Luo v QBE Insurance (Australia) Limited
[2022] NSWPICMRP 9
•22 December 2022
| DETERMINATION OF MERIT REVIEW PANEL | |
| CITATION: | Luo v QBE Insurance (Australia) Limited [2022] NSWPICMRP 9 |
| ClaimanT: | Yan Luo |
| Insurer: | QBE (Insurance) Australia Limited |
| Merit Review Panel members: | Merit Reviewer Terence O’Riain Merit Reviewer Katherine Ruschen Merit Reviewer Elizabeth Medland |
| DATE OF DECISION: | 22 December 2022 |
| cATCHWORDS: | MOTOR ACCIDENTS - Merit Review; Motor Accidents Injuries Act 2017; dispute about the amount of weekly payments of statutory benefits that are payable under Division 3.3; Schedule 2(1)(a); pre-accident weekly earnings (PAWE); regulated costs; panel review; PAWE calculation; earnings as an earner; COVID-19; jobkeeper payments as business subsidy; jobkeeper payments in PAWE calculation; jobkeeper payments not earnings as an earner; Allianz Insurance Australia Limited v Shahmiri discussed and applied; costs; Held – Merit Reviewer decision affirmed. |
| Determinations made: | Certificate of Merit Review Panel Issued in accordance with s 7.15(4) of the Motor Accident Injuries Act 2017 1. In relation to the merit review decision by a single Merit Reviewer, the Merit Review Panel confirms the decision of the single Merit Reviewer. 2. The Panel directs the claimant’s costs are assessed in accordance with the Motor Accident Injuries Regulation 2017 at $1,980 inclusive of GST. |
BACKGROUND
The President of the Personal Injury Commission (the Commission) has referred this merit review decision to the Merit Review Panel for determination.
Amount of weekly payments (Review) under Schedule 2(1) (a) of the Motor Accidents Injuries Act 2017 (MAI Act).
All Panel members confirmed that they had no previous involvement with this matter, or with the above claimant.
REASONS
Introduction
There is a dispute between Yan Luo (the claimant) and QBE (Insurance) Australia Limited (the insurer) about statutory benefits, payable as weekly payments under Division 3.3 of the MAI Act.
The claimant was injured in a motor accident on 5 March 2021 and applied to the insurer for statutory benefits.
On 8 November 2021, the insurer advised the claimant that it had determined her pre-accident weekly earnings (PAWE) at $507.64.
On 24 November 2021, the claimant applied to the insurer for an internal review of the insurer’s decision.
On 9 December 2021, the insurer issued a Certificate of Determination with a revised PAWE of $523.80.
The claimant sought a merit review at the Commission about her PAWE. On 27 April 2022, Merit Reviewer Seeneevassen affirmed the insurer’s decision, although he varied the PAWE upward to $654.75.
The claimant then applied to the Commission for a Review Panel to reconsider the merit review.
On 7 July 2022, the President’s delegate decided there was reasonable cause to suspect an error in the Merit Reviewer’s decision. This is the reviewable decision.
The Commission's President constituted a Review Panel (the Panel) to review the Merit Reviewer's decision.
The claimant submits that the insurer should treat Jobkeeper payments as gross business income. The claimant submits that the insurer should treat the Jobkeeper payments as a subsidy for the claimant operating her business within the meaning of
cl 3(2)(c) of Schedule 1 of the MAI Act.
The claimant submits that Jobkeeper payments form part of a person’s gross income since it is taxable and assessable. The claimant submits that the PAWE calculation should include Jobkeeper payments at $12,328.48.
Merit Reviewer Seeneevassen decided in the Certificate the Jobkeeper payments were not gross earnings to include in the PAWE[1]. The MAI Act only allows for income from personal exertion in calculating PAWE.
[1]paragraph [25]
The Panel must decide whether the MAI Act allows a decision maker to include Jobkeeper payments in Ms Luo’s earnings as an earner to calculate PAWE under Schedule 1, cl 4(2)(b)[2].
[2] … (b) if subclause (3) applies--the weekly average of the gross earnings received by the earner as an earner during the period from when the change of circumstance referred to in that subclause occurred to immediately before the day of the motor accident.
Review conduct
The Merit Review Panel met on 12 August 2022 and issued these directions:
(a) by close of business on 19 August 2022, the claimant was to upload any submission confirming the issues to the portal, and
(b) by close of business on 26 August 2022, the insurer was to upload any reply submission.
The parties supplied those submissions, and the Panel addresses them below.
The Panel met again on 11 October 2022.
The Panel has reviewed all the documents that the parties have made available.
Ms Luo submits that the Panel should assess her PAWE as $1,372.19. Ms Luo has several sources of income. She says that her PAWE should include her gross earnings from Jobkeeper, Acare salary and wages, Usana commissions, aged care services supplied to Better Living, and housekeeping services. She does not include her earnings from rent, ride-sharing and the sale of masks and sanitisers.
Documentation
As part of the merit review, the Panel considered these documents:
(a) Merit Reviewer Seeneevassen Certificate dated 27 April 2022;
(b) claimant’s submissions marked A1 and AD7;
(c) Presidential delegate’s decision referring this matter to the Panel, and
(d) final insurer’s Reply submissions marked AD2.
Objects of the relevant Acts
Ms Luo’s applies for review of her PAWE under the MAI Act. The Panel will decide the merit review under the Personal Injury Commission Act 2020 (the 2020 Act), the Commission's rules, and any relevant provisions of the MAI Act.
The MAI Act objects are found at s 1.3(2), which addresses “the early resolution of motor accident claims and the quick, cost-effective and just resolution of disputes” and “to provide early and ongoing financial support for persons injured in motor accidents”.
Section 1.3(4) provides that when interpreting the provisions of the MAI Act, a decision maker should promote the objects of the MAI Act.
Section 1.3(5) provides that when exercising an MAI Act discretion, the decision maker must act in a way that promotes the objects of the MAI Act. Part 5 of 2020 Act enables the Commission to make rules on the Commission’s practice and procedure. This includes panel proceedings reviewing Merit Reviewers or Medical Assessors’ decisions.[3]
[3] Section 41(2) of the 2020 Act.
Rules 127 to 130 of the Personal Injury Commission Rules 2021 (PIC Rules) are made under Part 5 of the 2020 Act. A Review Panel decides how it conducts and decides the proceedings outcome. The Panel may decide the proceedings solely based on the written application.[4]
[4] Rule 128 of the PIC Rules.
Section 3 sets out the objects of the 2020 Act and include ensuring the Commission’s decisions are timely, fair, consistent and of a high quality. It also enables the Commission to decide matters justly, quickly, cost effectively and with as little formality as possible.
Section 4 of the 2020 Act echoes ss 1.3(4) and (5) of the MAI Act and requires exercising the powers and discretions in a way that promote the 2020 Act.
Section 42(1) of the 2020 Act and the Commission rules expresses the Commission’s ‘guiding principle’. The section requires the Commission to facilitate “the just, quick and cost-effective resolution of the real issues in the proceedings”.
Section 42(2) requires the Panel, to give effect to the guiding principle when exercising any power given to me under the 2020 Act or the rules.
The merit review on the amount of PAWE is a fresh decision.
Amount of weekly payments
In deciding a merit review, according to s 7.13(1) of the MAI Act, the Panel must decide what the “correct and preferable decision” should be, according to the material before the Panel.
The Panel must step into the shoes of the insurer and decide the merits of the dispute – s 7.13(2), based on the information supplied rather than on finding errors in the earlier decisions.
Following s 7.13(3), the Panel may decide to:
(a) affirm the reviewable decision, or
(b) vary the reviewable decision, or
(c) set aside the reviewable decision and make a decision in substitution for the reviewable decision, or
(d) set aside the reviewable decision and remit the matter for reconsideration by the insurer in accordance with any direction made by the Merit Reviewer.
The Panel is satisfied that sufficient information is available to the Commission to decide these proceedings. It may decide this merit review without holding a conference or formal hearing (see s 52(3) of the 2020 Act) and can proceed on the papers in accordance with Procedural Direction PIC2.
In accordance with s 43 of the 2020 Act the rules of evidence do not bind the Panel. The Panel may inform itself on any matter in the manner it thinks appropriate and as the proper consideration of this matter permits.
The reviewable decision
The insurer’s original decision is that the claimant cannot include Jobkeeper payments to calculate PAWE.
The Merit Reviewer affirmed the insurer’s finding. Ms Luo disagrees with the decision and says the decision maker should include the Jobkeeper payments.
What is an earner?
Schedule 1, cl 2 of the MAI Act states as follows:
“Meaning of ‘earner’
A person who is injured as a result of a motor accident is an
‘earner’ if the person is at least 15 years of age and who–(a) was employed or self-employed (whether or not full-time)–
(i) at any time during the 8 weeks immediately preceding the motor accident, or
(ii) during a period or periods equal to at least 13 weeks during the year immediately preceding the motor accident, or
(iii) during a period or periods equal to at least 26 weeks during the 2 years immediately preceding the motor accident,
and, at the date of the motor accident, had not retired permanently from all employment, or
(b) before the motor accident, had entered into an arrangement (whether or not an enforceable contract)--
(i) with an employer or other person to undertake employment, or
(ii) to commence business as a self-employed person,
at a particular time and place, or
(c) was, immediately before the motor accident, receiving a weekly payment or other payment in respect of loss of earnings under this Act or the Workers Compensation Act 1987.”
Schedule 1, cl 3 of the MAI Act states as follows:
“Meaning of ‘loss of earnings’
(1) ‘Loss of earnings’ means a loss incurred or likely to be incurred in a person's income from personal exertion.
(2) A person's ‘income from personal exertion’ is--
(a) the amount that is the income of the person consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered, and
(b) the proceeds of any business carried on by the person either alone or in partnership with any other person, and
(c) any amount received as bounty or subsidy in carrying on a business.
(3) A person's ‘income from personal exertion’ does not include--
(a) interest, unless the person's principal business consists of the lending of money, or unless the interest is received in respect of a debt due to the person for goods supplied or services rendered by the person in the course of the person's business, or
(b) rents or dividends, or
(c) any employer superannuation contributions, or
(d) the monetary amount of any annual, sick or other leave entitlement.”
Schedule 1, cl 4 of the MAI Act states as follows:
“Meaning of ‘pre-accident weekly earnings’—general
(1) ‘Pre-accident weekly earnings’, in relation to an earner who is injured as a result of a motor accident, means the weekly average of the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies.
(2) In the following cases, ‘pre-accident weekly earnings’, in relation to an earner who is injured as a result of a motor accident, means—
(a) if, on the day of the motor accident, the earner was earning continuously, but had not been earning continuously for at least 12 months—the weekly average of the gross earnings received by the earner as an earner during the period from when the earner started to earn continuously to immediately before the day of the motor accident,
(a1) if the earner was employed or self-employed during a period or periods equal to at least 26 weeks during the first year of the pre-accident period, but was not obtaining earnings from any source at any other time during the pre-accident period—the average weekly gross earnings received by the earner as an earner during the first year of the pre-accident period,
(b) if subclause (3) applies—the weekly average of the gross earnings received by the earner as an earner during the period from when the change of circumstance referred to in that subclause occurred to immediately before the day of the motor accident,
(c)if the earner is an earner by reason of having entered into an arrangement with an employer or other person to undertake employment or to commence business as a self-employed person—the average weekly gross earnings that the earner could reasonably have been expected to earn, but for the injury, in employment under that arrangement.
(2A) The ‘pre-accident period’, in relation to a motor accident, is the period of 2 years immediately preceding the motor accident.
(3) This subclause applies if, during the 12 months immediately before the day of the motor accident, there was, as a result of any action taken by the earner, a significant change in his or her earnings circumstances that resulted in the earner regularly earning, or becoming entitled to earn, more on a weekly basis than he or she was earning before the change occurred.
[Note: Examples of a change of circumstances to which this subclause would apply include a change of job, a promotion, a move from part-time to full-time employment, or a pay increase arising from the achievement of performance standards.](4) For the purposes of this clause, an earner earns continuously if he or she obtains earnings from permanent employment or from a source that, on the day of the motor accident, was likely to continue for a period of at least 6 months to provide earnings to the earner on the same, or a similar, basis to the basis on which the earnings were being provided as at that day.”
THE REVIEWABLE DECISION
The Merit Reviewer made his decision referring to the claimant’s submissions.
The insurer did not submit anything further, so the Merit Reviewer relied on the insurer’s Certificate of Determination of 9 December 2021. The insurer’s PAWE determination relied on earnings from Acare, Better Living, and the claimant’s housekeeping services.
The claimant’s PAWE is her average weekly earnings over the relevant period determined under Schedule 1, cl (4) of the MAI Act.
The relevant period
The claimant’s PAWE falls under Schedule 1, cl (4)(3) of the MAI Act because she started employment with Acare on 5 October 2020.
The Merit Reviewer found a significant change in Ms Luo’s earnings circumstances resulted in her regularly earning more weekly than she was earning before she took up the employment.
The Merit Reviewer determined the PAWE under Schedule 1, cl (2)(b). That is, it is the weekly average of her gross earnings from 5 October 2020 to 4 March 2021. This relevant period was 151 days or 21.57 weeks.
Gross earnings
Acare
According to the claimant’s payslips, she earned $4,585.45 from Acare for the 154 days from 5 October 2020 to 7 March 2021. The relevant period being 151 days. The Merit Reviewer allowed $4,496.12 ($4,585.35 ÷ 154 x 151) as the claimant’s Acare earnings for the applicable period.
Jobkeeper
The claimant referred to Shqau v AAMI [2022] NSWPICMR 6 (Shqau) when submitting that an insurer or merit review should include her Jobkeeper payments as earnings. In Shqau, the Merit Reviewer found the Jobkeeper scheme was a wage subsidy program the Prime Minister announced on 30 March 2020. It was to help keep Australians in jobs in the face of the economic impact of the coronavirus. He found that Jobkeeper payments were earnings because they are business subsidies, within the meaning of
cl 3(2)(c) of Schedule 1 of the MAI Act.
It is a matter of law that Merit Reviews and tribunal findings do not bind a tribunal. Other decision makers may take note of their colleagues’ decisions to help them make their own decisions.
Division 3.3 of the Act provides for the weekly payments of statutory benefits to injured persons as follows:
(a) an injured person needs to have incurred a loss of earnings to be eligible for weekly payments of statutory benefits;
(b) the MAI Act defines loss of earnings in Schedule 1, clause 3 of the MAI Act to include the loss of any amount received as bounty or subsidy in carrying on a business, and
(c) if a claimant has lost earnings, the insurer calculates the claimant’s statutory weekly benefits based on the PAWE, among other factors.
The MAI Act says a person’s gross earnings are the basis of calculating PAWE.
Jobkeeper is a business subsidy and cannot be included to decide the claimant’s statutory benefits entitlement. These payments are only relevant considerations for deciding PAWE if they are also gross earnings.
The MAI Act does not define gross earnings. According to the Macquarie dictionary:
“The ordinary meaning of ‘earning’ is money earned, wages, and profits.
To earn is to gain by labour or service.”
The Merit Reviewer found that Jobkeeper payments are not gross earnings to be included in the claimant’s PAWE because Centrelink is not paying them for work or service.
Usana commissions
The claimant claimed the insurer should have included $6,055 of Usana commissions in her 2020/2021 tax return as earnings. She was a self-employed online marketing salesperson for Usana at the time of the accident.
The insurer did not include any Usana earnings because of insufficient information.
The Merit Reviewer found that the claimant was deriving earnings from Usana during the relevant period. He found Ms Luo’s NAB statements showed credit payments of $1,952.08 for the 143 days from 16 October 2020 to 4 March 2021.
The Merit Reviewer allowed $2,061.28 ($1,952.08 ÷ 143 x 151) as the claimant’s earnings from Usana.
Better Living
The claimant submits that her NAB statements show that she earned $3,895 from Better Living for 13 October 2020 to 4 March 2021. The insurer says the claimant’s bank statements verify that the claimant’s Better Living earnings were $3,125.
The claimant’s bank statements show total Better Living credit payments of $3,895. They are for the 155 days from 16 October 2020 to 19 March 2021, not to 4 March as the claimant says.
The Merit Reviewer allowed $3,794.48 ($3,895 ÷ 155 x 151) as the claimant’s Better Living earnings.
Housekeeper
The claimant submits that her earnings from housekeeping were $9,140 for the period 15 October 2020 to 5 March 2021. The insurer found that Ms Luo’s bank statements verified her earnings from housekeeping were $3,604.18.
The Merit Reviewer used Ms Luo’s 2021 tax return to estimate the claimant’s housekeeping earnings. He did this because he could not discern which credit transactions in Ms Luo’s bank statement related to her housekeeping services.
The claimant’s 2021 tax return shows that she derived income from her housekeeping activities of $9,140 for that financial year. It was a leap year with 366 days. The Merit Reviewer allowed $3,770.87 ($9,140 ÷ 366 x 151) as her gross earnings from housekeeping for the relevant period.
Rental income
Neither party included the claimant’s rental income as earnings. Rents are passive income, where the recipient is not paid for work or personal services.
Ridesharing and mask/sanitiser sales
The claimant excluded these sources of earnings from her PAWE determination because they fell outside the relevant period.
The Merit Reviewer calculated the claimant’s PAWE as:
Acare $4,496.12 Better Living $3794.48 Usana Commission $2,061.28 Housekeeper $3,770.87 Gross Earnings $14,122.77 PAWE ($14,123/21.57) = $654.75
Claimant’s submissions to the panel
The claimant agrees with the Merit Reviewer’s calculations on all points, but the Jobkeeper payments. Ms Luo calculates her PAWE should be $717.44 greater than the Merit Reviewer’s PAWE estimate.
The claimant submits that the Panel should treat Jobkeeper payments as gross business income and should form part of a person’s gross income since it is taxable and assessable.
The claimant submits that the PAWE should acknowledge Jobkeeper payments totalling $12,328.48. She received those payments during the relevant period as a business subsidy, within cl 3(2)(c) of Schedule 1 of the MAI Act.
In support of this submission, Ms Luo still relies upon the decision of Shqau v AAMI [2022] NSWPICMR 6.
Insurer’s submissions
The insurer’s submissions largely duplicate the Merit Reviewer’s decision.
The insurer relies on the Supreme Court decision of Allianz Insurance Australia Limited v Shahmiri [2022] NSWSC 481 (Shahmiri). In Shahmiri, Harrison AsJ noted at paragraph 63:
“The qualification that only the gross earnings received by the earner as an earner are to be taken into account to determine a claimant’s pre-accident weekly earnings, is in my opinion intended to exclude earnings earned by the earner that do not fall within the ambit of cl 2(a) because they are not earnings from employment or self-employment. For example, passive forms of income such as payments received from a rented property, or income from shares.”
Harrison AsJ reviewed Shahmiri’s Merit Review Panel’s differing majority and minority opinions, noting at paragraph 65:
“Further, as is pointed out by the dissenting member at [25]-[28] of her reasons, ‘loss of earnings’ and ‘earnings’ are not the same. Loss of earnings only becomes relevant once a claimant has already been defined as an earner and has had their pre-accident weekly earnings calculated. She relevantly states at [26] of her reasons (CB, 211):
[26] Clearly, ‘earnings as an earner’ means earnings from employment or self- employment. The definition of ‘loss of earnings’ particularises the types of payments that are included in or excluded from actual post-accident loss of earnings for the purpose of calculating the extent to which weekly benefits become payable under sections 3.6 and 3.7 which is distinct from the calculation to be carried out under clause 4(1).”
The insurer also relies upon the decision of Conde v Insurance Australia Limited t/as NRMA Insurance [2022] NSWPICMR 28 (Conde), wherein Merit Reviewer Katherine Ruschen—who dissented in Shahmiri—decided COVID-19 disaster payments received during the relevant period are excluded from PAWE. Merit Reviewer Ruschen reasoned:
“Whilst Mr Shahmiri’s PAWE calculation fell under clause 4(1) and I have concluded the claimant’s falls under clause 4(2)(b), the language of clauses 4(1) and 4(2)(b) in so far as is relevant in the Shahmiri appeal is the same. The findings of Harrison AsJ turn on the wording in clause 4(1) that PAWE is to be calculated based on the ‘weekly average of the gross earnings received by the earner as an earner during’ the relevant period, which is the same wording in clause 4(2)(b).
It follows from the use of the language, ‘gross earnings received by the earner as an earner during …’ in both clause 4(1) and 4(2)(b) and the reasons in the Shahmiri appeal that the decision of Harrison AsJ also applies to clause 4(2)(b).
[T]he claimant achieves earner status for the purpose of the MAI Act by reason of being in receipt of earnings from employment or self-employment as per the definition of earner in Schedule 1, clause 2. Pursuant to clauses 4(3) and 4(2)(b) only earnings received by the claimant ‘as an earner’ can be included in calculation of PAWE.
The claimant did not receive Centrelink COVID-19 disaster payments “as an earner”. She did not perform any work for those payments. The claimant is not in a relationship of employee and employer with Centrelink and did not render services to Centrelink. Accordingly, the claimant did not receive the payments in the capacity of employee or for any services rendered.
Accordingly, COVID-19 disaster payments are not earnings received by the claimant as an earner and are therefore excluded from PAWE. This conclusion is consistent with the article ‘COVID-19 hub for injured workers and road users’ published by the State Insurance Regulatory Authority which states ‘COVID-19 Disaster Payments are not considered earnings for the purpose of [PAWE]’.”
Given Ms Luo did not receive the Jobkeeper payments for any services she rendered, they cannot be included in PAWE as earnings she received as an earner under the MAI Act.
The insurer disputes the amount of housekeeping income, which the Merit Reviewer include in the PAWE. It submits that business-related expenses were not included in the calculation of the claimant’s gross earnings as a self-employed housekeeper.
The insurer refers again to Conde, with Merit Reviewer Ruschen stating:
“[27] The onus is on the claimant to provide sufficient evidence of her pre-accident earnings. As a sole trader the claimant ought to be able to provide reliable records of total sales of the business and total business expenses…
As a self-employed earner the gross earnings the claimant receives as an individual earner for the purpose of the MAI Act are the net profit of her business (before tax), after accounting for all expenses incurred by the business.”
Panel deliberations and decision
The Panel concludes the claimant Ms Luo is an earner under Schedule 1, cl 2 of the MAI Act.
Ms Luo falls under cl 4(2)(b). Shahmiri confirms under cl 4(1), that a decision maker must calculate PAWE based on the “weekly average of the gross earnings received by the earner as an earner during” the relevant period. This reasoning also applies to
cl 4(2)(b) of the MAI Act.
Under the MAI Act, Ms Luo is an earner because she received earnings from employment or self-employment per the definition of an earner in Schedule 1, cl 2. So, under cls 4(3) and 4(2)(b), the claimant’s income received “as an earner” is all a decision maker can include in the PAWE calculation.
Centrelink did not pay the claimant COVID-19 disaster payments for her services. The Panel agrees with the Merit Reviewer that Ms Luo was not an earner in that context.
The MAI Act excludes COVID-19 disaster payments when calculating PAWE. This finding is consistent with the guiding article “COVID-19 hub for injured workers and road users”, published by the State Insurance Regulatory Authority. It confirms the policy expressed in the legislation that an insurer calculating PAWE cannot include COVID-19 Disaster Payments.
The Panel does not consider the insurer’s submissions on the housekeeping income carries any weight. The Merit Reviewer used a reasoned method to assess that income. The Panel agrees with the Merit Reviewer’s findings about the housekeeping income.
Costs
Costs for merit reviews under Schedule 2(1) (a) of the MAI Act are not permitted under the Motor Accident Injuries Regulation 2017 (the Regulation) as required in section 8.10 (3) of the MAI Act.
However, legal representation costs may be awarded under Schedule 1, Part 1, (1)(3)(a) of the Regulation if any application for panel review is referred.
Ms Luo’s representation have performed significant work including preparing submissions and obtaining instructions, plus translating Chinese to English. It is appropriate to approve the maximum sixteen units at $112.53 per unit .
The Panel directs the claimant’s costs are assessed in accordance with the Motor Accident Injuries Regulation 2017 at $1,980 inclusive of GST.
Legislation and guidelines
The Review Panel considered the following:
·Motor Accident Injuries Act 2017 (NSW)
·The Motor Accident Guidelines (the Guidelines)
·Motor Accident Injuries Regulation 2017
Certification
The Review Panel agrees with the Merit Reviewer’s treatment of the COVID–19 payments for calculating gross earnings and the method he used to estimate how much housekeeping income Ms Luo made.
The outcome is the same as the Merit Review certificate dated 27 April 2022.
The Panel will affirm the outcome of that certificate.
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