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ACG v AAI Limited trading as GIO [2019] NSWDRS MR 159

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
Jurisdiction Merit Review
CatchwordsMedical dispute – minor injury – statutory benefits – medical assessment – physical medical dispute application – legal costs – reasonable and necessary costs – DRS application – wholly or mostly at fault – exceptional circumstances
Legislation cited Motor Accident Injuries Act 2017 (NSW) ss 1.3(2)(g), 7.13(4), 8.3, 8.3(1)(c), 8.10(1), 8.10(2), 8.10(3), 8.10(4), Div 7.6 Schedule 2 clause 1 (aa)
Motor Accident Injuries Regulation 2017 reg 10(d), Schedule 1 Clause 2(1)
Motor Accident Guidelines 2017 (as amended on 15 January 2019) cl 7.18.1, 7.18.6
Cases cited N/A
Text cited N/A
Parties ACG – Claimant
AAI Limited trading as GIO – Insurer 
Disclaimer This decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

Reasons for decision

Issued in accordance with section 7.13(4) of the Motor Accident Injuries Act 2017

Background

1.   ACG was injured in a motor vehicle accident on 14 April 2018.

2.   AAI Limited trading as GIO (“the Insurer”) accepted ACG’s claim under the Motor Accidents Injuries Act 2017 (“the Act”).

3.   On 6 August 2018, the Insurer issued a ‘Liability Notice – Benefits after 26 weeks’ to ACG denying liability for statutory benefits after 26 weeks of his claim on the basis that his injuries had been determined as ‘minor injuries’ and he had been determined as ‘wholly or mostly at fault’ under the Act.

4.   ACG disputed this decision and sought an internal review by the Insurer. On 5 September 2018 the insurer issued a Certificate of Determination – Internal review, which affirmed the original decision.

5.   ACG lodged an application with the Dispute Resolution Service (“DRS”) on 19 October 2018 for a medical assessment in relation to the ‘minor injury’ determination.

6.   On 21 June 2019 the insurer advised that it had issued an amended liability notice to ACG which determined that his injuries were ‘non-minor’.

7.   ACG’s legal representatives, P.K Simpson and Co then withdrew the application for a medical assessment in relation to the ‘minor injury’ determination, but indicated that they were seeking costs in respect of the dispute.

8.   The insurer says that an invoice dated 10 May 2019 for the sum of $1796.30 has been paid subsequently to the claimant. I note that invoice referred to was in respect of an order by Assessor Watson who determined the claims dispute in respect of fault.

9.   A further request for costs, in respect of the costs of preparing the application for a medical assessment, has been made to the insurer and the insurer has declined to pay.

10.   In an email to DRS dated 21 June 2019 the insurer stated that with regards to the minor injury dispute there should be no allowance for costs. This is the ‘reviewable decision’ for the purposes of the Act. The issue in dispute is whether ACG is entitled to recover from the Insurer the legal costs incurred pursuant to section 8.10 of the Act, and if so, the quantum of those costs.

11.   I note that clause 10(d) of the Regulations excludes disputes arising under section 8.10 of the Act from the requirement of internal review.

12.   ACG has made an application for merit review with the DRS on 14 May 2019. The application was accepted and falls within the jurisdiction of the DRS as a merit review matter under Schedule 2(1)(aa) of the Act. Documents considered

13.   I have considered the documents provided in the application and the reply and any further information provided by the parties. I have also considered ACG‘s application for medical assessment dated 19 October 2018.

Legislation

14.   In conducting my review, I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW) (“the Act”)
  • Motor Accident Guidelines 2017 (as amended on 15 January 2019) (“the Guidelines”)
  • Motor Accident Injuries Amendment Regulation 2017 (NSW) (“the Regulations”)

Submissions

15.   ACG’s representatives have made no submissions, other than to indicate that a request for costs has been made to the insurer and declined.

16.   The Insurer submits:

a.   The claimant has made an application pursuant to Schedule 2, Clause 1(aa) of the Motor Accident Injuries Act 2017 regarding a merit review dispute concerning legal costs. The claimant’s solicitors are claimant $1,796.30 (inclusive of GST) for the completion and lodgment of the Claimant’s physical medical (minor injury) dispute application.

b.   The insurer notes that by operation of section 8.10(3) of the Act, the claimant is entitled to recover legal costs in relation to a claim for statutory benefits if such costs are permitted by the Regulation of the DRS.

c.   The insurer submits that it is unable to pay any costs for legal services given that there is no mechanism permitting such costs, unless allowed by a Claims Assessor or a Court.

d.   Pursuant to section 8.10(4), the DRS can permit payment of legal costs incurred by a Claimant but only if satisfied that:

(a)  the claimant is under a legal disability, or

(b)   exceptional circumstances exist that justify payment of legal costs incurred by the claimant.

e.   ACG has the onus of complying with section 8.10(4) and until ACG satisfies DRS that there are exceptional circumstances in existence to justify the payment of legal costs, it is unable to pay such a claim for legal services.

f.   It is not submitted that the provisions in the Regulations in relation to maximum costs for legal services have no application at all. Such costs may be allowed where a claim proceeds to the assessment of damages under Division 7.6.

g.   The Insurer outlines its understanding of how medical disputes proceed in the new scheme, based on the intention of the scheme and submits that claimants may retain lawyers for the purposes of providing submission to the proper officer that the Medical Assessment was incorrect in a material respect. It is submitted that it is only at this point that the Insurer is liable to pay costs for legal services for the subject medical dispute by operation of Schedule 1 of the Regulations.

h.   The Insurer submits that ACG does not have exceptional circumstances to be allowed costs in connection with the dispute regarding minor injury. For ACG to engage lawyers to complete the application form for the medical dispute is not reasonable and necessary as it is not necessary for solicitors to make legal submissions to a medical assessor.

i.   The Insurer is not satisfied on the information before it that the information submitted supports that there are exceptional circumstances to justify payment of legal costs and submits that legal costs are not recoverable for this application.

Reasons

17.   The issue in dispute before me is ACG’s entitlement to legal costs relating to the application for medical assessment of the ‘minor injury’ dispute.

18.   Section 8.3 of the Act provides for the fixing of maximum costs recoverable by Australian legal practitioners. Section 8.10(1) provides that a claimant for statutory benefits is (subject to that section) entitled to recover from the insurer ‘reasonable and necessary’ costs in connection with the claim. This is qualified by subsections (2), (3) and (4) which provide that the recovery of costs is allowed if payment is permitted by the Regulations or the DRS.

19.   The Insurer makes a number of submissions in relation to the payment of legal costs in this matter. The Insurer submits initially that it is unable to pay any costs for legal services in connection with medical assessments because there is no mechanism permitting such costs unless allowed by a claims assessor or a court.

20.   I am not persuaded by the insurer’s submissions in this regard. Costs for medical assessments are specifically permitted by the Regulations at Schedule 1, Part 1(2)(1) of the Regulations, which provides:

The maximum costs for legal services provided to a claimant or an insurer in connection with a medical assessment under Division 7.5 of the Act, as allowed by the claims assessor or court, are 16 monetary units (to a maximum of 60 monetary units per claim).

21.   In providing a maximum amount recoverable the Regulations, in my view, specifically permit payment of reasonable and necessary legal costs incurred “in connection with a medical assessment”.

22.   The Insurer submits that the use of the words “claims assessor or court” supports that the intention of the scheme is that claimants are not legally represented in applications for medical assessment matters unless the matter proceeds to a proper officer for review of a medical assessment or assessment of damages under Division 7.6 of the Act. I note however that the costs recoverable in the case of these latter forms of dispute are provided for separately under the Regulations.

23.   Further, section 8.3(1)(c) of the Act provides that the Regulations may make provision with respect to declaring that no costs are payable for any such legal services or other matters of a kind specified in the Regulations. I consider, that if it was the intention of the scheme that costs are not recoverable in relation to medical assessment matters, such matters could have been specified in the Regulations as such.

24.   For the above reasons, I do not agree with the submissions of the Insurer that there is no mechanism allowing insurers to pay the costs of medical assessment matters and that this is in line with the perceived intention of the scheme that lawyers are not retained in medical assessment matters.

25.   Accordingly, I do not consider that ACG has the onus of establishing that exceptional circumstances exist to allow costs in this matter, as submitted by the Insurer, because I am not required to rely on sub-section 8.10(4)(b) of the Act as I am satisfied that the Regulations permit the recovery of reasonable and necessary costs of medical assessment matters, at Schedule 1, Part 1, clause 2 of the Regulations.

26.   ACG submits that the Insurer advised that it was unable to pay costs without an order from DRS, which appears to have been advised on the same basis as the submissions referred to above.

27.   I note that the DRS has jurisdiction to determine disputes arising in relation to costs as merit review matters under Schedule 2, clause 1(aa), which outlines the dispute as follows:

whether for the purposes of section 8.10 (Recovery of costs and expenses in relation to claims for statutory benefits) the costs and expenses incurred by the claimant are reasonable and necessary.

28.   Accordingly, in matters where there is a dispute between parties about whether the costs and expenses incurred are reasonable and necessary, for the purpose of recovery of such costs, the DRS has jurisdiction to determine such disputes and make determinations or “orders”.

29.   Jurisdiction is therefore conferred to the DRS when there is a dispute referred for determination. The above provision does not, nor does any other provision under the Act, work to prevent an insurer from agreeing to pay costs in matters in which it accepts it is liable to pay costs. Similarly, there is no provision in the Act or the Regulations which states that costs cannot be agreed to or paid without a costs order. Jurisdiction arises only in circumstances where there is a dispute.

30.   As noted above, section 8.3(3) provides that costs are recoverable if permitted by the Regulations or the DRS. I am satisfied on the reasons outlined above, that the Regulations permit costs in medical assessment matters. In this case, an “order” or determination from the DRS is not necessary for an insurer to agree to pay the reasonable and necessary costs of a claimant.

31.   It is also important to note that the Insurer’s behavior in this instance, in refusing to consider payment of legal costs on the grounds as submitted in this case, resulting in further disputation, falls contrary to the objects of the Act particularly that at section 1.3(2)(g): “to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes”. This object is reiterated at clause 7.18.1 of the Guidelines, and clause 7.18.6 also stipulates that insurers are to attempt to identify and narrow any issues in dispute before applications are lodged with DRS.

Reasonable and Necessary Costs

32.   Having established that the costs of medical assessments are recoverable, I will proceed to assess ACG’s reasonable and necessary legal costs in respect of the medical assessment. Sub- clause (1) of Schedule 1, Part 1, clause 2 of the Regulations limits costs in connection with medical assessments to 16 monetary units. I am required, pursuant to the jurisdiction conferred by Schedule 2, clause 1(aa) of the Act (above), to determine the quantum of the maximum costs I consider appropriate.

33.   ACG, through his legal representatives, lodged an application for medical assessment with the DRS on 19 October 2018 in respect of the Insurer’s decision, affirmed in an internal review on 5 September 2018, that he had a ‘minor injury’. Subsequent to lodgment of the application, on 15 November 2018, the Insurer revoked its decision in relation to minor injury, thereafter agreeing that ACG’s injury was non-minor.

34.   ACG withdrew his application for medical assessment with the DRS.

35.   It is open to me to permit any amount of costs up to the maximum amount, including nil. In this case, I consider it appropriate to allow costs for the preparation and lodgment of the application for medical assessment given that the Insurer appears to have conceded its decision was wrong after ACG was put to the cost of lodging an application. I note that the application was made following a number of emails to the insurer containing submissions in respect of ACG’s injuries.

36.   In this matter, given that there was one medical dispute about minor injury, that was referred to the DRS, I consider the maximum of 16 monetary units applies in respect to ACG’s application for medical assessment dated 19 October 2018.

37.   As noted above, it is open to me to permit any amount of costs up to the maximum amount.

38.   On review of ACG’s application for medical assessment dated 19 October 2018, I note that ACG’s legal representatives make 3 pages of submissions on his behalf. I note however that not all of those submissions related to the minor injury dispute. Approximately 2 pages related to the liability dispute which was subsequently determined by Assessor Watson, and for which costs were awarded, and to the reasons for the late lodgment of the application.

39.   There is approximately one page of submissions that directly related to the minor injury dispute. I note that those submissions, while not lengthy, refer to the efforts by the claimant’s legal representatives to resolve the dispute. Paragraph 8 references numerous calls to the insurer that were not responded to.

40.   The application includes a number of attachments, namely a copy of the Application for Personal Injury Benefits form, Certificate of Capacity/Certificate of Fitness dated 27 April 2018 and ‘liability notice’ letters from the Insurer. Further documents, including the request for an internal review, emails to the insurer containing further submissions, and the insurer’s internal review decision are also attached.

41.   ACG’s legal representatives do not provide a schedule itemising the costs incurred in respect of the application for medical assessment or make submissions about what the costs claimed in the invoices relate to. I note however their efforts directed at resolving the dispute, a number of emails containing submissions that were sent to the Insurer and a number of calls that were made. Ultimately ACG’s representatives were forced to make an application.

42.   When considering what costs, of the costs claimed by ACG’s legal representatives, are reasonable and necessary however, I have had particular regard to the Insurer revoking its decision in relation to minor injury subsequent to the application for medical assessment. If the Insurer fell into error in its original decision or failed to properly investigate ACG’s injuries before making the decision, I do not consider ACG should bear the costs of such an error.

43.   Applying my discretion and experience, having had regard to the application for medical assessment prepared by ACG’s legal representatives and to the level of submissions/reasons provided and overall consideration put into the application, I consider it appropriate to allow the maximum legal costs of $1633.00.

44.   Accordingly, I allow costs in the amount of $1796 (inclusive of GST) in respect to the application for medical assessment dated 19 October 2018.

Determination

45.   The Insurer’s reviewable decision made on 21 June 2019 is set aside and the following decision is made in substitution of the reviewable decision:

The Insurer is to pay ACG’s legal costs in the amount of $1796.00 (inclusive of GST) in respect to the application for medical assessment dated 19 October 2018.

46.   Effective date: This determination takes effect on 2 September 2019.

Michelle Boyle
Merit Reviewer and Claims Assessor
Dispute Resolution Service