Custovic v Allianz Australia Insurance Limited

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
CITATION:	Custovic v Allianz Australia Insurance Limited [2025] NSWPICMR 4
CLAIMANT:	Ibrahim Custovic
INSURER:	Allianz Australia Insurance Limited
MERIT REVIEWER:	Belinda Cassidy
DATE OF DECISION:	19 February 2025
CATCHWORDS:	MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; claimant’s request for gymnasium equipment refused by insurer citing three main reasons; gymnasium equipment not cost effective; treatment not reasonable and necessary and insurer had no liability to pay for it due to claimant being wholly or mostly at fault as per Custovic v Allianz Australia Insurance Limited; claimant lodged application for merit review of cost of treatment under Schedule 2(1)(i); two preliminary conferences and final submissions lodged by parties; paper assessment; relevant considerations identified by parties and Merit Reviewer as insurer’s previous decision making (not relevant), the rehabilitation period after surgery (which medical evidence suggested was 18 – 24 months of further rehabilitation), cost of alternative and cheaper equipment considered (request acknowledged other and cheaper options), where the equipment was to be housed (previous equipment damaged by flood water), and the impending 52 week cut off period and the time left was relevant to considering the cost effectiveness of the options; Held – the correct and preferable decision is that the cost of the treatment is not reasonable.
DETERMINATIONS MADE:	CERTIFICATE OF DETERMINATION Issued under Division 7.4 of the Motor Accident Injuries Act 2017 Having considered the evidence and the submissions of the parties, I determine: 1. The reviewable decision is confirmed. 2. The cost of the home gymnasium equipment requested is not reasonable in accordance with s 3.24(1)(a). A statement setting out the reasons for the above decision is included with this certificate.

INTRODUCTION

Mr Custovic was involved in a motorcycle accident on 24 September 2023 whilst on a bush trail in the Southern Highlands. He was seriously injured. He made a claim for statutory benefits against Allianz the third-party insurer of his own motorbike under the Motor Accident Injuries Act 2017 (the MAI Act).
As part of that claim, Mr Custovic requested the insurer purchase a multi-station home gym to assist with his rehabilitation. The cost of the equipment was quoted at $6,135.99. The insurer rejected the request.
Mr Custovic referred the dispute to the Personal Injury Commission (the Commission) on 25 October 2024 in an application for Merit Review. The application form states the dispute involves the “cost of treatment and care” and the matter was allocated to me for merit review.
I have held two preliminary telephone conferences with the parties on 3 and

20 December 2024. At the second teleconference I set a timetable for the provision of submissions and these reasons.
By way of background, Mr Custovic’s entitlement to statutory benefits ceased on the first anniversary of his accident (24 September 2024). I determined in a decision dated 29 October 2024 that Mr Custovic was wholly or mostly at fault due to his contributory negligence being assessed at 75%.[1]
[1] Custovic v Allianz Australia Insurance Limited [2024] NSWPIC 605.
At the first preliminary conference, the insurer confirmed that Mr Custovic’s statutory benefits had ceased on 24 September 2024.

LEGISLATIVE FRAMEWORK

General background to statutory benefits

Mr Custovic’s claim is governed by the provisions of the MAI Act. This legislation provides a scheme for the compulsory third-party insurance of all motor vehicles registered in New South Wales and a scheme of statutory benefits (under Part 3) and compensation by way of lump sum damages (under Part 4) for persons injured in motor accidents in New South Wales.
Statutory benefits payable by the “relevant insurer”[2] in accordance with Part 3 include:
(a) weekly loss of income benefits for “earners” under Division 3.3, and
(b) treatment and care benefits under Division 3.4.
[2] The “relevant insurer” is determined in accordance with s 3.2 of the MAI Act.
Section 3.24 provides as follows:
(1)    An injured person is entitled to statutory benefits for the following expenses (treatment and care expenses) incurred in connection with providing treatment and care for the injured person -
(a)the reasonable cost of treatment and care,
…
(2)    No statutory benefits are payable for the cost of treatment and care to the extent that the treatment and care concerned was not reasonable and necessary in the circumstances or did not relate to the injury resulting from the motor accident concerned.
(3)    The Motor Accident Guidelines may provide for—
(a)  circumstances in which the cost of treatment and care is taken to be reasonable for the purposes of this section, and
(b)  circumstances in which treatment and care is taken to be reasonable and necessary for the purposes of subsection (2).
Section 3.27 requires expenses to be verified.
Section 3.28 provides for the cessation of statutory benefits as follows:
(1)    An injured person is not entitled to statutory benefits under this Division for treatment and care expenses incurred more than 52 weeks after the motor accident concerned if—
(a)  the motor accident was caused wholly or mostly by the fault of the person and the person was over 16 years of age at the time of the motor accident, or
(b)  the person’s only injuries resulting from the motor accident were threshold injuries.

Dispute resolution

Division 7 of the MAI Act provides for dispute resolution within the benefits and compensation scheme. Disputes may need to be the subject of an internal review by the insurer before it can be referred to the Commission but otherwise disputes can be determined by Merit Reviewers, Medical Assessors and Members of the Commission.
Schedule 2 of the MAI Act recognises 47 different dispute types and declares some to be Merit Review matters, others to be Medical Assessment matters and others to be Miscellaneous Claims Assessment matters. Relevantly to the matter in dispute in these proceedings:
(a)    cl 1(i) of the Schedule declares the following to be a merit review matter - “whether the cost of treatment and care provided or to be provided to the claimant is reasonable for the purposes of section 3.24(1)”;
(b)    cl 2(b) of the Schedule declares the following to be a medical assessment matter - “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 section 3.24”, and
(c)    cl 3(n) of the Schedule declares the following to be a miscellaneous claims assessment matter - “any issue of liability for a claim, or part of a claim, for statutory benefits not otherwise specified in this Schedule.”

INSURER DECISION MAKING AND SUBMISSIONS

The request and denials

The claimant requested the equipment on 29 August 2024.
The insurer declined the request for the gym equipment in a letter dated 5 September 2024.[3] The insurer says (on the first page) that the equipment “is not considered to be reasonable and necessary treatment and care in accordance with … s 3.24(2)” of the MAI Act.
[3] Page 35 of the claimant’s bundle.
The insurer says in its reasons on the second page:
(a)    the treatment has been recommended so that the claimant’s treatment can continue after his claim ends;
(b)    that the claimant does not have the equipment and is “not comfortable in a gym environment”;
(c)    the claimant has undertaken a hydrotherapy program before;
(d)    the equipment is a full body trainer and is not specific to the claimant’s injuries;
(e)    he has been given a home-based exercise program without having a gym;
(f)    Allianz would not be able to monitor the use of the equipment to ensure he adheres to his specific program;
(g)    Allianz notes a risk of further injury if he does not use the equipment correctly or maintain it, and
(h)    there are “more cost effective (and suitable) options” such as dumbbells and TheraBands and that Allianz would review further requests for more cost-effective options.
The claimant sought an internal review of the insurer’s decision and on 27 September 2024, Allianz affirmed the initial decision and advised the claimant that it would not pay for the gym equipment saying:
(a)    the request was declined as it was not reasonable and necessary [21];
(b)    Allianz has approved physiotherapy and exercise physiology to support the claimant’s recovery and that he has returned to work and is able to perform certain weightlifting exercises [23];
(c)    the claimant’s desire to exercise in private was acknowledged but “I cannot accept that this justifies the need” for a home gym and that his injuries do not prevent him from exercising at a commercial gym [24], and
(d)    the insurer refers at [25] to the claimant’s previous home gym.

Claimant’s submissions

In the claimant’s application form he says the insurer has declined the request on the basis the cost of the equipment is not reasonable, and the equipment is not necessary.
Mr Custovic also says:
(a)    he has not reached his pre-injury fitness and the equipment was recommended by his provider to support and continue his rehabilitation;
(b)    he underwent further surgery on 11 September 2024, and his surgeon and GP recommended ongoing rehabilitation, and
(c)    Allianz had approved exercise physiology and physiotherapy up until the date his benefits ceased and that “It does not make sense for Allianz to say on one hand I do not have a requirement for the equipment, but then also have been approved for ongoing rehabilitation treatment.”

Insurer’s submissions

In submissions lodged with the reply form, the insurer refers at [4] to s 3.24 and says at [5] that treatment must be directly related to injuries, be aimed at helping injured person get back to usual activities, appropriate, provided by health professionals and cost effective. The insurer refers at [6] to cl 4.80 of the Motor Accident Guidelines and that the insurer must apply the Clinical Framework for the Delivery of Health Services in its decision-making.
The insurer relies at [7] on its internal review decision and says at [8] that “the request does not satisfy the legal and statutory requirement of ‘reasonable and necessary’”.
The insurer then proceeds to outline its submissions as to why the request for equipment is not “reasonable” and says:
(a) the common law provides that a person is entitled to damages for treatment and rehabilitation “to satisfy the reasonable (as opposed to ideal or optimal) needs of” the claimant [10]. The insurer says there is little difference between the common law and the statutory test [12] and at [13] to [16] refers to a number of common law cases;
(b) the request for the gym equipment is not reasonable in the circumstances and not cost effective [17], and
(c) that home based rehabilitation can occur without the purchase of the gym [19], the claimant has attended external premises to date [20] and that while his preference is to exercise at home this is “contrary to the legal principles” in the cited cases [21].
The insurer then sets out its submission about why the equipment is not necessary:
(a)    citing a workers compensation matter dealing with the test of “reasonably necessary” and noting the dictionary definition of necessary as “indispensable, requisite, needful, that cannot be done without”;[4]
(b)    the claimant has access to rehabilitation services in mainstream gymnasiums or more cost-effective equipment;
(c)    the home gym is not something that “cannot be done without”, and
(d)    the claimant needs strength and stability of his lower limb and therefore a commercial grade full body multi-trainer is not necessary or cost effective.
[4] The case is Clampett v WorkCover Authority of NSW [2003] NSWCA 52.
The insurer concludes at [28] that the gym equipment requested is not reasonable, is not necessary and is not cost effective.

First preliminary conference

The first preliminary conference took place on 2 December 2024 and a report was issued to the parties the next day.
Mr Custovic said he was waiting for advice from his lawyers as to whether he would pursue the fault and liability issue any further.
In the light of the decision about fault, I noted that the insurer only had a liability to pay for expenses incurred up to 52 weeks after the accident. Mr Custovic confirmed the equipment had not been purchased and therefore he had not incurred an expense in relation to it.
I drew the parties’ attention to the case of Mayer v Insurance Australia Limited t/as NRMA Insurance[5] where Member Medland said at [43]:
“In my opinion ‘incurred’ in the context of expenses, equates to a meaning of becoming liable for an expense. It follows therefore, in my opinion, that the insurer, once [found] liable for the surgery, became liable for all related treatment that would be reasonably contemplated as being reasonable and necessary at the time of the surgery.”
[5] [2024] NSWPIC 393.
I noted that there is no longer a jurisdiction for Merit Reviewers to determine what “incurred” means and whether treatment was incurred after the expiration period of statutory benefits but that under Schedule 2(3)(n) of the MAI Act, a Member appears to have the power to determine that issue. I note Member Medland’s decision is not binding on other Members or Merit Reviewers.
I queried with the parties whether the matter before me was actually a medical assessment matter. I also queried whether there was any medical evidence about the length of the claimant’s rehabilitation as that would be a relevant consideration in determining the cost effectiveness of the proposed equipment.
The insurer agreed the claimant’s need for rehabilitation was related to the accident and the claimant’s injuries but says the purchase of home gym equipment was not reasonable and necessary in the circumstances.
The matter was deferred for the parties to consider the matters raised.

Second preliminary conference

A second preliminary conference was held in the matter on 20 December 2024 and a report issued to the parties the same day.
The insurer stated there was no medical assessment matter in respect of its decision about the requested gymnasium equipment. The insurer confirmed that it was reasonable and necessary in the circumstances for Mr Custovic to have some form of rehabilitation after his surgery and that rehabilitation is related to the injuries caused by the accident.
The insurer confirmed that the dispute in this matter is about the cost of the rehabilitation proposed and whether the cost of the particular form of rehabilitation requested (home gymnasium) is reasonable in accordance with s 3.21(1)(a).
In the report, the following considerations were identified as relevant to the decision about whether the cost of the gym equipment was reasonable:
(a)    the cost of alternative and cheaper home gymnasium equipment noting the claimant’s exercise physiologist had acknowledged there were cheaper alternatives;
(b)    the length of time of the rehabilitation process, that is weeks, months, or years;
(c)    where the equipment is to be used in the light of the previous equipment having been damaged by floodwater, and
(d)    the looming 52 week cut off period, as the insurer had been asked to make a decision about the equipment less than a month before the cut off period.
The parties were asked to identify any further considerations they thought were relevant and to provide any additional evidence and final submissions. A timetable was set for the responses and for the delivery of written reasons.

Claimant’s further submissions

The claimant provided additional submissions dated 17 January 2025. He relies on a letter from his treating physiotherapist and a letter from his treating doctor and says at [2] his active rehabilitation will be for at least a further 18 – 24 months.
He provides at [3] – [8] information about the pre-accident home gymnasium confirming it was disassembled after the accident and then damaged after a storm and flooding in his garage. He says that since the flood, the garage has been repaired to prevent further water entry.
The claimant submits at [9] that what is reasonable should not be based on a “timeline restricted by coverage of a claim” and that the benefit of the equipment would last beyond the four to five weeks between the date of the request and the expiration of the one-year entitlement period.
The claimant gave two examples at [13] in support of this:
(a) a ride on mower which was approved on 1 May 2024 and which he will use for many years beyond the expiration of his statutory benefits, and
(b) footwear requested on 20 September 2024 and approved after his benefits ceased and which he will wear beyond the expiration of his statutory benefits.
The claimant says at [14] the insurer wanted him to get home equipment on 11 March 2024 and that in a treatment plan the insurer relies on the treatment plan discussed “working towards home-based equipment and home-based rehabilitation” and Mr Custovic seems to be saying that the insurer was on notice he was going to need the requested equipment.
The claimant then provides submissions concerning Mayer v NRMA. While acknowledging it is on “appeal” the claimant says at [16] it is still relevant. He says he made the request for the equipment as his doctors recommended it [17] and that the need for the equipment arose during the claim and before his statutory benefits ceased [19]. He says at [20] the only reason the equipment has not been purchased to date is because the dispute resolution process has continued past the cessation of benefits date.
The claimant says at [27] Allianz is liable for treatment and care expenses directly related to and reasonably contemplated at the time of surgery regardless of whether the treatment was provided and the cost incurred after benefits ceased.
Mr Custovic says he has provided a quote for use and access of the Movement Therapy Rehabilitation Gym as an alternative and believes his request is the most reasonable [29] - [30].

Insurer’s further submissions

Despite the insurer’s earlier agreement at the second preliminary conference that there was no medical dispute in this matter, the insurer’s final submissions contain many references to whether the treatment in dispute is “reasonable and necessary.” For example, the insurer concedes at [2] that rehabilitation is necessary but disputes that home gymnasium equipment is reasonable and necessary.
The insurer says at [3] that at the time the request for the equipment was made the claimant had not undergone the surgery and that in the post-surgery period the claimant needed supervised rehabilitation. The insurer says at [4] that no kind of gym equipment is reasonable and necessary.
The insurer submits at [8] that the considerations are whether “the request meets the claimant’s treatment needs and whether there is alternative treatment available and the relative cost of that treatment.”
The insurer accepts at [12] that the claimant’s GP and physiotherapist support supervised physiotherapy and exercise physiology rather than a home-based gym in the post-surgery period. The insurer says at [13] the dispute ought to be confined to whether at the time the request for the home gym was made, the request was reasonable and necessary.
The submits at [15] that in a scheme where treatment and care is limited to 52 weeks in circumstances where someone is wholly or mostly at fault, approval of equipment at a time for which there was no need does not support the overriding principles of the Act.
After restating a number of matters the insurer concludes at [21] that:
(a)    the provision of the gym equipment is not reasonable;
(b)    it is not necessary, and
(c)    is treatment what had not been incurred when his benefits ceased.

REVIEW OF THE EVIDENCE

Claimant’s statement

Attached to Mr Custovic’s application was a lengthy statement dated 24 October 2024 which is summarised below:[6]
(a) Mr Custovic was involved in an accident on 24 September 2023 [3] in which he sustained a compound fracture of his right femur [4]. He was placed in a coma and had emergency surgery [5] and further surgery the day after which inserted a titanium rod through his femur and screw fixation at his hip and knee [6];
(b)    he had post-surgical complications including pulmonary embolism, low blood pressure, chest pain and infections; [7]
(c)    he was bed-bound for two weeks [8a] left hospital, was able to walk short distances on crutches [8b] and that for four months he had chest pain and episodes of dizziness [8c];
(d)    during rehabilitation he had issues with his right knee in particular pain, clicking and restriction of movement [8e] and he had flare ups regularly which his surgeon advised was related to the screws in his leg but he had to wait for the bone to consolidate before he would contemplate removing them [8f];
(e)    he progressed to a point but was restricted because of the ongoing pain and he spent a year on pain killers “due to constant pain” [8h]. He saw a pain specialist, was advised to have nerve block injections but this was not approved by the insurer [8i];
(f)    he was not allowed to drive for 10 months after the accident [8j], and
(g)    he is “seriously de-conditioned as a result of the accident” [8k] and although he is back at work, he is having difficulties [l].
[6] The numbers in square brackets correspond to the paragraph number in the document.
He documents how he was before the accident, 30 years of age with four children, cooking all dinners, grocery shopping, cleaning the house and maintain the garden and the home [9]. He says before the accident he could deadlift 150 kg and lifted weights at least four times a week.
The claimant goes on to explain about his more recent surgery:
(a)    his treating orthopaedic surgeon was Dr Dave [10];
(b)    an MRI in July identified that the screws were the cause of his pain and surgery was recommended and approved [11];
(c)    his physiotherapist advised him that once irritating hardware was removed, recovery could progress [12];
(d)    he had the surgery on 11 September 2024 and was advised to continue his physiotherapy and exercise physiology [13];
(e)    the surgical incision was 15cms long which was longer than expected and he was told Dr Dave had difficulty finding the second screw [14];
(f)    his knee was and still is swollen although it is improving but his range of motion is limited [15], and
(g) he continued with his rehabilitation until his claim ended [17].
Mr Custovic says:
“[18] My exercise physiologist put in a recommendation for equipment on my behalf, as part of the natural plan to move to home based exercises, and so I would be able continue my rehabilitation program independently.
[19] The equipment requested is similar to the equipment I was using during my exercise physiology sessions at the rehabilitation facility, but all in one set.
[20] For context, the facility where I was doing rehabilitation is one open room, quiet and private. The sessions were often one on one. If there is anyone else there, it is another patient undergoing rehabilitation, with a specialist. It is a slow-paced environment, no loud music, and no judgment or impatience. I was happy to replicate something similar so I could do my exercises at home.”
He had a ‘squat rack’ of gym equipment in his garage before the accident but as he could not use it after the accident, he packed it up. It was damaged and has been thrown out [22]. That equipment would not be suitable for his current rehabilitation program [23].
Mr Custovic explains at [25] the problems he had with hydrotherapy in a public setting:
(a)    it did not work;
(b)    it was crowded with children who were not aware of his injury;
(c)    there were two instances of him being bumped or kicked;
(d)    people would be impatient with his slow pace, and it was hard for him to move and concentrate;
(e)    exercise for rehabilitation requires a “heightened level of concentration” which was “impossible to do”;
(f)    he had to continue his sessions in “a safe space and some privacy”;
(g)    if he had the choice “I would have opted for private hydrotherapy pool” but there was none nearby, and
(h)    the public pool was his only option which he made work by going at off peak times.
In terms of a public gym, he says:
(a)    the issue is a “commercial, fast paced gym” becomes busy, overcrowded and feels he would be at risk of further injury [26];
(b)    he used to work in commercial gyms in his early 20s and “I know from my experience of being in those gyms that it is not the right environment for me while I am at this stage of my rehabilitation [27];
(c)    he is competent with gym equipment and could manage the maintenance [28], and
(d) he would “prefer to be in a quieter, slow paced and private setting” and that having the equipment at home would mean he could do his rehabilitation when he wants “without distraction, interruption or judgment” [29].
Mr Custovic says he needs the new equipment because:
(a) he has not reached pre-injury fitness or conditioning [24], and
(b) he is “still very much in the midst of my recovery journey [35].”
The claimant has provided photographs showing the swelling of his injured knee and leg and the scars from the recent surgery.

Other evidence

Mr Custovic has provided copies of letters from Dr Dave (his treating orthopaedic surgeon) to his GP. The letter of 9 August 2024[7] refers to friction from the screws in the claimant’s leg and his recommendation that the screws be removed.
[7] Page 70 of the claimant’s bundle.
An Allied Health Recovery Request (AHRR)[8] dated 26 August 2024 sought a further eight exercise physiology sessions. The request came from Mr Avramoski of Movement Therapy who notes 29 sessions had been provided to date and that the end date for the current treatment would be 20 September 2024.
[8] Page 19 of the claimant’s bundle.
The claimant was reported to be deadlifting 50 kg, squatting with 12kg and lifting and carrying 22kg to his waist. He reported high fatigue levels at work but was unrestricted at home, was using a ride on mower and was unrestricted in activities in the community. The request includes the following:
“Ibrahim continues to progress well with his treatment with his goal of returning to running. Ibrahim's claim comes to an end on 22nd September, he will be provided with a home-based exercise program with progressions. An equipment request has also been submitted for him to continue his strength-based progress.”
The insurer’s approval letter for this exercise physiology was dated 29 August 2024.[9] The insurer approved the treatment referred to in AHRR 5 along with travel expenses to attend it. The letter also says:
“I will work closely with your treatment provider to review your treatment needs and tailor a plan towards self-management.
We note all sessions must be completed prior to the 22 September 2024.”
[9] Page 18 of the claimant’s bundle.
The equipment request referred to by Mr Avramoski in the AHRR 5 was also dated

26 August 2024.[10] It quite clearly states on the first page under the heading “equipment recommendation and justification”:
“The injured person will be able to continue their strength and stability rehabilitation for injury once their claim comes to an end on 22nd of September. They will be provided with a plan of progression of exercises and this equipment will allow them to continue their rehabilitation that they usually complete in the clinic setting.”
[10] Page 31 of the claimant’s bundle.
The request was for a “Reeplex CBT-PN Mult station Gym from Dynamo Fitness Equipment” at a cost of $6,135.99 including delivery.
A photograph was provided of the equipment and additional information as follows:
“The equipment includes everything required for the person’s rehabilitation to be able to progress to their end goals of higher levels of strength as per pre-injury. This will allow them to increase strength to return to running.”
The method of supply was stated that the claimant would purchase it and then seek reimbursement.
The application goes on to say:
“The equipment will allow the injured person to continue their rehabilitation in a home-based setting once their claim comes to an end on 22nd September. The injured person has no home equipment [as] such and does not have access to a gym. The injured person has also discussed that they are more comfortable not in a gym setting. The equipment is an all-in-one system that will allow them to continue their rehabilitation. It is an industrial grade system therefore it is expected to last much longer than other systems.”
If the equipment was not approved, Mr Avramoski expressed the view the claimant would not progress, and his condition would be likely to regress. In terms of alternatives, Mr Avramoski says:
“The recommended equipment is commercial grade and will not deteriorate as rapidly as the cheaper alternatives. This will mean that the injured person will be able to benefit from the equipment for a much longer period.”
The insurer declined the request on 5 September 2024 and on 17 September 2024,

Mr Avramoski wrote to the insurer supporting the provision of the home gym set[11] and in response to the insurer’s rejection of the request saying:
[11] Page 40 of the claimant’s bundle.
(a)    a hydrotherapy program is “drastically different” to a gym-based program;
(b)    the claimant feels comfortable in the clinic semi-private setting;
(c)    he is back to work and would need to continue his rehabilitation in peak hours;
(d)    there is no specific piece of equipment directly related to knee rehabilitation;
(e)    the claimant has lost a lot of strength, stability and confidence as a result of his accident and the equipment will have help him regain this as well as helping him return to running;
(f)    TheraBands and dumbbells are equipment not specifically targeting the injured areas;
(g)    while Allianz says it will be unable to monitor the claimant at home Mr Avramoski notes Allianz will be unable to monitor the use of dumbbells and TheraBands either. He also notes that the ride on lawn mower given to Mr Custovic was approved without Mr Custovic being given instructions in how to use or maintain it and his use of it was not monitored;
(h)    a full rack of dumbbells costs $2,000 to $5,000;
(i)    the clamant is completing high threshold exercises and the TheraBand cannot offer sufficient resistance;
(j)    the claimant wants to return to running and therefore needs lower limb protocols of being able to squat and deadlift certain weights, and
(k)    the recommended gym set is safer and specific.
On 19 September 2024 Allianz approved three physiotherapy programs in response to an AHRR from Mr Farias, physiotherapist also of Movement Therapy.[12] This was the tenth request, and 75 sessions of physiotherapy had been provided to date. There were similar goals stated to those of Mr Avramoski and the necessity of a home-based exercise program was recognised. Mr Farias notes the claimant is unable to jog or run but is “able to perform some home gym workouts. Able to perform rehab exercise in clinic and in home gym.”
[12] The approval letter is at page 24 and the AHRR is at page 25 of the claimant’s bundle.
The claimant told the insurer by email that he had told his doctor he was not doing any rehabilitation as his claim had been “cut off”. Dr Amen from the Picton Family Medical Centre wrote a to whom it may concern letter dated 19 September 2024 supporting the claimant’s needs to continue rehabilitation to get Mr Custovic back to his pre-injury status.[13]
[13] See pages 42 and 43 of the claimant’s bundle.
Mr Farias, physiotherapist wrote a letter dated 6 January 2025. He expresses the opinion that before the second surgery the estimated time to recovery was 12 months and that he has not seen the claimant since the surgery. He expresses the view it could be 18 – 24 months before the claimant was “ready to go to pre-injury duties”. Mr Farias expressed the view further physiotherapy, further exercise physiology and fitness / gym equipment at home may improve the recovery time.
Dr Amen wrote a to whom it may concern letter on 14 January 2025 advising that the claimant “still needs lots of rehab work with the physiotherapy and exercise physiologist to get him back to pre-injury state.” He says it will take a further 18 – 24 months of rehabilitation to return him to “full capacity of functioning and managing [his] daily living.”
Jasmin (no surname provided) sent a letter to the claimant dated 16 January 2025 advising that a “shared Appointment” is charged at $95 per week or $380 a month. She says these appointments are a form of group-based rehabilitation where up to six patients attend with their own program to work on with a qualified exercise physiologist.
The claimant requested further physiotherapy and on 20 December 2024 Allianz rejected the request noting he had been found mostly at fault and it was more than 52 weeks since his accident.

CONSIDERATION OF THE ISSUES

What is this dispute about?

Treatment that is requested by an injured person after a car accident can be declined by an insurer under the MAI Act for many reasons.
Three common reasons why an insurer might decline to fund an injured person’s treatment would be:
(a) the insurer is of the view the cost of the treatment is not reasonable under s 3.24(1)(a);
(b) the insurer is of the view the treatment is not related to the accident or is not reasonable and necessary under s 3.24(2), and
(c) the insurer is of the view it has no liability to pay for it in accordance with s 3.28(1)(b).
The claimant in this case has lodged a merit review dispute about the “reasonable cost of treatment and care” which is a dispute arising under s 3.24(1)(a).
The insurer has rejected the request for equipment on the basis it is “not reasonable and necessary” under s 3.24(2) and is not cost effective. The cost-effectiveness argument appears to be the response to the claimant’s s 3.24(1)(a) issue. Whether treatment is or is not necessary is not a consideration in a s 3.24(1)(a). Section 3.24(1)(a) disputes appear to be predicated on the basis that the treatment in dispute is either agreed or has been determined by a Medical Assessor as related to the accident and reasonable and necessary in the circumstances.
Mr Custovic, who is self-represented but still appears to have lawyers acting for him in respect of the fault or liability issue may not appreciate the various dispute types and the distinction between s 3.24(1)(a) and s 3.24(2) but it is a critical difference for me. While I have power to determine a dispute about the cost of treatment, I do not have the power to determine whether that treatment is related to the accident or reasonable and necessary in the circumstances. That is a matter which is clearly a medical assessment matter for a Medical Assessor to determine. I also do not have power in the current proceedings (a merit review matter) to determine whether the insurer has any liability to pay for the treatment (even if it was related and reasonable and necessary in the circumstances and the cost was reasonable). That type of dispute, revolving around the definition of the word “incurred” in s 3.24(1)(a) is a matter for a Member of the Commission in a miscellaneous claims assessment matter under Schedule 2(3)(n) of the MAI Act.
There is no dispute between the parties that the gymnasium equipment is a form of “treatment” within the statutory definition in s 1.6. The insurer concedes that there is no dispute about whether the proposed treatment is related to the injuries sustained in the accident. That means there is no dispute between the parties that some form of rehabilitation is required for Mr Custovic as he recovers from his injuries and in particular his recent surgery.
While I could refer the medical assessment matter (whether the treatment is reasonable and necessary in the circumstances under s 3.24(2) of the Act) for medical assessment pursuant to s 7.20(1)(a), I do not propose to do so in the light of my views on the cost issue. A medical assessment would incur costs for the insurer and the Commission and take 6 to 12 months to resolve. My decision on the cost of the treatment would likely be the same.
While I could request one of the parties lodge an application for a miscellaneous claims assessment matter to determine whether the expense has been incurred and the insurer has a liability to pay for it, I do not propose to do so in the light of my view on the cost issue. If a miscellaneous claims assessment matter was referred to the Commission and allocated to me for assessment, I would likely defer the decision to await the Court’s decision in the Mayer matter.
I will therefore determine the matter that has been referred to me, that is whether the cost of the treatment proposed is reasonable within the meaning of s 3.24(1)(a).

What are the considerations relevant to my decision?

In my report of 20 December 2024, I identified the following four considerations which might be relevant to my decision:
(a)    the cost of alternative and cheaper home gymnasium equipment;
(b)    the length of time of the rehabilitation process;
(c)    where the equipment is to be used (in the light of the flood damage to the former equipment), and
(d)    the 52 week cut off period.
I invited the parties to consider any other considerations. The insurer did not although Allianz raised issues about more cost-effective alternatives and not just alternative gymnasium equipment.
The claimant gave some examples of the insurer’s previous decisions which he says supports his argument that the treatment should be approved. This suggests an argument that I should consider Allianz’s prior decision-making when deciding the dispute about the current treatment.
I will deal with that matter first and then each of the matters referred to in paragraph 87.

Insurer’s previous decisions

The claimant submitted that the insurer had, in March 2024 suggested home based equipment and was therefore not refusing home based equipment. The submissions from the insurer suggest the home-based equipment proposed in March 2024 may have been TheraBands and dumbbells and not the gym equipment. The claimant says that it does not make sense for the insurer on the one hand to approve rehabilitation comprising exercise physiology sessions and then for the insurer to refuse rehabilitation in the form of the recommended equipment. As I understand the insurer’s submissions, Allianz would have approved additional exercise physiology sessions if the statutory benefits entitlement period was not a factor on the basis they were likely to be more cost effective.
The claimant says the insurer approved the purchase of a ride on lawn mower four to five months before his benefits ceased and this equipment will last for a long period after his statutory benefits cease. The claimant says the insurer has approved the purchase of shoes just a few days before his statutory benefits ceased and he will be wearing the shoes after his statutory benefits cease. I note that both of those decisions were made at a time when my decision in the fault and liability dispute had not yet been made or issued.
In my view what the insurer has decided in respect of previous treatment requests is not relevant to the matter that I am dealing with. I am required to determine whether, in accordance with the statutory scheme, the cost of the gymnasium equipment the subject of the 26 August 2024 request is a reasonable cost. It is not for me to determine whether the insurer’s previous decisions were correct or incorrect or whether the insurer’s earlier decisions are consistent or inconsistent. I must focus on the matter that is currently before me.

The rehabilitation period

Neither party has provided any expert evidence from a rehabilitation specialist. There is no report from the claimant’s treating surgeon, Dr Dave. The insurer has provided no evidence in response to the evidence provided by the claimant’s physiotherapist and his GP.
The claimant’s exercise physiologist, Mr Avramoski has not provided an opinion as to the length of the rehabilitation period (having seen the claimant for presumably the eight sessions approved by the insurer on 29 August 2024). He would be the person best placed in my view to offer a considered opinion of the likely rehabilitation period.
Mr Farias who has not seen the claimant since his surgery expressed an opinion about the claimant’s pre-surgery state suggesting a rehabilitation period of a further 12 months, or 12 months after surgery or 18 – 24 months before the claimant would be ready for pre-injury duties. Dr Amen the claimant’s GP has also expressed the view it could be 18 to 24 months more of rehabilitation before the claimant returns to full functioning.
On the basis of that evidence, I am satisfied that the claimant’s ongoing rehabilitation after surgery is likely to be 18 – 24 months.

Cost of alternative and cheaper equipment

The request for equipment purchase states that the equipment chosen is an industrial grade piece of equipment that will last longer than other systems. It is also said to be commercial grade that will not deteriorate as rapidly as the cheaper alternatives There is no suggestion of how long the other or cheaper alternatives might last as opposed to how long the chosen equipment may last.
Mr Custovic may wish to have equipment that will last beyond the end of his rehabilitation so he can get back to the level of weightlifting, exercise and running that he did before the accident, but in my view it is reasonable for the insurer only to provide equipment that will last for at least the length of the rehabilitation period which is 18 – 24 months.
Mr Custovic has provided a letter from Movement Therapy with costings for the claimant’s attendance at shared appointments with the exercise physiologist. At $95 per week or $380 per month, this suggests a total cost for exercise physiology at $4,560 for 12 months or between $6,840 and $9,120 for the 18 – 24 month rehabilitation period. On that basis the cost of a $6,100 piece of gym equipment appears cost effective however in the absence of evidence from Mr Avramoski as to the precise program and frequency of attendance required for how long it is difficult for me to make a true comparison of the cost of the alternative proposed by Mr Custovic.
The insurer suggested in its submissions that alternative home-based exercise equipment namely Therabands and dumbbells would be more cost-effective options but does not provide costings for those. The insurer also took issue with the whole-of-body nature of the gym equipment recommended and suggests the claimant only requires equipment specifically for his lower body. The insurer has provided no evidence about the availability of any such equipment or its cost.

Where the equipment is to be housed

In my view where the equipment was to be stored is relevant to the decision about the cost of equipment because if there is a significant risk of the new and expensive equipment being damaged or destroyed then it would be reasonable for the insurer to refuse to pay for it.
The claimant has provided in his statement evidence about what happened to his previous equipment. He says there was a significant storm and flood damage to the garage where his gym equipment had been before his accident and where it was stored after his accident. He says he has undertaken remedial work to the garage to prevent water damage in any future storm event.
The insurer appears to accept this evidence and not has introduced any evidence to suggest the claimant’s garage is not fit for the equipment.

The 52 week cut off period

While the claimant says the cut off period is irrelevant to the decision about the treatment, I disagree. The parliament has passed legislation that imposes a hard “cut off” of 52 weeks after the accident. For an insurer balancing the cost of $6,100 worth of equipment as opposed to other alternatives the remaining period of its liability to pay for treatment is relevant in my view.
The hard cut-off date is important in this case where Mr Avramoski asked for both clinic-based exercise physiology and the purchase of the equipment specifically so that Mr Custovic can continue his rehabilitation after his claim comes to an end. Mr Avramoski noted the end date for the claim and says the claimant has no home equipment and would no longer have access to a gym as part of the rationale for the purchase.
Under the previous scheme, Mr Custovic would have had access to up to $5,000 only for treatment and lost earnings under the accident notification scheme in Part 3.2 of the Motor Accidents Compensation Act 1999. Payment of treatment and rehabilitation expenses beyond that level depended on an injured person being able to recover damages under the blameless accident (no fault) provisions or on the basis someone else was at fault.
In the first iteration of the no-fault statutory benefits scheme in the MAI Act, there was a soft “cut off” after 26 weeks for persons with threshold injuries. Persons with minor injuries were permitted to continue to receive treatment expenses beyond the first 26 weeks if the treatment would assist with their recovery.[14] There was however a hard cut off of 26 weeks for those who were wholly or mostly at fault. After the amendment to the scheme on 1 April 2023 the entitlement period for statutory benefits was increased from 26 weeks to 52 and the hard cut off period applied to all injured persons whether they had soft tissue threshold injuries or significant injuries like Mr Custovic’s.
[14] Section 3.28(3).
The objects of the MAI Act set out in s 1.3 identify a number of competing themes. On the one hand the Act is said to encourage early and appropriate treatment and care to achieve optimum recovery from injury and to maximise the return to work and activities but on the other hand the scheme must keep premiums affordable. Section 1.3(3) says:
“that participants in the third-party insurance scheme have shared and integrated roles with the overall aim of benefiting all members of the motoring public by keeping the overall costs of the scheme within reasonable bounds so as to keep premiums affordable and of promoting the recovery and return to work or other activities of those injured in motor accidents.”
While the MAI Act provides statutory benefits to almost all injured persons regardless of fault, not all injured persons get everything they want for ever. The Act recognises that those wholly or mostly at fault have their entitlements restricted to the first 52 weeks and insurers do not have a liability to pay beyond the entitlement period. While Allianz must support the claimant to help him recover and return to work, Allianz does not, on the basis of the liability status of his claim, have to do so beyond the first 52 weeks after the accident. That is a consideration relevant to Allianz’s decision making particularly in the light of the significant cost of the equipment in issue.

IS THE COST OF THE GYM EQUIPMENT REASONABLE?

At the time Allianz refused the request for the gymnasium equipment, the 52 week cut off period was approaching, the liability issue was before the Commission and Allianz had approved the claimant’s in-clinic exercise physiology. The request was for a $6,100 piece of commercial or industrial equipment where the health professional recommending it recognised there were other, cheaper alternatives.
At the present time, the 52 week cut off period has passed, the liability issue has been determined (and has not been taken further) and the insurer’s liability to pay for ongoing treatment expenses has ceased.
In my view the correct and preferable decision is that the cost of the equipment recommended is not reasonable for the purposes of s 3.24(1)(a) of the MAI Act. The insurer’s internal review decision of 27 September 2024 in terms of the cost of the treatment is affirmed.

[2025] NSWPICMR 4

19 February 2025