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AGC v Allianz Australia Insurance Ltd [2019] NSWDRS MR 158

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
Jurisdiction Merit Review
CatchwordsMedical dispute – minor injury – statutory benefits – medical assessment – physical and psychological injuries – legal costs – reasonable and necessary costs – DRS application – liability notice – multiple invoices 
Legislation cited

Motor Accident Injuries Act 2017 (NSW) ss 1.6, 7.13(4), 7.17, 8.10, Schedule 2 clause 1 (aa), Schedule 2 clause 2(e)

Motor Accident Injuries Amendment Regulation 2017 Schedule 1 Clause 2(1), 2(3), 10(d)

Motor Accident Guidelines 2017 (as amended on 15 January 2019) 7.18.1, 7.18.6

Cases cited N/A
Text cited N/A
Parties AGC – Claimant
Allianz Australia Insurance Ltd – Insurer 
Disclaimer This decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

Reasons for Decision

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

Background

1.   AGC was injured in a motor vehicle accident on19 December 2017.

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

3.   On 9 August 2018 the insurer issued a Liability Notice to AGC denying liability for statutory benefits after 26 weeks of his claim on the basis that his injuries had been determined as ‘minor injuries’ and he had been determined as ‘wholly or mostly at fault’ under the Act. This decision was confirmed by an internal review dated 30 August 2018.

4.   AGC disputed this decision and lodged an application with the Dispute Resolution Service (“DRS”) for a medical assessment in relation to the ‘minor injury’ determination.

5.   AGC sought assessment of physical and psychological injuries by the DRS. Following the medical assessment, the insurer’s decision was confirmed with a finding that AGC’s injuries are “minor injuries”.

6.   AGC’s legal representatives, Stephen Young Lawyers, subsequently issued three 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)’ and $1796.26 for ‘DRS Application – Merit Review(weekly payments)’.

7.   The Insurer did not make payment of any of the invoices and wrote to AGC’s legal representatives on 12 June 2019 by email indicating that it would pay one invoice up to the maximum amount in relation to the minor injury dispute. This is the ‘reviewable decision’ for the purposes of the Act. The issue in dispute is whether AGC 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. I note that the application relates only to legal costs in respect of the Medical Dispute and not the Merit Review(weekly payments).

8.   It does not appear that AGC sought 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.

9.   AGC lodged his application for merit review with the DRS on 11 June 2019. The application was accepted and falls within the jurisdiction of the DRS as a merit review matter under Schedule 2(1)(aa) of the Act.

Document considered

10.   I have considered the documents provided in the application and the reply and any further information provided by the parties.

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 2017 (as amended on 15 January 2019) (“the Guidelines”)
  • Motor Accident Injuries Amendment Regulation 2017 (NSW) (“the Regulations”)

Submissions

12.   There are no submissions attached to AGC’s application. A letter from AGC’s legal representatives to the Complaints Team of Sira states:

“ We have requested the Insurer to pay our professional legal costs for lodging the application to SIRA (DRS 1-2e Minor Injury physical) on 14 January 2019, 20 March 2019, 9 May 2019, 28 May 2019 and 4 June 2019.

On 30 May 2019, the insurer contended that no legal costs are payable.

According to clause 2(3) of Schedule 1 of the Motor Accident Injuries Regulation 2017, the insurers are liable to pay the costs of legal services to the applicant.”

The insurer has written an identical letter in respect of the Minor injury psychological invoice for costs.

13.   The Insurer submits:

a.   Clause 2(1), Schedule 1 of the Regulations clearly limits the maximum costs payable to a legal practitioner for legal services provided in relation to a medical assessment to be 16 monetary units.

b.   Section 7.17 then defines a medical assessment to be an assessment of a medical assessment matter. The medical assessment matter in this case is “whether the injury caused by the motor accident is a minor injury for the purposes of the Act”.

c.   The costs payable for the determination of whether the claimant has a minor or non-minor injury caused by the motor vehicle accident (physical, psychological or both) is limited to 16 monetary units.

d.   The insurer disputes that any further amount is payable.

e.   There are no exceptional circumstances in this application, the claimant’s legal representatives are simply charging outside the limits of the legislation.

f.   It is also contrary to the objects of the legislation which, pursuant to section 1.3(2)(g) of the Act, includes “to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes…..”

g.   Even if the Merit Reviewer is satisfied that the claimant is entitled to two sets of costs for physical and psychological minor injury disputes, the insurer submits that the claimant’s legal representatives are not entitled to any further fees than 16 monetary units.

h.   Section 8.10 of the Act limits the entitlement of the Claimant to seek legal fees from the insurer to those costs that are reasonable and necessary.

i.    The claimant’s legal representatives essentially made no submissions as part of the application. The claimant’s legal representatives did not engage in any way with the legislation and the definition of minor injury. No references were made to any of the relevant diagnoses or medical opinions provided by the claimant’s treating practitioners.

j.    The insurer objects to any more than 16 monetary units being payable across both applications as this is what is reasonable and necessary for the quality of legal services provided.

k.  & In response to a query from DRS in respect of whether the insurer had paid one of the invoices, the insurer submitted that it had not yet paid for legal costs in relation to either invoice.

Reasons

14.   The issue in dispute before me is AGC’s entitlement to legal costs relating to the application for medical assessment of the ‘minor injury’ dispute. While AGC has made two applications, there is one costs dispute in respect of one ‘minor injury’ assessment. On that basis, this decision will address both applications, which are treated as one dispute.

15.   Section 8.3 of the Act provides for the fixing of maximum costs recoverable by Australian legal practitioners. 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’ costs in connection with the claim. This 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 DRS.

16.   As noted above, section 8.3(3) provides that costs are recoverable if permitted by the Regulations or the DRS. I am satisfied on the reasons outlined above, that the Regulations permit costs in medical assessment matters. In this case, an “order” or determination from the DRS is not necessary for an insurer to agree to pay the reasonable and necessary costs of a claimant.

17.   It is also important to note that Insurers refusing to consider payment of legal costs on the grounds as submitted in this case, resulting in further disputation, falls contrary to the objects of the Act particularly that at section 1.3(2)(g): “to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes”. This object is reiterated at clause 7.18.1 of the Guidelines, and clause 7.18.6 also stipulates that insurers are to attempt to identify and narrow any issues in dispute before applications are lodged with DRS.

Reasonable and Necessary Costs

18.   Having established that the costs of medical assessments are recoverable, I will proceed to assess AGC’s reasonable and necessary legal costs in respect of the medical assessment. Sub-clause (1) of Schedule 1, Part 1, clause 2 of the Regulations limits costs in connection with medical assessments to 16 monetary units. I am required, pursuant to the jurisdiction conferred by Schedule 2, clause 1(aa) of the Act (above), to determine the quantum of the maximum costs I consider appropriate.

19.   AGC, through his legal representatives, lodged an application for medical assessment with the DRS in respect of the Insurer’s decision, dated 9 August 2018, confirmed by internal review on 30 August 2018, that he had a ‘minor injury’. That application was subsequently referred to Assessor John Baker for assessment of the psychological injuries, and to Assessor Neil Berry for assessment of the physical injuries. Both Assessors found that AGC has a minor injury for the purposes of the Act.

20.   AGC’s legal representatives, Stephen Young Lawyers subsequently issued two invoices to the Insurer claiming recovery of legal costs in the amount of $1,796.26 for ‘DRS Application – Medical Dispute (Physical)’ and $1,796.26 for ‘DRS Application – Medical Dispute (Psychological)’. As noted above, the Insurer has declined to make payment of the invoices.

21.   It is open to me to permit any amount of costs up to the maximum amount, including nil. In this case, I consider it appropriate to allow some costs for the preparation and lodgment of the application for medical assessment noting the claimant is entitled to have the insurer’s decision reviewed.

22.   However, 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.

23.   It appears that AGC’s legal representatives have issued the two invoices on the basis that AGC has both physical and psychological injuries; although only one application for medical assessment was lodged, listing a number of different physical injuries and a psychological injury, and attaching one set of submissions.

24.   Regardless of whether two separate applications are lodged or not, I note that section 7.20 of the Act provides that a “medical dispute” can be referred to the DRS for a “medical assessment”. A definition for “medical assessment” is provided at section 7.17 as follows:

medical assessment means an assessment of a medical assessment matter under this Division

25.   Schedule 2, clause 2(e) of the Act declares a dispute about whether an injury is a ‘minor injury’ as a “medical assessment matter”.

26.   It is important to note that 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”.

27.   In AGC’s matter, given that there was one medical dispute about minor injury, that was referred to the DRS, I consider the maximum of 16 monetary units applies in respect to AGC’s application for medical assessment.

28.   As noted above, it is open to me to permit any amount of costs up to the maximum amount.

29.    Having considered AGC’s application for medical assessment I note that AGC’s legal representatives make only brief submissions on his behalf. The submissions outline the background of the dispute, and then state:

The GP of AGC has provided a medical note that states that AGC suffers from a non-minor injury

30.   This is the extent of the submissions directly related to the minor injury dispute. I note that no submissions in relation to the specific physical or psychological injury are made.

31.   The application includes a number of attachments, however I note that AGC’s legal representatives make no submissions in relation to how the documents attached are relevant to the application and support that AGC does not have a ‘minor injury’. The Insurer submits that AGC’s legal representatives have not made detailed submissions in support of the application.

32.   AGC’s legal representatives do not provide a schedule itemising the costs incurred in respect of the application for medical assessment or make submissions about what the costs claimed in the invoices relate to.

33.   When considering what costs, of the costs claimed by AGC’s legal representatives, are reasonable and necessary thought must be given to the work required to lodge the application.

34.   Applying my discretion and experience, having had regard to the application for medical assessment prepared by AGC’s legal representatives and to the level of submissions/reasons provided and overall consideration put into the application, I do not consider it appropriate to award the maximum costs allowable. In my view, maximum costs should be awarded in circumstances where the legal representative has put significant and justified time and effort into the application. In this instance, there are only brief submissions attached to the application, there is no indication that such submissions took a significant amount of time. There is no explanation from AGC’s legal representative in their application or their invoice as to how $1600 in costs has been incurred. I do consider that some costs are justified in taking the time to make an application to DRS and in this instance I consider it appropriate to allow legal costs of $900.00.

35.   Accordingly, I allow costs in the amount of $990.00 (inclusive of GST) in respect to the application for medical assessment.

Determination

36.   The Insurer’s reviewable decision made on 12 June 2019 is set aside and the following decision is made in substitution of the reviewable decision:

The Insurer is to pay AGC’s legal costs in the amount of $990.00 in respect to the application for medical assessment.

37.  Effective date: This determination takes effect on 2 September 2019.

Michelle Boyle
Merit Reviewer and Claims Assessor
Dispute Resolution Service