Fakhreddine v AAI Ltd t/as AAMI
[2021] NSWPICMR 32
•3 August 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Fakhreddine v AAI Ltd t/as AAMI [2021] NSWPICMR 32 |
| APPLICANT: | Yanti Fakhreddine |
| RESPONDENT: | AAI Ltd t/as AAMI |
| MERIT REVIEWER: | Ray Plibersek |
| DATE OF DECISION: | 3 August 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- Merit Review; dispute between the Claimant and the Insurer concerning legal costs for a medical assessment; Insurer advised the claimant in a liability notice that she was not wholly or mostly at fault but had suffered minor injuries; accordingly, insurer denied liability to make statutory benefit payments beyond the first 26 weeks after the accident; internal review; claimant submitted she had suffered from a psychiatric illness; claimant was due to be medically assessed in regard to alleged psychological injury however assessment not completed; claimant seeks legal costs for the preparation and conduct of medical assessment over the minor injury dispute; insurer submitted that as the medical assessment was never completed, the application for legal costs in this dispute was lodged prematurely; whether entitlement to legal costs is only available after the completion of a medical assessment; Held- legal costs not recoverable for ‘exceptional circumstances’; insurer to pay the Claimant’s reasonable and necessary legal costs assessed in accordance with 2017 Act and Regulations. |
| DETERMINATIONS MADE: | 1. The Insurer is to pay the Claimant’s reasonable and necessary legal costs assessed in accordance with the Motor Accident Injuries Act 2017 (the MAI Act) and the Motor Accident Injuries Regulation 2017 (the Regulations) in the amount of $1,000 plus GST totalling $1,100 in respect of the application for medical assessment (minor injury). 2. This determination takes effect on 3 August 2021. |
Background
There is a dispute between the Claimant, Yanti Fakhreddine, and the Insurer about a merit review concerning legal costs for a medical assessment. The application is made under Schedule 2, Clause 1 (aa) of the MAI Act.
The Claimant was injured in a motor vehicle accident on 8 July 2018. She was driving a Holden Cruz which was hit on the passenger side by another car at Hoxton Park Road at the intersection with Joadja Road, Cartwright.
After the accident the Claimant was able to get out of her car and go home, (AD 5). After the accident, she went to Liverpool Hospital. At the hospital the Claimant reported injuries included: neck, both shoulders, right hip, back pain and headache. She was discharged after treatment the next day.
In a liability notice dated 29 October 2018 the Insurer advised the Claimant that it had determined that she was not wholly or mostly at fault. It had also determined that the Claimant had sustained minor injuries. The insurer denied liability to make statutory benefits payments beyond the first 26 weeks after the accident, (AD 1).
On 26 November 2018 the Claimants solicitors requested that the Insurer conduct an internal review, (AD 2). The solicitors submitted that the Claimant suffered psychological injuries as a result of the accident and that the Insurer had not properly assessed whether the Claimant suffered from a psychiatric illness, (AD 2).
On 3 January 2019 the Insurer advised the Claimant of the outcome of the Insurer’s internal review as follows (AD 3):
“Outcome of internal review
1. The decision of the GIO Claims Team has been affirmed.
2. Your injuries fall under the definition of a ‘minor injury’ as per the Motor Accident Injuries Act 2017 (NSW).
3. Your entitlement to weekly benefits and treatment expenses will cease at 26 weeks.
4. You will not be entitled to make a claim for damages.5. You may be entitled to further treatment under Section 3.28(3) of the Motor Accident Injuries Act (NSW) 2017.”
The Claimant was due to be medically assessed by Assessor Michael Hong in May 2020 in regard to alleged psychological injury. However, that assessment was not completed.
The Claimant now seeks legal costs for the preparation and conduct of the medical assessment over the minor injury dispute.
In an invoice dated 10 February 2020 the Claimant’s solicitor claims professional fees of $1,600 (plus $160 GST) for “Professional Costs – Minor Injury Dispute”, (A2).
The description provided in the Claimant’s solicitor’s itemised tax invoice (A2) for payment is:
“Professional fees in relation to DRS Application Number 10076458 as per the
Motor Accident Injuries Regulation 2017, Schedule 1, Part 1, Section 2(1) - $1,600.00 plus GST.”
Submissions
An email dated 4 May 2020 from the Claimant’s solicitors claimed that the Claimant is entitled to costs in accordance with Schedule 1, Part 1, Clause 2(1) of the MAI Act.
The argument in favour of the awarding of legal costs made by the Claimant’s solicitors in the email dated 4 May 2020 was as follows:
“In this instance, the claimant instructed us to investigate her claim. The insurer determined that the claimant had sustained a minor injury. We requested an internal review from the insurer. The insurer maintained their position. The claimant instructed us to lodge the DRS application, which we did. The DRS arranged the assessments. As a result of various reasons, the claimant has not attended the DRS assessments.
We submit that we are entitled to costs because:1.We undertook all the work as outlined above
2.Irrespective of the outcome of the DRS assessment, the insurer is liable to pay the associated costs
3.The relevant clause refers to legal services in connection with a medical assessment – as stated above, Division 7.5 of the Act outlines the medical assessment process – attending the assessment is only one part of the medical assessment process. As such, any work undertaken ‘in connection with a medical assessment’ is payable by the insurer.”
In a later email dated 18 June 2020 the Claimant’s solicitor writes:
“… the claimant makes the following further submissions:
1.The wording of the legislation includes “in connection with”, as outlined on 4 May 2020. That takes into account the work involved in preparing the application, and lodging it.
2.The insurer’s position that costs must follow the actual assessment does not take into consideration circumstances in which the assessment cannot take place after the lodgement of the DRS application. There are instances where an assessment cannot take place after the lodgement of the application with the DRS. For example, if the claimant becomes deceased without an estate/the deceased’s estate does not wish to pursue the claim any further. Hence the reason why the words “in connection with” exist in the legislation”.
In the Claimant’s earlier submissions (A1 – dated 5 March 2020), they stated that the Claimant was:
“…entitled to costs in accordance with section 2(1) of Part 1 of Schedule 1
of the Motor Accident Injuries Regulation 2017 (NSW) (‘Act’) which states:
“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 monetaryunits per claim).”
In those earlier submissions the Claimant’s solicitors seemed to be claiming two sets of legal costs, (A1 – dated 5 March 2020 at paragraph 11). One claim seems to be for the application with the Dispute Resolution Service (dated 31 January 2020) in relation to the internal review decision. The second claim seems to be for the 5 March 2020 application. The solicitors claim was:
“In accordance with the above, we submit that we are entitled to payment of our costs in relation to the DRS application dated 31 January 2020.
We also request that a separate order be made that the insurer pay our costs (16 monetary units) in relation to this DRS application dated 5 March 2020.”
The Insurer submissions concerning legal costs are dated 3 June 2021, (AD 6 R 1). In summary, the Insurer submissions are that:
(a) the Claimant’s solicitor did not sufficiently articulate why a different outcome would be attained at the Personal Injury Commission (PIC), different to that comprehensively delivered at internal review by the Insurer;
(b) there was no indication that the Claimant’s alleged injuries would fall outside the classification of ‘minor’. The Claimant’s solicitor ought to have identified this before putting forward the PIC Application;
(c) no medical assessment took place and the matter was subsequently finalised. The dispute did not proceed to completion;
(d) the entitlement to legal costs follows the completion of a medical assessment matter and this dispute never proceeded to a point whereby it was a finalised medical assessment matter;
(e) it is not in line with the objects of the MAI Act to award the costs in a medical dispute that does not proceed to medical assessment;
(f) the Claimant’s solicitor did not provide a schedule itemising the tasks for which the costs were incurred with respect to the application for medical assessment;
(g) the Claimant’s solicitor did not make submissions specifying the tasks for which the costs were claimed in the invoice, and
(h) the Claimant is not entitled to legal costs as no medical assessment took place and the matter was finalised without a medical assessment being conducted.
The Insurer has also previously written in submissions (AD5 -R1, undated) that:
“The Insurer draws the Assessor’s attention to the Claimant’s relevant past medical history as outlined from the clinical notes on file:
- Chronic back pain; hypertension (2000)
- Back pain from workplace incident (2009),
- OCD (2012)
- PTSD (2012)
- Anxiety Disorder (2012)
- Depression (2012)- Cervical Spine degenerative disease (2015)
- Chronic pain Left Knee and Hip (2017)”
In those submissions the Insurer also noted (AD5 -R1, undated) that:
“Upon assessment the Claimant did not present with neurological signs or with Neck swelling. A CT angiogram was reported to be as normal. A subsequent MRI of the Cervical and Lumbar Spine revealed no evidence of disc protrusion or significant foraminal narrowing and no evidence of nerve root impingement.”
Relevant Statutory Provisions
Both parties in this dispute seem well aware of the statutory provisions relevant to this dispute as they have referred to those provisions in their submissions. Accordingly, I will not set out in detail the text of those provisions but will only refer to them briefly.
The objects of the MAI Act include, at sub-clause 1.3(2)(g), ‘to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes’. In the interpretation of a provision of the MAI Act or the Regulations, a construction that would promote the objects of the MAI Act or the provision is to be preferred to a construction that would not promote those objects (s 1.3(4)). In the exercise of a discretion conferred by a provision of the MAI Act or the Regulations, the person exercising the discretion must do so in the way that would best promote the objects of the MAI Act or of the provision concerned (s 1.3(5)).
The Claimant’s entitlement to recover legal costs is governed by Part 8 of the MAI Act. That Part applies to and in respect of legal costs payable on a party and party basis, on a solicitor and client basis or on any other basis, unless the Part otherwise provides, see section 8.2.
Section 8.3 of the MAI Act provides that Regulations may make provision for the fixing of maximum costs recoverable by Australian legal practitioners. Sub-section 8.3 (4) provides the recovery of legal costs is not allowed unless payment is permitted by the Regulations or the Commission.
Sub-section 8.10 (1) provides that a claimant for statutory benefits is (subject to the section) entitled to recover from the insurer ‘reasonable and necessary’ costs incurred by the claimant in connection with the claim. This is qualified by subsection 8.10 (3) which provides that the recovery of costs is allowed if payment is permitted by the Regulations or the Commission. Then subsection 8.10 (4) provides that the Commission can permit payment of legal costs incurred by the claimant if satisfied that the claimant is under a legal disability or exceptional circumstances exist.
Clause 22 of the of the Regulation provides that the costs set out in Schedule 1 are the maximum costs for legal services provided by an Australian legal practitioner to a claimant.
Clause 23 of the Regulation declares that no costs are payable for legal services provided to a claimant or to an insurer in connection with an application for internal review by the insurer. (See also sub-section 8.3 (1) (c)).
Schedule 1 Part 1 sub-clause 2 (1) of the Regulation provides that the maximum claim for legal services in connection with a medical assessment under Division 7.5 are 16 monetary units up to a maximum of 60 monetary units per claim.
“Medical assessment matter” and “medical disputes” are defined in section 7.17 of the MAI Act as follows:
“7.17 Definitions
In this Part—
medical assessment means an assessment of a medical assessment matter under this Division.medical dispute means—
(a) a dispute between a claimant and an insurer about a medical assessment matter, or(b) an issue arising about a medical assessment matter in proceedings before a court for damages or in connection with the assessment of a claim by the Commission.”
“Medical assessment matter” is defined in sub-section 7.1(1) of the MAI Act to mean a matter declared by Schedule 2 to be a medical assessment matter for the purposes of Part 7.
In Schedule 2 the definition of “medical assessment matter” includes a dispute about whether the injury caused by the motor accident is a minor injury for the purposes of the Act, Schedule 2, sub-clause 2(e) of the MAI Act.
In this case the dispute satisfies the definition of “medical assessment matter” because it is about whether or not the Claimant had sustained a psychological injury which meets the definition of “minor injury”.
Determination
In this matter the Claimant seeks the payment of legal costs of $1,600 plus GST totalling $1,760. The area of dispute is that the Claimant submits that even though the medical assessment for the minor injury dispute about psychological injury was never completed, legal costs should be awarded. The Insurer disagrees and submits that as the medical assessment was never completed, the application for legal costs in this dispute was lodged prematurely.
The application filed in relation to the medical matter was in connection with a dispute about a minor injury. A “minor injury” is declared by Schedule 2 sub-clause 2 (e) of the MAI Act to be a medical assessment matter.
The Claimant’s lawyers can only recover legal costs for legal services provided in relation to the medical assessment matters if payment of those costs is permitted by the Regulations or the Commission, sub-section 8.3(4).
The Claimant is not entitled to recover legal costs for legal services provided to a claimant in connection with an application for internal review by the insurer, clause 23 of the Regulation.
Success in the outcome of a dispute is not a pre-requisite to the Claimant accruing an entitlement to the payment of her legal costs in connection with the medical matters. In AAI Ltd v Moon [2020] NSWSC 714 (Moon) Wright J stated:
“82 As to the general nature of the entitlement conferred by s 8.10, it can be noted that it is not similar to the awarding of costs in court proceedings. There is nothing in s 8.10 or any other provisions of the MAI Act that suggests that a claimant’s entitlement to recover legal costs under s 8.10 depends on whether or not the claimant was successful before the DRS…”.
Payment of the Claimant’s legal costs in relation to the medical matters is permitted by Schedule 1 Part 1 sub-clause 2 (1) of the Regulations. The maximum costs for legal services provided to a claimant in connection with a medical assessment under Division 7.5 of the Act are 16 monetary units (to a maximum of 60 monetary units per claim). ‘Medical assessment’ means an assessment of a ‘medical assessment matter’ (s 7.17). ‘Medical assessment matter’ means a matter declared by Schedule 2 to be a medical assessment matter for the purposes of Part 7 (sub-section 7.1 (1)). Schedule 2 sub-clause 2(e) declares the minor injury dispute to be medical assessment matter. Together these provisions have the effect of allowing payment of the Claimant’s reasonable and necessary legal costs with respect to each medical assessment matter.
Based on the application of the relevant legislation above, the Claimant has an entitlement to the payment of her legal costs for the minor injury dispute which is a medical assessment matter.
The next issue that arises is whether the entitlement to legal costs is only available after the completion of a medical assessment matter by the minor injury dispute being determined. The Insurer argues that the Claimant is not entitled to legal costs as no medical assessment took place and the matter was finalised without a medical assessment being conducted. The Claimant’s solicitors argue that relevant clause refers to legal services in connection with a medical assessment. Attending the assessment is only one part of the medical assessment process. The Claimant’s argument is that the phrase “in connection with” also takes into account the work involved in preparing the application and lodging it. According to the Claimant, the Insurer’s position that costs must follow the actual assessment does not take into consideration circumstances in which the assessment cannot take place after the lodgement of the dispute application.
Having carefully considered the respective arguments, I prefer the view that some legal costs are available for legal work in preparing, lodging and conducting the application for a medical assessment. It may be that once the application for a medical assessment is made an insurer (or a claimant) could review its original position and decide to settle the dispute without it being determined. In such cases, it would be unjust to deny the Claimant legal costs on the basis that the medical assessment had not been made because the dispute has not been finally determined. Allowing legal costs before a final determination of a dispute is also consistent with the objects of the MAI Act. These objects include, at sub-clause 1.3(2)(g), ‘to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes’. Allowing legal costs only in cases where a dispute is finally determined does not promote early, quick and cost-effective resolution of disputes. It would, to the contrary, encourage continued disputation. Allowing legal costs before a final determination of a dispute also finds support in the words of Wright J in Moon’s Case. As his Honour stated:
“…the entitlement conferred by s 8.10, …. is not similar to the awarding of costs in court proceedings. There is nothing in s 8.10 or any other provisions of the MAI Act that suggests that a claimant’s entitlement to recover legal costs under s 8.10 depends on whether or not the claimant was successful before the DRS.” (At paragraph 82).
Having found that there is an entitlement to legal costs in this case, the next question that arises is the amount of costs that should be allowed. Sub-section 8.10 (1) provides that a claimant for statutory benefits is entitled to recover from the insurer ‘reasonable and necessary’ costs incurred by the claimant in connection with the claim. The Claimant’s solicitor claims professional fees of $1,600 (plus $160 GST). The Claimant’s solicitors have not itemised the legal services provided or the time taken to perform those services. The only detail provided by in the Claimant’s solicitor’s is an itemised tax invoice (A2) which states:
“Professional fees in relation to DRS Application Number 10076458 as per the
Motor Accident Injuries Regulation 2017, Schedule 1, Part 1, Section 2(1) - $1,600.00 plus GST.”
41.Apart from the invoice description above, there is little other detail about what material was prepared for the medical assessment application.
For the above reasons, I consider some costs should be allowed for the preparation and lodgement of the application for medical assessment (minor injuries dispute). It is open to me to permit any amount of costs up to the maximum amount.
The Claimant’s legal representatives have provided a tax invoice dated 10 February 2020 regarding the costs claimed in respect of the application for medical assessment (minor injuries dispute). I note they have not provided an itemised schedule or made submissions stipulating how the costs claimed have been incurred.
However, for the reasons discussed above, I am of the view that the Claimant’s legal representatives are entitled to legal costs in relation to the minor injuries dispute classified as being a ‘medical assessment’ matter.
When considering whether the costs claimed by the Claimant’s legal representatives are reasonable and necessary in this matter, I consider that some costs are appropriate based on the level of work which appears to have been made for the medical assessment application. While it is not apparent what time and consideration was put into the application, I consider that an amount of legal costs should be allowed for the time that would have been expended on consulting with the Claimant, review of the documents, as well as consideration and preparation of the medical assessment application. I also note, as submitted by the Insurer, that no medical assessment took place and the minor injury dispute was finalised without a final determination. Accordingly, the Claimant is entitled to some legal costs but not the maximum available amount.
Applying my discretion and experience, I consider it appropriate to allow legal costs of $1,000 (plus GST) giving a total of $1,100.
Accordingly, I allow costs in the amount of $1,000 (plus GST) in respect of the application for medical assessment regarding the minor injuries dispute.
Finally, sub-section 8.10(4)(b) of the MAI Act provides that the Commission can permit payment of legal costs if there are “exceptional circumstances” to justify payment of legal costs. The Claimant’s legal representatives have not applied for “exceptional circumstances” costs under this subsection. In their written submissions the Insurer’s solicitors submitted that no exceptional circumstances exist to justify the payment of additional legal costs.
There were no submissions or material before me that supports a finding of exceptional circumstances to justify payment of legal costs in this application. I am not satisfied that the information submitted supports a finding of exceptional circumstances. Therefore, I find that legal costs are not recoverable for “exceptional circumstances”.
Conclusion
The Insurer is to pay the Claimant’s reasonable and necessary legal costs assessed in accordance with the MAI Act and the Regulation in the amount of $1,000 plus GST totalling $1,100 in respect of the application for medical assessment (minor injury).
This determination takes effect on 3 August 2021.
Ray Plibersek
General Member and Merit Reviewer
Personal Injury Commission
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