Mr Zahr’s psychological functioning. Mr Haralambous carried out seven extensive tests in April 2008, including the well known Minnesota Multiphasic Personality Inventory – N.2 (MMPI-2) in April 2008 and prepared an extensive report for TAL.
Earlier this year, Mr Haralambous prepared a supplementary report in which he was asked to comment on a number of conclusions drawn by Dr Smith and to determine whether or not Dr Smith’s conclusions altered his original opinion. In determining that his conclusions were not altered by Dr Smith’s opinions, Mr Haralambous confirmed his earlier opinion that as a consequence of Mr Zahr’s test results, he could state with a high degree of certainty that Mr Zahr’s purported cognitive and psychological deficits were substantially exaggerated or embellished.
His Honour accepted Mr Haralambous’ evidence which he considered to be impressive, impartial and fair. He was fortified in his conclusions in respect of both the evidence of Mr Zahr – his “undiluted enthusiasm” for his part-time employment, and the absence of any hint in his glowing performance appraisals (obtained on subpoena by TAL) that he struggled or was unable to carry out his employment.
Possibly the most significant conclusion that his Honour drew related to his decision to prefer Mr Haralambous’ opinion over that of Mr Zahr’s treating psychiatrist, Dr Smith. While he did concede that Dr Smith did not have as complete a picture of Mr Zahr as was afforded to him, he also properly determined and accepted the real point of difference between the evidence of Dr Smith and Mr Haralambous. While Dr Smith had accepted Mr Zahr’s account of history and symptoms at face-value, fortified by the results of the extensive neuropsychological testings Mr Haralambous administered, he was not prepared to do so.
Much literature has been written in relation to both the benefits and disadvantages of reliance by insurers on the variety of objective measures of psychological functioning available to assist in detecting malingering or judging the successfulness of malingerers. Much research is still to be done in this complex area.
In this environment, it is often the case put by a patient’s treating psychiatrist (and then by his advocate if the matter is litigated) that such objective psychological testing is just a tool much like many of the radiological investigations available for the detection of organic or physical injuries.
The importance of his Honour’s conclusion in this case is the more appropriate description of these complex neuropsychological tests as a ‘tool’ able to play a critical role in identifying false or exaggerated claims. In this case, as will be the case with many claims for alleged depressive illness, such tests are, to use his Honour’s words, a valuable and in some cases indispensable aid to the formation of an accurate judgment and consequently a correct diagnosis.
For more information please contact: