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AAT v Allianz Insurance Ltd [2018] NSWDRS MR 020

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
Jurisdiction Merit Review - Other matters
Catchwords International claimant – injured while on holiday – whether the claimant’s loss of earnings is likely to be permanent – statutory benefits – fitness for work – post accident earning capacity – pre-accident weekly earnings
Legislation cited Motor Accident Injuries Act 2017 (NSW) ss 7.2, 3.21, Part 3 Division 3.3, 3.6, 3.7, 3.8, 3.15, 3.16, Schedule 1
Motor Accident Injuries Regulation 2017
Motor Accident Guidelines effective 13 July 2018 cl 7.67.10, 7.70
Workers Compensation Act 1987 (NSW) s 53
Cases cited N/A
Text cited N/A
Parties AAT – Claimant
Allianz Australia Insurance Limited – Insurer 
Disclaimer This decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

'Other Matters' Assessment Certificate

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Issued in accordance with section 7.2(3) of the Motor Accident Injuries Act 2017 and clauses 7.67.10 AND 7.70 of the Motor Accident Guidelines

Determination of a matter under section 3.21(2)(a)

ClaimantAAT
InsurerAllianz Australia Insurance Ltd
Date of Accident11 December 2017
DRS Reference10040333
Insurer Claim Number75C000037
DRS Decision MakerKatherine Ruschen
Date of Decision2 November 2018
Conference date and time24 October 2018 at 11:30 am
Conference venue and location By telephone
Attendances for ClaimantMr Andrew Stone SC
Attendances for InsurerMs Betty Taleski

The findings of the assessment of this Other Matter are as follows:

1.Pursuant to section 3.21(2)(a) the Claimant’s loss of earnings as a result of the injury sustained in the motor vehicle accident on 11 December 2017 is likely to be of a permanent nature.

2.Effective Date: 2 November 2018

A brief statement of my reasons for this determination are attached to this certificate

Katherine Ruschen
Decision Maker, Delegate of the Principal Claims Assessor
Dispute Resolution Services

Reasons for Decision – ‘Other Matters’ Assessment

Issued in accordance with section 7.2(3) of the Motor Accident Injuries Act 2017

Background

This determination arises under section 3.21(2)(a) of the Motor Accident Injuries Act 2017 about whether the claimant’s loss of earnings is likely to be of a permanent nature.

1.  The Claimant is a Singapore National who was injured in a motor vehicle accident in New South Wales on 11 December 2017 whilst on holiday in Australia. She was admitted to Gold Coast University Hospital for 35 days, which included prolonged ICU admission for approximately 2 weeks. The Claimant returned to Singapore and continues to be treated for her injuries in Singapore.

2.  The Claimant suffered serious injuries, including large and small bowel injuries and a left proximal humerus fracture.

3.  The Claimant was a pre-school teacher in Singapore at the time of the accident. She was due to return to work on 3 January 2018. The Claimant has not yet returned to work. She has been in receipt of sick leave benefits for December 2017, January 2018 and February 2018.

4.  The Claimant relies on a certificate of capacity/certificate of fitness from Dr Lim Yeow Wai (Dr Lim), Orthopaedic Surgeon, dated 21 August 2018. Dr Lim certifies that the Claimant has no capacity for any work from 1 June 2018 to 1 June 2019.

5.  The Claimant asserts her loss of earnings is permanent and she is therefore entitled to weekly payment of statutory benefits, despite her overseas residency.

6.  The Insurer does not dispute that the Claimant suffered serious injuries, but says whether the Claimant’s loss of earnings is likely to be of a permanent nature is a matter that must be determined by the Dispute Resolution Service (DRS), before it is able to pay statutory benefits to a person residing outside Australia.

Documents considered

7.  I have considered the documents provided in the application and the reply and any further information provided by the parties.

Submissions

8.  The Claimant submits the only requirement of section 3.21(2)(a) is that there has been a permanent loss of earnings in the sense that the Claimant has lost earnings which she will never recover. The Claimant highlights that section 3.21(2)(a) does not refer to a loss of earning “capacity” but only to a loss of earnings and therefore, any suggestion that a medical opinion on capacity for work is required is misguided.

9.  The Insurer acknowledges the Claimant has suffered economic loss as a result of injuries sustained in the accident, but says a determination as to whether the Claimant’s loss of earnings is likely to be of a permanent nature is a matter in respect of which the DRS has sole determination. The Insurer submits that such determination requires expert medical opinion. The Insurer says the medical evidence currently available is not sufficient for the purpose of determining the pivotal issue of whether the Claimant’s loss of earnings is likely to be of a permanent nature.

Legislation

10.   In making my decision I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW) (the Act)
  • Motor Accident Injuries Regulation 2017 (the Regulation)
  • Motor Accident Guidelines 2017 (the Guidelines)

Reasons

Legislation

11.   Section 3.21 provides (emphasis added):

(1)  An injured person who resides outside Australia is not entitled to receive any weekly payment of statutory benefits in respect of any period during which the person resides outside Australia, except as provided by this section when the loss of earnings in respect of which statutory benefits are payable is likely to be of a permanent nature.

(2)  An injured person residing outside Australia is entitled to receive on a quarterly basis the amount of the weekly payments accruing due during the preceding quarter if:

(a)  the Dispute Resolution Service has determined that the injured person's loss of earnings is likely to be of a permanent nature, and

(b)  the person establishes, in such manner and at such intervals as may be required by the Motor Accident Guidelines, the person's identity and the continuance of the loss of earnings in respect of which the weekly payment is payable.

12.   It is implicit from the words “in respect of which statutory benefits are payable” in section 3.21(1) that:

(a)  Before the question of whether the Claimant’s loss of earnings is likely to be of a permanent nature arises, the Claimant must prima facie be entitled to statutory benefits; and

(b)  If it is determined that the loss of earnings is likely to be of a permanent nature, the other provisions of Part 3, Division 3.3 of the Act (and the Guidelines, as applicable to a claim for weekly payment of statutory benefits) continue to apply.

13.   There is no dispute between the parties that prima facie, the Claimant is entitled to statutory benefits. The Insurer accepts liability for statutory benefits, subject to a determination under section 3.21(2)(a). The other provisions in Division 3.3 of the Act, however, will continue to apply to the Claimant and also assist to interpret section 3.21(2)(a). It is therefore instructive to set our some of the key provisions here, which I will refer to further below.

14.   In relation to the first entitlement period, section 3.6(2) provides:

A weekly payment of statutory benefits under this section is to be at the rate of 95% of the difference between the person's pre-accident weekly earnings and the person's post-accident earning capacity (if any) for the first entitlement period.

15.   In relation to the second entitlement period, section 3.7 is in similar terms to section 3.6 in that an assessment of the Claimant’s post-accident earning capacity (if any) is required in order to calculate payments.

16.   Section 3.15 sets out requirements for evidence as to fitness for work, including that the Claimant must provide “certificates of fitness for work … in respect of the period in respect of which the person is entitled to weekly payments of statutory benefits”.

17.   Under section 3.16 of the Act an “insurer can make a decision about the pre-accident earning capacity or post-accident earning capacity of an injured person at any time”.

18.   Pursuant to Schedule 1 of the Act “post-accident earning capacity” means:

(a)  for the first and second entitlement periods--the weekly amount that the person has the capacity to earn in the employment in which the person was engaged immediately before the motor accident, determined on the basis of the person's fitness for work in that employment, or

(b)  for any period after the second entitlement period--the weekly amount the person has the capacity to earn in any employment reasonably available to the person, determined on the basis of the person's fitness for work in any such employment.

Medical evidence

19.   The medical evidence currently available is limited and is set out below.

Gold Coast University Hospital Records

20.   The Claimant was admitted to Gold Coast University Hospital on 11 December 2017 and discharged on 15 January 2018. The Claimant’s principal diagnosis was:

  • Large left-sided pneumothorax. Moderate right-sided Haemothorax with ICC in situ bilaterally.
  • Abdomen: significant mesenteric tears – x2 SB with x1 small bowel injury – devascularise, nearly full thickness injury to caecum, significant sigmoid mesentery tear with devascularised segment.
  • Multiple rib fractures + Minimally displaced fracture of the sternal body.
  • Fracture of the left proximal humerus.
  • Pain management.

21.   The claimant required emergency laparotomy and bowel resection with stoma and surgical repair of the left proximal humerus fracture. Her recovery was complicated by the development of a pulmonary embolism.

22.   Upon discharge from Gold Coast University Hospital the Claimant was advised to wear an arm sling for the following 6 weeks. The Claimant’s stoma also required ongoing care.

Certificate of capacity/certificate of fitness from Dr Anthony Foat dated 21 December 2017

23.   Dr Foat records a diagnosis of “R Hemothorax, L pneumothorax, sternal [fracture], small bowel (injuries requiring small bowel resection) L prox humerus fracture”. He states the Claimant has no current capacity for any work and the estimated time to return to any type of employment is “uncertain”.

Certificate of capacity/certificate of fitness from Dr Wong Kutt Sing dated 31 May 2018

24.   Dr Wong records “multiple bowel injuries, rib fractures, left humeral fracture” and certifies the Claimant has having no capacity for any work from 22 January 2018 to 31 May 2018. Dr Wong states the Claimant’s estimated time to return to work is “uncertain”, although this appears to be in part because the Claimant did not return to Dr Wong for a follow up.

Certificate of capacity/certificate of fitness from Dr Lim dated 21 August 2018

25.   The only injury identified by Dr Lim is the left humerus fracture. Dr Lim certifies the Claimant as having no capacity for any work from 1 June 2018 to 1 June 2019.

Correspondence note from Associate Professor Tang Choong Leong dated 16 October 2018

26.   Associate Professor Tang reports the Hartmann’s procedure was reversed on 25 April 2018 and the Claimant’s early postoperative recovery was uneventful. He says, however, that the Claimant has been experiencing occasional adhesion colic and discomfort with bloating and has developed a hypertrophic scar that requires treatment by a plastic surgeon. Associate Professor Tang records that the Claimant has “not been working during this period due to the disability and surgery”.

Other information

27.   It is understood the Claimant will have future left arm surgery to remove the hardware.

28.   Photographs of the Claimant reveal significant and extensive abdominal and left arm and left armpit scars. They also indicate significant swelling and/or bulging of the abdomen.

29.   Whilst there is no direct evidence, according to the Claimant’s solicitor the Claimant suffers a wide range of ongoing symptoms and disabilities, including:

(a)  Constant and permanent pain, stomach cramps and discomfort as a result of the abdominal scarring, swelling and bulging.

(b)  Frequent diarrhoea, making it difficult to leave home.

(c)    Pain, stiffness and restriction of movement in the back.

(d)  Breathlessness and muscular aches after walking for more than a few minutes.

(e)  Depression, mood swings, anger and impaired sleep.

Whether the Claimant’s loss of earnings is likely to be of a permanent nature

30.   I agree with the Insurer that the medical evidence before me is insufficient to determine whether the Claimant has a permanent incapacity for work. However, the language of section 3.21 is “loss of earnings” not “loss of capacity” and an important distinction can be made between the terms. Loss of earnings is a retrospective. Loss of earning capacity is prospective. Loss of earnings refers to money the Claimant has already lost as a result of an injury. On the other hand, loss of earning capacity refers to the Claimant’s reduced ability to earn money in the future. The latter (loss of capacity) is addressed in the requirements of sections 3.6, 3.7, 3.8, 3.15 and 3.16 of the Act.

31.   Section 3.21 is in effect, the gateway for the Claimant to have an entitlement to receive weekly payment of statutory benefits. Once she steps through that gateway she remains subject to the other provisions of Division 3.3 of the Act, which deal with the issue of earning capacity and fitness for work. Even if the Claimant satisfies the requirement of section 3.21(2)(a), she is not immune from the ongoing operation of sections 3.6, 3.7,

3.8. 3.15 and 3.16, including their “capacity” and “fitness” requirements, on her entitlement to weekly payment of statutory benefits.

32.   In my view, an assessment of the Claimant’s capacity for work is not intended by section 3.21(2)(a). If that were the case the legislation would use the word “capacity” or “incapacity”, as is the case with section 53 of the Workers Compensation Act 1987 (NSW). Under that legislation statutory payments will cease, if a person ceases to reside in Australia, unless the “incapacity for work” resulting from the injury is likely to be of a permanent nature.

33.   Under the Act, however, the issue of capacity is addressed elsewhere in Division 3.3. As noted, the Claimant remains subject to any requirements of the Act and the Guidelines in relation to her ongoing capacity for work. For example, despite a determination that the loss of earnings is likely to be of a permanent nature, weekly payments would not accrue under section 3.7(2) for any period where an injured person has regained their full pre- accident capacity for work.

34.   Accordingly, I consider there is a material difference between loss of “earnings” and loss of “capacity” such that the absence of the word “capacity” in section 3.21(2)(a) means an assessment of the Claimant’s capacity to work is not required. Instead, the question under section 3.21(2)(a) is whether the Claimant’s loss of earnings is likely to be of a permanent nature. I do not need to assess the extent of the loss that is likely to be of a permanent nature. It is sufficient that the Claimant has suffered some loss of earnings and this is a situation that is likely to be of a permanent nature.

35.   Whilst I do not consider it necessary to assess capacity under section 3.21(2)(a), I do not accept the Claimant’s submission there is a loss of earnings of a permanent nature simply because the Claimant suffered a past loss that she will never recover. The test in section 3.21(2)(a) is not whether the loss of earnings itself “is permanent” nor whether the loss “is or is likely to be” permanent. Whilst in the general sense loss of earnings is a retrospective, the question in section 3.21(2)(a) is whether the loss “is likely to be of a permanent nature”. “Likely” suggests some prospective assessment is required.

36.   The phrase “of a permanent nature” also suggests something more is required than simply assessing whether an actual loss to date is a permanent loss in the sense it will never be recovered. It requires consideration as to whether the Claimant’s loss of earnings has characteristics which suggest the loss will likely be permanent, in the sense that it is not expected to change for an indefinite time.

37.   Based on the information before me, I conclude the Claimant’s loss of earnings is likely to be of a permanent nature, as there is a likelihood of either a partial or complete loss of earnings that is not expected to change for an indefinite time. In reaching this view I have had regard to the following:

(a)  There is no doubt the Claimant suffered very serious injuries and has undergone extensive treatment over a period of almost 11 months since the accident.

(b)  It is likely the Claimant will have at least two further surgeries (surgical removal of the hardware from her left arm and scar revision surgery).

(c)   The general consensus of the available medical opinions appears to be that the Claimant has had no capacity for any work to date.

(d)  Dr Foat and Dr Wong appear to be uncertain as to when or if the Claimant will have a capacity for work.

(e)  Dr Lim is of the view the Claimant will have no capacity for work for the immediate future, at least up until June 2019.

(f)    The ongoing symptoms and disabilities described by the Claimant’s solicitor indicate the Claimant is unlikely to resume a completely normal life at any time in the foreseeable future and the impact of this is likely to result in a permanent loss of earnings.

38.   It may be that the Claimant will regain some capacity for work in the future. In the meantime, the above indicia and the fact none of the doctors are able to say when or if the Claimant will be able to return to work, leads me to conclude on balance that the Claimant’s loss of earnings is likely to be of a permanent nature.

39.   For these reasons, I am satisfied the Claimant’s loss of earnings is likely to be of a permanent nature for the purpose of section 3.21(2)(b) of the Act. The Claimant is therefore entitled to receive weekly payment of statutory benefits, subject to the relevant provisions of Division 3.3, including sections 3.15 and 3.16 and the Guidelines.

Assessment of the Claimant’s pre-accident weekly earnings (PAWE)

40.   The Claimant submits that as an axillary function I should assess the amount of weekly payments accruing during the preceding quarters that have lapsed since the accident.

41.   I do not accept this proposition. This assessment is limited to an “Other Matters” assessment under section 7.2(3) of the Act. The only matter before me is whether the Claimant’s loss of earnings is likely to be of a permanent nature.

42.   On 19 January 2018 the Insurer accepted liability for a claim for statutory benefits. In doing so, the Insurer advised the Claimant it was unable to pay statutory benefits for loss of earnings until such time as the DRS had made a determination under section 3.21(2(a). The Insurer informed the Claimant that if the DRS determines the Claimant has an entitlement to weekly payments, the Claimant’s PAWE will need to be assessed once all of the Claimant’s financial material is provided.

43.   I have determined the Claimant’s loss of earnings is likely to be of a permanent nature. As such, the matter should now properly be remitted back to the Insurer to assess the Claimant’s PAWE.

44.   In the event a dispute arises about the assessment of the Claimant’s PAWE, that dispute should be handled in accordance with the dispute resolution process for such disputes, including any requirement for an internal review by the Insurer.

45.   Even if I were to accept that I should assess the Claimant’s PAWE, I do not have sufficient information before me to be able to do this. The only evidence provided by the Claimant is:

(a)  Singapore Notice of Assessment for the Year of Assessment 2016 which indicates during the period 1 January 2015 to 31 December 2015 the Claimant earned income from “trade” in the sum of $20,270SGD.

(b)  Singapore Notice of Assessment for the Year of Assessment 2017 which indicates during the period 1 January 2016 to 31 December 2016 the Claimant earned a total of $54,710SGD from “trade”.

(c)   A pay slip from Bethesda (Pasir Ris) Kindergarten which indicates the Claimant earned a wage of $2,300SGD for the period 1 December 2017 to 31 December 2017 (around $530SGD per week). In addition, the Claimant received an “AWS” (Annual Wage Supplement) payment of $2,108.33SGD. However, the AWS is a single, annual payment on top of an employee’s total annual wage, also known as the “13th month payment” in Singapore. It is not a payment the Claimant  would receive monthly (see https://www.mom.gov.sg/employment- practices/salary/variable-wage-components). Accordingly, the total of $4,408SGD in the pay slip would not represent average monthly earnings, as it includes a one-off supplement paid only in the month of December.

46.   The following definition of 'Year of Assessment' (YA) is published on the Inland Revenue Authority of Singapore Website:

“Year of Assessment (YA)” refers to the tax year in which income tax is calculated and charged. The assessment is for income earned in the preceding year, starting on 1 January and ending on 31 December.

Example

YA 2018 is for income earned from 1 Jan to 31 Dec 2017.

47.   Accordingly, as noted above, the Claimant’s most recent Notice of Assessment for YA 2017 is for income she earned during the preceding year, from 1 January 2016 to 31 December 2016. This is also apparent from the information recorded on the Notice, which includes that the tax assessment is based on information given by the Claimant “through e-Filing on 29 March 2017” (ie earnings would pre-date the filing date) and the date of issue of the Notice being 5 Jun 2017.

48.   Pursuant to Schedule 1 of the Act, "pre-accident weekly earnings" means “the weekly average of the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies” (based on the Claimant’s history she had been working in the same employment for 12 months prior to the accident subclause (2) would not apply).

49.   The evidence of the Claimant’s pre-accident weekly earnings during the relevant 12 month period is limited to the December 2017 payslip showing wages of $2,300SGD for that month. There is no evidence as to what, if anything, the Claimant earned during the preceding 11 months (ie prior to December 2017) of the 12 month pre-accident period. Unfortunately, the last Notice of Assessment is for YA 2017, which is in respect of income earned during the previous year, up until 31 December 2016. It therefore falls outside the relevant 12 month period upon which the Claimant’s PAWE is to be assessed.

50.   The Claimant should submit her pay slips/wage records for the 12 month period from 11 December 2016 to 10 December 2017 and her Notice of Assessment for YA 2018 (which will show earnings in the preceding year) to the Insurer for assessment of her PAWE.

51.   Pursuant to section 3.6(5) of the Act:

If a weekly payment of statutory benefits is payable under this section, but further information is required to determine the amount of the payment, interim payments are to be made in accordance with the Motor Accident Guidelines until the correct amount of the payment can be determined and paid.

52.   This is a matter the Insurer should consider. For the same reasons that I have declined to assess the Claimant’s PAWE, I do not consider I should make a direction under section 3.6(5) as it is not a matter currently referred to me for assessment. If a dispute arises in relation to any decision by the Insurer under section 3.6, including subsection (5), the dispute resolution process relevant to that dispute can be triggered.

53.   I have determined the Claimant’s loss of earnings is likely to be of a permanent nature. Accordingly, the Claimant is entitled to receive on a quarterly basis the amount of the weekly payments accruing due during the preceding quarter, subject to the requirements of section 3.21(2)(b) and the other applicable provisions of Division 3.3 of the Act and the Guidelines.

54.   I decline to assess the Claimant’s PAWE, as this is not a dispute before me. The Insurer should now assess the Claimant’s PAWE under the Act in order to commence weekly payment of statutory benefits to the Claimant in accordance with Division 3.3.

Conclusion

55.   My determination of the Other Matters dispute is as follows:

(a) Pursuant to section 3.21(2)(a) the Claimant’s loss of earnings as a result of the injury suffered in the motor vehicle accident on 11 December 2018 is likely to be of a permanent nature.

56.   Effective Date: 2 November 2018.

Katherine Ruschen
Decision Maker, Delegate of the Principal Claims Assessor
Dispute Resolution Service