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AHG v Suncorp Group Limited trading as GIO [2019] NSWDRS MR 194

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
Jurisdiction Merit Review 
CatchwordsLegal costs – minor injury dispute – deny liability for statutory benefits – medical assessment – psychological injuries – PTSD – adjustment disorder with depressed mood – legal disability – exceptional circumstances – reasonable and necessary costs – claims assessor or court
Legislation cited Motor Accident Injuries Act 2017 (NSW) ss  1.3(2)(a), 7.13(4), 8.3, 8.3(1)(c), 8.3(3), 8.10(1), 8.10(2), 8.10(3), 8.10(4), 8.10(4)(b), div 7.6, Schedule 2(1) (aa)
Motor Accident Injuries Regulation 2017 reg 10(d), 23, Schedule 1 Part 1 (2)(1)
Motor Accident Guidelines 2017 
Cases cited

N/A

Text cited N/A
Parties AHG– Claimant
Suncorp Group Limited trading as GIO– 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.   AHG was injured in a motor vehicle accident on 30 May 2018. AHG claimed she suffered injuries to her neck, right arm, right shoulder, chest, back, right leg and nervous shock.

2.   Suncorp Group Limited trading as GIO (“the Insurer”) accepted AHG’s claim under the Motor Accidents Injuries Act 2017 (“the Act”).

3.   On 9 January 2019, the Insurer made a decision to deny liability for statutory benefits after 26 weeks of AHG’s claim on the basis that she suffered ‘minor injuries’ for the purposes of the Act. AHG was notified by way of letter of that date. AHG’s legal representatives, PK Simpson & Co, lodged an application for internal review with the Insurer in respect of this decision. The Insurer affirmed its decision in a notice dated 9 January 2019.

4.   AHG disputed the Insurer’s decision and lodged an application with the Dispute Resolution Service (“DRS”) on 18 January 2019 for a medical assessment.

5.   AHG was referred to different medical assessors to conduct medical assessments in respect to the various injuries. Medical Assessor Dr Paul Friend conducted a medical assessment of AHG’s psychological injuries and issued a certificate dated 21 September 2019. Assessor Friend found that AHG’s Adjustment Disorder with Depressed Mood was a ‘minor injury’ for the purposes of the Act however AHG’s Posttraumatic Stress Disorder was not a ‘minor injury’ for the purposes of the Act.

6.   AHG’s legal representatives subsequently wrote to the Insurer by way of email dated 3 October 2019 and claimed recovery of legal costs of the medical assessment in the amount of $1,796.00 (inclusive of GST).

7.   The Insurer declined to make payment of the legal costs by way of letter dated 10 October 2019, on the basis that an allowance for legal costs had not been made by a claims assessor or a court. This is the ‘reviewable decision’ for the purposes of the Act. The issue in dispute is whether AHG is entitled to recover from the Insurer the legal costs incurred pursuant to section 8.10 of the Act.

8.   It does not appear that AHG 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 for internal review.

9.   AHG’s legal representatives referred the dispute in relation to legal costs to the DRS on 11 October 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.

Documents considered

10.   I have considered the documents attached to the email from AHG’s legal representatives dated 11 October 2019 referring the costs dispute and the Insurer’s reply as well as any further information provided by the parties. I have also considered the Insurer’s internal review decision dated 9 January 2019 and the medical assessment of Assessor Friend dated 21 September 2019.

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.   In the email dated 11 October 2019 referring the costs dispute, AHG’s legal representatives provide a summary of the dispute and make the following submissions:

a.   AHG presses for the full regulated costs of the application to be paid by the Insurer forthwith.

b.   AHG maintains the Insurer is responsible to pay the regulated costs of the application.

AHG’s solicitors have encountered similar behaviour from the Insurer on numerous matter and submit that the DRS has to date always found in favour of the claimant and has order the Insurer to pay the costs as required under the Act.

13.   The Insurer makes the following submissions:

a.   It is noted that by operation of Section 8.10(3) of the Act, AHG’s legal representatives are entitled to recover legal costs in relation to a claim for statutory benefits if such costs are permitted by the Regulations or DRS.

b.   The Insurer notes that AHG’s legal representative have omitted to provide submissions as to why they are entitled to the full regulated costs of the medical application. The legal representatives simply assert that they are entitled to the maximum regulated costs.

c.   The Insurer is unable to pay any costs for legal services given that there is no mechanism permitting such costs, unless allowed by a claims assessor or a court. Pursuant to section 8.10(4) of the Act, DRS can permit payment of legal costs incurred by a claimant but only if satisfied that:

i)  The claimant is under a legal disability; or

ii)   Exceptional circumstances exist that justify payment of legal costs incurred by the claimant.

d.  AHG has the onus of complying with section 8.10(4) and until she satisfies the DRS that there are exceptional circumstances in existence to justify the payment of legal costs, it is unable to pay such a claim for legal services.

e.  The Insurer does not submit that the provisions in the Regulation with respect to maximum costs for legal services have no application at all. The Insurer notes such costs may be allowed where a claim proceeds to the assessment of damages under Division 7.6.

f.  The Insurer draws its understanding of how medical disputes proceed under the Act, based on the intention of the scheme and submits that claimants may retain legal representation for the purpose of providing submissions to the proper officer that the medical assessment was incorrect in a material respect.

g.  It is submitted that it is only at this point that the Insurer is liable to pay costs for legal services for the subject medical dispute by operation of Schedule 1 of the Regulation.

h.  There is no evidence of exceptional circumstances in AHG’s matter to be allowed costs in connection with the dispute regarding minor injury.

i.   It is not reasonable and necessary for AHG to engage legal representation to complete applications for medical disputes as it is not necessary for a solicitor to make legal-based submissions to a medical assessor.

j.   The Insurer submits that in the alternative, should the Merit Reviewer disagree with the Insurer’s submissions, only minimum costs for completing the DRS application form should be awarded for the following reasons:

i)  The application for medical assessment only contained brief submissions consisting of one paragraph within the DRS application form. The submissions were not of a complex nature and no additional medical evidence was adduced.

ii)  AHG’s legal representative omitted to issue an official invoice for their services. Instead, an email was sent to the Insurer on 3 October 2018 requesting payment of $1,796.00 including GST.

iii)   AHG’s legal representatives have not provided a schedule itemising the costs incurred in respect of the application for medical assessment or provided submissions about what the costs claimed in the invoice relates to.

iv)   When considering what costs, of the costs claimed by AHG’s legal representatives, are reasonable and necessary in this matter, the Insurer does not consider the maximum costs of 16 monetary units is appropriate given that the application for medical assessment does not contain any complex submissions. It is not apparent what level of time and consideration was put into the application and appears to be minimal on the information before the Insurer.

k.    In light of the above and in consideration of the available information, the Insurer submits that legal costs should not be recoverable for the subject application.

l.   The Insurer reserves its right to make further submissions in the event that AHG and/or her legal representative adduce any further evidence and/or information in support of their application.

Reasons

14.   The issue in dispute is AHG ’s entitlement to legal costs relating to the application for medical assessment of the ‘minor injury’ 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 (3) and (4) which provide that the recovery of costs is allowed if payment is permitted by the Regulations or the DRS.

16.   The Insurer makes a number of submissions in relation to the payment of legal costs in this matter. The Insurer submits 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.

17.   I do not agree with these submissions from the Insurer. I note that subsection (2) of section 8.10 of the Act provides:

(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.

18.   Schedule 1, Part 1(2)(1) of the Regulations states:

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).

19.   In my view, the extracts above provide an express provision stipulating that costs and expenses are recoverable by a claimant in connection with medical assessments.

20.   The Insurer submits that the use of the words “claims assessor or court” supports that the intention of the scheme is that claimants are not legally represented in applications for medical assessment matters unless the matter proceeds to a proper officer for review of a medical assessment or assessment of damages under Division 7.6 of the Act. I note however that the costs recoverable in the case of these latter forms of disputes are provided for separately under the Regulations.

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 in the event that it was the intention of the scheme that costs are not recoverable in relation to medical assessment matters, such matters could have been specified in the Regulations as such.

22.   For the above reasons, I do not agree with the submissions of the Insurer that there is no mechanism permitting Insurer’s to make payment of the legal costs of medical assessment matters and that this is in line with the perceived intention of the scheme that lawyers are not retained in medical assessment matters.

23.   Accordingly, I do not consider that AHG has the onus of establishing that exceptional circumstances exist to allow costs in this matter, as submitted by the Insurer, because sub-section 8.10(4)(b) of the Act is not relevant in this case given that the Regulations specifically permit the recovery of reasonable and necessary costs of medical assessment matters, at Schedule 1, Part 1, clause 2 of the Regulations.

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:

hether for the purposes of section 8.10 (Recovery of costs and expenses in relation to claims for statutory benefits) the costs and expenses incurred by the claimant are reasonable and necessary.

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 and make determinations.

26.   Jurisdiction is therefore conferred to the DRS when there is a dispute referred for determination. The above provision does not, nor does any other provision under the Act, work to prevent an insurer from agreeing to pay reasonable and necessary costs in medical assessment matters. 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.

27.   It should be noted 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 further stipulates that insurers are to attempt to identify and narrow any issues in dispute before applications are lodged with DRS.

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, a determination from a court or claims assessor is not necessary for an insurer to agree to pay the reasonable and necessary costs of a claimant.

29.  Nevertheless with the dispute before DRS now, as a duly appointed Claims Assessor, I am satisfied that I have jurisdiction to determine the dispute and to assess AHG’s legal costs in respect of the medical assessment.

Reasonable and Necessary Costs

30.   Having established that the costs of medical assessments are recoverable, I will proceed to assess AHG’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.

31.   In this matter, the Insurer made a decision on 26 November 2018 that AHG’s injuries resulting from the motor vehicle accident were ‘minor injuries’ for the purposes of the Act. AHG’s weekly payments of compensation would therefore cease at 26 weeks after the accident.

32.   AHG’s legal representatives lodged an application for internal review with the Insurer. I note that the costs of legal services provided to claimants in connection with applications for internal review are not recoverable pursuant to clause 23 of the Regulations.

33.   The internal review decision dated 9 January 2019 is 12 pages long, consisting of detailed summaries and analysis of the available evidence. There is a significant amount of evidence and analysis of the legislation in support of the Insurer’s decision to affirm the original decision, that AHG’s injuries are ‘minor’ injuries under the Act.

34.   The application for medical assessment dated 18 January 2019, prepared by AHG’s legal representatives contains approximately one paragraph of submissions. There are some general submissions made in relation to AHG maintaining that she suffers from “non minor” injuries and it is submitted that AHG recently commenced a mental health plan and intended to procure further evidence in relation to her psychiatric injury. There are also some submissions made in relation to the Insurer’s internal reviewer providing a “lay opinion” and determining various complex medical issues without having the appropriate qualifications or medical experience and that AHG submits she should be assessed by DRS Assessors in relation to her injuries.

35.   I note that Assessor Paul Friend subsequently assessed AHG in relation to her psychological injuries and issued a certificate dated 21 September 2019 findings that AHG’s Adjustment Disorder with Depressed Mood was a ‘minor injury’ for the purposes of the Act however AHG’s Posttraumatic Stress Disorder was not a ‘minor injury’ for the purposes of the Act.

36.   The Insurer make a number of submissions that if costs are allowed, only minimal costs should be allowed for the application for medical assessment on the basis that the submissions made by AHG’s legal representatives were brief, were not of a complex nature and no additional medical evidence was adduced. The Insurer submits that AHG’s legal representatives have not made any submissions in relation to why the maximum costs, which are claimed, should be allowed.

37.   I acknowledge the submissions from the Insurer however consider that while AHG’s legal representatives provided brief submissions and do not engage with the provisions relating to ‘minor injury’ under the Act in the submissions, it appears that the legal representatives have put some consideration into the application and submissions made.

38.   As noted above, the Insurer’s internal review is a lengthy detailed document considering all of the injuries claimed by AHG and contained a number of attachments, that AHG’s legal representatives appear to have reviewed and considered.

39.   In respect to AHG’s psychological injuries, the Insurer provided on page 8 of its internal review decision, that the clinical notes from AHG’s general practitioner, Dr Beth Lavings, notes that AHG was prescribed Valium in a consultation on 30 August 2018 for panic attacks. The Insurer states in its decision that it is “unclear to the writer from the medical evidence if this is related to the motor accident”. The Insurer further notes that for an injury to be considered “non- minor, a diagnosis must be made under DSM-5”. The Insurer determines that given that Dr Lavings did not diagnose a psychological injury under DSM-5, AHG’s psychological injury did not meet the definition of psychological injury under the Act.

v) AHG ’s legal representatives provide specific submissions only in relation to her psychological injury in the application for medical assessment and note that they will obtain further evidence in relation to this injury. It appears that AHG herself subsequently lodged a copy of a Mental Health Plan and certificates of capacity with DRS.

40.   I note that the initial certificates of capacity prepared by AHG’s general practitioner, Dr Beth Lavings, provided a diagnosis of “MVA – passenger – airbag deployed and Facial haematoma and swelling and right-sided Chest pain from seat belt”, no diagnosis of a psychological nature and did not make any recommendations for psychological treatment.

41.   I am satisfied that AHG’s legal representatives did expend time in considering the dispute and preparing the application for medical assessment.

42.   For the above reasons, as well as having regard to the success of the application with respect to the psychological injury, I consider some costs should be allowed for the preparation and lodgment of the application for medical assessment dated 18 January 2019. It is open to me to permit any amount of costs up to the maximum amount.

43.   AHG’s legal representatives have not provided an invoice or a schedule itemising the costs incurred in respect of the application for medical assessment or made submissions about what the costs claimed in the email dated 3 October 2019 relate to.

44.   When considering what costs, of the costs claimed by AHG’s legal representatives, are reasonable and necessary in this matter, I do not consider the maximum costs of 16 monetary units is appropriate based on the level of work which appears to have been put into the application. While it is not apparent what time and consideration was put into the application, I consider a reasonable amount of costs should be allowed for the time that would have been expended on consulting with AHG, review of the documents and consideration and preparation of the application.

45.   Applying my discretion and experience, I consider it appropriate to allow legal costs of $960.00.

46.   Accordingly, I allow costs in the amount of $1,056.00 (inclusive of GST) in respect to the application for medical assessment dated 18 January 2018.

Determination

47.   The Insurer’s reviewable decision made on 10 October 2019 is set aside and the following decision is made in substitution of the reviewable decision:

The Insurer is to pay AHG’s legal costs in the amount of $1,056.00 in respect to the application for medical assessment dated 18 January 2018.

48.   Effective date: This determination takes effect on 13 December 2019.

Tajan Baba
DRS Decision-maker
Dispute Resolution Service