ABM v Insurance Australia Limited t/as NRMA Insurance

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
CITATION:	ABM v Insurance Australia Limited t/as NRMA Insurance [2021] NSWPICMR 18
APPLICANT:	ABM
RESPONDENT:	Insurance Australia Limited t/as NRMA Insurance
MERIT REVIEWER:	Tajan Baba
DATE OF DECISION:	17 June 2021
CATCHWORDS:	MOTOR ACCIDENTS- Merit review; costs dispute under section 8.10 of the Motor Accident Injuries Act 2017; recovery of costs and expenses; MRIs; gap payment; withdrew application; lodged legal costs dispute; confusion and clerical error; Held- legal costs incurred reasonable and necessary; allow maximum costs.
DETERMINATIONS MADE:	1. The Insurer’s reviewable decision made on 13 January 2021 is set aside and the following decision is made in substitution of the reviewable decision: The Insurer is to pay ABM’s legal costs in the amount of $1,826.18 (inclusive of GST) in respect to the treatment and care medical dispute referred in application dated 21 October 2020. 2. Effective date: This determination takes effect on 16 June 2021. 3. The reasons for this decision are attached to this certificate.

Background

ABM (the Claimant) was injured in a motor vehicle accident on 19 June 2018.
Insurance Australia Limited t/as NRMA Insurance accepted ABM’s claim under the Motor Accidents Injuries Act 2017 (the Act).
ABM underwent MRIs in 2019 with provider, MRI Now. Her legal representatives, Benefit Legal, requested reimbursement of the costs of the MRIs from the Insurer. The Insurer made payment of the ‘pre-approved’ costs however declined to make any further payment, despite ABM’s legal representatives’ request that a ‘gap payment’ remained outstanding.
ABM’s legal representatives sought an internal review of the Insurer’s decision not to make any further payment. On internal review dated 23 September 2020, the Insurer affirmed its decision not to reimburse the ‘gap payment’ on the basis that $700 had already been paid in accordance with the pre-approved “agreed rate and terms and conditions on 10 September 2019”.
ABM disputed the Insurer’s decision and her legal representatives lodged an application with the Personal Injury Commission (the Commission) dated 21 October 2020.
The Insurer subsequently reimbursed ABM for the ‘gap payment’, in the sum of $270.
ABM’s legal representatives withdrew the application to the Commission however referred a dispute for the legal costs of that application, in an email dated 16 December 2020. A tax invoice in the sum of $1,826, dated 6 January 2021, was also issued to the Insurer for these costs.
The Insurer declined to make payment of the invoice for legal costs by way of email dated 13 January 2021, on the basis that ‘exceptional circumstances’ did not exist under section 8.10(4) of the Act. This is the ‘reviewable decision’ for the purposes of the Act. The issue in dispute is whether ABM 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.
ABM 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.
The application to resolve the dispute in relation to legal costs falls within the jurisdiction of the Commission as a merit review matter under Schedule 2(1)(aa) of the Act.

Submissions

The Insurer’s legal representatives, Hall & Wilcox, made the following submissions, in emails dated 4 & 17 December 2020, in respect to the costs dispute:

(a) As the dispute is not of a kind mentioned in Schedule 1 of the Motor Accident Injuries Regulation 2017 (NSW) (the Regulations) ABM may only recover costs in the event the Commission is satisfied there exists ‘exceptional circumstances exist that justify payment of legal costs incurred by the claimant’ under section 8.10(4) of the Act.

(b) The Insurer disputes that such exceptional circumstances exist and to the contrary notes the following which is submitted will be relevant to the exercise of the Merit Reviewer’s discretion:

(i)The Insurer paid $1,400 in relation to invoices number 17332 and 20107 from ‘MRI Now’ for the MRI of the right knee on 3 June 2019, copies of which are provided by the Insurer.

(ii)The Insurer was entitled to rely on the ‘MRI Now’ invoice no. 20107 dated 10 July 2019 to conclude the balance outstanding at that time for the MRI service date of 3 June 2019 was $700, (reference is made to ‘total amount owing’) which the Insurer paid in full.
(iii)ABM did not identify the dispute correctly to the Insurer when seeking the internal review by reference to an outstanding amount of $270. Had ABM made simple enquiries of ‘MRI Now’ this would have identified that notwithstanding the invoice dated 10 July 2019 for the balance of $700, the outstanding balance at that time was in fact $970 and therefore the sum of $270 remained unpaid.
(iv)There was no outstanding fees due to MRI Now as at the date of the internal review application on 11 September 2020 or the application to the Commission on 21 October 2020 (save for the $270 due to a clerical error from the treatment provider).

(v)The Insurer was not aware of the outstanding $270 until the email from ABM’s legal representatives on 1 December 2020 and the supplementary submissions to the Commission.

(vi)Had MRI Now not erroneously issued an invoice for a balance of $700 or had ABM identified the balance outstanding to the Insurer, the Insurer would have been in a position to pay that outstanding amount without incurring costs associated with this dispute.

(vii)The Insurer’s costs responding to this dispute have been increased by ABM’s failure to make enquiries of MRI Now prior to initially lodging the dispute in relation to the MRI of 9 September 2019, which, in response to the Insurer’s submissions, ABM conceded had in fact been paid in full by the Insurer. In effect the Insurer has been put to the task of responding to two separate disputes, neither of which have merit.

(c) Accordingly, the Insurer submits there should be no order as to ABM’s costs.
ABM’s legal representatives make the following submissions, in an email dated 16 December 2020, in relation to the costs dispute:

(a)    All bills and accounts for all three MRI costs were provided to the insurer on 30 June 2020.

(b)    The invoice for service dated 3 June 2019 was among those services that had been sent.

(c)    The insurer has at the claims level, internal review level refused to pay all the invoices.

(d)    It was only at the Commission level and on wisdom of the Insurer’s legal representatives’ advice that the Insurer has resiled from its position and decided to pay the gap.

(e)    The insurer at the internal review stage had refused to pay anything above $700.

(f)    $700 is clearly well below the Australian Medical Association (AMA) set rate. The AMA rate is the correct rate. Reference is made to the Submissions of the Claimant filed for the application dated 21 October 2020.

(g)    The Insurer has repeatedly refused to pay the full rate and in doing so has caused ABM to be out of pocket.

(h)    ABM is unable to afford the payment and accordingly the application to the Commission had to be made. ABM had no option but to lodge this application.

(i)    Other than legal submissions ABM has not provided any new information to the Insurer.

(j)    The exceptional circumstances in this case is the Insurer’s conduct of rejecting payment of this gap payment, when they ought to have known to pay the gap.

(k)    ABM’s legal representatives have put on three sets of proper submissions before the Insurer resiled and agreed to pay the gap.

(l)    If ABM’s legal representatives did not provide such detailed submissions then the Insurer would not have paid the gap.

(m)     The Insurer knew or ought to have known their duty to pay the correct MRI rate which is the AMA rate. The Insurer is a sophisticated defendant.

(n)    The exceptional circumstances are:

(i)It is unusual, that ABM has had to put on three detailed and lengthy submissions (including detailed submissions in the Internal Review) to ask for the said cost to be paid.

(ii)It is unusual for Insurer to fight so hard against paying a gap fee but agree to pay the gap at the last hour before the matter is referred for determination and eventually publication.

(iii)It is unusual, that the Insurer has refused payment of the gap, even when the law directs them to pay the gap. The denial is bordering on unreasonable denial because it is easily arguable that there was no reasonable basis for the denial of liability. We submit there was no reasonably arguable view of the law available to the Insurer with regard to the correct MRI treatment rate, and therefore the gap.

(o)    In the circumstances it would be just and in the objects of the Act to allow exceptional circumstances. Noting the consideration for the Insurer’s three replys and the submissions in response, the rate should be at the maximum rate.

Reasons

The issue in dispute between the parties is ABM’s entitlement to legal costs relating to the treatment and care medical dispute for an outstanding ‘gap payment’ to MRI Now, referred to the Commission (formerly Dispute Resolution Services) in application dated 21 October 2020.
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.
The above is qualified by section 8.10(3) which provides that the recovery of costs is allowed if payment is permitted by the Regulations or the Commission. Subsection (4) provides that the Commission can permit payment of legal costs only if satisfied that the claimant is under a legal disability, or exceptional circumstances exist that justify payment of the costs incurred by the claimant.

Are exceptional circumstances required?

The Insurer submits that the medical dispute relating to the gap payment is not of a kind mentioned in Schedule 1 of the Regulations and therefore ABM may only recover costs in the event the Commission is satisfied “exceptional circumstances exist that justify payment of legal costs incurred by the claimant”, under section 8.10(4) of the Act. The Insurer disputes that any exceptional circumstances exist.
I do not agree with these submissions of the Insurer.
I note that section 8.10(2) 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…”
The maximum costs for the dispute in this case is provided for under Schedule 1, clause (2)(1) of the Regulations:

“The maximum costs for legal services provided to a claimant or an insurer in connection with a medical assessment [emphasis added] 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).”
For clarity, I note that section 7.20 of the Act provides that a ‘medical dispute’ can be referred to the Commission 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.”
Schedule 2, clause 2(b) of the Act declares a dispute about whether “any treatment and care provided to an injured person is reasonable and necessary in the circumstances…for the purposes of section 3.24 (Entitlement to statutory benefits for treatment and care)” as a ‘medical assessment matter’.
In ABM’s case, the ‘medical assessment matter’ is treatment and care, being the MRIs with MRI Now, and her entitlement to statutory benefits for such treatment and care.
The extracts above therefore provide an express provision stipulating that costs and expenses incurred in connection with making a claim for treatment and care statutory benefits are recoverable by a claimant.
ABM therefore does not have to establish that exceptional circumstances exist for costs under section 8.10(1) of the Act to be allowed, as I am satisfied that the Regulations permit such costs.

What is the reasonable and necessary costs incurred in connection with the Medical Assessment?

The Commission has jurisdiction to determine disputes arising in relation to costs as merit review matters under Schedule 2, clause 1(aa) of the Act, which outlines the dispute as follows:
“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.”
ABM’s application to the Commission dated 21 October 2020 did not proceed to a determination because the Insurer agreed to pay the ‘gap payment’ after the application was lodged. ABM subsequently withdrew her application.
While the dispute did not proceed to a determination, I am satisfied for the reasons outlined above, that the application prepared by ABM’s legal representatives was work ‘in connection with a medical assessment’ for which costs are permitted under Schedule 1, Part 1, clause 2(1) of the Regulations.
Schedule 1, Part 1, clause 2(1) limits costs in connection with medical assessments to 16 monetary units. It provides that:

“The maximum costs for legal services provided to a claimant or an insurer in connection with a medical assessment … are 16 monetary units (to a maximum of 60 monetary units per claim).”
Given ABM is entitled to the recovery of legal costs, I will proceed to assess the reasonable and necessary costs in this matter. It is open to me to permit any amount of costs up to the maximum amount. I am required pursuant to the jurisdiction conferred by Schedule 2, clause 1(aa) of the Act (outlined above), to determine the quantum of the maximum costs I consider appropriate, including nil.
The Insurer submits that there should be no order as to ABM’s costs.
The Insurer contends that the invoice no. 20107 dated 10 July 2019 from MRI Now incorrectly indicated that only $700 remained outstanding, and submits that the Insurer was entitled to rely on this invoice. It is submitted that there were no outstanding amounts due to MRI Now at the time of the internal review and the application to the Commission on 21 October 2020, except for this $270 (the ‘gap payment’), resulting from a clerical error by MRI Now. The Insurer submits that it only became aware of the outstanding $270 after an email from ABM’s legal representatives and supplementary submissions on 1 December 2020.
The Insurer also argues that ABM did not identify the dispute correctly to the Insurer when seeking the internal review by reference to an outstanding amount of $270. It is submitted that had MRI Now not erroneously issued an invoice for a balance of $700 or had ABM identified the balance outstanding to the Insurer, the Insurer would have been in a position to pay that outstanding amount without incurring costs associated with this dispute.
ABM submits that costs should be allowed at the maximum rate. She submits that the accounts for all three MRI costs were provided to the Insurer on 30 June 2020 and that the Insurer refused to pay all the invoices at the “claims level” and the “internal review level”. ABM asserts that the Insurer refused to pay anything above $700 at the internal review stage, and states that this is clearly well below the AMA set rate.
ABM submits that the Insurer has repeatedly refused to pay the full rate and in doing so has caused her to be out of pocket. She submits that she had no option but to lodge the application with the Commission. ABM notes that she did not provide any new information when the application to the Commission was made, other than legal submissions.
I have considered the submissions of ABM and the Insurer. It appears from these submissions and the information before me that there may have been some confusion between the parties as to outstanding amounts to MRI Now.
The Insurer submits that it was unaware that an amount of $270 remained outstanding to MRI now. I note that the invoice dated 10 July 2019, no. 20107, indicated that $700 was outstanding however a later invoice dated 24 October 2019 indicated that $970 remained outstanding.
There is also email correspondence between the parties in which the Insurer refers to the ‘approved’ amounts being paid and ABM’s legal representatives maintaining that a ‘gap’ payment making up the AMA rate remained outstanding. In an email dated 11 September 2020, ABM’s legal representatives refer to section 8.9 of the Act in relation to the requirement to pay the AMA rate and request an internal review. The Insurer’s decision on internal review maintains that it will only pay the $700 amount and not anything above this pre-approved “agreed rate and terms and conditions on 10 September 2019”.
On 19 October 2020, ABM’s legal representatives advised the Insurer that it would lodge an application with the Commission if the Insurer continued to refuse to make payment of the ‘gap’ amount.
I note in the submissions of the Insurer that there was confusion and a clerical error as to the amount that remained outstanding to MRI Now. I do not however agree with the Insurer that costs should not be allowed on the basis that ABM did not identify the dispute correctly or make the necessary enquiries with MRI Now to ascertain any error in the invoices.
On the information before me, ABM’s legal representatives clearly articulated on many occasions in writing that a ‘gap payment’ remained outstanding in accordance with the AMA rate, including in the application for internal review. The Insurer may not have understood the dispute correctly and there may have been confusion with the invoices issued by MRI Now, however I consider it was incumbent on the Insurer to ascertain what amounts remained outstanding and have tried to resolve the dispute before it made the decision to decline to make any further payments, particularly at the internal review stage
In my view, the Insurer had sufficient opportunity to ascertain what amount remained outstanding or discuss the remaining amounts with ABM. As submitted by ABM, the Insurer is a sophisticated defendant and it is also arguable that the Insurer ought to have known the duty to pay the correct AMA rate.
I accept ABM’s submission that she was left with no other option but to make the application to the Commission. The Insurer was put on notice before the application. It is uncertain if ABM would have been paid her statutory benefits had she not made the application and engaged legal representation. Accordingly, I am satisfied that the legal costs incurred by ABM were reasonably and necessarily incurred.
ABM’s application for medical assessment dated 21 October 2020 consists of the completed application form, close to four pages of detailed submissions and five attachments. I note that there were also further submissions lodged in December 2020. ABM submits that they had to put on three sets of proper submissions before the Insurer agreed to pay the gap.
While the application did not proceed to a determination, I consider it important to also have regard to the success of the application with respect to the Insurer conceding to pay the gap, when considering the amount of costs that should be allowed. If the Insurer fell into error in its original decision or failed to properly ascertain the dispute or what amounts remained outstanding following the requests from ABM, I do not consider ABM should bear the costs of such an error or omission.
Applying my discretion and experience, having had regard to the application and submissions and the overall consideration and time expended on the matter by ABM’s legal representatives, I consider it appropriate to allow the maximum of 16 monetary units in this matter. This currently equals $1,660.16 (excluding GST).

I allow costs in the amount of $1,660.16 (excluding GST) in respect to the treatment and care medical dispute referred in the application dated 21 October 2020.

Conclusion

The Insurer’s reviewable decision made on 13 January 2021 is set aside and the following decision is made in substitution of the reviewable decision:
The Insurer is to pay ABM’s legal costs in the amount of $1,826.18 (inclusive of GST) in respect to the treatment and care medical dispute referred in application dated 21 October 2020.
Effective date: This determination takes effect on 16 June 2021.

Legislation and Guidelines

In making this decision, I have considered the following:

· The Application, Reply and supporting documentation;
· Motor Accident Injuries Act2017 (NSW) (the Act), and

· Motor Accident Injuries Regulation 2017.

Tajan Baba

Merit Reviewer

Personal Injury Commission

[2021] NSWPICMR 18

17 June 2021