Ariashah v Suncorp (QLD)

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
Citation:	Ariashah v Suncorp (QLD) [2023] NSWPICMR 36
ClaimanT:	Koorosh Ariashah
Insurer:	Suncorp (QLD)
Merit Reviewer:	Maurice Castagnet
DATE OF DECISION:	3 July 2023
CATCHWORDS:	MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; claim for legal costs under section 8.10; whether claimant is entitled to recover reasonable and necessary legal costs incurred in connection with medical assessment matter (treatment and care) prior to 1 March 2021 if those costs were not “allowed by the claims assessor or court”; meaning of “reasonable and necessary costs”; assessment of reasonable and necessary costs; Held – claimant entitled to recover reasonable and necessary costs assessed at $1,826 inclusive of GST.
Determinations made:	CERTIFICATE Issued under s 7.13(4) of the Motor Accident Injuries Act 2017 1. In accordance with ss 8.10(1), (2) and (3) of the Motor Accident Injuries Act 2017, the claimant is entitled to recover from the insurer legal costs permitted by the Motor Accident Injuries Regulation 2017. 2. Pursuant to Sch 2(1) (aa) of the Motor Accident Injuries Act 2017, I determine that the legal costs incurred by the claimant in connection with the medical assessment matter (DRS reference 10145463) was reasonable and necessary. 3. Pursuant to s 7.13A of the Motor Accident Injuries Act 2017, the claimant’s reasonable and necessary costs are assessed in the amount of $1,826 inclusive of GST.

STATEMENT OF REASONS

INTRODUCTION

This application has been referred to me as a merit review matter under Schedule 2 cl 1(aa) of the Motor Accident Injuries Act 2017 (MAI Act) to determine whether for the purposes of s 8.10 of the MAI Act, the legal costs and expenses incurred by the claimant, Karoosh Ariashah, in connection with a medical assessment matter, are reasonable and necessary.

BACKGROUND

The claimant was injured in a motor accident on 24 June 2019. He claimed to have sustained both physical and psychiatric injuries in the accident.
Subsequently, the claimant made a claim with the insurer for payment of statutory benefits. This included a claim for payment of reasonable and necessary treatment and care.
On 6 August 2019, as part of the treatment for his injuries to the cervical and lumbar spines, the claimant was requested by his treating medical practitioner to undergo an MRI Scan. A request was then made for the insurer to approve the treatment.
On 16 August 2019, the insurer declined to approve the treatment on the basis that it was not reasonable and necessary. Following an internal review, the insurer confirmed its original decision.
On 12 November 2019, the claimant was referred again by his treating medical practitioner to undergo the treatment. Again, approval was not forthcoming from the insurer.
On 14 November 2019, the claimant, through his legal representatives, Benefit Legal made an application to the Personal Injury Commission (Commission), seeking a medical assessment of the dispute (the medical assessment matter).
On 2 March 2020, the Commission issued a certificate from Medical Assessor Mohammed Assem to the effect that the treatment was not reasonable and necessary.
On 4 May 2020, Benefit Legal submitted a tax invoice to the insurer seeking payment for the legal costs incurred by the claimant in connection with the medical assessment matter. The invoice was in the amount of $1,826 inclusive of GST which represented the maximum amount of legal costs permitted by the Motor Accident Injuries Regulation 2017 (Regulation) at the relevant time for this type of dispute.
By letter dated 5 May 2020, the insurer notified Benefit Legal that payment of their invoice was declined because “no allowance” had been made by “a claims assessor or a court” for the costs of the medical assessment matter.
More than a year later, by letter dated 29 July 2021, Benefit Legal made a further request to the insurer to pay their invoice.
By letter dated 4 August 2021, the insurer notified Benefit Legal that in order to confirm whether the claimant had “incurred a liability for legal costs” and “to assess the reasonableness and necessity of the legal services provided”, the insurer requested Benefit Legal to provide the following:
· the costs agreement between Benefit Legal and the claimant, disclosing the legal services to be provided in connection with the medical assessment matter and the legal costs that are likely to be charged “in accordance with ss 107 and 174 of the Legal Profession Uniform Law (NSW)”;
· an itemised bill of costs of the legal work provided to the claimant in connection with the medical assessment matter, including the legal qualifications and the admission dates of those persons who performed such legal services, and
· an authority to receive from the claimant, authorising Benefit Legal to receive moneys for the costs that the claimant is entitled to recover.
By letter of 22 September 2021, Benefit Legal responded by submitting that there is no legal requirement for a lawyer to provide the insurer with an itemised bill of costs for the recovery of the regulated costs. They renewed their request for the insurer to pay their invoice in the maximum regulated amount.
By letter of 24 September 2021, the insurer advised the claimant that it maintained its previous position, but in order “to avoid wasting further time and costs proceeding to a merit review”, the insurer was prepared to pay the claimant’ legal costs in the amount of $207.50 plus GST. This represented 2 monetary units. The insurer expressed the view that very minimal work was undertaken in the preparation of the medical assessment matter.
By letter of 25 September 2021, Benefit Legal rejected the offer and on this occasion they provided the insurer with a “Summary of Completed Work”. This was a description of the work that has been carried out by the legal practitioners in the law firm. There were no details of the amount of time taken to carry out the work but Benefit Legal indicated that considering the extent of the work carried out, they were entitled to payment of their invoice in the maximum amount.
By letter of 7 October 2021, the insurer reconfirmed its offer of $207.50.

About nine months later, by letter of 4 July 2022, Benefit Legal provided the insurer with a revised tax invoice dated 28 June 2022, setting out the items of work carried out on the matter from 26 August 2019 to 4 November 2021. The amount claimed for the costs in the invoice was also revised to $7,024.60. The insurer reconfirmed its offer of $207.50.
On 24 April 2023, Benefit Legal made an application to the Commission seeking a merit review of the insurer’s decision.

DOCUMENTS CONSIDERED

In making my decision, I considered the documents and submissions provided to the Commission by the claimant in his application and by the insurer in its reply. I also considered an additional document provided by the claimant to the Commission at my request.
I am satisfied that I have sufficient information to proceed with a determination of the dispute, on the papers.

LEGISLATION

In making my decision, I considered the following:

·        the MAI Act;
·        the Motor Accident Guidelines 2017 (Version 9.1) (Guidelines);
·        the Motor Accident Injuries Regulation 2017 (Regulation);
· the Legal Profession Uniform Law (NSW) 2014 No 16a (LPUL);
· the Legal Profession Uniform Law Application Act 2014 No 16 (LPULA Act), and
· the Legal Profession Uniform Law Application Regulation 2015 (LPULA Regulation).

THE CLAIMANT’S SUBMISSIONS

The claimant’s submissions may be summarised as follows:
(a) Section 8.10(1) of the MAI Act provides that a claimant is entitled to recover from the insurer, costs in connection with the claim which are ‘reasonable and necessary’.
(b) Part 2 of Schedule 1 of the Regulation permits payment of reasonable and necessary legal costs incurred ‘in connection with a medical assessment’.
(c) The words “in connection with a medical assessment” are interpreted to mean all the work that has been done in connection with the medical assessment matter.

(d)   The bill of costs dated 28 June 2022 sets out the work completed by the claimant’s solicitors in connection with the medical assessment matter.
(e)   The claimant submits that the insurer’s request for an itemised bill of costs and a cost agreement was unreasonable and unlawful. In AJK v GIO [2021] NSWPIC 321, Member Medland determined that an itemised list of work is not required to recover regulated costs.
(f)    The legal work was carried out by a junior solicitor and supervised by a senior solicitor. The claimant’s junior solicitor (HS) was admitted in 2018. The claimant’s senior solicitor, David Weng, was admitted in 2013 and he is an accredited specialist in Personal Injury Law.
(g)   Benefit Legal submits that the hours of work carried out on the medical assessment matter was in excess of the 16 monetary units allowed by the Regulation. On that basis, the claimant should be entitled the maximum legal costs allowed by the Regulation.

THE INSURER’S SUBMISSIONS

To respond to the application, the insurer engaged Moray & Agnew Lawyers as their legal representatives.
The submissions made on behalf on the insurer may be summarised as follows:
(a) The insurer does not dispute the matter was the subject of a medical assessment. However, the insurer disputes the claimant’s entitlement to regulated costs as a result of the assessment. This is on the basis that at the time that the Medical Assessment Certificate was issued (in March 2020), Schedule 1, Part 1, cl 2(1) of the Regulation provided as follows:

“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)”.

(b)   In the current version of the clause, the term “as allowed by the claims assessor or court” has been deleted. Accordingly, the insurer says that at the time of the assessment, the Regulation did not allow the claimant to recover the regulated costs from the insurer in circumstances where those costs had not been allowed by the claims assessor or court.
(c)   Section 8.10(3) of the MAI Act provides that a claimant is only entitled to recover reasonable and necessary legal costs incurred if the payment of those costs were permitted by the Regulation or the Commission. The insurer reiterates that at the time of the assessment, legal costs were to be allowed by either the claims assessor or court and, consequently, the claimant did not have an entitlement to recover same.
(d)   Further, the insurer submits that the Regulation makes an allowance for the ‘maximum’ legal costs, being 16 monetary units, associated with an assessment under Division 7.5. The Regulation does not create an automatic right of entitlement to recover the maximum legal costs, but rather, those legal costs that are considered reasonable and necessary.
(e)   The insurer says that in the interests of resolving the dispute and noting that no allowance was made for the recovery of legal costs, the insurer assessed the claimant’s reasonable and necessary legal costs at two monetary units and offered to resolve the dispute for $207.52 plus GST. In accordance with the Regulation noting the time of the assessment, that offer was based on a monetary unit amounting to $103.76.

I note that in these submissions made on behalf of the insurer, Moray & Agnew Lawyers did not re-agitate the insurer’s earlier view that in order to assess the reasonable and necessary costs incurred, the claimant’s legal representative was required to provide, amongst other things, a costs agreement and an “authority to receive” from the claimant. This is appropriate. In my view, those documents are not necessary for an assessment of party/party costs, in particular, an assessment of such costs on a regulated basis. I consider that the provisions of s 107 of the LPUL are not relevant for the purposes of any assessment of costs. Lastly, I note that s 174 (3) of the LPUL, provides that a law practice is not required to comply with the disclosure provisions of s 174(1) of the LPUL if the total legal costs in a matter (excluding GST and disbursements) are not likely to exceed $3,000.

RELEVANT LEGISLATION

Part 8 of the MAI Act provides for the regulation of legal costs and other fees that may be charged and recovered in relation to claims arising under the MAI Act.
Relevant to the present matter, s 8.10 of the MAI Act deals with legal costs between party and party in relation to a claim for statutory benefits and permits the claimant to recover costs from an insurer.
Section 8.10 of the MAI Act provides:
“Recovery of costs and expenses in relation to claims for statutory benefits
(1)   A claimant for statutory benefits is (subject to this section) entitled to recover from the insurer against whom the claim is made the reasonable and necessary legal costs, and other costs and expenses, incurred by the claimant in connection with the claim. Other costs and expenses include the cost of medical and other tests and reports.
(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).
(3)   A claimant for statutory benefits is only entitled to recover from the insurer against whom the claim is made reasonable and necessary legal costs incurred by the claimant if payment of those costs is permitted by the regulations or the Commission.
(4)   The Commission can permit payment of legal costs incurred by a claimant but only if satisfied that—
(a) the claimant is a person under legal incapacity, or
(b) exceptional circumstances exist that justify payment of legal costs incurred by the claimant.
(5)   An insurer is not entitled to recover from a claimant for statutory benefits any legal costs, or other costs and expenses, of the insurer in relation to the claim.”
Part 7, sub-s 7.1(1) of the MAI Act defines a “medical assessment matter” to mean a matter declared by Schedule 2 to be a medical assessment matter for the purposes of this Part.
Schedule 2, cl 2(b) of the MAI Act declares a dispute about whether any treatment and care provided or to be provided to the injured person is reasonable and necessary in the circumstances or relates to the injury caused by the motor accident for the purposes of s 3.24 (Entitlement to statutory benefits for treatment and care), is declared to be a medical assessment matter for the purposes of Part 7.
Schedule 1, Part 1 sub-cl 2 (1) of the Regulation provides that the maximum costs for legal services provided to a claimant in connection with a medical assessment under Part 7, Division 7.5 of the MAI Act are 16 monetary units (to a maximum of 60 monetary units per claim).
Sub-s 8.3(4) of the MAI 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 (whether the claimant or the insurer) in connection with the claim unless payment of those legal costs is permitted by the regulations or the Commission.

DISCUSSION

The insurer’s primary submission is that at the time the medical assessment matter was completed in March 2020, Schedule 1, Part 1 sub-cl 2 (1) of the Regulation stipulated that the maximum costs for legal services to a claimant in connection to the matter was 16 monetary units “as allowed by the claims assessor or court”. On that basis, the insurer argues that the claimant is not entitled to recover any regulated legal costs for the medical assessment matter because no such allowance has been made. Secondly, the insurer submits that such allowance is not automatically the maximum amount permitted by the Regulation.
I accept that the claimant is not automatically entitled to the maximum amount permitted by the Regulation. The claimant has to show (either to the satisfaction of the insurer or ultimately, the Commission) that he has incurred reasonable and necessary legal costs up to the maximum amount. However, I do not accept the insurer’s primary submission for the following reasons.
I note that on 1 March 2021, Schedule 1, Part 1 sub-cl 2 (1) of the Regulation was amended by deleting the words “as allowed by the claims assessor or court” from the provision.
The enabling legislation is the MAI Act. Section 8.10(1) of the MAI Act provides that a claimant for statutory benefits is entitled to recover from the insurer, the reasonable and necessary legal costs incurred by the claimant in connection with his claim for statutory benefits. Section 8.10 (1) has not been amended since the commencement of the act in 2017.
The Regulation is the subordinate legislation. Prior to 1 March 2021, Schedule 1, Part 1
sub-cl 2 (1) stipulated that in order to exercise the entitlement to such costs, a claimant had to proceed with an application to the Commission’s predecessor (the Dispute Resolution Service) to have those costs assessed and “allowed” by a claims assessor.
Such an allowance could conveniently be obtained by the claimant as part of a claims assessor’s assessment and allowance of overall costs in a claim for damages. If, however, the claimant has not yet proceeded or does not intend to proceed with a claim for damages, it does not follow that the claimant is disentitled from recovering reasonable and necessary legal costs incurred for the medical assessment matter concerned. As inconvenient as it was, the claimant still retained the right to proceed with a separate application to the Dispute Resolution Service for an assessment of the costs and allowance by a claims assessor.
Of course, there was nothing in the provision of Schedule 1, Part 1 sub-cl 2 (1) (as it stood in March 2020), that would have prevented an insurer from conducting its own assessment of what the claimant’s reasonable and necessary legal costs should be. If a claimant was dissatisfied with the insurer’s assessment, he or she would then proceed to make the application to the Dispute Resolution Service.
For the above reasons, and pursuant to ss 8.10(1), (2) and (3) of the MAI Act, I find that the claimant is entitled to recover from the insurer the regulated legal costs incurred in connection with the medical assessment matter as at March 2020 and to date.

Reasonable and necessary costs

The next issue to be determined is whether for the purposes of s 8.10(1) of the MAI Act, the legal costs incurred by the claimant in the medical assessment matter were “reasonable and necessary”.
The phrase “reasonable and necessary” is not defined in the MAI Act. In AAI Ltd trading as GIO v Moon [2020] NSWSC 714, Wright J made the following observations at [105] in the context of s 8.10 (1):
“Whether legal costs are ‘reasonable and necessary’ is a matter that depends on the particular circumstances of each case. No issue arose in the present matter concerning the construction or application of the words ‘reasonable and necessary’. As a result, it is not appropriate to consider that aspect of s 8.10(1) in these reasons. It can be noted that, if there is a dispute concerning whether the legal costs sought to be recovered by a claimant for statutory benefits are ‘reasonable and necessary’, this is declared by Sch 2 cl 1(aa) of the MAI Act to be a ‘merits review matter’ for the purposes of Pt 7 of the Act and can be determined in accordance with Div 7.4 of Pt 7.”
Based on those observations, I consider that the phrase should be given its ordinary meaning and I should determine what work was reasonable and necessary to have been carried out by a law practice in the preparation and submission of a medical assessment matter to the Commission.

I consider that reasonable and necessary legal tasks would include:
·        Reviewing the internal review decision and related documents to determine whether to proceed with the application for a medical assessment.
·        Obtaining instructions – emails, letters, telephone calls, conference with the claimant.
·        Obtaining any further information from medical service providers as necessary.
·        Compiling, checking all relevant supporting documents for the application.
·        Lodgement of the application with the Commission.
·        Communication with the claimant, insurer and Commission throughout the process.
·        Reporting to the claimant on the outcome of the application.
Lastly and based on the observations made by Wright J, I may also consider any other reasonable and necessary work carried out depending on the facts and circumstances of the case.

Assessment of reasonable and necessary legal costs

According to s 7.13A (1) of the MAI Act, a merit reviewer may include in the certificate of determination of a merit review, an assessment of the claimant’s legal costs.
In making the assessment, s 7.13A (3) provides that the merit reviewer must give effect to the requirements of the Regulation under Part 8 of the MAI Act and have regard to the principles referred to in s 200 of the LPUL.
On that basis, when making an assessment concerning reasonable and necessary costs in a dispute under Schedule 2 cl 1(aa) of the MAI Act, I consider that I must apply the same considerations.
On 28 June 2022, Benefit Legal issued an itemised bill of costs to the insurer in the amount of $7,024.60 inclusive of GST detailing work carried out during the period between 26 August 2019 and 4 November 2021.
There is no formal requirement to provide an itemised bill of costs for work carried out to claim regulated costs from an insurer. However, where there is a dispute about whether reasonable and necessary costs do not amount to the maximum amount, I consider that it would be useful to provide a document to the insurer that would identify the work carried out, by whom and for how long. Such information would in my view assist in the early resolution of the dispute. If there is no resolution, and the dispute proceeds to the Commission for assessment, that information will no doubt assist the Commission in making the assessment.
I have outlined what reasonable and necessary legal tasks that would be carried out in this type of matter at paragraphs 44 and 45 of these reasons. I have reviewed the itemised bill of costs and identified the items of work that I considered to be reasonable and necessary in this matter. My assessment is found in Schedule 1 attached to these reasons.
The next question is what amount of costs should be attributed to that work, keeping in mind the regulated amount allowed for the costs and s 200 of the LPUL.
Section 200 of the LPUL provides that in considering whether legal costs are fair and reasonable, the costs assessor must apply the principles of s 172 of the LPUL as far as they are applicable.
In this matter, I considered that the relevant s 172 factors to be taken into account were the level of skill and experience of the lawyers who carried out the work, the time spent to do the work and the number and importance of the documents involved.
I note that most of the work was appropriately carried out by a junior solicitor and supervised at an appropriate level by a senior solicitor.
Taking into account those factors, the maximum amount of regulated costs and the way that the maximum amount of regulated costs has been arrived at, I considered that it was appropriate to apply an hourly rate for the work carried out by these lawyers based on the monetary units referred to in the Regulation.
Schedule 1, Part 1, cl 4 of the Regulation provides an hourly rate based on 3 monetary units for certain work carried out by a lawyer in a claims assessment matter. I consider that a lawyer of similar level of skill and experience would carry out the work in the present matter. At the relevant time, a monetary unit equated to $103.76. The hourly rate concerned would therefore be $311.28.
Applying that hourly rate to the reasonable and necessary tasks I have determined and applying the amount of time that I have determined as fair and reasonable to carry out each task, I have assessed that the reasonable and necessary legal costs incurred by the claimant to be $1,849 inclusive of GST. That assessment is contained in Schedule 1 attached to these reasons.
It is apparent that the amount of $1,849 inclusive of GST exceeds the maximum amount permitted by the Regulation at the relevant time. As this dispute is about the amount that should be allowed for regulated costs, I have reduced the amount allowed to $1,826 inclusive of GST which was the maximum amount permitted by the Regulation at the relevant time.
Benefit Legal submitted that their bill of costs exceeded the regulated amount and amounted to $7,024.60 because of the protracted negotiations that ensued after the insurer’s refusal to agree to payment of their reasonable and necessary costs in the matter in the maximum regulated amount.
Looking at the history of the dispute and my findings, it is apparent that the insurer held a misguided view that the claimant was not entitled to recover his reasonable and necessary legal costs. While holding that view, the insurer made unreasonable requests for onerous documents and information (such as a copy of a costs agreement and an authority to receive) from the claimant at the same time. This would have undoubtedly created confusion as to whether or not the claimant would be paid reasonable and necessary legal costs up to or in the maximum regulated amount.
Nevertheless, for his part, the claimant appears to have also taken an equally combative approach by not providing proper particulars of the work carried out as soon as a dispute was on foot. An itemised bill of costs was provided on 28 June 2022. In my view, in the face of the strong resistance by the insurer to pay the legal costs in the maximum amount, the simplest approach ought to have been firstly, the provision of an itemised bill of costs sooner rather than later.
Secondly, if the dispute had not resolved after the provision of the itemised bill, the claimant ought to have proceeded with an application for assessment of the costs by the Dispute Resolution Service. If the Dispute Resolution Service then found or the Commission found as I did in this assessment (that the work carried out in the itemised bill warranted an allowance of the legal costs at the maximum amount), there would be in my view, persuasive grounds in those circumstances to seek payment of the cost of the application on the basis of exceptional circumstances.
Given the history of this dispute, I am not prepared to exercise my discretionary power under sub-s 8.10 (4) (b) of the MAI Act to do so on this occasion.

CONCLUSION

In accordance with ss 8.10(1), (2) and (3) of the MAI Act, the claimant is entitled to recover from the insurer legal costs permitted by the Regulation.
Pursuant to Sch 2(1) (aa) of the MAI Act, I determine that the legal costs incurred by the claimant in connection with the medical assessment matter (DRS reference 10145463) was reasonable and necessary.
Pursuant to s 7.13A of the MAI Act, the claimant’s reasonable and necessary costs are assessed in the amount of $1,826 inclusive of GST.

[2023] NSWPICMR 36

3 July 2023