IMPORTANT DECISION UPHOLDING THE INTEGRITY OF THE LIFETIME CARE AND SUPPORT SCHEME
September 22, 2016
Nominal Defendant v Adilzada  NSWCA 266
Decision of the NSW Court of Appeal on 22 September 2016 ( Meagher JA, McColl and Gleeson JAA agreeing).
The Lifetime Care Scheme – Background
The Lifetime Care and Support Scheme (‘the Scheme’) was established in 2006 to provide for the treatment and care needs of people seriously injured in motor vehicle accidents, on a ‘no fault’ basis. People who can establish their injuries were caused by the fault of the owner or driver of a motor vehicle can, in addition, claim damages from the negligent party’s CTP insurer for things not provided by the Scheme, namely non-economic loss, loss of earning and earning capacity, and (in some cases) the cost of professional fund management of the damages (where the injured person lacks capacity to do so themselves). Scheme participants do not have a right to claim damages from the CTP insurer for the services provided by the Scheme.
Before the Scheme came into effect, catastrophically injured claimants who could prove fault recovered damages for their future treatment and care needs as well; those damages could amount to many millions of dollars.
The Scheme is funded by a levy on CTP green slips. CTP insurers therefore no longer collect premiums to meet treatment and care needs of the catastrophically injured. Because they do not collect premiums, they do not have claim reserves to meet claims for those items.
As a result, a vital element of the Scheme design was that injured claimants could not choose whether to be part of the Scheme or not. If their injuries qualified them for the Scheme, then their needs would be met by the Scheme as incurred.
Catastrophically injured claimants who can prove fault in their claims might understandably prefer to receive a lump sum so they can have control over their lives and not have to deal with a bureaucracy over their treatment and care needs for the rest of their lives. However, that is no longer an option since the introduction of the Scheme.
If a catastrophically injured claimant does not apply to be a participant in the Scheme, the enabling legislation (the Motor Accidents (Lifetime Care and Support) Act 2006 (NSW)) confers an entitlement on the insurer to make an application without the consent of the injured claimant. If it were otherwise, CTP insurers would be responsible for meeting multimillion dollar claims for which they had not been allowed to collect premiums.
Participants are all admitted to the Scheme on an interim basis for two years, after which they need to be assessed again to make sure they still have the sort of serious functional limitations and high level needs for assistance that qualifies them for the Scheme. The two year period reflects the conventional medical wisdom that there is scope for recovery from (in particular) brain injuries for about two years, after which persisting functional deficits are likely to be permanent.
Applications for interim and lifetime Scheme participation must be supported by medical evidence, and often this comes as a result of medical examinations that the CTP insurer on risk for the claim arranges.
The Case – Background
On 18 October 2007, Mr Adilzada (‘the claimant’) was injured in a motor vehicle accident, sustaining a severe brain injury.
On the insurer’s application, Mr Adilzada became an interim participant in the Scheme in 2012, but did not accept any services offered to him by it for the whole of his two year interim participation period.
He also did not want to remain in the Scheme after his period of interim participation expired. Nor did he want to attend a medical assessment organised by the insurer to determine if he was still eligible for the Scheme when his period of interim participation expired.
Mr Adilzada commenced District Court proceedings for damages (including substantial damages for treatment and care services), and in those proceedings, at the request of the insurer, the Court ordered that he attend a medical assessment the defendant had arranged for him pursuant to the power contained in Uniform Civil Procedure Rules (‘UCPR’) 23.4.
The claimant claimed he did not know that assessment was for the purpose of a doctor providing an opinion for the insurer to use in an application for Scheme participation. He attended the assessment, but then objected to the insurer’s right to use the report to support an application for him to become a lifetime participant in the Scheme.
The matter came back before the District Court, and Judge Elkaim was asked to consider whether an insurer could invoke s86 for medical examinations for the purpose of assessing a claimant’s eligibility for the Scheme.
Section 86 of the Motor Accidents Compensation Act 1999 (NSW) (‘the MAC Act’) relevantly provides:
86 Medical and other examination of claimant
(1) A claimant must comply with any request by the person against whom the claim is made or the person’s insurer:
(a) to undergo a medical examination by one or more medical practitioners nominated by that person or insurer, or
(b) to undergo a rehabilitation assessment, an assessment to determine functional and vocational capacity or an assessment to determine attendant care needs, by an assessor nominated by that person or insurer, or
(c) to undergo an assessment in accordance with Motor Accidents Medical Guidelines,
not being, in any such case, an examination or assessment that is unreasonable, unnecessarily repetitious or dangerous.
(3) A claimant must comply with any request by a medical assessor or the Authority to undergo a medical examination or an assessment by the medical assessor for the purposes of a medical assessment under Part 3.4.
(4) If the claimant fails without reasonable excuse to comply with such a request:
(a) the claim cannot be referred to the Authority for assessment under Part 4.4 and any such assessment cannot be continued while the failure continues, and
(b) court proceedings cannot be commenced or continued in respect of the claim while the failure continues.
The insurer (Allianz, as agent for the Nominal Defendant) contended that a request to attend a medical assessment – the purpose of which was to determine whether a claimant was eligible to be a participant in the Scheme – was a request to which
s86(1) and (4) applied. The sanction in s86(4) had to be an integral part of the Scheme to maintain its integrity, otherwise there was no mechanism by which a reluctant claimant could be persuaded to present for medical assessment of their eligibility for the Scheme.
The claimant argued the section did not apply to such requests, and the trial judge agreed that it could not be used for the purpose of compelling a claimant to attend such a medical assessment to assess eligibility for the Scheme.
The decision was an interlocutory one, so the insurer required leave to appeal. Allianz sought and was granted that leave, since the issue is of critical importance to the industry.
The Court of Appeal (Meagher JA, McColl and Gleeson JJA agreeing) unanimously allowed the appeal, finding that s86 applies to medical assessments arranged for the purpose of determining that person’s eligibility for participation in the Scheme. If the claimant fails without reasonable excuse to comply with such a request, s86(4) applies so that court proceedings cannot be commenced or, if commenced, cannot be continued in respect of the claim where the failure continues.
In doing so, the Court of Appeal must have appreciated that in order to uphold the objects of the MAC Act, and the integrity of the CTP scheme as a whole, it was necessary to provide some mechanism to prevent an uncooperative claimant from profiting from that lack of cooperation by gaining access to damages for treatment and care needs to which, as a Scheme participant, they would not be entitled.
The Court did not agree that there was a power in s86 to permit the Court to compel a claimant to attend a medical examination organised by the insurer, as the insurer had sought by its motion invoking UCPR 23.4 relief. Meagher JA reasoned that s86(4) provides that the stay of proceedings for assessment of the damages while the failure to attend the examination continues was sanction enough (in order to make the system workable and sustainable).
This decision is a very welcome one, since there has been an increasing incidence of claimants refusing to cooperate with assessments aimed at determining whether they are eligible to enter, or remain in, the Scheme, while at the same time claiming substantial damages from the CTP insurers on risk for the sorts of things the Scheme would otherwise provide for the claimant.
The finding that UCPR 23.4 has no application to claims where there is a failure to submit to medical examinations for Scheme eligibility is not of particular concern, because while ever the claimant refuses to attend the examination, assessment of his or her claim for damages is stayed. The claimant has a choice to submit to examination, or be prevented from recovering any damages for their injuries at all.
This decision makes very plain that claimants will not be permitted to have their damages claims assessed, either in the Claims Assessment Resolution Service, or in Court, if they have unreasonably failed to submit to a medical assessment, including an assessment relating to their eligibility to be a participant in the Lifetime Care and Support Scheme.
Authored by Judith Waldock, Partner and James Oldknow, Lawyer, Sydney.
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