Dealing with Quality of Life Benefits Applications: Further Judicial Guidance

The ACT Supreme Court has handed down a new decision on the steps involved in Quality of Life (QOL) benefits applications under the Motor Accident Injuries Act 2019 (ACT) (the MAI Act). The decision will impact how insurers finalise QOL applications and has changed the landscape of how applications ought to be managed to comply with an insurer’s obligations under the MAI Act.

The claimant was involved in two motor accidents. NRMA was the insurer for both accidents and accepted liability for statutory benefits. A QOL application was submitted for both accidents and NRMA referred the claimant for WPI assessments of physical injuries sustained in the motor accident.

The chronology of the QOL application was that:

• An independent medical examiner (IME) provided a first WPI report that assessed WPI at 5%, attributable to the first accident;
• NRMA issued a QOL offer reflecting 5% WPI for the first accident and 0% for the second accident;
• The claimant rejected the QOL offer and obtained a second WPI report from a private medical examiner (PME). That report assessed WPI at 7% but found that, if spinal surgery was required, the PME’s assessment of WPI would increase to 25%;
• The IME reviewed his first WPI report and affirmed the assessment of 5% WPI;
• NRMA issued a final WPI offer of 5% for the first accident and no monetary award for the second accident, which was rejected by the claimant;
• The claimant underwent spinal surgery and the claimant provided notice of intention to bring a common law claim under the Civil Law (Wrongs) Act 2002 (ACT);
• The claimant served NRMA with two further QOL applications in relation to each accident. Those applications were not accepted by NRMA on the basis that the QOL process had been finalised;
• NRMA paid the claimant the QOL benefit offered in relation to the first accident that was not previously accepted.

The issues for determination were:

1. Did the Supreme Court have jurisdiction to hear the dispute?
2. Were the initial QOL applications ‘finally dealt with’?
3. Could a second QOL application be brought?
4. Can a motor accident claim be brought without a final WPI offer?

The Supreme Court holds an inherent jurisdiction to make an orders in the nature of mandamus. The claimant asked the Court to exercise that power. Muller J agreed that the Court could exercise that power and that it was appropriate to do so.

Principally, that was because insurers under the MAI Act were bodies engaged in the exercise of a delegated statutory authority that determined the rights of injured persons pursuant to statutory powers. In that respect, when making decisions under the MAI Act, insurers were effectively acting as delegates of the regulatory body administering the MAI Act. That being so, it followed that the power of mandamus could be invoked.

The substantive dispute required the QOL applications for each accident to be considered separately.

As to the first accident, the claimant argued that the final WPI offer was never accepted, such that the QOL application could not be finalised. The claimant also said that the insurer did not provide reasons for why the insurer decided that the final WPI offer was 5%.

The insurer disagreed and said that the claimant only had a binary choice: to accept the offer, or seek external review at the ACT Civil & Administrative Tribunal (ACAT). As neither occurred and the final WPI offer was not challenged, the insurer was obliged to finalise the QOL application by paying to the claimant the amount previously offered.

The adequacy of the IME report impacted the dispute on the second accident. The claimant said that the IME did not provide any proper reasoning for the insurer to assess WPI at 0% for the second accident. The argument was the absence of a specific WPI assessment did not equate to a WPI of 0%. Even if the final WPI offer was valid, the claimant said it was rejected.

In contrast, the insurer argued that the IME report adequately addressed both accidents, and in any event, the claimant’s second WPI report only addressed the first accident. Without a second WPI report being provided, the claimant was deemed to have accepted the IME’s assessment of 0% for the second accident, such that the second accident’s QOL application was also properly finalised.

Muller J found that the QOL application for the first accident was finalised, whereas the second accident was not.

In coming to that conclusion, Muller J made these important findings on the statutory interpretation of the MAI Act:

1. Claimants do not need to provide a second WPI report in response to a first WPI report. Instead, when a first WPI report and QOL Benefits offer assess WPI at less than 10%, all that is required is for a claimant to advise the insurer that they disagree with the IME’s first WPI report. A claimant has two options at this stage: to accept or to disagree with the first WPI reports and QOL Benefits offer. If a claimant disagrees and does not provide a second WPI report within 26-weeks, that will not finalise their QOL application.
2. However, the process differs after a second WPI report is provided and when an insurer has issued a final WPI offer of less than 10%. There, claimants can accept an insurer’s offer or to lodge external review with the ACAT. A claimant cannot disagree with a final WPI offer like they can a QOL Benefits offer.
3. So long as a QOL application is not already finalised in relation to a motor accident, there is no statutory bar on claimants bringing a second QOL application. His Honour set out the scenarios for when a QOL application would be finalised. If an application is not finalised and fresh injuries emerge for assessment, nothing in the MAI Act prevents a claimant from withdrawing or relodging an application.
4. In circumstances where stabilisation of a claimant’s injuries are raised by the WPI reports, including where there are indications of a need for surgery, there is an obligation on an IME and an insurer both to recommend a delay of any WPI assessment.

In Millmore, the QOL process for the first accident had finalised as the claimant had disagreed with a final WPI offer when that option was not available to him. As the final WPI offer was not accepted and external review was not sought at the ACAT, the claimant was deemed to have accepted the insurer’s offer and the QOL application was finalised.

However, as a final WPI offer was not properly made for the second accident, the second QOL application was not finalised. That being so, Muller J directed that the insurer make a final WPI offer in relation to the second accident according to law.

His Honour also found that the absence of a final WPI offer of 10% or more did not preclude the claimant from lodging a motor accident claim for damages under s239. The effect of that provision was to limit the award of damages available to claimants without a WPI of 10% or more, but it did not restrict a person’s right to institute proceedings to sue a tortfeasor. However, if a claimant proceeded with a claim doomed to fail, the insurer had the option to strike out the proceedings.

Millmore v McInerery has provided helpful guidance for insurers in managing QOL applications.

Insurers can draw on the decision as authority that:

1. A condition will be ‘stabilised’ when it is unlikely to substantially deteriorate or improve. Importantly, in circumstances where uncertainty as to stabilisation of a claimant’s injuries arises from the WPI reports, both the IME and an insurer are obliged to recommend a delay in WPI assessments occurring.
2. In response to a first WPI report, claimants do not need to obtain second WPI reports. A claimant only needs to notify an insurer that they disagree with the first WPI report. Where that occurs, a QOL application will not be finally dealt with after 26-weeks and a claimant may reactivate a QOL application at a later date.
3. However, that position changes on receipt of a final WPI offer. In that case, there is no option to simply disagree. Claimants must either accept the insurer’s offer or seek external review at the ACT Civil & Administrative Tribunal.
4. If an insurer does not comply with its statutory obligation to issue a final WPI offer, claimants may apply to the Court to compel compliance. A QOL application will not be finally dealt with in those circumstances. Alternatively, if an insurer does comply, the proper recourse for challenging a final WPI offer remains with the ACT Civil & Administrative Tribunal.
5. A claimant is not limited to lodging only one QOL application. Where fresh evidence emerges after a QOL application is lodged, there is no bar to a claimant making a new QOL application prior to the date 4.5 years after a motor accident.
6. A claimant is not prevented from filing proceedings without a final WPI offer greater than 10%. The only restriction imposed by section 239 is on the award of damages a claimant might receive. That provision did not limit a claimant’s right to prosecute a negligence claim. Where proceedings are improperly commenced, they are liable to be struck-out.

The judgment is a helpful source authoritive guidance for licensed and interstate insurers in managing QOL applications under the MAI Act. Insurers should bear in mind the decision when considering the appropriate steps to take in accepting, progressing, and finalising QOL applications.

This article was co-authored with contributions from Izaac Molenkamp, Associate.