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PFA Ruling: Regarding the duty of the board of trustees in relation to the assessment of a disability benefit

13 November 2008 Mamodupa Mohlala (Pictured), Pension Fund Adjudicator

The Pension Funds Adjudicator has issued an important ruling in the matter of M Vs ESKOM PENSION AND PROVIDENT FUND regarding the duty of the board of trustees of a fund in relation to the assessment of a disability benefit. The effect of the determination is that the board of trustees of a fund has a duty to assess all medical reports submitted by a member properly and its decision regarding a disability claim should be reasonable and justifiable having regard to all the evidence before it. The determination indicates that it is unacceptable for funds or its board to act negligently in assessing a disability claim as this may have serious consequences for a member. This tribunal stressed that a dereliction of duty by a fund in this regard may attract an award for punitive damages.

The facts of the matter are briefly the following:

Facts

Mr. M (“the complainant”) is employed as a Head of Finance by Eskom Holdings Ltd (“the employer”) and is a member of the Eskom Pension and Provident Fund (“the fund”) by virtue of his employment. The complainant is suffering from diabetes and hypertension. The complainant consulted three doctors, a Special Physician, Podiatrist and a Family Physician, who confirmed that he is suffering from type 2 diabetes mellitus, vascular disease with amputation, renal impairment and hypertensive heart disease.

The complainant applied for an ill-health retirement benefit to the fund on the grounds that he is no longer able to work properly due to his illness. The board of the fund declined the application on the grounds that the complainant’s illness is not permanent and does not render him incapable of performing his duties.

Complaint

The complainant is aggrieved by the repudiation of his claim for an ill-health retirement benefit. He argued that he has diabetes which became uncontrollable in October 2005. He submitted that he was amputated above the knee in his right leg due to a fungal infection. Further, he stated that he uses prosthesis and crutches to walk. Moreover, he argued that his doctor recommended that he must rest, stay away from noise and stressful environment.

Response

The respondent submitted that although the complainant’s doctors confirmed that he is suffering from diabetes and hypertension with peripheral vascular diseases, they nevertheless indicated that his condition has stabilized. It argued that the medical reports submitted by the complainant indicate that he would not require any restrictions, accommodation, therapeutic intervention or support devices. Thus, it stated that the complainant will be able to perform the duties of his occupation if he is confined to sitting and is not required to walk around. Further, it indicated the complainant can delegate some of his duties to his subordinates. However, it pointed out that the complainant qualifies to have his work environment adapted to accommodate his condition.

It further averred that the complainant is not entitled to an ill-health retirement benefit as he is not permanently incapable of performing his duties or any other alternative duties as required in terms of the fund’s rules. It argued that the medical reports does not indicate that the complainant is permanently incapable of performing his duties.

Determination

After considering all the evidence and the rules of the fund the Adjudicator held the following:

It was held that the critical issue is whether the board’s decision to repudiate the complainant’s claim for an ill-health retirement benefit is reasonable on the evidence before it. The first issue is whether the evidence indicates that the complainant is permanently incapable of performing his duties as set out in the fund’s rules. After having regards to all the medical evidence, the Adjudicator held that there is conclusive evidence which shows that the complainant is permanently incapable of performing his duties as Head Finance due to his medical condition.

This is due to the fact that one of the complainant’s doctors recommended that the complainant should seek medical boarding as his medical condition is progressive irrespective of adequate control of both sugar and hypertension. Further, another doctor indicated that the complainant has tried to return to work but finds it stressful as a result of the amputation which makes it impossible for him to cope with the demand of his occupation. The complainant’s doctors also indicated that his continued occupation causes anxiety as well as poor control of his diabetes.

Held that the next enquiry is whether the complainant is incapable of discharging any other duties or alternative occupation which he would reasonably be capable of discharging by virtue of his education, training and experience. Held that the decision of the board that the complainant will be able to perform sedentary duties or may delegate some of his duties is based on a medical report which does not canvass the question of whether or not he is not capable of discharging any other duties. Held that the weight of the medical evidence indicates that the complainant is not capable of performing any other alternative occupation. This was confirmed by the medical reports that were submitted by the complainant.

Further, it was held that having regard to the fact that the complainant’s condition is treatment resistant and is combined with other diseases like hypertensive heart disease, chest pain, peripheral vascular disease and renal impairment, the conclusion is incapable that he is permanently incapable of performing the duties of his own occupation or any other alternative occupation. Therefore, it was held that the repudiation of the complainant’s claim was unreasonable having regard to all the medical reports and other evidence before the board.

The Order

· It was declared that the complainant qualifies for an ill-health retirement benefit in terms of the fund’s rules (Rule 25(1)(3))

· Held that the decision of the board of the fund to repudiate the complainant’s claim for an ill-health retirement benefit was unreasonable and was set aside.

· The fund as ordered to pay the complainant his ill-health retirement benefit as set out in the fund’s rules within six weeks of the date of this determination.

Click here to read the full determination (PDF file 70kb)

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