First published in ITIJ 105, October 2009
The travel insurance industry is governed by various laws that pertain to various sectors of the market – from aviation medicine to the sale of insurance policies. Here, three lawyers from different parts of the world discuss how laws in their respective countries relate to a variety of regulatory issues facing travellers and the travel insurance industry. At the International Travel Insurance Conference, held in November 2008 in Budapest, three lawyers – Jill McCutcheon, a partner in the Canadian law firm Blaney McMurty LLP; Daniel Scognamiglio, a partner with Blake Lapthorn in the UK; and Tom Hudson, senior vice president and general counsel of MEDEX Global Group in the US – took the stage to give a presentation on how laws affecting common issues in the global travel insurance industry vary in different parts of the world. ITIJ put similar questions to those raised at the conference to this expert panel.
ITIJ: What laws exist to protect the safety of passengers who may suddenly become ill (or whose conditions worsen) while travelling aboard an airplane?
Hudson: The American Aviation Medical Assistance Act of 1998 (AMAA) increased the requirements for medical equipment carried aboard commercial airplanes (including mandatory defibrillators), increased the requirements for crew training so cabin staff might better be able to deal with medical emergencies, and put strict limits on the liability that can result from in-flight care given by a crew member. The AMAA also protects the ‘Good Samaritan’ – a medical professional who happens to be a passenger on a flight where a medical situation arises – and, in a similar way, protects medical escorts travelling with a patient on behalf of an assistance company.
ITIJ: Can you explain the liability protection?
Hudson: The liability protection is strong. Unless the assisting passenger is grossly negligent in what he or she does to help the sick or injured passenger, the airline, crew and the Good Samaritan cannot be held liable for any injury that results from the emergency treatment in the air. The only duty imposed on the crew is that they exercise good faith in determining that the Good Samaritan is a medically qualified individual. To my mind, if the passenger says that he is a physician, that’s more than sufficient. If the passenger is a former boy scout with a first aid badge, he’s not qualified, obviously.
McCutcheon: In Canada, there is no statute in effect that is comparable to AMAA but Transport Canada, the governing regulatory authority in Canada, has responded by taking action to implement improved medical equipment on board flights with more than 100 passengers. Various provinces of Canada have legislation in place that protects a Good Samaritan who responds in the event of a medical emergency. Such persons are relieved from liability unless they are grossly negligent. However, these statutes would likely not apply to protect a medical professional who responds to an emergency in flight.
Scognamiglio: In the UK, there is no legislation like that of the AMAA in the US. It is for the captain to decide to allow a Good Samaritan to provide treatment. Many airlines provide indemnity for volunteering healthcare professionals. If one of the ground-to-air medical assistance providers is involved, they may also assume the legal liability, provided their advice is followed.
It is possible, with appropriate skills, to perform complex and potentially lifesaving procedures on an aircraft
ITIJ: What about European Union (EU) law?
Scognamiglio: There is no EU rule obliging a doctor to help in a medical emergency. In the UK, the General Medical Council (GMC) has advised that a doctor has an ethical duty to help, and the British Medical Association (BMA) says that doctors should be willing to identify themselves and offer help in an emergency. This is extended in France and Germany where there is a legal obligation to help.
ITIJ: Under the AMAA, it appears that a physician volunteer performing competently is protected from liability regardless of the treatment result. Is that the case in the UK and EU?
Scognamiglio: It is possible, with appropriate skills, to perform complex and potentially lifesaving procedures on an aircraft (the emergency tracheotomy with a Bic biro springs to mind), but usually the doctor’s role is to assess, diagnose and advise the crew whether the situation can be managed on board or if diversion is necessary. The decision to divert will ultimately be taken by the captain after discussion with ground staff and the advice of any onboard assistance. A doctor, nurse or other health professional is not negligent if he or she acts in accordance with a practice accepted at the time as proper by a responsible body of medical opinion, even though other practitioners may have treated the patient differently.
ITIJ: The AMAA also deals with the use of defibrillators by the crew. How does UK or EU law address the use of medical equipment?
Scognamiglio: Cabin crew must have basic first aid training that is tailored with specific reference to likely events on board an aircraft, but there is very little guidance as to the minimum requirements. Some airlines provide additional training to that which is required as a minimum standard. Under the Joint Aviation Authority (JAA) rules, two different sorts of equipment must be used on airlines – a basic first aid kit and a medical kit containing complex equipment and drugs that can only be used by, or under the supervision of, a qualified person such as a doctor or nurse. The contents specified for these kits is quite basic and there is only a requirement to carry an extended medical kit on aircraft with more than 30 passenger seats and where the aircraft will, at some point in its journey, be more than 60 minutes flying time from an aerodrome at which qualified medical assistance could be expected to be available. Also, some airlines subscribe to telemedicine services in the event of an airborne emergency.
Hudson: Actually, the defibrillator requirement has caused quite a debate in the US aviation legal and regulatory circles. On one hand there is the equipment, which, used by a trained crew member or a physician passenger, can save the life of a fellow passenger in cardiac arrest. On the other hand, the use of a defibrillator is only one aspect of the recognised treatment for ventricular fibrillation, which includes administering the drug Epinephrine and other procedures. Since airlines that have a defibrillator don’t have the drugs, an argument could be made that the airline was negligent in not stocking the drugs. I think such an argument would fail because of the AMAA and the unreasonableness of imposing the further duty of storing the drugs properly and training a crew member to administer drugs. That being said, this is a complicated legal topic.
ITIJ: Let’s move on to the regulations that govern the sale of travel insurance. We understand that Canada has addressed this matter recently?
McCutcheon: Clarifying amendments to Part XIII of the Insurance Companies Act in Canada has created a great deal of debate. Some of the issues that have arisen are relevant to travel insurers and intermediaries who sell travel insurance. These amendments clarify that a foreign insurer need only gain admission to Canada as a foreign branch if it is ‘insuring in Canada a risk’. In a nutshell, it is the location of the insuring activity and not the location of the risk that attracts the requirement of being authorised as foreign company in Canada. An example would be a foreign insurer selling travel insurance to Canadian visitors – that insurer likely does not need to be admitted in Canada as an authorised foreign company. However, if the selling and underwriting of the product, among other activities, are conducted in Canada, a different result may ensue.
It is still permissible to discriminate on the grounds of gender
Also, the distribution of insurance is regulated at the provincial level in Canada. There has been a jurisdictional dispute as to whether banks that distribute travel insurance need comply with provincial laws regarding the distribution of insurance. This dispute was resolved in a case out of Alberta that went all the way to the Supreme Court of Canada. Banks do have to comply with provincial insurance laws in distributing insurance, including travel insurance. As such, various provinces have started to pass laws and regulations to occupy this regulatory field – banks can still distribute travel insurance but there are increasingly more rules that apply. Apart from those developments, there remains the licensing regime across the country, which is fractured and doesn’t make a whole lot of sense. Travel agents benefit from some exemptions but some other distribution channels for travel insurance do not benefit from any licensing exemptions.
Hudson: Confusion continues in the US over this issue because there are different rules on selling insurance in almost every state, making it very difficult to regulate nationally. I should clarify that this issue concerns the sale of insurance by a travel agent as part of a packaged trip or a tour. This is how many US travel insurers and their managing general agents sell travel insurance. The United States Travel Insurance Association (UStiA) is talking with the National Association of Insurance Commissioners (NAIC) to clarify rules regarding the regulation of travel agents and to soften the regulatory regime. Basically, the UStiA is asking the NAIC to accept the fact that travel agents should not be required to take the same licensing examination as an insurance agent. Ideally, retailers whose main business is not the sale of insurance would be exempt from licensing requirements. The retailer (a travel agent) would need to tell its customers that the insurance policy is being offered by a licensed agent and underwritten by a licensed insurance company. The travel agent could hand out basic information about the coverage and benefits, but detailed questions or coverage issues would be addressed by a licensed person.
Scognamiglio: The Financial Services Authority (FSA) in the UK regulates the sale of all insurance products, including travel insurance. Until recently, travel agents selling travel insurance as part of a holiday package were not regulated, although travel agency staff were meant to pass an exam set by ABTA (The Travel Association). A government investigation eventually led to such insurance sales being brought under the auspice of the FSA. Those travel agents who do not seek to become FSA authorised can continue to sell travel insurance by applying to become an appointed representative of an FSA-authorised insurer. The FSA plans to regularly investigate travel agency firms to ensure new selling standards are being adhered to.
ITIJ: Another area of interest is discrimination on the grounds of age and gender and how new anti-discrimination laws are affecting the drafting of travel insurance policies?
Scognamiglio: The Gender Directive (Council Directive 2004/113/EC) deals with the circumstances in which an insurer may charge different premiums or provide different benefits dependent on gender. The Directive came into force in England on 6 April 2008 in the guise of the Sex Discrimination (Amendment of Legislation) Regulations 2008. It is still permissible to discriminate on the grounds of gender, provided that the data is accurate and relevant to the use of sex as an actuarial factor and is compiled, published and regularly updated, which a lot of insurers now seem to be doing. There is, however, an absolute prohibition on discrimination in terms of benefits or premiums on grounds of pregnancy or maternity. Historically gender has not been used when underwriting travel policies, so there was little or no data. That has now changed as there is understandable concern in having to pay for the entire maternity services for a ‘holiday maker’ who has travelled abroad where a baby is delivered and who is claiming the costs of that delivery and all of the other associated maternity costs against their travel insurance.
The consensus of opinion is that the Act and Directive are ambiguous. For insurers, there is debate as to re-wording of insurance policies that currently discriminate against cover in the later stages of pregnancy. A court is likely to take a ‘tautological’ approach by trying to interpret the purpose of the Directive. There are some groups (such as the Equality and Human Rights Commission) that remain vigilant, waiting for the right case to test the change in the law. It is a brave insurer that does not review its wording in light of the changes to the law and the vigilance from the pressure groups. It is not until such a test case makes it to the courts that UK insurers will really know where they stand on this issue. Having said that, a great deal of care is provided in the majority of jurisdictions free of charge to the newborn who may also gain automatic citizenship with the consequential rights. Indeed, most airlines refuse to carry those in the later stages of pregnancy and some insurers have always covered the later stages of pregnancy in any event.
At the same time, working its way through the UK Parliament is an Equality Bill, which aims to bring together the anti-discrimination laws to include discrimination on the grounds of age. It will likely still allow insurers scope to charge higher premiums where statistics show this is relevant and justified, and data will need to be collated. However, any interested party should be vocal as to the implications of discrimination as the effect on travel insurance is not yet confirmed. The current problems faced by the government will inevitably slow up the progress of the legislation. On the horizon is the Anti-Discrimination Directive from Europe that will prevent discrimination in other areas and interested parties should keep a close eye on the progress of the legislation and act accordingly. Accordingly the Gender Directive seems to be the thin end of a wedge preventing discrimination in insurance.
McCutcheon: In Canada, provincial law prohibits a variety of unfair insurance practices. The country also has human rights laws that apply to prohibit discrimination on various prohibited grounds, of which gender is one. However, it is accepted that insurance is, by its nature, ‘discriminatory’ and so if differences in coverage, exclusions, and premium can be justified on a reasonable basis, that is likely not prohibited.
Hudson: I am not aware of any US laws that specifically address insurance policy language and impose requirements on insurers; however, there may be various state laws that impose a definition of same-sex partners – a topic much discussed these days. In the US, the legal system allows for discrimination on a ‘rational basis,’ which is a constitutional doctrine. For example, it is more dangerous to travel in the third trimester of pregnancy, so travel cover does not have to be provided to pregnant women during this period. However, I can’t think of any other gender discrimination that would be permissible. On the other hand, age banding of premiums is frequently seen in travel insurance, and I think that there is a rational basis for charging more for a senior citizen that a younger person. The incidence of claims can be proven empirically to be higher and directly linked to illnesses that affect the geriatric traveller.
ITIJ: Are travel insurers increasingly facing litigation and, if so, how are they coping?
McCutcheon: Most of the time disputed travel insurance claims are settled out of court. However, we have seen an increase in the number of claims disputes, with more cases being brought against insurers.
Hudson: I don’t know if there has been an increase in US lawsuits filed by travellers claiming personal injury or property damage. Usually, it would be personal injury because property damage claims are small and not worth litigating. The defendants, remember, include not just the insurer, but also the travel agent, maybe the tour operator and the tour group rep, perhaps the insurance agent and, probably, the assistance company. Plaintiff lawyers suing in the US like the ‘shotgun’ approach, so they sue everybody, especially those with deep pockets. I’m talking about litigation filed in the US, even though the cause of action usually arises in a foreign country. Putting aside the legal defence of jurisdiction, (i.e., where one can be sued), a traveller who sustains injury in a foreign hospital at the hands of a foreign doctor is not likely to seek redress in the courts of the foreign country. The foreign court system is either too slow or corrupt, or the damages that might be awarded are paltry. Therefore, a tourist who breaks her hip in Greece, is admitted to a Greek hospital, and then endures a bad hip replacement by a Greek surgeon will forget about the hospital and the doctor in Greece and sue instead all of the other players in a US court. And, there may be adequate grounds to file suit in the US court, regardless. The allegations could include negligence on the part of the tour guide, who should have known that the footbridge would collapse, or the assistance company that selected the Greek hospital. Again, I am not aware of any increase in the number of lawsuits being filed against any of the usual defendants.
Scognamiglio: The economic downturn in England will lead to an increase in the number of claims if historic data is anything to go on. There are a number of new laws in England enabling claims to be brought here that previously had to be litigated abroad.
The normal rule that an injured party may sue in either the jurisdiction of the accident or the home jurisdiction of the defendant is being further displaced by Rome II, which came into force in January 2009. It affects the ability of claimants to sue in their home jurisdiction. Thus, an English holidaymaker may sue in England despite an accident having happened in another part of the EU – that was only possible in limited circumstances, such as a package holiday. This causes any insurer problems where the foreign court does not understand the English law of subrogation, demands that the insurer is present at the trial, refuses to pay out due to the lack of original documentation or for any of a number of other reasons.
This new legislation may help travel insurers, in particular where they have an outlay to be recovered from elsewhere in the world, as the English courts can be more predictable and are much more understanding of the insurer's rights of subrogation – especially where the policy terms are silent as to subrogation or original documentation may be lacking. Costs tend also to be awarded on top of damages in England, which should make the recovery of an outlay a cheaper prospect in England.
Rome II is, at best, ambiguous in places, and it remains to be seen how accepting an English Judge is at applying foreign law. If my own experience is anything to go by, the majority of English Judges much prefer to apply the law of England wherever possible.
ITIJ: What about medical tourism? With more and more people travelling outside their home country for medical treatment, what are the legal issues that have arisen?
Hudson: Medical travel is increasing all the time. It’s difficult to pick up a healthcare journal or even a popular magazine without seeing an article on ‘medical tourism.’ I, myself, have attended several conferences over the last two years on international medical travel. The estimates vary greatly, but there appears to be a significant number of travellers and substantial monies being spent on procedures performed in foreign hospitals. Of course, medical travel is primarily for the uninsured, the underinsured and those seeking elective surgery, which isn’t covered. These patients don’t have health insurance, and their goal is to obtain good care at low cost. Also, what is ‘foreign’ depends on the patient’s home country, but it appears that hospitals in South East Asia, India, Latin America, South America and Central Europe are the most popular destinations for hips, knees, orthopaedic surgery, cardiac care, cosmetic surgery and dental care. The principal driver is the cost differential. A new hip can cost $60,000 in the U.S. but only $15,000 in India. Quality does not appear to be an issue and, in fact, most of the prominent hospitals are accredited by the Joint Commission International (JCI).
The only duty imposed on the crew is that they exercise good faith in determining that the Good Samaritan is a medically qualified individual
With that brief introduction, the legal issues are many and varied, but let’s focus on a large, self-insured employer that wants to send its employees overseas for high quality, low cost health care. Firstly, what if something goes wrong? You can’t easily seek redress in a foreign court. Secondly, what are the requirements of US health insurance law? In each US state, the insurance department would have to approve a scheme to send employees overseas for healthcare. Certainly, the employee’s share of the company health insurance premium would be lower and the public interest great. I think state insurance departments would look carefully at this savings opportunity. Thirdly, employers with union shops would have to obtain the permission of the union to send union employees to a foreign hospital. Finally, employers who want to encourage employees can share the savings on the surgery with the employee, and I think that such sharing programs may require regulatory approval.
Scognamiglio: I tend to deal with medical tourists when it has all gone horribly wrong. Fortunately this is not a terribly common occurrence. Medical treatment tends to be split between that provided by the state and private treatment. The UK benefits from the National Health Service (NHS), which provides medical care as a public service. While the NHS has its supporters and detractors, it does try to save money on occasion, which involves sending some patients to be treated abroad. The NHS has, however, confirmed that should any mistakes be made that it will deal with subsequent claims. People are increasingly going abroad to seek private treatment to save money. This is often for treatment not available through the NHS, such as cosmetic surgery and some dental treatment. There are a myriad of problems when something does go wrong. Sometimes the treatment has been booked through an apparently legitimate UK company, but that does not necessarily mean that the UK company can be pursued if the treatment does go wrong. That company will often dissolve itself if they face a claim and will rarely have any insurance. That can leave us with the prospect of pursuing a case in a jurisdiction where there may not be law enabling a malpractice claim; there is a very low level of damages and the general standard of care can be low.
McCutcheon: There continues to be tension between the public health system in Canada and the demand, both from domestic and foreign residents for specialised healthcare services in Canada. Canadians who can afford private care essentially have to seek it through medical tourism and from foreign sources. If a service is otherwise covered by the public system in Canada, a facility or practitioner may not offer the service to a Canadian on a fee for service basis. The motivation for Canadian medical tourists is different. They want access to the service and not a more cost effective source of the service.
ITIJ: The Corporate Manslaughter and Corporate Homicide Act have attracted some attention. Can you comment?
Scognamiglio: For the first time in the UK, organisations can be found guilty of corporate manslaughter. They face an unlimited fine, may have to publish details of the conviction and the fine and, in some cases, senior management face a custodial sentence. An organisation is guilty of an offence if the way in which its activities are managed or organised by its senior management is a substantial element in the cause of death and there is a gross breach of the duty of care. The Act came into force on 6 April 2008 – the first prosecutions are now coming through in England with the first trial expected in 2010. This highlights the need to have robust and effective health and safety procedures in place to prevent such allegations following an incident, and employers are being advised to have adequate insurance cover. Senior management can be liable for the death of employees and members of the public, including customers, patients and guests on their premises.
McCutcheon: Canada does not have a comparable statute but provisions of the Criminal Code that make it an offence to cause bodily harm or death through criminal negligence could apply.
Hudson: We don’t have a statute like the UK Corporate Manslaughter Act. Maybe we should. It would certainly put corporate America on notice of a higher standard being demanded for worker safety. Over the years, coal miners and factory workers in the US have been subjected to unsafe and sometimes dangerous and deadly workplace conditions. While the corporation responsible might one day be called to pay damages or other reparations, no officers or directors of the company have been jailed. That may be unfair or short-sighted in cases where senior corporate management knew about the risks being forced on its unknowing employees – the cancer caused by exposure to asbestos comes to mind.
Nevertheless, I think the focus of your question is the travel industry; specifically, travel insurance. I read an article by my friend, Dr. Charlie Easmon, who observed that the UK Act reinforces what a good company does to protect its travelling employees while clarifying the penalties that can be imposed on a bad company. Dr. Easmon feels that the Act has a direct application to a company’s travel policies. He said: “A death abroad will lead to more scrutiny than ever before.” Consider Dr. Easmon’s example of an employee travelling to an exotic location on his employer’s business. The employer tells the employee to ask his general practitioner (GP) about health risks and the need for vaccinations. The GP, of course, is not a specialist, and the employee should have been referred to a physician who understands the risks, can advise the employee, and treat the employee before he departs. If the employee contracts an illness that could have been mitigated or avoided altogether, the employer may have some serious liability and, as Dr. Easmon points out, may also be liable under the UK Act.