AFD v Allianz Australia Insurance Limited [2019] NSWDRS MR 130

JurisdictionMerit Review
CatchwordsStatutory benefits – knee rupture – ACL reconstruction surgery – personal injury benefits – wholly at fault – two stage procedure – reasonable and necessary treatment – non-minor injury – cut-off date – decline stage two surgery – dispute medical treatment
Legislation cited                    Motor Accidents Injury Act (NSW) ss 1.6(1), 3.1, 3.2, 3.24, 3.28, 7.13(4)
Motor Accident Guidelines cl 4.101
Motor Accident Injuries Regulation 2017
Interpretation Act 1987 s 36(1)
Cases cited


Text citedN/A
PartiesAFD - Claimant
Allianz Australia Insurance Limited - Insurer
DisclaimerThis decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

Merit review reasons for decision

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


1.  AFD was involved in a motor vehicle accident at Somersby on 23 September 2018. According to his application for personal injury benefits claim form, he was stationary at the intersection of the Central Coast Highway and Wiseman’s Ferry Road when he turned right ‘on a red arrow thinking it was green’ and collided with a vehicle driven by the insured driver.

2.   AFD made a claim for statutory benefits on or about 8 November 2018 against his own insurer Allianz. Allianz agrees it is the relevant insurer pursuant to s 3.2 of the Act and liable to pay AFD the statutory benefits to which he is entitled under Part 3 of the Act.

3.  AFD is unsure whether he was charged by the police with any driving offence but thought he may have been given a ‘ticket’ for ‘running a red light’.

4.  Allianz’s claims consultant Rebecca Banner issued a liability notice to AFD dated 11 February 2019 denying liability to pay any statutory benefits to AFD beyond 23 March 2019 because Allianz says AFD was wholly at fault for causing his accident and an internal review undertaken by Mr De Courtenay, an internal dispute resolution officer with Allianz affirmed that decision.

5.   AFD agrees with the Insurer that he was wholly at fault for causing this accident.

What is in dispute?

6.   The Claimant injured his right knee in the accident and needs ACL revision surgery. AFD  wants Allianz to pay for it. Allianz says it will not pay for the surgery.

7.   That dispute has been referred to me as a Merit Review to determine:

Whether for the purpose of section 3.28 … treatment and care expenses have been incurred after the expiration of the period during which statutory benefits are payable.

8.   AFD has not yet had the surgery, he is on the public waiting list for it and therefore strictly there is difficulty with the phrase ‘have been incurred’ however I have proceeded, without objection, on the basis that ! will determine the matter now rather than waiting until the surgery has actually occurred.

Background and chronology of communication

One surgery - first approval 13 February 2019

9.   AFD had previously damaged his right knee and his anterior cruciate ligament (ACL) been surgically repaired in June 2017. But there is no dispute in this matter that AFD ruptured his grafted right ACL in the accident. Dr Ben Gooden advised Allianz in a report dated 5 February 2019 that the ACL had ruptured, that the rupture was caused by the accident and that it needed to be repaired. Allianz accepts this.

10.   On 11 February 2019 Allianz asked Dr Gooden for a quote for AFD’s surgery and later that day a quote was received.

11.  On 13 February 2019, Allianz wrote to AFD advising him that Allianz ‘approved the surgery’ and that surgery was described in this letter as a ‘revision of your right anterior cruciate ligament requested by Dr Gooden on 11/2/2019’. AFD was also advised that payment for the surgery had also been approved at the rate of $4,866.00.

12.   On 13 February 2019, Allianz also wrote to Dr Gooden advising him that the surgery and his quote had been approved. That letter (and the instructions on the back) leave no room for variation or unforeseen circumstances that might occur. What would Allianz have done (or paid), for example if the cost of the surgery blew out due to AFD having an anaphylactic reaction to the anaesthetic, or him developing an infection in the wound requiring an additional hospital stay?

Two stage surgery – second approval 25 February 2019

13.   On 20 February 2019, Dr Gooden wrote to the Claimant’s GP (and a copy of this letter was also provided to Allianz – although when is not entirely clear). This letter suggests there were two options for the surgery:

a.   The first option would be the removal of the 2017 graft and insertion of the revision graft all in the one operation or

b.  The second option would be to remove the 2017 graft and undertake an assessment of the tunnel diameters and, if necessary, execute bone grafting on the tunnels in one operation and then perform a further operation some six months later to revise the ACL.

14.  Dr Gooden then provided Allianz with two quotes for surgery both of which are dated 21 February 2019:

a.   The first was for option 1 (the single surgical procedure) and the cost for that procedure was said to be $4,866.00 and

b.  The second quote was for option 2 and is headed ‘revision right anterior cruciate ligament reconstruction 1st stage of 2 stage procedures’ and is in the sum of $4,849.00.

15.  Mr de Courtenay explained that the two quotes were provided to Allianz because of the two options and that all Allianz was considering was the surgery on 27 February and the cost of that surgery.

16.   In the bundle of material provided to me by Allianz is a transcript of a file note dated 25 February 2019 made by Joshua Ho (Injury Management Specialist) which says:

[Phone call] call back from Emma (Dr Gooden’s receptionist) …

Explained that [Claimant] will have:

  • 80% chance of going to normal revision with Patella tendon
  • 20% change of going to 2 staged revision with additional Bone graft to Femur and Tibia – which provides further expanded tunnel for 2nd stage of revision to secure the Patella tendon
If [Nominated Treating Specialist] goes ahead with 2 staged procedure, 2nd stage – will have to wait for the bone graft to integrate (roughly around 6 months)

Emma advised that the 2nd stage would be the same item numbers as the original quotation received for normal revision with Patella Tendon using item #s 49551 and 51303.

IMS [Joshua Ho] advised [Nominated Treating Specialist] to keep [Allianz] in the loop following procedure and confirmed IMS will advise [Customer Care Consultant] to forward approval to [Nominated Treating Specialist] shortly.

17.   On 25 February 2019, Allianz wrote to Doctor Gooden with the heading ‘AFD’s surgery has been approved (option 2)’. The letter goes on to says ‘Right ACL Revision (option 2) has now been approved to support AFD’s recovery’ and fees totalling $4,849 were approved. That letter is deficient because it did not make it clear to Doctor Gooden that Allianz would not be paying for the second stage if it occurred after 24 March 2019.

18.  Mr de Courtney explained that this second approval letter was sent because the first approval letter was approving option 1 and Allianz wanted to clarify with Dr Gooden that it was approving the surgery on 27 February 2019 regardless of which option was going to take place.

19.   It does not appear that Allianz wrote another letter to AFD advising him that it was approving the second option for surgery however on 25 February 2019 Allianz wrote to AFD advising him that his benefits were ending on 23 March 2019 but that Allianz would continue to pay for ‘all reasonable and necessary treatment on or before 23 March 2019’. The wording of that letter is unclear, particularly as it made no reference to the word ‘incurred’ which is used in the legislation. Was Allianz advising the Claimant that it would pay for any reasonable and necessary treatment approved on or before 23 March 2019, or reasonable and necessary treatment undertaken on or before 23 March 2019, or invoices submitted on or before 23 March 2019? The letter is also deficient because it did not mention the pending ACL surgery which at that time Allianz knew could involve surgery that would take place after 23 March 2019 (if, during the course of the operation on 27 February 2019, it became clear option 2 was going to have to be pursued).

Surgery and declining to pay

20.  AFD informed me, and Mr De Courtenay agreed that the decision as to which ACL reconstruction option would be pursued was not a decision for Ms Banner or anyone at Allianz to make, but a decision which would be made by Dr Gooden during the course of the operation when he had removed the 2017 graft and inspected the inner workings of AFD’s knee.

21.   AFD had his surgery on 27 February 2019.

22.   Unfortunately, during the operation, Dr Gooden assessed the Claimant’s knee and determined that the ACL could not be revised at that stage and that the two-stage process was needed. Dr Gooden completed the first stage.

23.  At some later stage, Dr Gooden or AFD requested approval to proceed to the second stage and on 8 May 2019, Dr Gooden wrote to Allianz saying:

As you are aware AFD has undergone the first stage or a 2 stage right anterior cruciate ligament reconstruction through his third party claim. I understand that you as his CTP insurer has some objections to funding the second stage of the 2 stage revision as it falls outside the time period for his claim.

I support his application to have the second stage performed under this claim. The decision to proceed with a 2 stage revision was a clinical one that was made by me intra operatively at the time of his surgery on 27 February. The second stage is an integral part of his treatment and the definitive management for his anterior cruciate ligament rupture which was covered under his third party claim.

24.  On 17 May 2019 Allianz wrote to the Claimant advising him that:

Allianz does not accept liability for the 2nd stage of the 2 stage revision of right anterior cruciate ligament reconstruction.

25.   The reason given for this decision was explained on pages 2 and 3 of the letter that because AFD was at fault in causing his accident, his benefits cease after 26 weeks under s 3.28(1)(a) of the Act and that ‘Allianz is unable to approve the 2nd stage of the surgery’.

26.   AFD sought an internal review of the 17 May decision and Mr de Courtenay issued a certificate of determination affirming the original decision and providing reasons dated 1 July 2019. Those reasons state that Allianz approved the two options for surgery on 27 February 2019 and not for any other surgery (paragraph 18), that because he is at fault his benefits cease after 26 weeks that is 23 March 2019 (paragraphs 16 and 17), the surgery in dispute is to occur after 23 March 2019 and that therefore the expense in relation to it will be ‘incurred’ after 23 March 2019 (paragraphs 19 and 20).

27.   On 11 July 2011 in answer to a series of questions from me, Dr Gooden reported that the cost of the second stage of AFD’s surgery is as per an attached quote. The quote was not attached but it was explained to me by his receptionist Emma that the cost would be the same as the cost of the quote for the first option because they are the same item numbers.

28.   Dr Gooden then says:

We received approval for both stages of AFD’s surgery in writing on 13.0.2019 and 23.02.2019, however, we were informed that it was only approved on the proviso that surgery was performed within the 26 week period post Andrew’s motor vehicle accident. However undertaking the first stage of a 2 stage revision requires progression to the second stage 3 – 6 months post the first stage. The two operations (although separated temporarily) are contiguous. The second stage is a requirement of the first stage and thus the two operations can be considered the same treatment episode.

29.   Dr Gooden’s report also deals with the situation for AFD now that Allianz has refused to pay for the second stage of surgery:

AFD is currently on the public waiting list at Hornsby Hospital for his revision surgery but unfortunately there is approximately a 12 month wait for surgery through the public system. He now has approximately a 10 month wait on the list. Ideally his second stage should be performed at the 3 month mark post the first stage of the 2 stage revision to help prevent further degeneration in his knee with the possibility of further functional instability. The second stage of the 2 stage procedure is really part and parcel of the first stage and it is my opinion should be seen as a continuation of care for the same episode.

If there is a further delay in his surgery there is a risk of him undergoing further instability episodes in his knee with giving way which can further damage the menisci and cartilage structures in the knee and can cause significant issues with patient’s recovery. Ideally we should perform the second stage of his revision procedure as soon as possible.

30.   It would appear, that by refusing to pay for all of AFD’s accident related surgery, Allianz may be exposing AFD to secondary injury, a longer recovery or a worse outcome overall.

Legislative Background

31.   The Motor Accident Injuries Act 2017 provides for the compulsory insurance of all motor vehicles registered in New South Wales (by way of privately underwritten Greenslip insurance) and the payment of benefits and compensation to those people killed or injured in motor vehicle accidents in New South Wales.

32.   Under Part 3 of the Act people injured in a car accident in New South Wales after 1 December 2017 are entitled to income support and treatment benefits regardless of whether anyone is at fault and even though they may be at fault (section 3.1). However, not everyone is entitled to benefits. For example if a person has a workers compensation claim, they are not to be any paid statutory benefits at all. And, not everyone injured in a car accident gets the same level of benefits. For example, no income support benefits are payable more than 26 weeks after a car accident if a claimant is wholly at fault.

33.   The entitlement to statutory benefits for treatment and care is regulated by Division 3.4 of the Act which provides (at 3.24):

(1)  An injured person is entitled to statutory benefits for the following expenses (treatment and care expenses) incurred in connection with providing treatment and care for the injured person:
(a)  the reasonable cost of treatment and care,

(b)  reasonable and necessary travel and accommodation expenses incurred by the injured person in order to obtain treatment and care for which statutory benefits are payable,

(c)  if the injured person is under the age of 18 years or otherwise requires assistance to travel for treatment and care, reasonable and necessary travel and accommodation expenses incurred by a parent or other carer of the injured person in order to accompany the injured person while treatment and care for which statutory benefits are payable is being provided.

(2)  No statutory benefits are payable for the cost of treatment and care to the extent that the treatment and care concerned was not reasonable and necessary in the circumstances or did not relate to the injury resulting from the motor accident concerned.

34.   There is no dispute that, leaving aside the issue of liability, the second stage of surgery is reasonable and necessary treatment for AFD’s accident related injuries.

35.  However, section 3.28(1) of the Act provides:

(1)  An injured person is not entitled to statutory benefits under this Division for treatment and care expenses incurred more than 26 weeks after the motor accident concerned if:
(a)  the motor accident was caused wholly or mostly by the fault of the person and the person was over 16 years of age at the time of the motor accident, or

(b)  the person’s only injuries resulting from the motor accident were minor injuries.

36.   Under this section, Allianz does not have to pay for treatment and care expenses incurred by AFD more than 26 weeks after the accident if his accident was caused wholly by his own fault.

My consideration of the issues

What is the liability status of this claim?

37.   In its original liability decision dated 11 February 2019, Allianz denied liability on the basis that AFD was wholly at fault and advised him at pages 2 and 3 that:

Your treating specialist Dr Gooden confirms that your ACL knee rupture is related to this motor accident

The … Act section 1.6(1) defines the meaning of minor injury as being a soft tissue injury or a minor psychological or psychiatric injury. The Act, Motor Accident Injuries Regulation 2017 and associated Guidelines go onto define soft tissue injury and minor psychological and psychiatric injury.

With consideration both of the above medical information and the definition of a “minor” injury as per the Act; the evidence supports you have sustained Not a “minor injury” [my emphasis].

38.   In a letter dated 17 May 2019 headed ‘liability notice – decline surgery’ Allianz advised AFD it did not accept liability for the second stage of the surgery and referred to the previous 11 February 2019 liability notice. On pages 2 and 3 of that letter Allianz writes:

Your treating specialist Dr Gooden confirms that your ACL knee rupture is related to this motor accident.

You underwent surgery on the 27 February 2019, in this surgery Dr Gooden made a decision that you would require a 2 stage revision.

In the letter dated 8 May 2019, Dr Gooden confirmed that you would still require the 2nd

stage to be completed.

Due to your benefits ceasing on the 23 March 2019 due to you being at fault Allianz is unable to approve the 2nd stage of the surgery.

The Act defines the meaning of minor injury as being a soft tissue injury or a minor psychological or psychiatric injury; it further defines these injuries with the associated regulations and guidelines.

With consideration both of the above medical information and the definition of a “minor” injury as per the Act; the evidence supports you have sustained a minor injury [my emphasis].

39.   Apparently Allianz recognised a typographical error in this letter and issued an amended letter dated 17 May 2019 which was sent on or about 27 May 2019 amending the last line quoted above as follows:

With consideration both of the above medical information and the definition of a “minor” injury as per The Act; the evidence supports you have sustained not a “minor” injury.

40.   I am satisfied that Allianz has, at all times, denied liability to pay the Claimant statutory benefits beyond the first 26 weeks after the accident on the basis that AFD was wholly at fault for causing his accident.

41.   I am also satisfied that Allianz has consistently accepted that AFD sustained a non- minor injury. Had AFD not been at fault because he has an injury that is not a minor injury, he would be entitled to a lifetime of reasonable and necessary treatment and care including the surgery at the centre of this dispute.

42.   Allianz has, at all times, misstated the cut-off date for AFD’s benefits. Allianz has said it would not pay for any treatment care expenses incurred after 23 March 2019 being 26 weeks after the date of the accident on 23 September 2018.

43.   Under s 36(1) of the Interpretation Act 1987, when time is calculated from the date of an event, the day of the event is not counted and therefore AFD’s statutory benefits should have been cut off on 24 March 2019 and not 23 March 2019.

Is AFD entitled to to treatment beyond 26 weeks after the accident?

44.   Section 3.28(1) of the Act says that AFD is not entitled to treatment and care expenses incurred after the first 26 weeks following his accident. I agree with the submission from Allianz that the Act is clear in its language using the words ‘is not’. There is no grey area and no discretion available to Allianz. AFD either is or is not entitled to treatment and care beyond 24 March 2019.

45.   In submissions dated 16 July 2019, Mr de Courtenay for Allianz says:

a.   The surgery quotes referred at all times to a single procedure on a single day;

b.  The insurer only ever approved the procedure on 27 February 2019;

c.   No verbal amendments were made, Dr Gooden and the Claimant were aware of the need to complete the surgery before AFD’s benefits were cut off;

d.  The word ‘incurred’ in s 3.28 should be given its ordinary and natural meeting which it states is ‘to become liable or subject to through one’s own action; bring upon oneself’;

e.  The Claimant incurs the expense of surgery when he is liable to pay it which is after it has been performed;

f.   The word ‘incurred should be interpreted in the context of the scheme and points me to the Motor Accident Guidelines cl 4.101 regarding expenses being reimbursed to the claimant on production of receipts ‘confirming the expenses incurred’. The insurer says this supports a meaning of an expense accrued by way of an invoice following date of service.

g.   The Insurer has no liability to pay for any treatment and care service provided after 26 weeks following the accident.

46.   Allianz is correct in stating that it has no liability to pay for treatment expenses incurred after 24 March 2019. The phrase in the legislation is not ‘treatment which occurs after’ but treatment expenses incurred after a certain date.

47.   AFD raised, at the teleconference on 10 July 2019, that there may have been a further conversation with Dr Gooden and Allianz expressly approving the second stage of surgery. I am satisfied, on the basis of the report of Dr Gooden dated 11 July 2019 and the file notes that there were no verbal amendments made to the agreements and approvals documented in the correspondence concerning AFD’s surgery.

What does ‘incurred’ mean?

48.   I accept Allianz’s submission that the word ‘incurred’ should be given it usual or ordinary meaning and that the context of the word in the legislation (and the delegated legislation or Motor Accident Guidelines) should also be considered.

49.   Having considered the sections of the Medical Assessment Guidelines relating to treatment while it is not entirely clear, there would appear to be two ways in which an injured person’s treatment and care expenses are paid:

a.   by the insurer to the claimant by way of reimbursement of monies paid by the claimant; or

b.  by the insurer to the treatment provider who submits invoices to the insurer or

50.   The Insurer submits that the Claimant can only incur an expense when he becomes liable to pay it and that is after the surgery is performed. This is true for the first method identified above, when the Claimant arranges the treatment, pays for it and is then reimbursed by the Insurer. The Insurer has drawn my attention to cl 4.101 of the Motor Accident Guidelines which only relates to verification of expenses incurred through the first method of payment, that is where the Claimant seeks reimbursement of monies they he has actually paid. In that case the person incurring the expense is the Claimant and he incurs that expense when he becomes liable to pay it which may be in advance of the treatment or after the treatment depending on the terms of the contract he has entered into with the treatment provider.

51.   Having examined the approval letters of 13 and 25 February 2019 it would appear Allianz has a process in place for the second method of payment which involves pre-approval of treatment and encompasses both approval in advance of the actual treatment and approval of the quotation for that particular treatment. Allianz then requests an invoice in relation to that approved treatment and, in the case of surgical procedures a report of the operation performed. Allianz has written to the doctor in this case and said:

Item codes applicable to the above approved surgery will be paid in accordance with the…AMA fees list upon receipt and review of your itemised account and operation report.

52.   I do not agree with the insurer‘s submission that an expense is incurred when the Claimant becomes liable it when the circumstances are those of the second method (involving communication and payment between the Insurer and the Doctor). In that case, the Claimant has very little input at all into the administrative and financial arrangements being made. This prompts the question, in the situation when the insurer demands pre-approval for treatment, the Doctor seeks approval to undertake that treatment and the Insurer approves the treatment, who is incurring the expense? In my view it is not AFD, but Allianz because Allianz is approving the incurring of the expense for the treatment of the Claimant’s injuries that the insurer has agreed it has a liability to treat. Allianz is therefore contracting with the doctor and Allianz has the liability to pay the doctor for the cost of the treatment that Allianz has agreed it will pay for.

What has Allianz agreed to pay for?

53.   The Insurer, its customer care consultants and its injury management specialists are not doctors and it is not a matter for them to determine what surgery was or is to occur and for that reason, the Insurer approved both option one (the single operation) and option two (the two-stage operation). If that was all Allianz had done it is likely there would be a different result to this dispute but Allianz did not simply approve both operations whatever the cost and how ever many stages were involved.

54.   The clear construction of the letters, quotes, emails and communication flowing between Allianz and Dr Gooden is, in my view, that Allianz has approved the surgery on 27 February 2019 be it option one (the single operation) or option two (the two-stage operation) and has only agreed to pay for option one or the first stage of option two. When that surgery on 27 February 2019 was performed, Allianz became liable for the cost of it but I do not consider Allianz became liable for the cost of the second stage.

55.   The Doctor has said the two stage procedure is contiguous and part of the same treatment episode although separated by a period of time (three to six months). I agree that appears to be true but unfortunately his quotes and correspondence do no reflect this. Dr Gooden’s communication has focussed on the surgery of 27 February 2019 only and approval for that surgery and payment for that surgery.

56.   If Dr Gooden had presented the quote for option two with both stages costed, then, if Allianz had approved that two-stage surgery and whatever total costing Dr Gooden had included in that quote, Allianz would be, in my view and subject to the words used in the approval letter, under a compulsion to pay for both stages of the surgery.

57.   Whether Allianz should have approved the first stage of the two-stage surgery when it had no intention of paying for the second stage without knowing whether that would compromise the Claimant’s recovery, cause secondary injury or result in a worse outcome is not something for me to determine. Whether Allianz should have made it clear in the approval letter to Dr Gooden dated 25 February 2019 and the letter to AFD of the same date that Allianz was approving option 2 but only paying for the first stage is also not something that I should determine.


58.   While the second stage of AFD’s surgery has not taken place, I am satisfied that any expense associated with that surgery will be a treatment expense incurred after the the 26 week mark after the accident. Therefore, because AFD was wholly at fault for causing his accident by operation of the benefit termination provision of s 3.28(1), Allianz does not have to pay for that surgery.

59.   I have been advised that Allianz has paid $17,483.69 to or on behalf of AFD including about $730 in weekly income support benefits. It may be small comfort to AFD, but had his accident occurred before 1 December 2017 he would have been entitled, as the at-fault driver to no-fault benefits capped at $5,000 under the accident notification provisions of the previous compensation scheme.

60.  Finally I note that s 3.28(3) says:

(3)  Despite subsection (1), statutory benefits under this Division for treatment and care expenses incurred more than 26 weeks after the motor accident concerned are payable in respect of minor injuries [my emphasis] if the Motor Accident Guidelines authorise their payment. The payment for those expenses may be so authorised if the treatment or care will improve the recovery of the injured person, the insurer delayed approval for the treatment and care expenses or in other appropriate circumstances.

61.  This provision, which permits the payment of treatment expenses incurred after the 26 week cut off, is of no comfort to AFD who has sustained major injuries (that is injuries that are not minor injuries). It seems to me a legislative anomaly that there is a ‘soft’ cut off for those with lesser injuries than AFD but a ‘hard’ cut off for someone with more serious injuries.

Belinda Cassidy
DRS Merit Reviewer
Dispute Resolution Services
26 July 2019.