Perras v Insurance Australia Limited t/as NRMA Insurance

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
Citation:	Perras v Insurance Australia Limited t/as NRMA Insurance [2022] NSWPICMR 62
ClaimanT:	Sam Perras
Insurer:	Insurance Australia Limited t/as NRMA Insurance
Merit Reviewer:	Katherine Ruschen
DATE OF DECISION:	31 October 2022
CATCHWORDS:	MOTOR ACCIDENTS - Merit review; whether costs are reasonable and necessary; Schedule 2(1)(aa) of the Motor Accident Injuries Act 2017 (2017 Act); section 8.10 of the 2017 Act; costs of internal review; costs of medical assessment; Schedule 1(2) of the Motor Accident Injuries Regulation 2017 (Regulation); Regulation 10; Regulation 20; Regulation 22; Regulation 23; Held – the application is remitted to the insurer.
Determinations made:	1. the matter is remitted back to the insurer to consider the claimant’s claim for costs in connection with the medical assessment, upon conclusion of the medical assessment.

STATEMENT OF REASONS

introduction

There is a dispute between Sam Perras (the claimant) and the insurer about whether for the purposes of s 8.10 of the MAI Act costs and expenses incurred by the claimant are reasonable and necessary.
The claimant was involved in a motor accident on 13 March 2021.
The claimant made an application for personal injury benefits under the MAI Act.
On 17 March 2022, the insurer determined that treatment for a right shoulder arthroscopy is refused on the basis it is unrelated to the injuries arising from the motor accident and/or not reasonable and necessary.
On 23 March 2022, the claimant requested an internal review of the above decision.
On 20 April 2022, the insurer issued their internal review decision in which the original decision of 17 March 2022 was affirmed.
On 26 April 2022, the claimant lodged an application with the Personal Injury Commission (the Commission) for a review of the insurer’s internal review decision dated 20 April 2022 regarding treatment (the medical dispute) by way of a medical assessment under Division 7.5 of the MAI Act.
On 26 April 2022, the claimant also:
(a) sent a letter to the insurer for payment of regulated costs at the maximum sum allowed by the Regulation in respect of costs said to be incurred in connection with the medical assessment, and
(b) lodged an application with the Commission for a merit review in respect of the claim for costs.
In their letter to the insurer dated 26 April 2022 claiming costs the claimant’s solicitor states:
“The insurer has otherwise failed to amend its previous incorrect decision and the claimant accordingly requests the insurer to concede that regulated legal fees in the amount of $1,710 plus GST pursuant to Schedule 1, Part 1, Clause 2(1) of the MAIA are payable to the claimant in addition to disbursements”.
This statement suggests the claimant’s solicitor is under the misapprehension that the claimant automatically becomes entitled to payment of maximum legal costs the moment the claimant disputes an internal review decision about a medical dispute, even before costs are incurred in connection with a medical assessment and/or regardless of whether actual costs in connection with a medical assessment reach or exceed the maximum.
No evidence of the costs incurred as at 26 April 2022 in connection with the pending medical assessment has been provided by the claimant.
It is understood the application to resolve a medical dispute is pending before the Commission and has not yet been the subject of a medical assessment.

SUBMISSIONS

The claimant submits:
(a) the claimant’s legal representatives have investigated the claimant’s entitlement, sought and reviewed evidence, complied with the obligations of the Act, Regulation and Guidelines applicable to the NSW CTP Scheme for claims on or after
1 December 2017 and drafted submissions in an attempt to resolve this dispute, and
(b) the claimant is entitled to payment of regulated legal fees in the sum of $1,710 plus GST, which is the maximum payable under Schedule 1, Part 1, Cl 2(1) of the MAI Act.
The insurer submits that given the medical assessment has not yet taken place, the request for the payment of costs of the medical assessment is premature and that it will consider such costs following the outcome of the medical assessment.

REASONS

Pursuant to Schedule 2(1)(aa) whether for the purposes of s 8.10 (recovery of costs and expenses in relation to claims for statutory benefits) the costs and expenses incurred by the claimant are reasonable and necessary is a merit review matter.
The insurer has not conducted an internal review on the question of costs under s 8.10. However, pursuant to Regulation 10 an internal review is not required before making a merit review application under Schedule 2(1)(aa).
Relevantly, s 8.10 permits the recovery of costs and expenses in relation to claims for statutory benefits as follows:
“(1)    A claimant for statutory benefits is (subject to this section) entitled to recover from the insurer against whom the claim is made the reasonable and necessary legal costs, and other costs and expenses, incurred by the claimant in connection with the claim. Other costs and expenses include the cost of medical and other tests and reports.
(2)     The regulations may make provision for or with respect to fixing the maximum costs and expenses recoverable by a claimant under this section (including any matters for which no costs and expenses are recoverable from the insurer).
(3)     A claimant for statutory benefits is only entitled to recover from the insurer against whom the claim is made reasonable and necessary legal costs incurred by the claimant if payment of those costs is permitted by the regulations or the Commission.
(4)…”
Schedule 1 of the Regulation sets out the matters in which costs are permitted. Under Schedule 1(2) costs are permitted “in connection with a medical assessment” under Division 7.5 of the MAI Act.
Maximum costs under the Regulation are fixed under Regulation 22.
Pursuant to Regulation 23 “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 under Part 7 of the Act”.
The Regulation permits payment of costs in connection with a Division 7.5 medical assessment under Schedule 1(2) up to the maximum allowed by the Regulation. The maximum does not operate as a fixed sum that becomes payable upon lodgement of an application to resolve a medical dispute, as the claimant’s submissions seem to suggest. Rather, the maximum operates as a cap on the amount recoverable. If it were a fixed fee presumably the legislation would refer to it as one rather than refer to a maximum.
To recover the maximum, the claimant must have actually incurred reasonable and necessary costs in connection with the medical assessment in an amount that reaches or exceeds the maximum. Further, Schedule 1(2) provides that costs are payable “in connection with a medical assessment”. Accordingly, the medical assessment first needs to take place before there can be an assessment of whether the costs incurred are reasonable and necessary. Whether costs in connection with a medical assessment are “reasonable and necessary”, as required by s 8.10 of the MAI Act, cannot be known until the medical assessment is complete.
The medical assessment application was lodged on 26 April 2022, the same day as this merit review application. Accordingly, save for the costs of drafting the medical assessment application and its supporting submissions most, if not all, costs incurred on or before 26 April 2022 would not be costs in connection with the medical assessment. This is also borne out by the claimant’s description of the costs as being costs to “investigate [their] entitlement, seek and review evidence, comply with obligations of the [MAI Act, Regulation and Guidelines] and draft submissions in an attempt to resolve this dispute”. This description bears little relationship to the work one would expect to be done in connection with a medical assessment and suggests the claimant seeks to recover costs for work done prior to the medical assessment in connection with the claim for statutory benefits generally and/or the internal review.
Indeed, the need to prepare a medical assessment application (and in turn incur costs of same) does not arise until such time as the insurer issues their internal review decision. In this case, the internal review decision was issued on 20 April 2022. Accordingly, any costs incurred prior to 20 April 2022 cannot be costs incurred in connection with a medical assessment, as the need for a medical assessment had not arisen prior to 20 April 2022.
The application for a medical assessment was lodged just three business days after the internal review decision. It seems unlikely that in this three day period alone, the claimant incurred costs in connection with the medical assessment at or above the maximum.
It follows from the above that whilst the claimant may begin to incur costs in connection with the medical assessment upon preparing and lodging the application on
26 April 2022 an assessment of costs actually incurred, including whether they are reasonable and necessary costs in connection with the medical assessment and whether the amount reaches or exceeds the maximum cannot be undertaken until after completion of the medical assessment.
An assessment of costs in any matter where only reasonable and necessary costs are payable (as is the case here) is an exercise undertaken following completion of the relevant interlocutory or substantive dispute giving rise to the entitlement to costs. In other words, a costs assessment takes place after the event giving rise to the entitlement to costs and not at the beginning of or during the event. In this case, the event giving rise to an entitlement to costs is the medical assessment, which is not yet complete.
As the medical assessment has not concluded the claim for costs in connection with same is premature, as is this merit review. Accordingly, the matter is remitted back to the insurer. Once the medical assessment is complete the insurer should determine and pay the amount of reasonable and necessary costs incurred by the claimant in connection with the medical assessment, up to the maximum prescribed in the Regulation.
If a dispute arises following the medical assessment as to whether costs of the medical assessment are reasonable and necessary, it is open to the claimant to then make a merit review application at that time under Schedule 2(1)(aa) of the MAI Act.

CONCLUSION

The claimant has an entitlement to costs in connection with the medical assessment that are reasonable and necessary, up to the maximum prescribed by the Regulation. However, as the medical assessment has not yet concluded any determination as to the extent to which the claimant has incurred reasonable and necessary costs of the medical assessment (including whether the amount payable is at or below the maximum) is premature. Accordingly, the determination in this merit review is as follows:
(a) the matter is remitted back to the insurer to consider the claimant’s claim for costs in connection with the medical assessment, upon conclusion of the medical assessment.

LEGISLATION AND GUIDELINES

In making this decision, I have considered the following:
·        The application, reply and supporting documentation;
·        MAI Act, and
·        the Regulation.

[2022] NSWPICMR 62

31 October 2022