Insurance Australia Limited t/as NRMA Insurance v Warner
[2022] NSWPIC 479
•31 August 2022
| CERTIFICATE OF DETERMINATION OF MEMBER | |
Citation: | Insurance Australia Limited t/as NRMA Insurance v Warner [2022] NSWPIC 479 |
| Claimant: | Holly Warner |
| insurer: | Insurance Australia Limited t/as NRMA Insurance |
| Member: | Belinda Cassidy |
| DATE OF DECISION: | 31 August 2022 |
CATCHWORDS: | MOTOR ACCIDENTS - Damages claim; approval of settlement under section 6.23 of the Motor Accidents Injuries Act 2017; claimant self-represented; claimant sustained significant scarring to her left leg; it was pinned between the hot exhaust of a car that reversed into her knocking her over and the hot engine of her bike; insurer wholly admitted liability and made offer of settlement of almost $10,000 which the claimant accepted; offer made up of $3,200 in statutory benefits paid; about $800 in tax paid on statutory benefits and $6,000 for additional past loss of earnings; Held — settlement approved; no matter of principle; claimant had made good recovery; returned to full time work and changed roles; while scars easily visible and claimant was self-conscious of them they did not interfere with claimant’s work, home duties or activities of daily living and needed to active treatment; no likely claim for non-economic loss or future losses. |
| determinations made: | 1. Having considered the claim in accordance with s 6.23 of the Motor Accident Injuries Act 2017 and noting that the claimant and the insurer have proposed to settle the claim for the sum of $9,858.96, the Commission determines: (a) The proposed settlement is approved. (b) The insurer is to deduct no more than $3,863.24 from the settlement sum. |
STATEMENT OF REASONS
Introduction
Ms Holly Warner (the claimant) was injured in a motor accident on 6 February 2019. Ms Warner was riding her motorbike in a car parking area, when a car reversed into her, knocking her to the ground. Ms Warner sustained burns to both sides of her left calf when her leg was caught between the hot exhaust of the car and the hot engine of her motorbike.
Ms Warner was 20 at the time of the accident and is now 24 years of age.
Ms Warner made two claims against NRMA, the third-party insurer of the motor vehicle she says caused her accident:
(a) a claim for statutory (income support and treatment) benefits made on or about 20 February 2019, and
(b) a claim for lump sum compensation or damages made on 4 February 2022[1].
[1] The application for personal injury benefits (claim form) is document A2 in the bundle and the application for damages (claim form) is document A4 in the bundle.
NRMA admitted liability and have been paying Ms Warner her statutory benefits[2]. Because it is conceded by NRMA that Ms Warner has more than a “minor injury”, NRMA must continue to pay for Ms Warner’s reasonable and necessary, accident-related treatment needs after her damages claim is settled.
[2] NRMA’s notices accepting liability are dated 13 May 2019 (statutory benefits after 26 weeks) and 2 March 2022 (damages) and are documents A3 and A5 in the bundle.
NRMA have admitted liability for Ms Warner’s damages claim and NRMA made an offer of $9,858.96[3] which Ms Warner has accepted. Because Ms Warner is self-represented, the settlement has to be approved.
[3] By phone and confirmed in an email dated 20 July 2022 as per document A8 in the bundle.
NRMA referred the claim and the settlement to the Personal Injury Commission (the Commission). I am a General Member of the Commission, and the proceedings were referred to me for me to decide whether to approve or not approve the settlement. I held a single teleconference in the matter and have decided to approve the settlement.
LEGISLATIVE FRAMEWORK
Approval of settlement
Because of the date of her accident, Ms Warner’s claims and her entitlements are governed by the provisions in the Motor Accident Injuries Act 2017 (the MAI Act). Section 6.23 of that Act provides that if an injured person is not represented by a lawyer, any settlement of a damages claim must be approved by a member of the Commission. In my view, the approval process in the legislation is an important safety net to ensure an injured person, not represented by a lawyer, obtains a proper amount of damages.
In deciding whether or not to approve the settlement, I must consider the cl 7.37 of the Motor Accident Guidelines which says:
“Under section 6.23(3) of the Act, before the Personal Injury Commission may approve the settlement of a claim for damages, it must be satisfied that:
(a) the proposed settlement satisfies the timing requirements in section 6.23(1) of the Act
(b) the proposed settlement is just, fair and reasonable and within the range of likely potential damages assessments for the claim were the matter to be assessed by the Commission, taking into account the nature and extent of the claim and the injuries, disabilities, impairments and losses sustained by the claimant, and taking into account any proposed reductions or deductions in the proposed settlement
(c) the claimant understands that they are entitled to be represented in respect of the claim by an Australian legal practitioner
(d) the claimant understands the nature and effect of the proposed settlement and is willing to accept the proposed settlement”.
Damages provisions
The MAI Act provides, at s 4.3 that, in a claim for damages Ms Warner is entitled to seek:
(a) damages for non-economic loss (sometimes called non-pecuniary loss) in accordance with s 4.11, and
(b) damages for his economic or pecuniary losses under s 4.5 of the legislation including lost wages, the additional cost of accommodation and housing, funds management and any income tax paid by NRMA on any weekly statutory benefits paid.
Section 4.11 of the MAI Act says that damages for non-economic loss can only be awarded if the claimant has a whole person impairment (WPI) of greater than 10% and s 4.13 provides that the maximum amount of non-economic loss damages that can be awarded is $590,000.
Non-economic loss is defined in the MAI Act as involving:
(a) pain and suffering;
(b) loss of expectation of life;
(c) loss of amenities of life, and
(d) disfigurement.
Whole person impairment is assessed in accordance with Chapter 6 of the Motor Accident Guidelines (the Guidelines)[4] which are largely based on the American Medical Association’s Guides to the Evaluation of Permanent Impairment, Fourth Edition (AMA 4 Guides). Section 7.21(3) provides that a person’s physical impairment cannot be combined with any psychological impairment to overcome the 10% threshold.
CONSIDERATION OF THE SETTLEMENT
[4] Section 7.21. The current version of the Guidelines is Version 8 which is effective from April 2022.
The evidence
The statutory benefits claim form lists the following injuries:
(a) third degree burns to the claimant’s left leg – the left and right sides of her calf;
(b) severe anxiety and panic attacks;
(c) permanent damage to her body causing severe self-esteem issues, short and long term, and
(d) severe depressive episode.
Emergency personnel did not attend the accident scene and the claimant took herself to Royal Prince Alfred Hospital (RPAH) on the day of the accident.
The claimant says at section 7 of the claim form that from 18 February 2019 for an unspecified time she would need time off work due to pending surgery.
Ms Warner also discloses in her claim form that she was a casual employer as a supervisor at a restaurant in Enmore earning $813.96 per week.
There is a short letter to Professor Maitz of Concord Repatriation General Hospital (Concord Hospital) from Alice Rigg of RPAH dated 6 February 2019[5] confirming the claimant’s attendance at hospital and noting the mix of “superficial dermal (partial) thickness burns and deep dermal partial thickness vs full thickness burns” as well as a minor soft tissue injury over the knee. Ms Warner was discharged with instructions to attend the burns clinic and present the letter.
[5] Document A14 in the bundle.
The discharge summary from RPAH[6] confirms the generate state of the claimant’s burns and notes the claimant had no bruising or deformity elsewhere but that Ms Warner had minor pain in her left knee
[6] Document A15 in the bundle.
There are four certificates of capacity suggesting the claimant had time off work or was on light duties until 19 March 2019[7].
[7] Documents A18 – A22 in the bundle.
Professor Maitz wrote to NRMA on 28 February 2019[8] advising that the claimant had full thickness burns to her left lower leg. He said that there were four separate wounds with a total body surface area (TBSA) of 1%. He referred to debridement and grafting surgery on 22 February 2022 and he was to review Ms Warner on 1 March 2019. He certified Ms Warner unfit for work until 8 March 2019. Professor Maitz also said that donor tissue for the skin grafts was taken from the back of the claimant’s lower leg.
[8] Document A23 in the bundle.
Also on file is an email from Agee Dwayne (rehabilitation consultant) to NRMA dated 9 April 2019[9] advising that Holly had told them “I’ve since returned to work and am doing well – my doctor has not provided me with any further certificates as I’m now fit and back to normal”.
[9] Document A24 in the bundle.
NRMA wrote to Professor Maitz with a series of questions which he answered on 10 June 2019[10]. He noted the general nature of the injury (full thickness contact burns) and a pre-existing history of depression suggesting this would have no impact on her recovery. Apart from the surgery he noted Ms Warner needed ongoing occupational therapy for 6-12 months. Finally, he noted the claimant’s injury had no effect on the following activities of daily living (ADL):
(a) self-care and personal hygiene;
(b) domestic duties;
(c) employment / study, and
(d) travel and social functioning.
[10] Document A25 in the bundle.
Professor Maitz said that Ms Warner had “fully healed”.
There is a medical certificate dated 4 February 2022 from Dr Naoshaba Shafi[11] certifying as follows:
“Holly Warner was examined by me on Friday 4 February 2022.
She was involved in an accident on 6 February 2019 where she sustained 3rd degree burns to L lower leg requiring skin graft. In my opinion her physical injury to her L lower leg has healed but she has reduced sensation in the area and exposure to the sun causes increased risk of sun burn. It has also left scarring in the region which has caused psychological trauma to her. She is a young woman who is unable to wear shorts, skirts due to the scarring on her leg. This has affected her mentally.”
[11] Document A 26 in the bundle.
Ms Warner’s evidence
Ms Warner gave evidence by audio-visual link. She was articulate and friendly and, in my view, frank and reliable. I asked her about her activities of daily living and she said the scars do not stop her doing things around the home, and they do not affect the work she does. She has changed roles since the accident and is no longer in hospitality but working in Canberra with a not-for-profit organisation involved with sports.
Ms Warner said that as a result of her accident, she made certain lifestyle choices which have led to her change in role, in a positive sense. She said that working in hospitality she tended to smoke and drink but as she was advised this would delay or impair the healing process she stopped smoking, reduced her drinking and moved into a different role. She says she studied film, television and radio at university and is now working, producing and developing documentaries in sport.
Ms Warner told me that her scars do not stop her playing her preferred sport of tennis, but they do affect what she wears. Instead of wearing shorts or skirts, she wears long leggings when she plays to hide the scars and in particular to prevent sunburn. She says her scars are very sensitive to the sun and they also have reduced sensation to touch. She says she still goes to the beach, but the scars influence the choices she makes in terms of outdoor activities and what she wears. She says sometimes this can be uncomfortable (for example the leggings in hot weather).
Ms Warner said she is no longer having any treatment for the scars although she has compression bandages which she wears in an attempt to limit the contour defect and improve the appearance of the scars.
There are a number of photographs of the claimant’s left leg uploaded to the Commission’s file showing the raw scars shortly after the accident, others from after the surgery and two showing the claimant’s leg with the healed scars. They are large and visible. While they are a good colour match with the surrounding skin, they are obvious and there are parts of the scars which have a defective (indented) contour when compared to the surrounding skin. It is understandable that the claimant is conscious of them and seeks to cover them up.
I asked Ms Warner about her psychological state. She advised that this is less severe than it was. She said she saw a therapist earlier on and this helped minimise the ongoing effects and has helped her adjust to the scars on her body. She did say that she was looking forward to the conclusion of the claims process and putting it all behind her.
The elements of the claim
The settlement reached by the claimant with the insurer reflects $3,863.84 paid in weekly statutory benefits and the sum of nearly $6,000 representing the reimbursement of $824 in income tax paid by the insurer on statutory benefits pursuant to s 4.5(1)(d)[12].
[12] The insurer’s letter of 20 July 2022 refers to this as “Fox v Wood” is somewhat inaccurate. The common law entitlement to the reimbursement of income tax paid on workers compensation benefits established in the case of Fox v Wood (1981) 148 CLR 438 is now enshrined in s 4.5(1)(d) of the MAI Act in relation to motor accident benefits.
The remainder of the settlement sum I was told represents lost “past earnings” which the insurer’s representative could not explain but which Ms Warner indicated was by way of compensation for lost shifts and work she may have been able to do but could not because of her accident. There is also the “top up” from the statutory benefits paid which is paid at the rate of 95% of lost earnings. Ms Warner was in the hospitality sector and may also have benefited from tips or gratuities not included in declared earnings.
Ms Warner said she had returned to work within two months of the accident and soon thereafter was back to normal.
Ms Warner makes no claim for future loss of earnings or earning capacity and it is clear to me from what she told me that there is no impairment to her earning capacity in the future as a result of this accident. Ms Warner strikes me as a positive person and someone who has made the most of what has happened to her.
There is also no claim for any cost of transport, accommodation or funds management and bearing in mind the nature of the claimant’s injuries I am satisfied that Ms Warner would have no entitlement to those heads of damage.
In terms of the claimant’s entitlement to non-economic loss. The claimant’s only physical assessable injury is her scarring. They are not insignificant and would, in my view, be considered by most observers as unattractive. I am of course, not a medical assessor, but I am aware of the AMA4 Guides and the Guidelines and the general principles of the assessment of skin disorders.
Skin impairments are categorised into five classes of impairment. Class 1 skin impairments attract a WPI of 0-9%. To fall into this class requires:
(a) the presence of signs and symptoms, and
(b) no limitations to activities of daily living or limitations to a few ADL, and
(c) there is no treatment or intermittent treatment required.
Class 2 skin impairments attract a WPI of 10-24%. In order for a skin impairment to fall into this class, there must be;
(a) signs and symptoms present, and
(b) a limitation in the performance of some ADL, and
(c) intermittent to constant treatment.
Ms Warner certainly has signs and symptoms present. She told me that she is not having any medical or allied health treatment although she sometimes wears compression stockings. If these stockings are considered treatment this could possibly be considered as intermittent treatment. The evidence of Professor Maitz is that there has been no impact on the claimant’s ADL. The claimant’s evidence to me was that her scars do not prevent her working, playing sport, travelling or undertaking her domestic duties but that she dresses to cover her scars while playing tennis and is more aware of the need to use sunscreen. On the basis of this evidence, it could be considered she has a limitation to at least one activity of daily living (sport and recreational activities) but not “some” and therefore she would not fall into Class 2. In my view Ms Warner is unlikely to overcome the 10% threshold required for an entitlement to damages for non-economic loss due to any physical injuries.
In terms of her mental health and her adjustment to the scars she has sustained, the evidence of Dr Shafi raises the prospect of psychological injury and ongoing symptoms related to the effect of the scarring. Ms Warner’s evidence, her return to work (and changed roles), her resumption of sport and continuation of her domestic activities satisfies me she would be highly unlikely to overcome the 10% WPI threshold required for an entitlement to damages for non-economic loss in respect of her psychological injuries.
Should I approve the settlement?
I have decided to approve the settlement reached between the parties for the sum of $9,858.96 because:
(a) it is now three years since the accident and the timing requirements in s 6.23(1) have been met;
(b) the only deduction from the proposed settlement is the weekly statutory benefits paid by the insurer;
(c) the amount offered is just, fair and reasonable and within the range of likely potential damages that could be assessed in the Commission in accordance with the MAI Act, and
(d) Ms Warner is keen to put this accident and her claim behind her and move on with her life.
I have explained to Ms Warner, and she understands, that she is entitled to have a lawyer but does not want to have one; that she has the right to explore her entitlement to non-economic loss but she does not wish to do so, and that by accepting the insurer’s offer, her claim for damages is at an end.
Ms Warner is aware that her statutory benefits claim continues, insofar as treatment is concerned, and that if she requires any further treatment for her scars or for any psychological issues that are reasonable and necessary and related to her accident caused injuries, she is entitled to have that treatment paid for by the insurer.
Accordingly, pursuant to s 6.23 of the MAI Act,the proposed settlement of Ms Warner’s claim for damages is approved.
0