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AEQ v Allianz Australia Insurance Ltd [2019] NSWDRS MR 120

Overview

Jurisdiction: Merit Review

Catchwords: Statutory benefits – workers compensation claim – taxi driver – failure to comply with a request by the insurer – refuse payment of statutory benefit – duty of insurers to act with good faith

Legislation cited:

  • Motor Accident Injuries Act 2017 (NSW) ss 1.2, 1.3, 3.25, 3.35, 6.3, 7.12, Schedule 2
  • Motor Accident Injuries Regulation 2017
  • Motor Accident Guidelines effective 13 July 2018

Parties:

  • AEQ – Claimant
  • Allianz Australia 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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Issued under section 7.31(4) of the Motor Accident Injuries Act 2017

The Claim:

  • Claimant: AEQ
  • Insurer: Allianz Australia Insurance Limited
  • Claim Number: 37C000915

The Reviewable Decision:

  • Reviewable decision-maker: Sarah Hoy
  • Date of Reviewable decision: 26 March 2019
  • Nature of Reviewable decision: Whether the insurer is entitled to refuse payment of statutory benefits in accordance with section 3.35 of the Act.

The Merit Review:

  • Our Reference: 10089875
  • Merit Reviewer: Tami O'Carroll
  • Date of Merit Review Certificate: 13 May 2019

Merit Reviewer’s Determination

This determination relates to a merit review matter, which is a reviewable decision under Schedule 2(1)(s) of the Motor Accident Injuries Act 2017 (the Act) – whether the insurer is entitled to refuse payment of statutory benefits in accordance with section 3.35 of the Act.

My determination of the merit review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for that decision:
    • The Insurer was not entitled to refuse payment of statutory benefits under section 3.35(2)(b) of the Act.
    • The Insurer requires AEQ to make a claim for workers compensation for the injury with the relevant workers compensation insurer, in accordance with section 3.35(4) of the Act, within 14 days of the date on which AEQ receives this determination. The reasons given for this merit review determination are the reasons for this substituted decision of the insurer.

Tami O'Carroll
Merit Reviewer,
Dispute Resolution Service

Reasons for decision

Background

1. AEQ was injured in a motor vehicle accident on 10 April 2018.

2. AEQ works as a taxi driver. At the time of the accident, AEQ was driving his taxi and he had a passenger in the car.

3. By letter dated 26 March 2019, the insurer advised AEQ that his claim for statutory benefits was not accepted “as the circumstances of the accident entitle you to workers compensation benefits”.

4. AEQ sought an internal review of that decision.

5. On 11 April 2019, the insurer issued an internal review decision. It found reasonable grounds exist to consider that workers companion may be payable as AEQ appears to have been in the course of employment driving his taxi when the accident occurred. AEQ failed to comply with the insurer’s request to make an application for workers companion under section 3.25(2)(b) of the Act. It maintained the decision to decline payment of statutory benefits on the basis that AEQ refused to make an application for workers compensation.

6. An application for merit review was lodged with the Dispute Resolution Service on 11 April 2019. The dispute is about whether the insurer is entitled to refuse payment of statutory benefits under section 3.35(2)(b) of the Act.

7. The application was lodged in accordance with section 7.12(1) of the Act and the Motor Accident Guidelines (the Guidelines).

Documents and Information

8. I have considered the documents provided in and submitted with the application and the reply.

Submissions

9. AEQ submits:

  • At no point has the insurer formally requested that he make a workers compensation claim. At most emails on 28 February 2019 and 14 March 2019 “request that the prospect of lodging a workers compensation claim be discussed…”
  • These emails do not contain a request, requirement or direction from the insurer that a workers compensation claim be made and do not comply with section 3.35 of the Act. The Insurer was therefore not allowed to refuse payment of statutory benefits on the basis of a failure to lodge a worker compensation claim.

10. In reply, the Insurer submits:

  • AEQ has refused to make a claim for workers compensation following a request to do so made pursuant to section 3.3.5 of the Act. He is therefore not entitled to statutory benefits.
  • AEQ was requested to lodge a workers compensation claim on 28 February 2019 and 19 March 2019. Both emails state “please also be advised upon review of the description of the accident and registration details it looks as though [AEQ] was in the course of his employment at the time of the accident, if so please discuss lodging the claim through Workers Compensation and provide us with an update on this matter.”
  • A request for a works compensation claim to be made was also made in the liability notice dated 26 March 2019 – three paragraphs of that notice are quoted.
  • A further request was made at the internal review stage where AEQ’s legal representative responded “no” to the internal dispute resolution officers request for evidence showing that AEQ made or attempted to make a workers compensation claim.
  • There are reasonable grounds to consider that workers compensation is or may be payable as it appears that AEQ was in the course of his employment at the time of the accident.
  • AEQ was driving his taxi which had a passenger in it at the time of the accident and this is confirmed in the statement from the other driver involved and the passenger in the other vehicle. As driving passengers between locations is the business of AEQ it could reasonable be inferred that he was in the course of employment at the time. No evidence has been provided to the contrary.
  • No evidence has been provided to establish that AEQ has attempted to make a workers compensation claim. The insurer has required a claim for workers compensation be lodged on at least three occasions. AEQ has not complied with the insurer’s request to make a claim for workers compensation under section 3.35(2)(b) of the Act.

Legislation

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

  • Motor Accident Injuries Act 2017 (NSW) (the Act)
  • Motor Accident Guidelines effective 13 July 2018 (the Guidelines)
  • Motor Accident Injuries Regulation 2017 (NSW) (the Regulation)

Reasons

Legislative Framework

12. AEQ has requested a merit review of the Insurer’s decision that he is not entitled to statutory benefits due to a failure to comply with a request by the insurer to make a claim for workers compensation.

13. Section 3.35(1) of the Act states:

An injured person is not entitled to statutory benefits under this Part if compensation under the Workers Compensation Act 1987 (workers compensation) is payable to the injured person in respect of the injury concerned (or would be payable if liability for workers compensation had not been commuted).

14. An insurer under the compulsory third-party insurance scheme has no capacity to determine whether workers compensation is payable to an injured person. The Act therefore provides direction to insurers in respect of payment of statutory benefits, where there is a potential claim for workers compensation. That direction is given under the following sections of the Act:

15. Section 3.35(4) of the Act states:

If the relevant insurer for a claim for statutory benefits under this Part considers on reasonable grounds that workers compensation is or may be payable in respect of the injury concerned, the insurer may require the injured person to make a claim for workers compensation in respect of the injury.

Section 3.35(2) of the Act states:

The relevant insurer for a claim for statutory benefits under this Part is not entitled to refuse payment of statutory benefits under this Part on the grounds that workers compensation is payable in respect of the injury unless:

(a) the injured person has made a successful claim for workers compensation in respect of the injury, or

(b) the injured person has failed to comply with a request by the relevant insurer under this section to make a claim for workers compensation in respect of the injury [emphasis added].

16. There is no dispute between the parties that AEQ circumstances fall outside those described in section 3.35(2)(a) – rather the information indicates that AEQ has not made any claim for workers compensation. The relevant question is therefore whether AEQ failed to comply with a request made “under this section” to make a claim for workers compensation.

17. As any request relied on by the Insurer under section 3.35(2)(b) of the Act must have been made in accordance with the provisions under section 3.35(4) of the Act. Pursuant to that section, the insurer was entitled to “require” AEQ to make a claim for workers compensation if it considered on reasonable grounds that such compensation is or may be payable in respect of the injury.

Communication Between AEQ and the Insurer

18. On 18 June 2018, AEQ’s Application for Personal Injury Benefits was emailed to SIRA. After not receiving a response, AEQ’s legal representative then sent the Application to the insurer under cover of a letter dated 21 February 2019.

19. By email dated 28 February 2019, the insurer advised that they were assessing the claim. They sought an explanation as to why the claim had been lodged late, I note that the AEQ has provided information in submissions that it was not late, however, this is not an issue which is pertinent to the dispute at hand and I will therefore make no further comments in this respect.

20. The insurer also states in that email:

“Please also be advised upon review of the description of the accident and registration details it looks as though [AEQ] was in the course of employment at the time of the accident, if so please discuss lodging the claim through Workers Compensation and provide us with an update on this matter”.

21. It then sent what appears to be an exact duplicate of that email to the AEQ’s legal representative on 14 March 2019.

22. It then wrote to AEQ on 26 March 2019 stating that it was unable to accept his claim for statutory benefits as the circumstances of the accident entitle him to workers companion benefits. It states:

“you provided a statutory benefits claim form dated 18 June 2018 where it was identified that you were involved in a motor vehicle accident whilst driving [the vehicle registration details are provide]. This registration is identified as a taxi. Allianz engaged a factual invetigations to confirm the circumstances around the accident…it was identified in a statement provided that you had a passenger in your vehicle at the time of [the] accident.”

23. It referred to section 3.35(2)(b) of the Act and stated that by emails dated 28 February 2019 and 14 March 2019, it had formally requested that AEQ lodge a claim for workers compensation benefits. Because he had not complied with such requests, his claim for statutory benefits was not accepted. AEQ was “encouraged” to lodge a claim for workers compensation as soon as soon as possible.

Findings

24. I am not satisfied that the insurer was entitled rely on section 3.35(2)(b) of the Act to refuse payment of statutory benefits when it made its decision on 26 March 2019.

25. Any request relied on by the insurer to invoke its entitlement to rely on section 3.35(2)(b) of the Act needs to have been made in accordance with section 3.35(4) of the Act. Further, this request needs to have been made prior to the issuing of its decision to refuse payment of statutory benefits based on a failure to comply with such a request.   For reasons which are given below, I am not satisfied that the insurer made such a request prior to the issuing of its decision on 26 March 2019 and I am therefore not satisfied that it was entitled to rely on section 3.35(2)(b) of the Act.

26. Section 3.35(4) of the Act entitles an insurer to require a claimant to make a claim for workers compensation where it considers on reasonable grounds that workers compensation is or may be payable.

27. In the emails of 28 February 2019 and 14 March 2019, the insurer states that based on a description of the accident and the registration details “it looks as though” AEQ was in the course of employment as the time of the accident. The use of this vague language makes it unclear as to whether the insurer had reached a conclusion on the point.

28. Section 6.3(3) of the Act sets out the duty of Insurers to act with good faith as follows:

The duty of an insurer to act with good faith includes the following duties:

(a) The duty to provide a claimant with information about entitlements to statutory benefits and damages,

(b) A duty to disclose all relevant information (including reports by health professionals) relied on to make a decision on a claim,

(c) The duty to provide written reasons for all decisions that materially affect a claimant’s entitlement to statutory benefits or damages,

(d) The duty to advise a claimant of any right under this Act to review any such decision of the insurer,

(e) The duty to make prompt payment of statutory benefits and damages.

29. A decision by an insurer to exercise its power to require a claimant to make a claim for workers compensation under section 3.35(4) of the Act is one which materially affects their entitlement to statutory benefits. The insurer had a duty to make its conclusion as to whether it believed on reasonable grounds that workers compensation payments may be payable clear to AEQ. Further, it had a duty to provide reasons as to why it reached that view and to explain to AEQ the significance of this issue on the outcome of his claim for statutory benefits. The statements made by the insurer in the emails are vague and imprecise and do not adequately do this.

30. Further, the insurer does not adequately explain the significance of such a decision on AEQ’s entitlement to statutory benefits. Reference to the sections of the Act that entitled the insurer to make the decision and that highlight the potential consequences of such a decision were surely required. There is no reference in the emails sections 3.35(1), 3.35(2)(b) or 3.35(4) of the Act.

31. AEQ’s legal representative submits that the emails from the insurer do not contain a request, requirement or direction from the insurer that a workers compensation claim be made and do not comply with section 3.35 of the Act. I agree with that submission. I do not consider that the insurer’s advice to AEQ to discuss lodging a claim for workers compensation payments if he was in the course of employment at the time of the accident amounts to request ore requirement to do so within the terms of the Act.

32. Section 3.35(4) of the Act entitles an insurer (if the remainder of the section applies) to “require” an injured person to make a claim for workers compensation. The language used by the insurer is again vague and imprecise and does not amount to a request or requirement to lodge a workers compensation claim. Any such requirement must be made in words that make it clear that a claim must be lodged. The source of authority the insurer relies on for making the request and the consequences of a failure to comply with the request also need to be made clear.

33. It appears that it is not until the letter of 26 March 2019 that the Insurer brings to AEQ’s attention the provisions of section 3.35 (although still not specifically to 3.35(4) of the Act). This was too late as it was when advising AEQ that his claim for statutory benefits had not been accepted.

34. Before the insurer was entitled to rely on section 3.35(2)(b) of the Act, it was required to make a request within 3.35(4) of the Act, for AEQ to make a claim for workers compensation. It has not done so. It also failed to comply with its obligations under section 6.3(3) of the Act.

35. I note that the insurer asserts in submissions that a request was made on internal review. However, even if such a valid request was made, it was after the decision was made to deny statutory benefits- as indicate above, such a request needed to be made before the insurer purported to rely on section 3.35(2)(b) of the Act.

36. I therefore find that the insurer was not entitled to rely on section 3.35(2)(b) of the Act to refuse payment of statutory benefits.

37. However, the questions remains as to whether compensation is payable to AEQ under the workers compensation scheme. This matter is not one which the insurer, the claimant’s legal representative nor I can decide. The issue must be put to the relevant workers compensation insurer for their determination.

38. In order to expedite the process of providing AEQ with the appropriate benefits. It would be beneficial if he could make a workers compensation claim and provide the details of the claim to the CTP insurer to follow up and clarify, provision for which is made under section 3.35(7) of the Act.

39. In considering my determination of this merit review, I have also taken into account the objects of the Act and in particular sections 1.3(2)(g), 1.2(4) and 1.2(5) which provide:

(2) For that purpose, the objects of this Act are as follows:

(3) To encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes

(4) In the interpretation of a provision of this Act or the regulations, a construction that would promote the objects of this Act or the provision is to be preferred to a construction that would not promote those objects.

(5) In the exercise of a discretion conferred by a provision of this Act or the regulations, the person exercising the discretion must do so in the way that would best promote the objects of this Act or of the provision concerned.

Determination

My determination of the merit review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:
    • The Insurer may not refuse statutory benefits under section 3.35(2)(b) of the Act.
    • The Insurer requires AEQ to make a claim for workers compensation for the injury with the relevant workers compensation insurer, in accordance with section 3.35(4) of the Act, within 14 days of the date on which AEQ receives this determination. The reasons given for this merit review determination are the reasons for this substituted decision of the insurer.

Tami O’Carroll
Merit Reviewer,
Dispute Resolution Service