SINGAPORE: A court has rejected an insurer’s bid to get a second insurer to split a payout of about S$39,000 (US$29,100) to a worker who injured his finger at a building site.
The construction worker was covered by two insurance companies, but only one – HSBC Life (Singapore), previously known as AXA Insurance – took part in contesting the claim.
After reaching a settlement with the injured worker for about S$39,000 despite multiple new injuries being added on, HSBC Life contacted the second insurance company, MSIG Insurance (Singapore), asking for the sum to be paid.
HSBC Life later launched a court application to get MSIG Insurance to foot half of the bill.
In a judgment made available on Wednesday (Jul 31), District Judge Teo Guan Siew rejected the application, saying the settlement HSBC Life had reached with the worker was not “reasonable” in light of the “questionable nature” of the worker’s various injury claims.
THE CASE
The worker, who was not named in the judgment, was employed by Long Hui Construction. The company had an annual work injury compensation policy under HSBC Life that indemnified it against any sums it might have to pay to employees who were injured due to work-related accidents.
The worker was assigned to a building project, with the main contractor Soil-Build taking out an insurance policy with MSIG Insurance to indemnify itself against any work injury compensation claims by employees linked to the building project.
On Oct 26, 2019, the worker was engaged in hacking work when a breaker – a heavy-duty demolition tool – fell on his right hand.
He sustained a minor injury to his right index finger and was taken to a clinic at Fullerton Healthcare, which issued him two days of medical leave.
The worker’s supervisor gave a similar account of the accident on the same day, and said the worker had stated he felt pain only in his finger and not anywhere else.
As only two days of medical leave had been issued, his employer Long Hui decided there was no need to file any report with the Manpower Ministry (MOM).
The main contractor Soil-Build was later informed of the incident report, but did not notify its insurer, presumably because it also viewed the accident as minor, the judgment stated.
Three days after the accident, the injured worker visited Tan Tock Seng Hospital (TTSH). He complained of back and shoulder pain in addition to his finger injury, claiming that he had also fallen when the breaker landed on his finger.
WORKER INITIATES CLAIM, ADDS INJURIES
He then notified MOM about the accident and initiated a claim process under the Work Injury Compensation Act (WICA).
Under the WICA claim process, the amount of compensation that an employer is liable to pay an injured employee is computed based on various factors, particularly the extent to which the injury has caused any temporary or permanent incapacity to the employee.
MOM sent a letter to Long Hui in February 2020 saying it had investigated the accident and would be admitting the claim by the worker over his injury to his finger and back. No mention was made of the right shoulder injury.
Two TTSH medical reports were prepared for the WICA claim, stating that the worker had sustained 15 per cent permanent incapacity for injuries to his back, shoulder and knee, and that he suffered 7.5 per cent permanent incapacity for his finger injury – for a total of 22.5 per cent permanent incapacity.
The judge noted that there had been no mention of the additional knee injury until, presumably, a subsequent assessment by TTSH.
MOM later issued a notice of assessment dated September 2020 for a sum of about S$19,700 based on a permanent incapacity rate of 12.5 per cent, lower than TTSH’s assessment.
The notice of assessment is a preliminary assessment by MOM that parties can dispute by filing objections.
The injured worker was dissatisfied with MOM’s notice of assessment and filed a notice of objection, which led to a series of pre-hearing conferences by the ministry in a bid to settle the claim without having to go to the Labour Court.
In the conferences, MOM asked if the injured worker had told the first doctor at the Fullerton clinic about his shoulder injury – and the clinic confirmed that this did not happen.
HSBC Life then told MOM that it was not agreeable to the assessment for the supposed additional shoulder injury.
However, a TTSH memo later showed that the worker had been attended to for knee and shoulder injuries in October 2019 at the hospital.
HSBC Life said this was the “turning point” because MOM showed parties the TTSH memo and supposedly advised HSBC Life to accept the assessment of 22.5 per cent permanent incapacity.
The judge said it was unlikely that MOM gave such advice based on its own notice of assessment, and the lack of evidence for such a claim.
After this, HSBC Life decided to settle with the injured worker and settled on a sum of about S$29,600 – an amount that was higher than indicated in MOM’s notice of assessment.
After adding in medical leave wages and medical expenses, the full sum was S$39,035.44.
Meanwhile, MSIG Insurance was unaware of the accident or the claim made by the injured worker because it had not been notified.
HSBC Life later wrote to MSIG Insurance asking for the sum of S$39,035.44. It later revised this demand to half the sum – at about S$19,500, on the basis of double insurance.
Under the principles of double insurance, an insurer who has fully paid for a loss covered by another insurer may be able to claim contribution, said Judge Teo.
However, the insurer called upon to contribute may resist the demand on the basis that it would not have been liable under its policy, for example, because the insured person failed to give notice in time under policy terms.
A co-insurer that has not been notified of the claim could also argue it had been prejudiced as it was deprived of the chance to investigate or take part in the handling of the claim.
“While the legal position is not fully settled as regards the significance of notice and whether the co-insurer should be given an opportunity to participate in the handling of the claim, it is clear that if the insurer making payment was actually not liable or had paid in excess of its actual legal liability, then the no right of contribution would exist at law,” said Judge Teo.
MSIG Insurance argued that HSBC Life had chosen to pay the worker’s claim by consent and not because MOM found Long Hui liable after a hearing. In doing so, HSBC Life had voluntarily assumed liability and should not be entitled to claim contribution from a co-insurer.
MSIG Insurance also said HSBC Life had acted unreasonably in failing to notify MSIG Insurance in good time of the claim and their intention to settle.
It added that the amount HSBC Life settled on with the worker was more than it was legally liable for, and so MSIG Insurance should not have to contribute to the sum.
JUDGE’S FINDINGS
Of the three reasons, Judge Teo dismissed the first and said the second might be a factor but was not determinative.
Instead, he said HSBC Life’s settlement with the worker was not reasonable, and there was nothing to contradict the evidence that the worker’s injury was minor.
Judge Teo said HSBC Life had not done “everything it could reasonably have done to challenge the worker’s claim”.
“Indeed, it might be queried whether the circumstances of the accident were capable of causing injuries to the back, shoulder and knee, let alone injuries of an extent that causes permanent incapacity,” said the judge.
“Based on the photographs in the incident report showing the work site and a re-enactment of the accident, the worker was squatting when the breaker fell on his right hand. The manner in which the accident took place would appear inconsistent with injuries to the back, and especially the shoulder and knee.”
Judge Teo said HSBC Life should have exercised greater due diligence in light of the questionable nature of the worker’s injury claims and made further investigations.
He added that his decision does not suggest that every WICA claim must be challenged by an insurer or every case taken to court before a co-insurer makes a contribution.
Instead, every case must be looked at on its own facts and circumstances.