AAI Limited v State Insurance Regulatory Authority of New South Wales [2016] NSWCA 368 (21 December 2016)

The third respondent alleged physical and psychological injuries as a result of a motor vehicle accident on 5 July 2009. A dispute arose in relation to the entitlement to non-economic loss pursuant to section 131 of the Motor Accidents Compensation Act 1999 (NSW) (MACA). A medical certificate was issued by MAS Assessor Sharon Reutens on 15 August 2012, assessing 14% whole person impairment for psychological injuries.

AAI sought a MAS Review pursuant to section 63 due to the Assessor’s failure to apportion impairment between compensable (under MACA) and non-compensable (under MACA rather than CLA for example) aspects of the injury.

By way of decision dated 22 November 2012, the MAS Proper Officer rejected the application for Review as he was not satisfied that there was reasonable cause to suspect that the medical assessment was incorrect in a material aspect as required by s 63(2) of the MACA.

AAI sought an order in the nature of certiorari on the basis of jurisdictional error or error of law on the face of the record, to set aside the decision of the Proper Officer.

Decision

At first instance, Button J identified the fundamental issue to be whether there was a material error in not attempting to ‘disentangle’ the degree to which the various components of an alleged single violent incident (some of which were admitted to be motor accidents as defined in the Act, and some of which were not) caused psychiatric injury.

His Honour did not accept that it was incumbent upon a medically qualified expert in performing functions pursuant to s 58(1)(d) of the MACA, to engage in a legal analysis of causation or whether an accident falls within the combined meanings of a ‘motor accident’ in ss 3 and 3A.

He therefore considered that AAI had not established an error of law by the MAS Assessor or Proper Officer.

AAI appealed.

The Court of Appeal held, granting leave to appeal and dismissing the appeal.

In focusing on the ‘medical assessment matter’ in s 58 of the MACA, the Court reflected on the construction of the Act, so to ensure consistency with the language and purpose of all provisions of the statute[1].

McColl JA held (with Macfarlane and Simpson JJA agreeing) that the question whether the plaintiff was injured in a “motor accident” is a liability issue not to be constrained by a determination relating to an entitlement to just one head of damage: [133].

The Court also identified that the powers of a medical assessor are limited and therefore the implications of their determinations:

Medical assessors are only appointed for the purposes of Pt 3.4. Their function is to resolve the medical disputes referred to in s 58 which may be referred to them by either party to the dispute, a court or a claims assessor. They do not play a role in determining issues arising under Ch 4 or Ch 5, save to the extent a certificate such an assessor issues is “conclusive evidence as to the matters certified in any court proceedings or in any assessment by a claims assessor in respect of the claim concerned”: [136]

AAI relied on Motor Accidents Authority of NSW v Mills[2] in submitting that it was for the medical assessor to determine whether the incident was a motor accident. McColl JA dismissed this submission, finding that at the time the accident in Mills occurred, s 61 was in a different form, requiring a medical assessor assess “the degree of permanent impairment”, without express reference to the elements of causation. McColl JA observed that it was only in those circumstances that Giles JA considered that without any regard as to causation from the motor accident, an assessment of the degree of permanent impairment would have no statutory basis or function.

Implications

This case quite rightly limits the legal effect of a MAS Certificate. The Court confirmed the decision in Pham, that the certificate was conclusive as to the medical causation of the relevant “injury” (i.e. could the injury have been caused by the motor accident), but not as to matters outside of the strict limits of s 61(2) – so not binding on legal causation (i.e. was the injury caused by the motor accident).

This all again draws attention to the relationship between impairment (and the 10% WPI ‘gateway’) and damages. That is to say, once a medical assessor has determined that an injured party exceeds the s 131 threshold, a judge or CARS assessor must award damages for non-economic loss (unless referred back for Further Assessment). This case finds that the only discretion left to a judge or CARS Assessor is to determine the quantum and apportionment of damages (not impairment). McColl JA agreed with the primary judge that “the practical result could be that damages for non-economic loss could be very small, if not negligible” at [95].

Unfortunately, this may lead to awards inconsistent with section 131 as it states that no damages may be awarded for non-economic loss unless the degree of permanent impairment of the injured person as a result of the injury caused by the motor accident is greater than 10%” (emphasis added).

The intention of the Act was surely not to award any damages, negligible or not, for non-economic loss, unless there is a WPI impairment that exceeds the threshold, after applying both medical and legal causation.

What McColl JA then suggests is that a matter should not be referred to a medical assessor where there is any doubt about the issue of whether the events which occurred fell within the statutory definition of a ‘motor accident’. “‘That’ liability issue should be determined before a medical assessor is asked to determine the s58(1)(d) issues, or, it might be observed, the s58(1)(b) issue. The medical assessor can then ‘take note of the court’s reasons’” (per McColl JA at 160).

This case reinforces the judgment of Leeming JA in Spratt v Perilya Broken Hill Ltd; Spratt v Rowe[3] that “the MACA leaves, for the exclusive and conclusive determination by medical assessors, questions of permanent impairment and causation”[4]. His Honour did not consider that Mills held that s 58(1)(d) left the issue of what constitutes, or what can be characterised as, a ‘motor accident’ for the medical assessor.

Practically, this would require a threefold assessment:

  1. A medical assessor would be required to find medical causation, i.e. that there is an injury and so it could be medically caused by the alleged ‘motor accident’, along with a WPI assessment;
  2. A judge or CARS assessor would be required to determine legal causation of the alleged injury – so was it caused by the ‘motor accident’;
  3. In the event the judge or CARS assessor determines anything other than full legal causation, the matter must be referred back to the medical assessor under s 62(1) for re-assessment of only those injuries (or the appropriate proportion of those injuries) found to be legally caused by the motor accident.

This of course, raises the question of whether a judge or CARS assessor can dictate a causation finding to a medical assessor (given the partial legal nature, per McColl JA). Historically, medical assessors have not been considered bound by causation findings of the court or a CARS Assessor and there is nothing in the Act that stipulates a matter can be referred back on a basis that limits or confines the manner by which a MAS Assessor is to approach the question under Section 58 (save for the Project Blue Sky interpretation and being bound by what the Court has now said in this matter). In psychological injuries, the web of causation then becomes more confusing considering the need to apply the Psychiatric Impairment Rating Scale.

These issues remain relatively untested; although there is an argument that as a quasi-adjudicator, medical assessors should be bound by the principles of res judicata and “Anshun” estoppel.