O'Connor v IAG Ltd t/as NRMA Insurance
[2021] NSWPICMR 41
•9 July 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | O'Connor v IAG Ltd t/as NRMA Insurance [2021] NSWPICMR 41 |
| CLAIMANT: | Veronica Lee-Ann O'Connor |
| INSURER: | IAG Ltd t/as NRMA Insurance |
| MERIT REVIEWER: | Ray Plibersek |
| DATE OF DECISION: | 9 July 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- Merit Review; legal costs; legal costs for a medical dispute about whether proposed treatment of facet joint injections were reasonable and necessary; claimant’s solicitor argued that the medical review involved special skill and care based on his knowledge of specialised medical research and articles from his accredited specialist qualifications; solicitor’s approach in seeking a medical assessment based on arguments about medical literature shows a high degree of skill and knowledge from the solicitor and satisfies the requirement of exceptional circumstances; claimant sought order that insurer pay her costs on the basis that exceptional circumstances exist; section 8.10(4)(b) of the Motor Accidents Injuries Act 2017; insurer submitted exceptional circumstances did not exist; AAI Limited v Moon considered; Held- satisfied exceptional circumstances exist; specialised skill and knowledge of the solicitor; claimant entitled to recover $3,500 amount for legal costs. |
| DETERMINATIONS MADE: | 1. The Insurer is to pay the Claimant’s reasonable and necessary legal costs assessed at $3,500 plus GST totalling $3,850. 2. This determination takes effect on 9 July 2021. |
Background
There is a dispute between, the Claimant Veronica Lee-Ann O'Connor and the Insurer about whether for the purposes of section 8.10 of the Motor Accident Injuries Act 2017 (the 2017 Act) costs and expenses incurred by Ms O'Connor are reasonable and necessary.
The Claimant was injured in a motor vehicle accident on 17 October 2019. She was driving about 30 to 40 km/ph along Seymour Street, Bathurst when a Holden Rodeo utility collided with the passenger side of her vehicle, (A-9).
At the time of the accident Ms O’Conner was working as a personal carer. She had a right shoulder reconstruction performed in May 2018.
After the accident the Claimant continued to experience headaches, neck, and shoulder pain. She saw a number of doctors, had physiotherapy and an MRI on 11 December 2019, (A-9).
One of the Claimant’s treating doctors, Professor Hawke, recommended left C4-C5 facet joint injections. The Insurer declined to approve these injections and this refusal was upheld by the Insurer’s internal review, (R-6).
The Insurer’s decision to refuse approval for treatment was referred for a Medical Assessment to Medical Assessor Dr Peter Yu. By a certificate dated 27 October 2020 Dr Yu determined that the proposed treatment of left C4-C5 facet joint injections were reasonable and necessary and will improve the recovery of the injured person, (A-11).
The Claimant now seeks legal costs for the preparation and conduct of the medical treatment dispute referred to above.
Submissions
The solicitors for the Claimant seek the payment of the Claimant’s reasonable and necessary legal costs incurred by her under section 8.10 of the 2017 Act. See submissions dated 11 November 2020, (A -12 paragraph 1).
The legal costs sought by the Claimant are for a medical dispute about whether the proposed treatment of left C4-C5 facet joint injections were reasonable and necessary and will improve the recovery of the injured person, (A -12 paragraph 4).
The submissions note that the Medical Assessor found in favour of the Claimant in each issue in dispute.
The Claimant requested payment from the Insurer by email dated 27 October 2020, the Claimant's legal costs with respect to the Medical Assessment in the amount of
$1,660 plus GST totalling $1,826.
The Claimant seeks the maximum legal costs amount allowed by Schedule 1, Part 1, clause 2(1) of the Motor Accident Injuries Regulation 2017 (the Regulation) or, if exceptional circumstances are found, an amount of $3,500 plus GST.
The basis upon which the Claimant argues that exceptional circumstances exist are that the Insurer, in denying the recommended treatment, relied on medical journal articles and medical guidelines not specifically used in the NSW CTP Scheme and which would not usually arise for consideration in a dispute about whether recommended treatment was reasonable and necessary. It was necessary for the Claimant’s solicitor to read, understand and respond to that literature and obtain a detailed statement from the Claimant concerning the accident related injuries, her treatment and her ongoing symptoms.
The Claimant’s solicitor’s submits that in the event that costs in excess of the maximum prescribed by Schedule 1, Part 1, clause 2(1) are permitted the claimant seeks costs of $3,500 plus GST otherwise if exceptional circumstances are found not to exist, then the Claimant claims the prescribed maximum costs of $1,660 plus GST, (A -12 paragraph 15).
The Insurer submits that the 2017 Act and Regulations attempt to provide some certainty in relation to costs of the scheme and this incorporates certainty in respect of the payment of legal costs. This certainty is achieved by providing maximum costs in relation to certain disputes. That certainty provides a basis for the Insurer to then estimate their future liabilities and set a premium for the provision of CTP insurance. (See R-1 paragraph 9, dated 15 October 2020).
Consistent with the objects of the 2017 Act, the discretion to award such costs must be exercised in a manner consistent with the framework of the legislation and the legislative intent, lest the cost of the scheme becomes unpredictable. (See R-1 paragraph 10).
The Insurer submits that the current dispute did not involve complex legal or medical issues. A medical dispute with consideration of relevant and current medical journal articles and the medical guidelines are matters which a practitioner in this area should be acquainted with and would not of itself give rise to an exceptional circumstance within the context of section 8.10 (4) of the 2017 Act. This is a common type of dispute that would ordinarily find its way to the Dispute Resolution Service (DRS) for resolution. (See R-1 paragraph 10).
The Insurer submits that exceptional circumstances do not exist that would justify payment of the legal costs sought in this case above the regulated amount. Accordingly, under section 8.10(4)(b) of the 2017 Act, the Claimant’s payment of legal costs in respect of the medical assessment should be limited to 16 monetary units, which currently equates to a monetary sum of $1,660 plus GST totalling $1,826. (See R-1 paragraph 23).
Relevant Statutory Provisions
Both parties in this dispute are 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 2017 Act include, at s 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 2017 Act or the Regulations, a construction that would promote the objects of the 2017 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 2017 Act or the Regulations, the person exercising the discretion must do so in the way that would best promote the objects of the 2017 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 2017 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, section 8.2.
Section 8.3 of the 2017 Act provides for the fixing of maximum costs recoverable by Australian legal practitioners. Sub-section 8.10(1) provides that a claimant for statutory benefits is (subject to that section) entitled to recover from the insurer ‘reasonable and necessary’ costs in connection with the claim. This is qualified by subsections (3) and (4) which provide that the recovery of costs is allowed if payment is permitted by the Regulations or the Commission, if satisfied that the claimant is under a legal disability or exceptional circumstances exist.
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.
Sub-section 7.1(1) defines medical assessment matter to mean a matter declared by Schedule 2 to be a medical assessment matter for the purposes of this Part.
Schedule 2, clause 2(b) of the 2017 Act declares a dispute about whether any treatment and care provided to the injured person is reasonable and necessary in the circumstances is declared to be a “medical assessment matter”.
Under Clause 3(1) of Schedule 1 of the Regulation, the maximum costs for legal services provided to a claimant or an insurer in connection with an assessment under Division 7.6 of the 2017 Act involving a dispute about a regulated miscellaneous claims assessment matter are 16 monetary units (to a maximum of 60 monetary units per claim).
Reasonable and necessary costs
In this matter both the Claimant and Insurer in their written submissions agree that the Claimant is entitled to the payment of legal costs of 16 monetary units, which currently equates to a monetary sum of $1,660 plus GST totalling $1,826. The area of dispute is that the Claimant submits that exceptional circumstances exist and an amount of
$3,500 plus GST should be awarded. The Insurer disagrees and submits that there are no exceptional circumstances which justify the higher payment.
Do exceptional circumstances exist?
In AAI Ltd t/a GIO v Moon [2020] NSWCC 714 (Moon) His Honour Wright J considered in some detail legal costs, the operation of section 8.10 and the meaning of “exceptional circumstances”.
Wright J stated at paragraph 103 that:
“… in summary, the legal costs that a claimant for statutory benefits is entitled to recover and be paid under s 8.10, are the “reasonable and necessary” legal costs “incurred by the claimant” in connection with the claim:
(1) where those legal costs do not exceed the relevant maximum legal costs fixed by the regulations made under s 8.10(2) and thus the payment of those legal costs is “permitted by the regulations”; and
(2) where those legal costs exceed the relevant maximum legal costs fixed by the regulations but the DRS:
(a)is satisfied that the claimant is under a legal disability or that exceptional circumstances exist; and
(b)has permitted the payment of those legal costs, in accordance with s 8.10(4).”
30. The Court held that sub-section 8.10(3) should be construed as conferring on the DRS (Commission) a discretion to permit the recovery and payment of legal costs in excess of the maximum costs fixed by the Regulations, where the requirements of sub- section 8.10(4) are met. The Court referred to a category of cases considered exceptional, because they involve an unusual degree of factual or legal complexity or for some other reason, and this requires the incurring of more substantial legal costs by a claimant. These cases fall within sub-section 8.10(4). It would be consistent with the objects and other provisions of the 2017 Act, including for example sub-section 7.46, and the express terms of sub-sections 8.10(3) and (4), to permit the amount of legal costs recoverable under sub-section 8.10 in such exceptional cases to exceed the maximum fixed by regulation, where that was reasonably required to prevent injustice, hardship or some other relevant adverse consequence.
The phrase ‘exceptional circumstances’ in sub- section 8.10 (4) (b) is not defined in the 2017 Act. The existence of ‘exceptional circumstances’ was accepted by the parties in Moon’s case and was not in contention and not discussed at any detail in the judgment, [see paragraph 16].
Some assistance for the meaning of the phrase ‘exceptional circumstances’ can be derived by reference to the principles discussed in San v Rumble (No. 2) [2007] NSWCA 259. That case examined the meaning of the phrase “exceptional case and for the avoidance of substantial injustice” as it appears in s 153 of the Motor Accidents Compensation Act 1999 (NSW). Campbell JA reviewed numerous cases on the meaning of ‘exceptional circumstances’. His Honour referred to Ho v Professional Services Review Committee No 295 [2007] FCA 388 where Rares J (at [26]) said that exceptional circumstances "... can include a single exceptional matter, a combination of exceptional factors, or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional."
Campbell JA then concluded his review of the cases and stated that [at paragraph 67]:
“In deciding whether it is an “exceptional case” within the meaning of section 153(1), the court needs to find that the circumstances of the instant case are unusual or out of the ordinary, whether that unusualness or being out of the ordinary arises from qualitative or quantitative factors. But, to adapt Kelly, the case need not be one that is unique, unprecedented, or very rare. The conclusion that the case is exceptional can arise in any of the ways identified by Rares J in Ho. Beyond that, it seems to me it is not possible to provide general guidance. it will be necessary to approach each application by careful
consideration of the facts of the individual case.”
Applying the concepts and discussions above about the meaning of “exceptional circumstances”, I find that exceptional circumstances exist in this case.
In one sense all cases involve exceptional circumstances because the facts in each case are unique to that case.
In this matter the Claimant’s solicitor argued that it involved special skill and care by the solicitor because it required the solicitor to make arguments based on his knowledge of specialised medical research and articles he was aware of due to his accredited specialist qualifications. In the submissions for the Claimant, the Claimant argues that exceptional circumstances exist. These exceptional circumstances are that the insurer, in denying the recommended treatment, relied on medical journal articles and medical guidelines not specifically used in the NSW CTP Scheme. This issue would not usually arise for consideration in a dispute about whether recommended treatment was reasonable and necessary. It was necessary for the Claimant’s solicitor to read, understand and respond to that literature and obtain a detailed statement from the Claimant concerning the accident related injuries, her treatment and her ongoing symptoms.
In my view the solicitor’s approach in seeking a medical assessment based on arguments about medical literature shows a high degree of skill and knowledge from the solicitor and satisfies the requirement of exceptional circumstances.
In Moon’s case, the Court referred to a category of cases considered exceptional, because they involve an unusual degree of factual or legal complexity or for some other reason which required the incurring of more substantial legal costs by a claimant. Moon’s case stated it would be consistent with the objects and other provisions of the 2017 Act, including the express terms of sub-sections 8.10(3) and (4), to permit the amount of legal costs recoverable under sub-section 8.10 in such exceptional cases to exceed the maximum fixed by regulation where that was reasonably required to prevent injustice, hardship or some other relevant adverse consequence.
In the present Claimant’s case, the solicitor incurred greater legal costs because of the complexity of the medical evidence and the need for a medical assessment to prevent injustice and hardship to the Claimant who was suffering debilitating neck and back pain.
I find that exceptional circumstances exist in this case and I determine the award of
$3,500 plus GST for legal costs.
Conclusion
Under sub-section 8.10 (4) I am satisfied that that exceptional circumstances exist that justify payment of legal costs incurred by the Claimant.
The amount of the Claimant’s reasonable and necessary costs assessed in accordance with the 2017 Act and the Regulations is $3,850 inclusive of GST.
Ray Plibersek
General Member and Merit Reviewer
Personal Injury Commission
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