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AHY v AAMI Insurance trading as GIO [2019] NSWDRS MR 212

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
Jurisdiction Merit Review
CatchwordsLegal costs – minor injury dispute – travel expenses – medical assessment costs – exceptional circumstances – reasonable and necessary – itemised bill of costs
Legislation cited Motor Accident Injuries Act 2017 (NSW) ss 7.13(4), 8.3(1), 8.3(4), 8.10(1), 8.10(2), 8.10(3), 8.10(4), Schedule 2 clause 1(aa)
Motor Accident Injuries Regulation 2017
Motor Accident Guidelines 2017 (as amended on 15 January 2019)
Cases cited

N/A

Text cited N/A
Parties AHY – Claimant
AAMI Insurance 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.   AHY was injured in a motor vehicle accident on 1 June 2018. Allianz Australia Insurance Limited accepted AHY’s claim under the Motor Accidents Injuries Act 2017 (the Act).

2.   On 12 December 2018, MAS Assessor McGrath issued a certificate which found the Claimant had sustained a minor injury as a result of the motor accident.

3.   On 20 May 2019, the Claimant’s legal representative issued an invoice for costs regarding the medical assessment matter in the amount of $1,796.30 (inclusive of GST) and disbursements of $26.40 for travel to attend the medical assessment of Assessor McGrath, totaling $1,822.70.

4.   On 18 June 2019, the Insurer emailed the Claimant declining payment of the invoice dated 20 May 2019 on the basis that the payment had not been approved by a claims assessor or court.

5.   On 4 July 2019, the Claimant sought an internal review by the Insurer regarding their decision to decline payment of costs.

6.   On 19 July 2019, the Insurer wrote to the Claimant confirming its decision not to pay costs.

7.   On 8 August 2019, the Claimant lodged the application with DRS for review of the Insurer’s decision not to pay costs.

Documents considered

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

Legislation

9.   In conducting my review, I have considered the:

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

Submissions

10.   AHY’s legal representative makes the following submissions on her behalf:

(a)   On 20 May 2019, an invoice [at (A1)] was issued to the Insurer for payment of the Claimant’s legal costs relating to a minor injury dispute which was resolved by way of assessment on 8 March 2019, by Assessor McGrath. The Claimant was found to have a minor injury.

(b)   On 18 June 2019, the Insurer emailed the Claimant’s legal representative [at (A2)] declining payment of the invoice on the basis that there had been no allowance made by a claims assessor or court.

(c)  On 4 July 2019, the Claimant sought a review of the Insurer’s decision [at (A3)] and as no response was received a follow up letter was sent on 17 July 2019 [at (A4)].

(d)  On 19 July 2019, the Insurer confirmed by letter that it declined payment of the invoice [at (A5)].

(e)  Payment of two invoices is sought, firstly the amount of $1,822.70 (inclusive of GST) for the Claimant’s legal costs, including travel expenses, arising out of the DRS application for medical assessment. Secondly, an amount of $1,633.00 (exclusive of GST) for the Claimant’s legal costs associated with the current merit review application to the DRS.

11.   The Insurer provides the following submissions in response:

(a)   Section 8.10(4) of the Act provides that the DRS can only permit payment of legal costs incurred by a Claimant who is under a legal disability or where exceptional circumstances exist which justify payment. The Claimant’s legal representative has failed to establish that either of these circumstances arise in this matter. Further, the lack of exceptional circumstances is supported by the medical assessor upheld the Insurer’s original decision that his injury was minor.

(b)  Section 8.10(1) provides that legal costs that are permitted must also be reasonable and necessary.

(c)  Schedule 1, Part 2 of the Regulation sets a cap on the recovery of legal costs and does not entitle the Claimant’s legal representative to claim the maximum fee by default. An itemised bill of costs has not been provided nor established why their claim for the maximum legal fees is reasonable and necessary.

(d)  The claim for payment of legal costs regarding the DRS application is not allowed under the Regulation which only permits a maximum of 16 monetary units per application.

(e)  The claim for the costs of travel expenses regarding the Claimant’s medical assessment should be directed to the Insurer’s claims team for reimbursement.

Reasons

12.   The issue in dispute is AHY’s entitlement to legal costs relating to the application for medical assessment of the minor injury dispute.

13.   Section 8.3(4) of the Act provides that an Australian legal practitioner is not entitled to be paid or recover legal costs for any legal services provided to a party to a claim for statutory benefits in connection with the claim unless payment is permitted by the Regulation or the DRS.

14.   Section 8.3(1) of the Act provides for the Regulation to fix the maximum amount of costs recoverable by an Australian legal practitioner.

15.   Section 8.10(1) of the Act 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 of the DRS.

16.   This application for costs has been referred as a merit review matter under Sch 2, cl 1(aa) of the Act which provides:

Whether 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.

17.   Accordingly, I am satisfied that the DRS has jurisdiction to determine whether the costs incurred by AHY are reasonable and necessary.

18.   The Insurer submits that s 8.10(4) of the Act provides that the DRS can only permit payment of legal costs if I am satisfied that AHY is under a legal incapacity or special circumstances exist. The Insurer submits that s 8.10(1) is then applied to determine whether the costs are reasonable and necessary. The Insurer argues that AHY has not established either of these requirements.

19.   Schedule 2, 1(aa) of the Act identifies as a merit review matter a dispute as to whether costs and expenses incurred by the Claimant for the purposes of s 8.10 are reasonable and necessary.

20.   Section 8.10(3) refers to a Claimant being able to recover reasonable and necessary legal costs if those costs are permitted by the Regulation or the DRS.

21.   Section 8.10(4) refer to the Claimant being able to recover legal costs in circumstances where they are under a legal disability or exceptional circumstance exist that justify payment of the costs incurred.

22.   I am satisfied that s 8.10(3) allows a Claimant to recover reasonable and necessary legal costs to a maximum amount as provided for by the Regulations.

23.   Section 8.10(4) is not limited by the Regulation and an amount can therefore be determined by the DRS but only if the Claimant is under a legal incapacity or exceptional circumstances exist to justify payment of the legal costs.

24.   Having established that the costs of a medical assessment are recoverable I will now determine whether or not those costs sought by the Claimant in relation to the medical assessment matter were reasonable and necessary.

25.   Schedule 1, Pt 1, cl 2 of the Regulations limits costs in connection with a medical assessment to 16 monetary units. In accordance with Sch 2, cl 1(aa) of the Act I am required to determine the amount of costs I consider reasonable and necessary in this instance.

26.   The Insurer argues that the Claimant’s legal representative have not provided an itemised bill of costs or established why they should be paid the maximum amount allowable for legal costs. Further, the outcome of the medical review was to uphold their decision that the Claimant’s injury was minor.

27.   The Claimant was entitled to seek review of the Insurer’s decision regarding the minor injury dispute. I note that the outcome of that review was to uphold the Insurer’s decision. I am therefore making a determination that in respect to the costs associate with lodging the medical assessment application at the DRS, the Insurer is to pay the Claimant’s costs in the amount of $895.15, being payment of half the legal costs sought by the Claimant for the medical assessment review.

28.   AHY’s legal representative has asked for payment of the costs associated with the application to DRS. Schedule 1, cl 1 of the Regulation does not provide for the payment of legal costs in relation to this Merit Review application. I am therefore not satisfied that AHY is entitled to the costs of this merit review.

29.   In regard to the disbursements claimed in relation to the medical assessment, the Insurer has indicated that the Claimant should contact the Insurer’s claims team directly to have this resolved.

Determination

30.   The Insurer’s reviewable decision of 4 June 2019 is set aside and the following decision is made in substitution:

The Insurer is to pay AHY’s legal costs in relation to the application for medical assessment dated 12 December 2018 in the amount of $898.15 (inclusive of GST).

Emma Toohey
Merit Reviewer and Claims Assessor
Dispute Resolution Service