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AFJ v AAI Limited trading as GIO [2019] NSWDRS MR 149

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
Jurisdiction Application for Review of Merit Review 
CatchwordsReview of merit review – legal costs – minor injury – physical injury – psychological injury – DRS application – single medical assessment – separate invoices
Legislation cited Motor Accident Injuries Act 2017 (NSW) ss 6.21, 7.15(1), 7.15(3), 7.15(6), 8.10, Schedule 1 clause 2(1), Schedule 2 Clause 2(e)
Motor Accident Injuries Regulation 2017
Motor Accident Guidelines effective 1 December 2017 cl 7.236
Cases cited N/A
Text cited N/A
Parties AFJ – 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.

Application for Review of Merit Review

Background

1.   The Claimant, AFJ was injured in a motor vehicle accident on 30 April 2018.

2.   On 19 July 2019, Tajan Baba Merit Reviewer made a merit review decision.

3.   By application dated 23 July 2019 Stephen Young Lawyers on behalf of AFJ, made an application to have the merit review decision reviewed on the basis that there is reasonable cause to suspect that the decision was incorrect in a material respect.

4.   On 9 August 2019 the Insurer, AAI Limited trading as GIO, lodged a reply.

5.   The application for a review of a merit review decision was received on 23 July 2019. I am satisfied the application was made within the time required under sub- section 7.15 (6) of the MAI Act and clause 7.236 of the Guidelines.

6.   Under sub-section 7.15 (3) of the MAI Act, I am only to refer the application to a panel, if I am satisfied that there is reasonable cause to suspect that the decision determining the review was incorrect in a material respect having regard to the particulars set out in the application.

Documents considered

7.   I have considered the submissions and documents provided in the application and the reply. I have also considered the merit review decision of Merit Reviewer Tajan Baba dated 19 July 2019.

Legislation

8.   In making my decision/conducting my review I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW) (“the MAI Act”)
  • Motor Accident Guidelines effective 1 December 2017 (“the Guidelines”)
  • Motor Accident Injuries Regulation 2017 (NSW) (“the Regulation”)

Submissions

9.   Under sub-section 7.15 (1) of the MAI Act a claimant or insurer may apply to a proper officer to refer a decision of a merit reviewer to a review panel for a review.

10.   In a submission accompanying the application dated 23 July 2019, the Applicant submits that there are three issues in dispute which are said to be incorrect in a material respect. In summary, the Claimant’s submissions about the three issues in dispute are:

i.   The legal costs in dispute are two separate tax invoices each representing costs of $1,633.00 plus GST. The claimant has not submitted a single tax invoice for $3,592.52 which does not exceed the amount set in the Regulation.

ii.   The medical dispute over the “minor injury” required two medical assessments for physical and psychological injury. Because Schedule 1 Part 1 clause 2(1) refers to “a medical assessment” it should be interpreted to mean one physical assessment matter and one psychological assessment matter for which two sets of costs should be allowed. The legislation allows for legal costs for more than one medical assessment(s) for the same dispute.

iii.   The legal costs allowed of $960 were unfair and insufficient. Sufficient consideration was not given to the legal practitioner’s hourly rate and the amount of work done on the matter. A costs penalty pursuant to section 6.21 of the Act should be applied given the time spent lodging the merit review due to the insurer’s inadequate practices.

11.  The Respondent Insurer provided detailed Submissions in Reply in a document attached to its reply dated 9 August 2019.

12.  In summary, the Respondent Insurer’s Submissions in Reply address the arguments raised in the application for review as follows:

a)  The Reply refers to the Reasons for Decision dated 19 July 2019 and submits that the Assessor [sic- Merit Reviewer] erred in forming a view that Schedule 1 Clause 2(1) “permit payment of reasonable and necessary legal costs incurred”. The Insurer reiterates that Schedule 1, Part 1, clause 2 of the Regulation only operates to fix the maximum legal costs that may be incurred by the claimant (or an insurer). Such legal costs are only recoverable from the insurer by operation of section 8.10 if the DRS is satisfied that exceptional circumstances exist that justify the costs incurred by the claimant to be recovered from the insurer.

b)  The Insurer noted that the Claimant’s Solicitor has issued two separate invoices in relation to a single medical dispute about a minor injury dispute. Only one DRS Application form was lodged on behalf of the Claimant relating a physical minor injury dispute. The Insurer notes that it did not receive a separate application form for a psychological minor injury dispute from the Claimant’s Solicitor. The Insurer further submits that legal costs are not awardable per injury type and that a concurrent physical and psychological minor injury dispute falls under the ambit of a single medical assessment application.

c)  The Insurer does not agree with the Claimant’s Solicitor’s contention that two sets of costs should be allowed per injury type. The Insurer submits that a medical assessment matter is categorised under Schedule 2, clause 2(e) of the Act as a dispute whether an injury is a minor injury. That clause does not differentiate between a physical minor injury or psychological minor injury. The Insurer further submits that a single medical assessment matter may relate to both a physical and psychological minor injury review, and as such the dispute should be treated as one single dispute.

d)  The Insurer submits that the legal costs awarded by the Assessor [sic] in the amount of $960.00 are grossly excessive in the circumstances, even in the case where the Insurer had overturned its original decision.

Reasons

13.  The issue in dispute before the Merit Reviewer was a claim for the recovery of legal costs.

14.  The Claimant’s legal representatives, Stephen Young Lawyers, issued two invoices to the Insurer claiming recovery of legal costs of the medical assessment in the amount of $1,796.26 for ‘DRS Application – Medical Dispute (Physical)’ and $1,796.26 for ‘DRS Application – Medical Dispute (Psychological)’, [both invoices inclusive of GST].

15.  The submissions in the Application for Review have raised three disputed issues. In addition, the Respondent Insurer’s Submissions in Reply raised an additional issue, (referred to as issue (a) in paragraph 12 above).

16.  I will address each issue separately below using the numbering set out in paragraph 10 above.

(i)  Two Separate Disputes

17.   The merit review decision of Merit Reviewer Baba dated 19 July 2019 states (at paragraph 35) that : “… I do not consider I am able to allow the total cost of the two invoices, in the sum of $3,592.52, as it exceeds the maximum costs of 16 monetary units ($1,633.00) provided in the Regulations.”

18.      The Merit Reviewer then concludes (at paragraph 39):

“…the maximum costs provided at Schedule 1, Part 1, clause 2 of the Regulations relates to costs in connection with a “medical assessment”, which is defined to be an assessment of a “medical assessment matter”. The maximum of 16 monetary units therefore does not relate to injuries or types of injuries, which appears to be the basis of the two separate invoices issued in this matter, but rather the “medical dispute” regarding ‘minor injury’ which has been referred to the DRS for a “medical assessment”.

19.  The Claimant submits that Merit Reviewer incorrectly applied their request for a review. The legal costs in dispute are two separate tax invoices each representing costs of $1,633.00 plus GST. The Applicant submits that the Merit Reviewer’s decision at paragraph 35 is incorrect in a material respect.

20.  The Respondent’s Submissions in Reply argue that legal costs are not awardable per injury type and that a concurrent physical and psychological minor injury dispute falls under the ambit of a single medical assessment application.

21.  I have considered the merit review decision and also the submissions and particulars provided by the Applicant and Respondent Insurer. I have no reason to suspect that the Merit Review decision was incorrect. I agree with the Respondent’s Submissions in Reply that the Claimant’s Solicitor has issued two separate invoices for what is a single medical assessment. Accordingly, I will not refer the application to a panel because I am not satisfied that there is reasonable cause to suspect that the decision determining the review was incorrect in a material respect having regard to the particulars set out in the application.

(ii)  One Physical Assessment and One Psychological Assessment.

22.  The merit review decision of Merit Reviewer Baba dated 19 July 2019 states (at paragraph 36) that the Claimant’s legal representatives issued two invoices for legal costs on the basis that the Claimant had both physical and psychological injuries. Merit Reviewer Baba notes that only one application for medical assessment was lodged listing a number of physical and psychological injuries and attaching one set of particulars.

23.  The Claimant submits that as the medical dispute required two medical assessments, being physical and psychological, then two sets of costs should be allowed.

24.   The Respondent’s Submissions in Reply argue that a single medical assessment matter may relate to both a physical and psychological minor injury review, and as such the dispute should be treated as one single dispute.

25.  I have considered the merit review decision and also the submissions and particulars provided by the Applicant and Claimant. I have no reason to suspect that the Merit Review decision was incorrect. I agree with the Respondent’s Submissions in Reply to the effect that as there was only one application for medical assessment there is only an entitlement to the payment of one invoice up to the maximum amount provided for in the legislation. Accordingly, I will not refer the application to a panel because I am not satisfied that there is reasonable cause to suspect that the decision determining the review was incorrect in a material respect having regard to the particulars set out in the application.

(iii)  Legal Costs Insufficient.

26.  The merit review decision of Merit Reviewer Baba dated 19 July 2019 states (at paragraph 48) that, having regard to the application for medical assessment and the level of submissions/ reasons provided, it is appropriate to allow $960 for legal costs.

27.  The Claimant submits that this amount is unfair and insufficient given the legal practitioner’s hourly rate and the amount of work done on the matter.

28.  The Respondent’s Submissions in Reply argue that the legal costs awarded of $960.00 are grossly excessive in the circumstances

29.  I have considered the merit review decision and the submissions and particulars provided by the Applicant and Claimant. I have no reason to suspect that the Merit Review decision that legal costs should be assessed at $960.00 was incorrect. Accordingly, I will not refer the application to a panel because I am not satisfied that there is reasonable cause to suspect that the decision determining the review was incorrect in a material respect having regard to the particulars set out in the application.

(iv)  Respondent’s Submission

30.  The Respondent’s Submissions in Reply raise a separate point not raised by the Claimant in its Application, (see paragraph 12 (a) above). The Respondent submits that the Merit Reviewer erred in forming a view that Schedule 1 Clause 2(1) “permit payment of reasonable and necessary legal costs incurred”.

31.   I have considered the merit review decision and the Respondent’s submission. I do not agree with the Respondent’s submission on this point. In my view, if one reads the Merit Reviewer’s full reasoning on this issue, set out at paragraphs 16 to 29 inclusive, she correctly states that Schedule 1, Part 1, clause 2 of the Regulation operates to fix the maximum legal costs that may be incurred by the claimant (or an insurer). Accordingly, I will not refer the application to a panel because I am not satisfied that there is reasonable cause to suspect that the decision determining the review was incorrect in a material respect having regard to the particulars set out in the application.

Conclusion

32.  For the above reasons, I will not refer the application to a panel.

33.  I am not satisfied that there is reasonable cause to suspect that the decision determining the review was incorrect in a material respect.

Ray Plibersek
Proper Officer
Dispute Resolution Service