AAJ v AAI Limited t/as AAMI
[2021] NSWPIC 68
•7 April 2021
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| CITATION: | AAJ v AAI Limited t/as AAMI [2021] NSWPIC 68 |
| APPLICANT: | AAJ |
| RESPONDENT: | AAI Limited trading as AAMI |
| MEMBER: | Ms Belinda Cassidy |
| DATE OF DECISION: | 7 April 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- Claims assessment as to a proposed settlement approval under section 6.23(2)(b) of the Motor Accident Injuries Act 2017; liability accepted; non-minor injuries; entitled to treatment and care; claim for lump sum compensation; non-economic loss; whole person impairment of 5%; some limitation of movement; returned to full time work; future loss of earning capacity; ongoing gym-based exercises; top up of his statutory benefits; buffer; Held- proposed settlement approved. |
| DETERMINATIONS MADE: | The proposed settlement is approved in accordance with section 6.23(2)(b) of the Motor Accident Injuries Act 2017 |
INTRODUCTION
AAJ was crossing Beecroft Road at a light controlled on 5 June 2018 when he was knocked down by AAMI’s insured vehicle? which had travelled through a red light.
AAJ has made two claims against AAMI following that accident as follows:
(a) a claim for statutory (income support and treatment) benefits, and
(b) a claim for lump sum compensation or damages.
AAJ and AAMI have agreed on a sum to settle the lump sum damages claim. Because AAJ does not have a lawyer representing him, his settlement must be approved in accordance with the relevant provisions of the Motor Accident Injuries Act2017 (the MAI Act).
LEGISLATIVE BACKGROUND
Preliminary matters
AAMI referred AAJ’s claim to the Dispute Resolution Service (DRS), which was part of the State Insurance Regulatory Authority. The application was allocated to me for consideration and I have held four teleconferences in the matter as follows:
(a) 17 July 2020 at 12.00 pm with AAJ and Ms G;
(b) 19 October 2020 at 2.00 pm with AAJ and Ms G;
(c) 27 January 2021 at 10.00 am with AAJ and Ms G, and
(d) 6 April 2021 at 2.00 pm with AAJ and Mr H.
The Personal Injury Commission (the PIC) was established on 1 March 2021 and the DRS was abolished by cl 3 of Part 2, Division 2, schedule 1 to the Personal Injury Commission Act 2020. I am a Member of the Motor Accidents Division of the PIC and cl 14B(1) of the Personal Injury Commission Regulation 2020 designates AAMI’s application ‘pending proceedings’ and cl 14B(3) empowers me to determine those proceedings.
Because of the date of the accident, cl 14B(4)(c) provides that the MAI Act and the Motor Accident Guidelines (the MA Guidelines) continue to apply.
Approval of the settlement
Section 6.23 of the MAI Act provides the following restrictions on settling claims for damages:
(a) Unless a claimant has a whole person impairment of greater than 10%, the claim cannot be settled within two years.
AAJ does not have a whole person impairment greater than 10% however more than two years has passed since the date of his accident.
(b) The settlement must be approved by DRS and I am not to approve the settlement unless I am satisfied there is compliance with any of the requirements of the MAI Act or the MA Guidelines.
I will outline the relevant provisions of those two instruments below with some commentary.
Clause 7.389 of the Guidelines requires AAMI to include in its application details of:
7.389.1 the amount of the proposed settlement and a breakdown of the amount allowed for each head of damage.
The insurer has now provided me with a calculation of the past and future economic loss claims and the basis of the breakdown in respect of settlement amount.
7.389.2 the amount of any reductions in the proposed settlement.
AAMI has indicated that the sum of $18,551 will be deducted (for past statutory benefits paid).
AAMI has included in its application a copy of the Deed of Agreement which says that any amount pursuant to Commonwealth legislation will also be deducted. I queried with AAMI what these amounts were and whether there was an amount to be deducted for any relevant Medicare payback. At the first teleconference, Ms G for AAMI advised me that no notice of charge had been requested from Medicare and that AAMI is of the view there is no Medicare amount due. Ms G confirmed that if there was any amount due to be paid to Medicare, it would be paid as part of AAJ’s statutory benefits claim and not as part of the damages claim. It would have been preferable for this to have been included in the Deed of Agreement however in its absence I have made it clear to the parties that the settlement is ‘exclusive’ of any such Medicare payment. I note AAJ said at the fourth teleconference that he had received a notice from Medicare advising him of Medicare-related treatment which has been incurred after the accident. I explained to AAJ that any unrelated Medicare funded treatment does not have to be repaid but that any accident related Medicare funded treatment will have to be repaid but that AAMI would be attending to that. Mr H for AAMI assured AAJ that someone from AAMI would contact him and explain the Medicare deduction process.
7.389.3 the amount of any advance payments made.
I have been advised none have been made.
7.389.4 the evidence, documents and materials relevant to an assessment of the proposed settlement figure.
I will outline the evidence below.
Clause 7.399 of the MA Guidelines, requires me to consider the following:
7.399.1 timeliness – the proposed settlement satisfies the timing requirements in the Act.
In this case, a Medical Assessor has determined that AAJ does not have a whole person impairment of greater than 10%, however the second anniversary of AAJ’s accident had passed when the settlement was referred for approval.
7.399.2 appropriateness – the proposed settlement is just, fair and reasonable and within the range of likely potential damages assessments for the claim were the matter to be assessed by a claims assessor, taking into account the nature and extent of the claim and the injuries, disabilities impairments and losses sustained by the claimant, and taking into account any proposed reductions or deductions in the proposed settlement.
This will be dealt with in my reasons below.
7.399.3 understanding – the claimant understands the nature and effect of the proposed settlement and is willing to accept the proposed settlement.
I will also deal with this in my reasons below.
THE CLAIMS AND THE MEDICAL ASSESSMENT
The Claims
AAMI accepted liability for AAJ’s claim for statutory benefits and has paid weekly income support benefits and treatment and care benefits to, or on behalf of AAJ in the sum of $46,099.24. I am advised by AAMI that $18,551.70 of that amount has been payments of weekly income support benefit under Division 3.3 of the MAI Act.
AAMI has accepted that AAJ had non-minor injuries and so he is entitled to treatment and care relating to his accident caused injuries for the rest of his life pursuant to Division 3.4 of the MAI Act. ‘Treatment’ is widely defined and includes medical treatment (including reviews by the Claimant’s GP and specialist), allied health treatment (including physiotherapy or exercise physiology), medication (over the counter as well as prescribed) and may extend to his gym membership if that is helping his recovery and the management of his injuries.
AAJ then made his second claim, a claim for lump sum compensation or damages. AAMI accepted liability for that claim and has negotiated a settlement of that claim with AAJ.
AAJ and AAMI initially reached an agreement as to the quantum of AAJ’s claim as set out in an Agreement of Release dated 25 June 2020. The agreed amount was $52,551.70.
Following the first teleconference, AAMI made a further offer to the Claimant of $78,551.70 as set out in an Agreement of Release dated 20 August 2020 which appears to be made up of:
(a) Statutory benefits already paid $18,551.70
(b) Top up of lost earnings $1,500
(c) Future loss of earning capacity $58,500
The Medical Assessment - Non-economic loss
At the first teleconference I expressed my concern about the Claimant’s potential entitlement to non-economic loss. The Insurer relied on the report of Dr Andrew Keller dated 5 May 2020 which expressed the opinion that the Claimant had a whole person impairment of 3%. I noted that Dr Keller was an occupational physician and not an orthopaedic surgeon and his assessment of permanent impairment did not include:
(a) Any assessment of the Claimant’s scarring.
(b) Any mention of any deterioration or aggravation of the Claimant’s Irritable Bowel Syndrome (IBS).
(c) While Dr Keller has assessed loss of motion in the Claimant’s foot and the knee it was not clear to me whether he had assessed the alleged nerve damage and symptomatology the Claimant reported to me in his shin.
I advised the parties I would prefer to consider the settlement approval with an independent assessment of all the Claimant’s injuries and referred the matter for a whole person impairment assessment by the Dispute Resolution Service.
Medical Assessor Ian Cameron assessed the Claimant’s whole person impairment on 27 September 2020 after a medical examination on 14 September. Assessor Cameron found:
(a) The Claimant’s injuries had stabilised.
AAJ had a whole person impairment of 5% made up of soft tissue and nerve injury to the left lower leg (3%), an aggravation of the Claimant’s IBS (1%) and scarring to the left lower leg (1%). The Assessor also carefully considered the reported nerve injury and whilst acknowledging there was injury to the peripheral nerves and there is a permanent impairment as a result, that permanent impairment was 0.0075% (by a complex calculation which I will not repeat) which is, in accordance with the relevant Guidelines rounded down to 0%.
REVIEW OF THE EVIDENCE
Treating medical and related evidence
The Claimant was taken to Royal North Shore Hospital by ambulance on 5 June 2018 and was discharged on 10 June 2018. Hospital notes reveal AAJ was diagnosed with ‘segmental [open] fractures of the left tibia and fibula’ and no other injuries.
The Claimant’s treating orthopaedic surgeon, Dr Isaacs has produced his records. I note the Claimant returned for surgery on 11 July 2019 for removal of the hardware from his leg.
In a report to the Claimant’s GP dated 7 November 2019, Dr Isaacs, the Claimant’s treating specialist notes the Claimant is healing ‘beautifully’, is heading back to normal, but is unable to run and has shin pain. Dr Isaacs said it can take two years to return to normal ‘after you snap your tibia in half’. I note in passing that Assessor Cameron referred to the Claimant’s left leg injury as a ‘severe’ injury.
The Claimant has provided me with photographs of the scarring which shows several wounds and visible surgical scars to the Claimant’s left leg.
Insurer’s medico-legal evidence
Dr Andrew Keller an occupational physician provided a report to the Insurer following an examination on 4 May 2020. His report notes:
(a) The Claimant was a product manager with L and now works with D computers. Dr Keller does not explore the reasons for the Claimant changing jobs. He does however note the Claimant was unfit for three months and was working full time hours by 18 November 2018 and has been working from the office and at home.
(b) The Claimant takes Nurofen a couple times a week.
(c) The Claimant had a gardener attending weekly since the accident and that he may have needed assistance for the first five to six months after the accident but that he does not need it now.
(d) AAJ has intermittent but daily pain affecting the left knee and ankle which can be as high as 9 out of 10 in terms of intensity. The Claimant’s pain was worse after a day at work. The Claimant told me this was particularly so when he was travelling to work by public transport and when participating in off-site meetings.
(e) The Claimant has some limitation of movement in the left knee and left ankle.
(f) His condition has stabilised and AAJ should continue a high level of exercise and that he is a member of a gym.
Dr Keller noted the Claimant had returned to full time work and was fit for his pre-injury employment and pre-injury duties.
Claimant’s medico-legal evidence
After the second preliminary conference, AAJ advised that while he had not engaged the services of a lawyer he had spoken to someone who was a lawyer. AAJ told me he wanted to obtain his own evidence particularly about his possible future loss of earning capacity. AAJ and AAMI came to an arrangement that I understood resulted in the Insurer making the arrangements, paying for the medico-legal assessment and providing the doctor with reports and that AAJ chose the expert, Dr Farhan Shahzad an occupational physician.
While Dr Shahzad has written his report (dated 19 March 2021) addressed to AAMI and he thanks AAMI for the referral, I note that Dr Shahzad is, in fact, AAJ’s expert.
Dr Shahzad takes the following history from the Claimant:
(a) He documents the Claimant’s work history noting that AAJ worked for L as an E-Commerce manager and that he is currently working at D as a Product Manager.
(b) He works flexibly, full-time, generally from home.
(c) He notes the accident and the period of initial hospitalisation (one week) and that the Claimant was unfit for work from 5 June to 31 August 2018.
(d) There was a gradual return to work and on 27 November 2018 Dr Isaacs completed a certificate of full capacity.
(e) The Claimant had the hardware removed from his leg in July 2019.
(f) AAJ has ‘just about completed’ his rehabilitation and continues to follow up with his doctor.
(g) The Claimant has been unable to run or participate in his pre-accident sports but has been seeing a physiotherapist and going to the gym.
Under the heading ‘Current Status’ the Claimant reported pain of 8-9 out of 10 in his left shin with numbness around the left knee. The Claimant said he had normal sitting tolerance but could only stand for 30 minutes and could only walk or run for 15 minutes. He struggles with some activities (bending and twisting, squatting and kneeling).
Dr Shahzad notes the Claimant helps out at home with the cleaning, vacuuming and mopping to a limited extent.
Under the heading ‘present treatment’ Dr Shahzad notes the Claimant is taking Nurofen and Panadol, is going to the gym, six days a week, having physiotherapy and seeing his doctor and that he has not yet been discharged from Dr Isaacs’ care.
Dr Shahzad examined the Claimant and considered the x-rays and noted AAJ ’has made a significant improvement but still has a limited range of movement in the left ankle resulting in longstanding restrictions with a reduced range of movement’. Dr Shahzad did note the Claimant was able to return to work because of his expertise and presumably because of the nature of the work he was required to do.
In answer to a number of questions posed to him, Dr Shahzad expressed the following opinions:
(a) AAJ’s injuries have stabilised and maximum medical improvement has been reached. I explained to AAJ that this term is used by doctors and may not mean the Claimant has completely recovered but that he has reached a stage where there is no significant further improvement expected.
(b) Ongoing gym-based exercises are reasonable but otherwise he needs no further treatment.
(c) There is no additional risk of arthritis as AAJ is making a ‘gradual recovery’.
(d) He will be able to resume all his pre-injury domestic duties.
(e) He will be unable to participate in aggressive or contact sports (the Claimant’s pre-accident sports are reported to be basketball, cricket and tennis).
(f) He does ‘not consider there to be any ongoing functional impediment in regard to his earning capacity’.
(g) There is a favourable prognosis.
At the fourth teleconference, AAJ expressed his disappointment at the contents of this report. AAJ said he had hoped it would be more definitive about the future and there would be more detail about why there was no additional risk of arthritis and why there was a favourable prognosis.
Claimant’s evidence
The Claimant told me at the first teleconference that the ‘loose skin and scarring still provides a lot of pain’ and that he has ‘pain and numbness in my knee and minimal feeling in my foot’. He said his knee was more swollen than his uninjured knee, that he was very active before the accident, that he cannot run and has difficulty walking for more than 20 minutes.
I asked AAJ on the first occasion how he was at the end of the day? He said it depends. If he is working from home, he is more stationary and if he is sitting for a long time his leg can lock up. He says when he gets up he tends to limp because of his leg and ankle until he is warmed up. He says if he is working off-site he can get more pain and if he is more active or doing strenuous things he gets more pain in his shin, knee and ankle. AAJ mentioned he also gets pain in his back.
The Claimant said to me at the fourth teleconference that he was still experiencing pain and swelling. AAJ said that he felt he was over-compensating his left leg injuries by using his right leg more. He said he was experiencing hip issues and that he was worried that the little things were adding up. He was still not running or jogging and had not returned to his pre-injury sports.
At the first teleconference I asked AAJ what Dr Isaacs said about the pain in his shin and AAJ said he had been told that the pain may never go, that the numbness may be due to permanent nerve damage and that he needed to keep up his activity levels and build up muscle. Dr Isaacs had told him that deterioration was always a risk and he mentioned arthritis because of the ways the bones were broken. AAJ said that he had last seen Dr Isaacs in November 2020. Dr Isaacs had basically told him he was not going to improve further and that he was as good as he was going to get.
I asked AAJ why he left his pre (and post) accident employer L? He said it was primarily because he had too many off site meetings and his injuries were causing him difficulties. He confirmed that his current job with D was similar and a progression (his income increased from $90,000 per annum to $105,000) but he was able to work from home (even before COVID) on some days. He says there are some off site meetings in this job but he does not always go to them.
The Claimant has a degree in Business Administration and has been working in the IT industry for five years. He said he enjoys his job. He says he is young and getting married soon. He said he intends to continue working and progressing in his career. He said he has been at D for 2.5 years and is progressing and taking on more projects. He did however say he cannot do off site work and travel and as a result his career may be limited. He says at D if you want to progress to the director level you have to have experience in all areas. If there are areas where he cannot work, this may affect his ability to progress and he is worried about this.
The Claimant said he had IBS before the accident, that this worsened after the accident when he was inactive. While it has improved, AAJ said he is not back to where he was before the accident and he has to be even more careful now with what he eats, has to remain active and has to carefully monitor his medication.
AAJ confirmed at the fourth teleconference that he had seven days off work in July 2019 when he had the hardware removed from his broken leg. He also had three days off work for the purposes of a colonoscopy to investigate the flare up of his IBS. AAJ was unsure but thought he had taken sick leave for these 10 working days. AAMI’s representative was unsure whether statutory benefits had been paid for these days saying AAJ never requested payment however Mr H indicated that AAMI would be amendable to increasing its offer to cover these periods of sick leave, subject to the provision of medical certificates or pay-slips verifying the time off had been taken. I explained to AAJ that he was entitled to approach his employer if he wished to have his sick leave re-credited.
SHOULD I APPROVE THE SETTLEMENT?
Introductory remarks
I am now comfortably satisfied that the Claimant does not have an entitlement to damages for non-economic loss, but I think it is important to recognise that he has been assessed as having a 5% impairment which is permanent. In other words, the Claimant will suffer from the after-effect of his injuries for the remainder of his life which is according to the medium life expectancy tables a further 54 years (based on his age of 29 years).
Through the conversations I have had with the Claimant and the Insurer during the course of my assessment, I am satisfied that AAJ is now aware that his statutory benefits claim continues for life and that the Insurer is required to pay for any reasonable and necessary accident related:
(a) Medical (GP and specialist) follow up consultations.
(b) Medication (over the counter or prescription).
(c) Domestic, gardening and handyman assistance which may be needed because of his injuries.
(d) Rehabilitation expenses - in particular AAJ is aware that the Insurer may have a liability to pay for his gym membership if the medical advice is that he needs to continue to attend a gym to ensure his accident related injury does not deteriorate or to maintain his state of recovery.
The amount of the settlement that I am asked to approve comprises the following:
(a) Statutory income support benefits already paid $18,551.70.
(b) Top up of lost earnings $1,500.
(c) Future loss of earning capacity $58,500.
Past loss of earnings
I am satisfied that the sum of $1,500 being the Claimant’s top up of his statutory benefits from 90% to 100% of his net earnings is appropriate and within the range of damages likely to be awarded.
Following AAJ’s evidence at the fourth teleconference I am satisfied that the Claimant had a week off work after this second surgery, in July 2019 and he had a further three days off work at the time of his colonoscopy. Bearing in mind Assessor Cameron’s finding in relation to his IBS aggravation, and the clear relationship between the second surgery and the accident, I am satisfied that the Claimant’s claim for past loss of earnings should include an additional 10 days, subject to the provision of proof such as medical certificates and/or pay slips. I note the Insurer has, in principle, agreed to consider this.
Future loss of earning capacity
I accept that the most likely future circumstances for AAJ, but for this accident and its injuries is that he would continue to work in the IT industry in a role similar to that which he is currently engaged in and that he would have continued to progress and work to the usual retirement age of 70.
I note the Insurer originally informed me that the allowance for future loss of earning capacity damages was based on $100 a week for seven years. There is no evidence that the Claimant is currently losing $100 per week or is likely to be losing that amount for seven years. He is working a full-time job at a greater salary than before the accident. The Claimant confirmed that other than the additional 10 days (for surgery and a colonoscopy) he has not had any other accident related absences from work.
I accept AAJ’s evidence that he is working with modifications and with some difficulty. I have therefore assumed that the current sum of $58,500 for future loss of earning capacity in the settlement offer which the Claimant has accepted is what is usually termed a ‘buffer’ or ‘cushion’ for the possibility that the Claimant will suffer occasional losses as a result of his injuries such as days off work that he would otherwise not have had, additional time off work between jobs should he be required to look for work and possible lack of promotional opportunities or even early retirement.
In Dunbar v Brown [2004] NSWCA 103 the Court of Appeal found that a buffer could be allowed to account for absences from work from time to time and in particular to allow for periods of respite or treatment. This principle has been applied and followed in a number of subsequent judgments of the Court including Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302 where Justice McColl said at [30]:
There is a point … beyond which the selection of a figure for economic loss is so fraught with uncertainty that the preferred course is to award a lump sum as a “buffer”, without engaging in an artificial exercise of commencing with a precise figure, and reducing it by a precise percentage.
Bearing in mind the age of the Claimant (29) and the length of his working life (which could be 38 more years) I think a buffer of the size offered by the Insurer and agreed by the Claimant is acceptable and within the range likely to be awarded.
Having spoken with the Claimant I am satisfied that the Claimant:
(a) Has exhausted settlement negotiations with the Insurer.
(b) Is aware he can seek legal advice but that he does not wish to do so.
(c) Understands the binding nature of the settlement and this approval and that he may not be able to make a further claim for damages in the future.
(d) Understands what the Insurer will be deducting from the settlement.
(e) Accepts the amount for past loss of earnings is a ‘top up’ to 100% of his lost income during the period he was being paid weekly statutory benefits.
(f) Accepts that the amount for future loss of earning capacity reflects an amount which covers the loss arising from the difference between his current state and the most likely future circumstances but for the accident and his injuries. In particular this amount accounts for any possible early retirement, periods of time off work between now and then and any difficulty he may have obtaining employment in the future due to his accident related injuries.
The Insurer has confirmed that the Claimant will not be out of pocket for any amount that has to be repaid to Medicare and that the Claimant has the right to be reimbursed for sick leave taken (if any was taken) for the second surgery in July 2019 and for the colonoscopy. The Claimant accepts that he will need to provide the Insurer with pay-slips or medical certificates (or both) to ensure this is included in the lump sum.
I am therefore satisfied that the proposed settlement figure of $78,551.70 is an appropriate one and that it complies with the requirements of clause 7.399.2 of the Guidelines, in that it is “just, fair and reasonable and within the range of likely potential damages assessment for the claim were the matter to be assessed by a claims assessor, taking into account the nature and extent of the claim and the injuries, disabilities, impairments and losses sustained by the Claimant.”
Accordingly, pursuant to section 6.23(2)(b) of the MAI Act,the proposed settlement of the Claimant’s claim for damages is approved.
Belinda Cassidy
Member (Motor Accidents Division)
Personal Injury Commission
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