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AEF v CIC Allianz Insurance Limited [2019] NSWDRS MR 109

Overview

Jurisdiction: Merit Review

Catchwords: Minor injuries – legal costs – reasonable and necessary costs – costs order – costs for dispute – medical assessment – try on – legal costs for medical assessment

Legislation cited:

  • Motor Accident Injuries Act 2017 (NSW) ss 1.3, 1.6, 7.13, 8.3, 8.10, Schedule 2
  • Motor Accident Injuries Regulation 2017
  • Motor Accident Guidelines (as amended on 15 January 2019)

Parties:

  • AEF – Claimant
  • CIC Allianz Insurance Limited– Insurer

Disclaimer: This decision has been edited to remove all unique personal identification including the name of the claimant.

Merit review certificate

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  • Claimant:AEF
  • Insurer:CIC Allianz Insurance Limited
  • Applicant:AEF
  • Date of Accident:10 January 2018
  • DRS Reference:10080658
  • Insurer Claim Number:37C000102
  • Decision Maker:Tajan Baba
  • Date of Certificate:18 April 2019

Certificate

  • Issued in accordance with section 7.13(4) of the Motor Accident Injuries Act
  • 2017 Schedule 2, clause 1(aa) of the Motor Accident Injuries Act 2017

Tajan Baba
Merit Reviewer and Claims Assessor
Dispute Resolution Service

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

Background

1. AEF was injured in a motor vehicle accident on 10 January 2018.

2. CIC Allianz Insurance Limited (“the Insurer”) accepted AEF’s claim under the Motor Accidents Injuries Act 2017 (“the Act”).

3. The Insurer determined AEF’s injuries as ‘minor injuries’ under section 1.6 of the Act. AEF disputed this decision and the matter was referred for a medical assessment by Assessor Gregory Carr. On 23 October 2018, Assessor Carr assessed the injuries as minor injuries for the purpose of the Act.

4. AEF’s legal representatives, PK Simpson & Co, subsequently issued an invoice to the Insurer by way of letter dated 25 October 2018, for legal costs in the amount of $1,600.00 plus GST, relating to its professional fees in connection with the medical assessment.

5. The Insurer declined to make payment of the invoice in a letter to AEF’s legal representatives dated 13 December 2018, on the basis that there was no entitlement to legal costs. This is the ‘reviewable decision’ for the purposes of the Act.

6. The issue in dispute is whether AEF 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.

7. AEF did not seek an internal review by the Insurer of the reviewable decision and 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.

8. AEF lodged his application for merit review with the Dispute Resolution Service (“DRS”) on 28 February 2019. The application was accepted by the DRS and the dispute is subject to merit review under Schedule 2(1)(aa) of the Act.

Documents considered

9. I have considered the documents provided in the application and the reply and any further information provided by the parties. I have also considered AEF application for medical assessment and the medical assessment certificate of Dr Gregory Carr dated 23 October 2018.

Submissions

10. AEF submits:

  • The legal costs incurred were reasonable and necessary because of the scarcity of documents relied upon by the Insurer in making the decision regarding minor injury. Also, the decision was made by a lay person with no medical training which puts him in a difficult position to accept the determination without an assessment by a medical professional. The application was justified in the circumstances as well as it being his right to have his injuries fully investigated and assessed by a DRS Assessor.
  • He only seeks to recover the reasonable and necessary costs incurred which is permitted under Schedule 1, Part 2, section 2 of the Regulation at a maximum of $1,600.00.
  • The Insurer of its own volition requested AEF’s legal representatives furnish a tax invoice and subsequently chased the invoice.
  • The refusal to pay regulated legal costs in this matter is a “try on” by the Insurer to subvert the Act and the Regulation to their own benefit.
  • The costs payable under the Regulation are incidental to his legal representative conferring with him prior to drafting the application, perusal and consideration of the relevant medical evidence, drafting the application, review of the medical assessment and conferring with him on the prospects of success. The costs associated with this work exceed the regulation but were incurred by him to receive a fair and just assessment and claims process on the whole.
  • He also claims the costs of this merit review in the full amount of $1,633.00 plus GST, as the application has only become required due to the “disgraceful behaviour of the insurer” and the “ineptitude of the insurer” which has required his legal representative to go to the additional cost to enforce regulated and payable costs that should already have been paid.
  • He therefore claims the initial costs of $1,600.00 plus GST in relation to the DRS Assessment and in addition, the costs of this DRS Merit Review in the amount of $1,633.00 plus GST, totaling $3,233.00 plus GST.

11. The Insurer submits:

  • It is not disputed that there is an entitlement to costs. Rather, the Insurer asserts that there is currently no mechanism for those costs to be determined and/or awarded. That is, a DRS medical assessor does not have the power to make costs orders under the Regulations. Only ‘claims assessor or court’, in a substantive merit review (Schedule 1, Part 1, Clause 1) or miscellaneous claims assessment (Schedule 1, Part 1, Clause 3), are afforded the power to determine costs.
  • In any event, costs should not be awarded in this dispute. The Insurer emphasises that the range of costs up to a maximum of $1,600.00 plus GST provided under Schedule 1, Part 2, section 2 of the Regulation does not automatically entitle AEF to a costs order.
  • Firstly, the Insurer relies on the general legal principle that costs follow the event. In this case, the reviewable decision of the Insurer (in relation to minor injury) was upheld.
  • Further, there was no merit in AEF’s application and no reasonable prospects of success. Reference is made to the medical evidence which all confirmed that AEF’s injuries were minor. The Insurer notes that section 1.3(2)(g) of the Act provides that one of the objects of the Act is “to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes”. Unnecessary disputes should be discouraged, as in this case.
  • Finally, AEF’s legal representative appear to have provided limited to no legal services in connection with the dispute. The legal representative has written five pages of submissions for the legal costs dispute and wrote not one page of submissions for the minor injury dispute. The legal representative submits that costs are payable for professional services in relation to considering the medical evidence and drafting the application however neither of these services were provided. The one submission on minor injury was “It is the claimants [sic] legal representative position, that subacromial bursitis is not within the definition of section 1.6.” However, there is no reasoning provided, no application of the relevant legislative provisions to the medical condition and no substantive arguments.
  • Rather if the legal representative had of turned his or her mind to the question, they would have concluded that bursitis is in fact a minor injury. This is a position confirmed by numerous decision of the DRS. The Insurer submits that the above does not constitute legal services which would warrant an award of the maximum costs.
  • The claimant’s legal representatives are also seeking costs for the present merit review application. Costs for determination of a dispute related to Schedule 1, Clause 1(aa) of the Act are not awardable because it is not a regulated merit review matter under Schedule 1, Part 1, Clause 1 of the Regulations for which costs are permitted.
  • The Insurer concludes that there is currently no mechanism to assess AEF’s cost application for a medical dispute. If the DRS is minded to determine the costs dispute, it is submitted that no costs be awarded to AEF as his application for medical review was unsubstantiated by medical evidence, had no prospects of success and did not involve any specific legal services.

Legislation

12.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 Regulation”)

Reasons

13. The issue that is in dispute before me is AEF’s reasonable and necessary legal costs relating to the medical assessment of Dr Carr.

14.Section 8.3 of the Act provides for the fixing of the maximum costs recoverable by Australian legal practitioners. Sub-section (4) provides that practitioners are not entitled to be paid legal costs for services provided to a party to a claim for statutory benefits unless those legal costs are permitted by the Regulations or the DRS.

15. The costs application before me has been referred as a merit review matter under Schedule 2, clause 1(aa) which outlines the issue 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.

16. Section 8.10(1) provides that a claimant for statutory benefits is entitled to recover from the insurer reasonable and necessary legal costs incurred in connection with the claim. However, section 8.10(1) 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 Dispute Resolution Services.

17. I do not consider that I am required to consider sub-section 8.10(4)(b) of the Act in this matter.

18. Costs are regulated by Schedule 1, Part 1, clause 2 of the Regulations, and sub-clause (1) limits those costs to 16 monetary units.

19. The Insurer submits that that there is currently no mechanism for the costs claimed by AEF to be determined and/or awarded under the Regulations. It is submitted that a DRS medical assessor does not have the power to make a costs orders, only a ‘claims assessor or court’ have this power in a substantive merit review (Schedule 1, Part 1, Clause 1).

20. As noted above, jurisdiction for this matter is conferred by Schedule 2 clause 1 sub-clause (aa) of the Act as a merit review matter. I accept that the Regulations do not permit a Merit Reviewer to review this matter. Claims Assessors however, can exercise such a discretion under the Act.

21. As a Claims Assessor, duly appointed, I am satisfied that I have jurisdiction to determine the dispute and to assess AEF’s legal costs in respect of the assessment by Assessor Carr.

22. Given that I have established that I have jurisdiction, I will proceed to assess AEF’s reasonable and necessary legal costs in respect of the medical assessment, by considering the proportion of the maximum costs under Schedule 1, Part 1, clause 2 of the Regulations that I consider appropriate.

23. In making my assessment, I must have regard to the objects of the Act. As submitted by the Insurer, section 1.3(g) provides that one of the objects is “to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes”.

24. AEF’s application for medical assessment by Assessor Carr was not successful. In a certificate dated 23 October 2018, Assessor Carr determined that AEF’s injuries were minor injuries for the purposes of the Act. The Insurer’s reviewable decision was therefore affirmed.

25. The Insurer makes submissions in relation to the general legal principle that costs follow the event. I acknowledge this general principle however do not consider that it applies in matters such as these as the Regulations permit costs for an initial medical assessment whether the applicant is successful or not, unlike the provisions in respect to costs for applications for further assessments and reviews in which costs are allowed only if the applicant is successful.

26. Nevertheless, applications for medical assessments still require an assessment of the merits of the application as the Regulations provide a maximum amount of costs that can be permitted and it is open to the reviewer to permit any amount up to this maximum, including nil.

27. In this respect, the Insurer submits that AEF’s application had no reasonable prospects of success and that the medical evidence all confirmed that AEF’s injuries were minor. It is submitted that if the legal representative had of turned his or her mind to the question, they would have concluded that bursitis is in fact a minor injury and that this is a position confirmed by numerous decision of the DRS. The Insurer submits that this does not constitute legal services which would warrant an award of the maximum costs.

28. AEF submits that the application was necessary because of the scarcity of documents relied upon by the Insurer in making the decision regarding minor injury and because the decision was made by a lay person with no medical training. This put him in a difficult position to accept the determination without an assessment by a medical professional. AEF also refers to his right to have his injuries fully investigated and assessed by a DRS Assessor.

29. In making the decision dated 14 May 2018 regarding minor injury, the Insurer relied on the claim form completed by AEF, Certificates of Capacity and results of an ultrasound of the right shoulder dated 7 March 2018. Neither of these documents provided a diagnosis except the ultrasound results which concluded “subacromial bursistis”.

30. I note that section 1.6 of the Act provides that a ‘minor injury’ includes a soft tissue injury and the definition of this is provided at subsection (2). I acknowledge the submissions of the Insurer in relation to AEF’s legal representatives turning his/her to that definition and considering previous decisions of DRS on this point. In my view, the prospects of success of the case would have been relatively apparent to AEF’s legal representatives, based on general knowledge in relation to the injury and/or basic research of the nature of the injury.

31. I do however also acknowledge the submissions of AEF in relation to the scarcity of documents relied upon by the Insurer and the decision being made by a person with no medical training.

32. Considering this, and more so that the application was made at relatively early stages of a new scheme when the understanding and precedents referred to by the Insurer are developing and commonly still being tested, I consider it reasonable in the circumstances that AEF proceeded with his application for an assessment by a medical assessor. This is also particularly when consideration is given to the legal consequences that a decision in relation to minor injury has on AEF’s future entitlement to benefits under the Act.

33.Given that I am satisfied that some costs are reasonable in this matter, I must now determine the quantum of costs I consider appropriate.

34. AEF seeks costs in the amount of $1,760.00 ($1,600.00 plus GST). The invoice issued by his legal representative claims that this relates to:
To our professional costs including taking instructions, completion of necessary documentation, reviewing
of documents exceeding but agreed…

35. Applying my discretion and experience, on review of the application for medical assessment prepared by AEF’s legal representatives and having regard to the level of submissions/reasons provided, and that further medical opinions or investigations to that already available were not sought, I consider it appropriate to allow costs of $600.00.

36. AEF also claims the costs of this merit review in the amount of $1,633.00 plus GST. As noted above, subsection (3) of section 8.10 of the Act provides that necessary and reasonable costs are recoverable in respect to disputes in connection with statutory benefits only if it is permitted by the Regulations or DRS. The Regulations do not permit costs for disputes relating to legal costs.

37. Subsection (4)(b) of 8.10 provides that DRS can permit legal costs if there are exceptional circumstances to justify payment of legal costs. AEF has not specifically sought that I apply my discretion under this subsection. AEF has made submissions in relation to the behaviour and “ineptitude” of the Insurer. In the event that AEF had made an application, I would not be not satisfied that the information submitted to support these submissions support that there are exceptional circumstances to justify payment of legal costs. I find that legal costs are not recoverable for this application.

Determination

38. The Dispute Resolution Service affirms the reviewable decision of the Insurer dated 21 January 2019.

39. The amount of the Claimant’s costs assessed on this application in accordance with the Motor Accident Injuries Regulation 2017 is $nil inclusive of GST.

Tajan Baba
Merit Reviewer and Claims Assessor
Dispute Resolution Service