The initial EK medical used to use the standard Ishihara test which involves reading the numbers hidden in the dots. This booklet is standard the world over and has been the same book for every pilot medical I have ever attended. It is very easy to "learn" the numbers even if you can't read them. I am not suggesting this is what has happened here as I don't have any information about the case but I think the EK initial medical now requires a full eye examination from an opthamologist which will pick up colour blindness in a much more reliable way.
Where i suspect LIPS are able to avoid paying out is the fact you are born with colour blindness therefore it is classed as a pre existing condition.