Phung v AAI Ltd t/as AAMI
[2022] NSWPICMR 12
•24 February 2022
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Phung v AAI Ltd t/as AAMI [2022] NSWPICMR 12 |
| CLAIMANT: | Truong Phung |
| INSURER: | AAI Ltd t/as AAMI |
| MERIT REVIEWER: | Ray Plibersek |
| DATE OF DECISION: | 24 February 2022 |
| CATCHWORDS: | MOTOR ACCIDENTS- Merit Review; legal costs for treatment and care dispute; claim for maximum regulated legal costs; sections 8.3 and 8.10 of the Motor Accident Injuries Act 2017; Held- claimant not awarded maximum regulated legal costs. |
| DETERMINATIONS MADE: | 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 treatment and care dispute. |
Issued under section 7.13(4) of the Motor Accident Injuries Act 2017
Background
There is a dispute between Truong Phung (the Claimant) and AAI Ltd t/as AAMI (the Insurer) about a merit review concerning legal costs for a treatment and care dispute for physiotherapy.
The Claimant was injured in a motor vehicle accident on 17 January 2019.
On 18 November 2019, the Claimant’s General Practitioner made a request for physiotherapy treatment for the Claimant.
On 22 November 2019 the Insurer denied the request for treatment.
On 13 December 2019 the Claimant requested an internal review of the Insurer’s decision to refuse the request for treatment.
On 19 March 2020 the internal review decision affirmed the original decision to refuse the request for treatment.
On 23 April 2020, an application was made to the Dispute Resolution Service seeking a review of the decision to refuse the physiotherapy request.
On 18 November 2020 Medical Assessor David Gorman issued a Certificate that the requested treatment did relate to the injury caused by the motor accident, but that it was not reasonable and necessary in the circumstances and will not improve the recovery of the injured person.
On 19 March 2021 the Claimant’s solicitors issued an invoice for their legal costs to the Insurer for $1,660.16 plus GST.
In response, by letter dated 13 April 2021, the Insurer denied payment of the full amount claimed and instead offered professional legal costs of $622.56 + GST (6 monetary units) for the treatment and care application.
The Claimant and his solicitors have now lodged a dispute seeking a determination that the Insurer pay the maximum fees allowed for the treatment and care application.
I note the background facts outlined above are taken from the submissions from the parties as no original documents were provided by the parties.
Submissions
In submissions dated 2 August 2021, (A 1), the Claimant’s solicitors contend that the Claimant is entitled to costs in accordance with Schedule 1, Part 1, Clause 2 of the MAI Act. They submit that legislation is clear that the maximum costs are 16 monetary units in connection with a medical assessment. They refer to Schedule 1, Part 1(2)(1) of the Regulations which uses the phrase “in connection with”. The solicitors argue that as long as the Claimant’s solicitors have performed work “in connection” to the dispute they are entitled to receive the maximum legal costs stipulated. I note the Claimant’s solicitors have not attached a copy of their invoice and have not provided any description of what work they did for the Claimant.
In submissions dated 24 August 2021, (R 1), the Insurer submits that:
(a) the amount offered previously from the AAMI Claims Team, (of $622.56 + GST) represents the time and effort put into the application by the Claimant’s solicitor;
(b) the Claimant’s solicitors failed to formulate any submissions with reference to the relevant medical evidence that would alter the previous Internal Review determination;
(c) the medical application put forth by the Claimant’s solicitors was unmeritorious and unsuccessful;
(d) there is little evidence that the Claimant’s solicitor has demonstrated any genuine legal expertise beyond that of advising the Personal Injury Commission (the Commission) that the dispute was in relation to ‘treatment and care’ dispute;
(e) the Claimant’s solicitor did not provide any medical evidence in support of their application;
(f) maximum costs may be awarded in circumstances where the legal representative has put significant and justified time and effort into the application;
(g) in this case there has been no identifiable effort exerted with respect to providing medical evidence and/or formulating arguments in support of the Claimant’s position, and
(h) costs should only be allowed for the time it took to complete the Commission Application form and brief submissions.
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 Regulations 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 Regulations 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)).
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(b) declares a dispute about whether any treatment and care provided to the injured person is reasonable and necessary in the circumstances or relates to the injury caused by the motor accident.
In this case the dispute satisfies the definition of “medical assessment matter” because it is about whether or not the Claimant’s treatment and care provided is reasonable and necessary in the circumstances. Accordingly, legal costs are available in this dispute.
Determination
In this matter the Claimant seeks the payment of legal costs of $1,660.16 plus GST. The Insurer has made a counteroffer of professional legal costs of $622.56 + GST (6 monetary units).
The Claimant’s solicitors 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…”
Based on the application of the relevant legislation above, the Claimant has an entitlement to the payment of his 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 found that there is an entitlement to legal costs in this case, the next question that arises is what 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 $1,660.16 (plus GST). The Claimant’s solicitors have not itemised the legal services provided or the time taken to perform those services. The only detail provided about what work was done by the Claimant’s solicitors is in the Claimant’s solicitors submissions (A 1) and the Insurer’s submissions (R 1). Apart from those descriptions, 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 for treatment and care. It is open to me to permit any amount of costs up to the maximum amount.
The Claimant’s legal representatives have not provided a copy of their tax invoice to the Commission for the legal costs claimed for the application for medical assessment. Nor have they provided an itemised schedule or made submissions stipulating how the costs claimed have been incurred.
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 obtaining instructions from the Claimant, reviewing the documents, as well as consideration and preparation of the medical assessment application and submissions. The Claimant claims the maximum regulated amount of legal costs. The Insurer strongly disputes the award of maximum legal costs and points in considerable detail to the shortness of the Claimants’ submissions, the lack of any new medical evidence and that the medical assessment was unsuccessful. I am persuaded by the Insurer’s arguments and find that the Claimant is not entitled to the maximum amount of legal costs. 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 for the treatment and care 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 treatment and care dispute.
Ray Plibersek
General Member and Merit Reviewer
Personal Injury Commission
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