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AFV v AAI Limited trading as GIO [2019] NSWDRS MR 148

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
JurisdictionApplication for Review of Merit Review
CatchwordsLegal costs – medical application – application for review of a decision – late application – costs and expenses – legal disability – exceptional circumstances – minor injury – legal costs – statutory interpretation – reasonable and necessary – allowed by a Claims Assessor
Legislation cited Motor Accident Injuries Act 2017 (NSW) ss 1.3(2)(a), 1.3(2)(b), 1.3(2)(g), 7.15(1), 7.15(3), 7.15(6), 8.10(1), 8.10(2), 8.10(3), 8.10(4), Schedule 1, Schedule 2(1) (aa)
Motor Accident Injuries Regulation 2017 Schedule 1 Part 1 (2)(1)
Motor Accident Guidelines 2017 cl 7.235, 7.236, 7.237, 7.238
Cases cited N/A
Text cited N/A
Parties AFV – 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 (Respondent), AFV was injured in a motor vehicle accident on 4 February 2018 at Freshwater.

2.   On 2 September 2019, Merit Reviewer and Claims Assessor Michelle Boyle made a merit review decision setting aside the Insurer decision under review and that the Insurer (Applicant) pay AFV’s legal costs in respect to a medical application in the amount of $1,796.30.

3.   By application dated 2 October 2019 the Insurer, AAI Limited trading as GIO, applied 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 14 October 2019, Penrose Lawyers on behalf of the claimant AFV, lodged a reply.

Jurisdiction and consideration of late application

5.   Clause 7.236 of the Guidelines provides that application for review of a decision of a single merit reviewer must be made within 28 days of the date of the decision.

6.   Because the date of the decision was 2 September 2019 and application for a review of a merit review decision was dated 2 October 2019, I am satisfied the application was not made within the time required under sub- section 7.15 (6) of the MAI Act and clause 7.236 of the Guidelines.

7.   Clause 7.237 of the Guidelines provides that proper officer may refuse to accept an application for review if it is made more than 28 days after the date of the decision.

8.   Under clause 7.238, the proper officer may exercise a discretion to accept a late application for review of a decision, consistent with section 1.3 of the MAI Act, if the proper officer believes the exercise of that discretion would best promote the objects of the Act or the provision concerned, and the objects of DRS. When exercising the discretion, the proper officer must act reasonably, impartially and give proper and genuine consideration to the particular circumstances of the issue and the claim.

9.   Th Insurer in its submissions (at paragraph 1.3) dated 2 October 2019, submits that its application for review was lodged within the time limits provided for by section 7.15 of the MAI Act and Part 7 of the Guidelines.

10.   In submissions dated 14 October 2019, Penrose Lawyers on behalf of the claimant AFV, do not respond to or specifically oppose the Insurers’ submissions about whether the application was made within time.

11.   Pursuant to clause 7.235 to clause 7.238 of the Guidelines I have decided to accept the late application in this case for the following reasons. When exercising my discretion to accept a late application I have had regard to section 1.3 of the MAI Act including sub-sections 1.3 (2) (a), (b) and (g) which refer to early and ongoing financial support and also to the quick and just resolution of disputes. I have also considered Schedule 1 of the MAI Act and the objects of the DRS. I have taken into account that the application was only a few days late. I note the claimant’s solicitors did not raise any objection to the lateness of the application for review. In all the circumstances of this case I have decided to accept the late application.

12.   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

13.   I have considered the submissions and documents provided in the application for review and the reply. I have also considered the documents enclosed with the application for review and the reply including the merit review decision of Merit Reviewer Michelle Boyle dated 2 September 2019.

Legislation

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

  • Motor Accident Injuries Act 2017 (NSW) (“the MAI Act”)
  • Motor Accident Guidelines effective 15 January 2019 (“the Guidelines”)
  • Motor Accident Injuries Regulation 2017 (NSW) (“the Regulation”)

Submissions

15.  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.

16.  In its submissions accompanying its application for review dated 2 October 2019 the Insurer identifies four grounds for review as follows (at paragraph 1.4):

“a) The decision, as made by the DRS Decision Maker, was ultra vires;

b) The Decision Maker failed to properly interpret and apply the Motor Accident Injuries Regulations 2017 (NSW) and the Motor Accident Injuries Act 2017(NSW), specifically, the following:

1.4.b.1.  Schedule 2, Part 1, Clause 1(aa) of the Act;

1.4.b.2.  Schedule 1, Part 2, Clause 1 of the Regulations;

1.4.b.3.  Section 8.10 of the Act.”

17.  A brief summary of the Insurer’s submissions are as follows:

  • First, Schedule 2 of the Act makes no provision for the assessment of legal costs by way of merit review. There is a reference only to ‘costs and expenses’ in Schedule 2, Part 1, Clause 1(aa), there is no reference to ‘legal costs’. Therefore, the decision-maker has no jurisdiction to determine the payment of legal costs in respect of a medical dispute. The decision under review is ultra vires. (At paragraph 1.5).
  • Second, sub-section 8.10(2) of the Act provides that regulations may make provision for the fixing of the maximum costs and expenses recoverable by a claimant. Then, under sub-section 8.10(3), the claimant is only entitled to recover from the insurer reasonable and necessary legal costs incurred by the claimant if payment of those costs is permitted by the regulations or the Dispute Resolution Service. Neither of these circumstances apply to the decision under review. Then, under Schedule 1, Part 2, Clause 1 of the Regulations, the costs for legal services for a medical assessment are as allowed by the claims assessor or court. In the decision under review, costs have not been allowed by either a claims assessor or a court and thus cannot be awarded under sub-section 8.10(3). (At paragraph 1.6 to 1.9). The Insurer then states the decision-makers response to this argument is circular and should not be accepted.
  • Third, sub-section 8.10(4) provides that Dispute Resolution Service 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.
    The Insurer argues that the decision-maker makes no determination as to whether the claimant is under a legal disability or if there is ‘exceptional circumstances’.

18.  In a submission accompanying the reply dated 14 October 2019, Penrose Lawyers on behalf of the claimant responded to the Insurer’s submissions as follows:

  • Schedule 2, Part 1, Clause 1(aa) of the Act. A reference to ‘costs’ is a reference to ‘legal costs’ and this clause should be read in conjunction with section 8.10 of the Act which provides that a claimant is entitled to recover necessary legal costs incurred by the claimant in connection with the claim.
  • Section 8.10 of the Act and Schedule 1, Part 2, Clause 1 of the Regulations. The Insurer has failed to properly interpret sub-section 8.10 (3) of the Act which clearly states that a claimant for statutory benefits is entitled to recover reasonable and necessary legal costs if the payment is permitted by the Regulations or the DRS. The claimant’s submissions note that the decision-maker Michelle Boyle is a merit reviewer and claims assessor but more importantly an agent of DRS empowering her to make a costs decision.

Reasons

19.      The central issue in dispute is whether the Claimant, AFV’s legal costs are payable for the preparation and submission of an application for a medical assessment for a “minor injury” determination.

20.  The relevant legislation starts with section 8 which provides in part as follows:

8.10 Recovery of costs and expenses in relation to claims for statutory benefits

(1)   A claimant for statutory benefits is (subject to this section) entitled to recover from the insurer against whom the claim is made the reasonable and necessary legal costs, and other costs and expenses, incurred by the claimant in connection with the claim. Other costs and expenses include the cost of medical and other tests and reports.

(2)   The regulations may make provision for or with respect to fixing the maximum costs and expenses recoverable by a claimant under this section (including any matters for which no costs and expenses are recoverable from the insurer).

(3)   A claimant for statutory benefits is only entitled to recover from the insurer against whom the claim is made reasonable and necessary legal costs incurred by the claimant if payment of those costs is permitted by the regulations or the Dispute Resolution Service.

(4)   The Dispute Resolution Service 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.

21.   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 legal costs” incurred by the claimant in connection with the claim. Sub-section 8.10 (1) also refers separately to “other costs and expenses”. Sub-section 8.10 (1) is qualified by sub-sections 8.10 (2), (3) and (4).

22.   Sub-section 8.10 (2), provides that the recovery of costs and expenses is allowed if payment is permitted by the Regulations or the DRS. Sub-section 8.10 (2) is limited in its terms and applies to “other costs and expenses”. It does not appear to apply to “legal costs” which are referred to separately in sub-section 8.10 (3).

23.   Sub-section 8.10 (3), provides that a claimant is only entitled to recover “reasonable and necessary legal costs” if ”payment of those costs is permitted by the regulations or the Dispute Resolution Service.” Sub-section 8.10 (3) is limited in its terms to “legal costs”.

24.   Sub-section 8.10 (4) then states that the DRS can permit the payment of legal costs only if it is satisfied that “…the claimant is under a legal disability, or… exceptional circumstances exist that justify payment….”

25.   Further to sub-section 8.10 (4), the relevant regulation that seems to apply is Schedule 1 sub- clause 2(1). Costs for legal services for medical assessments are specifically permitted by the Regulations at Schedule 1, sub-clause 2(1), 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).

26.   Accordingly, by operation of sub-section 8.10 (3), a claimant for statutory benefits is only entitled to recover legal costs if payment of those costs is permitted by the regulations or the Dispute Resolution Service in the circumstances prescribed in section 8.10 (4).

27.   The first argument raised by the Insurer is that the decision maker in the case of a merit review for the payment of legal costs for a medical review has no jurisdiction. Schedule 2 clause 1 of the Act sets out a list of matters where the DRS has jurisdiction. This list includes sub-clause 1(aa) which provides:

The following matters are declared to be merit review matters for the purposes of Part 7:

The reasoning from the Insurer is that because sub-clause 1 (aa) only refers to “costs and expenses” and does not include a refence to “legal costs”, then by necessary implication, legal costs are not included and the merit reviewer has no jurisdiction to make a decision.

28.   This argument by the Insurer is a finally balanced point of statutory interpretation. It is correct that legal costs are not referred to or included in the sub-clause. However, reading the sub-clause in its full context, I conclude that legal costs is intended to be included in sub-clause 1 (aa). The sub-clause refers to the whole of section 8.10 and refers to “…costs and expenses incurred by the claimant are reasonable and necessary.” The words “reasonable and necessary” are only used in conjunction with legal costs in section 8.10. They are not used to qualify the phrase or words “costs and expenses”. Accordingly, because sub-clause 1 (aa) refers to the whole of section 8.10 and the words “reasonable and necessary”, the sub-clause by necessary implication includes legal costs and so confers jurisdiction on a merit reviewer in the DRS to make a decision on the matter.

29.   For the above reasons I do not accept the first argument put by the Insurer. I am not satisfied on this argument 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.

30.   The second argument raised by the Insurer in its written submissions refers to sub-sections 8.10 (2) and sub-section 8.10 (3). Paragraph 1.7 of the Insurer’s written submissions then states (original emphasis included):

1.7. Section 8.10(2) of the Act provides that the Regulations fix the maximum costs and expenses recoverable by the claimant. Section 8.10(3) then goes on to provide that claimants are only entitled to recover legal costs from the insurer as follows:

a)  Where those legal costs are “reasonable and necessary legal costs incurred by the claimant”;

and

b)  Where those legal costs “are permitted by the Regulations or the Dispute Resolution Service”.

31.  Paragraph 1.8 of the Insurer’s written submissions then states: “ 1.8. GIO submits that neither of the above circumstances outlined by Section 8.10(3) apply in relation to the decision under review.”

32.   The Insurer’s claim that sub-section 8.10 (3) uses the word “and” between sub-clause (a) and (b) is incorrect. The word “or” is used in the legislation. The Insurer submits that neither of those circumstances apply in relation to the decision under review. I note that the Insurer’s submissions in paragraph 1.10 then correctly refer to the legislation using the word “or”.

33.   The third argument raised by the Insurer in its written submissions refers to Schedule 1, Part 2 of the Regulations which relates to medical disputes. The Insurer submits that the costs of the medical assessment that were allowed in the decision under review have not been “allowed by a Claims Assessor”, nor have they been “allowed by a Court”. Section 8.10(3)(a) therefore cannot apply to the decision under review.

34.   Clearly the decision-maker in this case is not a Court. Her signature block indicates that she is both a “Merit Reviewer and Claims Assessor, Dispute Resolution Service”. Although not specifically stated, the decision-maker in this case seems to be appointed as both a merit reviewer and a claims assessor. There is no evidence or submissions before me that brings into question the appointment of the decision-maker as both a merit reviewer and claims assessor. Accordingly, I cannot see any facts or reasoning that would support this ground of the Insurer’s argument.

35.   For the above reasons I do not accept the third argument put by the Insurer. I am not satisfied on this argument 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.

36.   The fourth argument raised by the Insurer in its written submissions is that under sub-section 8.10(4) the DRS can permit payment of legal costs, but “only if satisfied” that the claimant is either under a legal disability, or exceptional circumstances exist. The Insurer then submits that decision under review makes no reference at all to sub-section 8.10(3) and makes no determination as to whether the claimant is under a legal disability, or if “exceptional circumstances” exist to justify the insurer paying the legal costs incurred by the claimant.

37.   Sub-section 8.10 (3), provides that a claimant is only entitled to recover “reasonable and necessary legal costs” if “payment of those costs is permitted by the regulations or the Dispute Resolution Service.”, (emphasis added). The first important point to note is that the legislation uses the word “or” so that there are two mechanisms or routes by which costs can be awarded; either by regulation or by the DRS.

38.   In the decision under review the decision-maker clearly stated, (at paragraph 20 of her reasons), that in her view, the Regulations specifically permit payment of reasonable and necessary legal costs incurred “in connection with a medical assessment”. It is clear from her reasons that the decision-maker made her decision to award legal costs based on the power provided in the Regulations. This aspect of her reasoning does not appear to be challenged by the Insurer.

39.   What the Insurer is contesting under this ground for review is the decision-maker’s failure to make a determination as to whether the claimant is under a legal disability, or if “exceptional circumstances” exist to justify the insurer paying the legal costs incurred by the claimant.

40.   The appropriate response to this argument is that the decision-maker does not need to make a determination on this issue because she has already made a determination on the other available basis which is under the Regulations. The Insurer’s submission seems to be contending that the decision is invalid and open to review unless the decision-maker makes a decision under both the available routes of regulation and by the DRS. Contrary to this contention by the Insurer, the legislation clearly provides that a determination of legal costs can be made on an alternative basis under the regulation or by the DRS.

41.   For the above reasons I do not accept the fourth argument put by the Insurer. I am not satisfied on this argument 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

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

43.   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