|NSW DISPUTE RESOLUTION SERVICE (NSWDRS)|
|Catchwords||Medical dispute – MRI – physiotherapy treatment – statutory benefits – medical assessment – legal costs – reasonable and necessary costs – exceptional circumstances|
Motor Accident Injuries Act 2017 (NSW) ss 1.3(2)(g), 7.13(4), 8.3, 8.3(1)(c), 8.10(1), 8.10(2), 8.10(3), 8.10(4), Schedule 2 clause 1 (aa)
Motor Accident Injuries Amendment Regulation 2017 reg 10(d), 22, Schedule 1 Clause 2(1)
Motor Accident Guidelines 2017 (as amended on 15 January 2019) 7.18.1, 7.18.6
AGD – Claimant
AAI Limited trading as AAMI– 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
1. AGD was injured in a motor vehicle accident on 19 September 2018.
2. AAI Limited trading as AAMI (“the Insurer”) accepted AGD’s claim under the Motor Accidents Injuries Act 2017 (“the Act”).
3. AGD’s treating doctor submitted a treatment request to the Insurer, seeking approval for the costs of an MRI of the right hip and physiotherapy treatment. The Insurer declined to provide approval by way of letters dated 21 December 2018 and 23 January 2019 respectively. A further request was submitted for an MRI of the cervical spine which the Insurer also declined by way of letter dated 8 March 2019.
4. AGD disputed the Insurer’s decisions and her legal representatives, Benefit Legal Lawyers lodged two applications with the Dispute Resolution Service (“DRS”) for medical assessments dated 6 March 2019 and 8 May 2019.
5. DRS referred the applications to Assessor Dr Alexander Woo who issued a medical assessment certificate on 21 July 2019. Assessor Woo determined that the referrals for an MRI of the cervical spine and physiotherapy treatment were reasonable and necessary and the referral for MRI of the right hip was not reasonable and necessary.
6. AGD’s legal representatives subsequently issued an invoice to the Insurer dated 29 July 2019 claiming recovery of legal costs of the medical assessment in the amount of $1,796.30 (inc GST).
7. The Insurer declined to make payment of the invoice by way of email dated 5 August 2019. This is the ‘reviewable decision’ for the purposes of the Act. The issue in dispute is whether AGD 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.
8. AGD did not seek an internal review by the Insurer of the reviewable decision. 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. AGD lodged her application for merit review with the DRS on 30 August 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.
10. I have considered the documents provided in the application and the reply and any further information provided by the parties. I have also considered AGD’s applications for medical assessment dated 6 March 2019 and 8 May 2019 as well as Assessor Woo’s medical assessment certificate dated 21 July 2019.
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”)
12. In the application for merit review AGD’s legal representatives note that the Insurer declined to make payment of AGD’s legal costs on the basis that legal fees must be ordered by the “claim assessor or court” (Schedule 1, (2)(1) of the Regulations). AGD’s legal representatives provide background information to the dispute and refer to submissions made to the Insurer on 12 August 2019 in response to the Insurer’s decision. These submissions included:
b. AGD’s application to DRS was of a medical assessment matter for the purposes of statutory benefits. It was not a claim for damages.
c. A claims assessor or court has no jurisdiction to order costs in statutory benefits. Reference is made to clause 22 of the Regulations and section 7.37 of the Act.
d. As the Insurer has denied AGD’s entitlement for costs, it is the Insurer’s onus to prove that an assessor must make an order for costs under the Regulations or the Act. The documents which the Insurer has provided so far do not provide any proper grounds as to why AGD is not entitled to her costs.
13. AGD’s legal representatives note that the Insurer subsequently affirmed its decision in an email response dated 12 August 2019. AGD’s legal representatives make a number of submissions in respect to this email and the following additional submissions:
b. It would be outrageous and against the objects of the Act and the Guidelines if an additional merit review application for costs is required for every DRS medical assessment matter lodged.
c. The DRS and disputes team of every insurer would be inundated with further additional and unnecessary merits review applications for costs if the insurer’s submissions were correct. The additional costs, time and extra DRS resources needed to meet such an onerous requirement would be against the objects of the Act.
14. In the reply to AGD’s application, the Insurer makes the following submissions:
b. The Insurer reproduces clause 22 of the Regulations in relation to the fixing of maximum costs recoverable by legal practitioners and refers to sections 8.3 and 8.10 of the Act. The Insurer also reproduces Schedule 1, (2)(1) of the Regulations which provides:
d. The Insurer reproduces Schedule 2, (1)(aa) of the Act and submits that a merit reviewer is neither a claims assessor or a court and it unclear whether a merit reviewer has the power to permit payment of legal costs, incurred by the claimant, by the insurer.
e. The Insurer reproduces section 8.10 of the Act and submits that It is important to note that the word “legal” is omitted from the merit dispute matter under Schedule 2, (1)(aa). It is submitted that on one view it may be the intention of the scheme that a merit reviewer is only empowered to determine “other costs and expenses incurred by the claimant in connect with the claim”[sic] including the types of costs and expenses referred to in the last sentence of section 8.10(1) and reasonable and necessary costs and expenses incurred by the claimant in attending any medical examination.
f. The Insurer submits that before a claimant can recover legal costs from the insurer, such costs must be incurred in accordance with the Regulations, and section 8.10 of the Act must be applied before the DRS can permit a claimant to recover costs from an insurer. It is submitted that the Regulation does not permit the recovery of legal costs incurred by the claimant from the insurer but does nothing more that fix the maximum costs for legal services that can be incurred by a claimant or insurer. Section 8.10 of the Act permits only the claimant to recover such costs from the insurer.
g. Finally it is submitted that there is clear legislative intention of Schedule 1, (2)(1) of the Regulations that costs incurred by the claimant or an insurer in connection with a medical dispute can only be allowed by the “claims assessor or court” and arguably restricting recovery of costs on a party/party basis to claims that proceed to a claim for common law damages and assessed by a claims assessor or a court.
h. In light of the above and in consideration of the available information, the insurer is not satisfied that there are exceptional circumstances to justify the payment of legal costs. The insurer submits that legal costs should not be recoverable for the subject application.
15. The issue in dispute before me is AGD’s entitlement to legal costs relating to the applications for medical assessment of the treatment dispute.
16. 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 of those costs is permitted by the regulations [emphasis added] or the Dispute Resolution Service”.
17. The Insurer makes a number of submissions in relation to the payment of legal costs in this matter. The Insurer submits initially that it is unable to pay any costs for legal services in connection with medical assessments because there is no mechanism permitting such costs unless allowed by a claims assessor or a court and that the Regulations does nothing more that fix the maximum costs for legal services that can be incurred by a claimant or insurer.
18. I do not agree with these submissions of the Insurer. In my view, costs for medical assessments are specifically permitted by the Regulations at Schedule 1, Part 1(2)(1) of the Regulations, which provides:
19. In providing a maximum amount recoverable, the Regulations in my view specifically permit payment of reasonable and necessary legal costs incurred “in connection with a medical assessment”. I note that the regulations do not in any other way ‘permit’ any other type of costs.
20. The Insurer submits that the use of the words “claims assessor or court” arguably restricts recovery of costs on a party/party basis to claims that proceed to a claim for common law damages and assessed by a claims assessor or a court. I note however that the words “claims assessor or court” are omitted from the disputes outlined at Schedule 1, Part 1, 2(2) & (3) and Schedule 1, Part 1, 2(4) provides that “the maximum costs set out in subclauses (2) and (3) are in addition to the maximum costs set out in subclause (1)”. If the Insurer’s interpretation is correct, Schedule 1, Part 1, 2(2) &
(3) would also include the words “claims assessor or court”.
21. Further I note that section 8.3(1)(c) of the Act provides that the Regulations may make provision with respect to declaring that no costs are payable for any such legal services or other matters of a kind specified in the Regulations. I consider, that if it was the intention of the scheme that costs are not recoverable in relation to medical assessment matters that do not proceed to a claim for common law damages, this could have been specified in the Regulations.
22. For the above reasons, I do not accept the submissions of the Insurer that costs of medical assessment matters are not permitted unless the matter proceeds to a claim for common law damages.
23. The Insurer also refers to Schedule 2, (1)(aa) of the Act and submits that a merit reviewer is neither a claims assessor or a court and it unclear whether a merit reviewer has the power to permit payment of legal costs, incurred by the claimant, by the insurer.
24. I note that the DRS has jurisdiction to determine disputes arising in relation to costs as merit review matters under Schedule 2, clause 1(aa), which outlines the dispute as follows:
25. Accordingly, in matters where there is a dispute between parties about whether the costs and expenses incurred are reasonable and necessary, for the purpose of recovery of such costs, the DRS has jurisdiction to determine such disputes as merit review matters.
26. As a Claims Assessor, duly appointed, I am satisfied that I have jurisdiction to determine the dispute and to assess AGD’s legal costs in respect of the medical assessment by Assessor Woo.
27. It should be noted that the above provision does not, nor does any other provision under the Act, work to prevent an insurer from agreeing to pay costs in matters in which it accepts it is liable to pay costs. Similarly, there is no provision in the Act or the Regulations which states that costs cannot be agreed to or paid without a costs order.
28. 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.
29. 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.
30. The Insurer also makes submissions in relation to not being satisfied that AGD has exceptional circumstances to justify the payment of legal costs and that legal costs should not be recoverable for the subject application. It does not appear on the information before me however that AGD has made an application for costs of this application.
Reasonable and Necessary Costs
31. Having established that costs of medical assessments are recoverable, I will proceed to assess AGD’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.
32. 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 applications for medical assessment dated 6 March 2019 and 8 May 2019.
33. AGD’s legal representatives prepared 3.5 pages of submissions for the application dated 6 March 2019 in relation to the MRI of the right hip and physiotherapy treatment, as well as attachments. The application dated 8 May 2019 in relation to the MRI of the cervical spine included 2 pages of submissions and attachments.
34. Both applications were successful, with the exception of the MRI of the right hip which was not assessed as reasonable and necessary.
35. The Insurer does not make any submissions in relation to why the costs claimed are not reasonable and necessary.
36. AGD’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.
37. When considering what costs, are reasonable and necessary on the information before me, I have had particular regard to AGD’s legal representatives preparing two applications for medical assessment, because the request for the MRI to the cervical spine was declined following the lodgment of the first application in relation to the MRI of the right hip and physiotherapy.
38. I have also had regard to the amount of work that AGD’s legal representatives have put into the applications including the level of submissions/reasons provided and overall consideration put into the applications.
39. Finally, the success of the applications must also be considered (with exception of right hip referral). If the Insurer fell into error in its original decision or failed to properly investigate the need for the treatment before making the decision to decline, I do not consider AGD should bear the costs of such an error and having to bring the dispute to the DRS.
40. Applying my discretion and experience, I consider it appropriate to allow the maximum costs of 16 monetary units, $1,660.00 (indexed as at 1 October 2019).
41. Accordingly, I allow costs in the amount of $1,826.00 (inclusive of GST) in respect to the applications for medical assessment dated 6 March 2019 and 8 May 2019.
42. The Insurer’s reviewable decision made on 5 August 2019 is set aside and the following decision is made in substitution of the reviewable decision:
43. Effective date: This determination takes effect on 11 October 2019.
Merit Reviewer and Claims Assessor
Dispute Resolution Service