QBE Insurance (Australia) Ltd v Jovanovic [2015] NSWSC 241 | Case summary

Background

As indicated earlier, Ms Jovanovic claimed that she was injured in a motor vehicle accident that occurred on 23 January 2010. She claimed injuries, including injury to her lower back, as a result of the accident.
QBE disputed that Ms Jovanovic's lower back symptoms were caused by the motor vehicle accident. There was no doubt that Ms Jovanovic had chronic degenerative disease in her lumbar spine prior to the accident. QBE argued that her back symptoms were solely related to the degenerative condition suffered by her before the accident.
With respect to her pre-existing condition, Ms Jovanovic had consulted Dr Saeed Kohan, a neurosurgeon. Following the motor vehicle accident, she again consulted Dr Kohan on 1 February 2010. He ordered an MRI scan, which was undertaken on 3 February 2010.
In a report of 22 February 2010, Dr Kohan reported this of the MRI scan: "MRI scan shows L4/5 degenerative disc disease with lateral recess stenosis which is moderate on both sides and the compression of L5 nerve roots in the lateral recess is noted. Bone scan did not show any significant abnormality."
Throughout 2010, Dr Kohan treated Ms Jovanovic with an epidural injection into her lower back and recommended that she undertake physiotherapy. In December 2010 Dr Kohan recommended that the first defendant undergo surgery to her lower back, namely L4/5 fusion and discectomy.
QBE had Ms Jovanovic assessed by Professor Michael Ryan, an orthopaedic surgeon. He expressed the opinion that surgery was not an appropriate treatment option for Ms Jovanovic. QBE declined to fund the surgery.
In May 2011, QBE received a further request for funding with respect to a lumbar spinal fusion and discectomy. QBE again declined to fund the proposed treatment.
On 25 August 2011, Ms Jovanovic applied to the Medical Assessment Service ("the MAS") of the MAA for an assessment of the reasonableness of the treatment proposed by Dr Kohan about which she and QBE were in dispute ("the treatment dispute"). Ms Jovanovic also applied to the MAS for an assessment of whole person impairment. Such an assessment was necessary as a step towards the assessment of damages claimed. The parties could not agree whether Ms Jovanovic had reached the threshold of 10 per cent whole person impairment ("WPI"). I will refer to this dispute as "the impairment dispute".
On 7 February 2012, a certificate under Pt 3.4 of the MACA was issued by the Medical Assessor, Dr James Wong. The certificate was entitled as to: "whether the treatment provided or to be provided to the injured person relates to the injury caused by the motor accident".
The certificate declared that: "The following treatment: ● L4/5 decompression surgeon plus spinal fusion with internal fixation of the lumbar spine as recommended by Dr Saeed Kohan DOES NOT RELATE TO THE INJURIES caused by the motor accident." The certificate, which was accompanied by 16 pages of reasons, resolved the treatment dispute between QBE and Ms Jovanovic.
On 19 March 2012, an application by Ms Jovanovic for a review of the assessment of Dr Wong with respect to the proposed treatment was rejected by the Proper Officer of the MAA.
The impairment dispute was referred to a Medical Assessor, Dr Michael Long. On 14 July 2012, a certificate was issued by Dr Long in which it was determined that the soft tissue injury in the cervical spine, the soft tissue injury of the lumbar spine and the referred pain in the left leg from the back injury, in combination did not give rise to a permanent impairment which was greater than 10 per cent whole person impairment. That certificate was accompanied by 13 pages of reasons. It resolved the impairment dispute.
Dr Long's certificate was not the subject of any application for review.
On 30 July 2013, Ms Jovanovic underwent surgery at the hands of Dr Kohan. She underwent a discectomy and a fusion at L4/5. The surgery was not funded by QBE.
In December 2013, Ms Jovanovic lodged an MAS application for further assessment of both the treatment and impairment disputes. In that respect, she relied upon a report of Dr Kohan dated 18 November 2013.
The report of Dr Kohan of 18 November 2013 was succinct. It was addressed to Ms Jovanovic's solicitors. It said: "This is in response to your specific question regarding Ms Jovanovic in relation to any gross pathological findings at the time of surgery for L5/L5 anterior fusion for her disc injury. In that regard I should explain that the best evidence is based on her history and radiological findings, which suggest the injury to the disc at L4/L5 at the time of her injury. During the surgery there is no specific findings that could suggest injury versus chronic degenerative changes, in particular in her case, given that her surgery was performed some years after the initial injury."
That report was accompanied by some notes from the South Eastern Sydney Local Health District with respect to her admission to St George Hospital. Those notes do not provide any relevant additional information. They confirm that the operation took place.
In February 2014, the third defendant, Ms Probert, who was the Proper Officer of the MAA (the second defendant), dealt with Ms Jovanovic's application for further assessment of both the treatment and the impairment disputes.
On 27 March 2014, after having received further submissions, Ms Probert rejected the application for further assessment of both disputes.
The decision of a Proper Officer with respect to an application for further assessment is governed by s 62 of the MACA. Where a party seeks a further assessment, the grounds upon which the Proper Officer may order the reassessment are limited to whether there has been a deterioration of the injury, or whether there is any additional relevant information about the injury. The section provides that: "(1A). A matter may not be referred again for assessment by a party to the medical dispute on the grounds of deterioration of the injury or additional relevant information about the injury unless the deterioration or additional information is such as to be capable of having a material effect on the outcome of the previous assessment."
Thus, where a party seeks a re-assessment, the Proper Officer needs to be satisfied that "additional material" has been provided, and also that such "additional material" is capable of having a material effect on the outcome of the previous assessment.
In her decision of 27 March 2014, the third defendant determined the following: "Although I am satisfied that the claimant suffered a soft-tissue lumbar spine injury as assessed by Medical Assessor Long, I am not satisfied that the applicant has demonstrated that the surgery undertaken by the claimant is now causally related or that the additional information provided by the applicant is such as to be capable of having a material effect on the outcome of the previous assessments as required by s 62(1A) of the Motor Accidents Compensation Act 1999."
Based upon this reasoning, the third defendant determined that neither of the disputes, that is, the treatment dispute or the impairment dispute, would be referred for further assessment. On its face, this rejection of the reassessment application was rational and appropriately based on the material provided.
Regrettably, in the reasons of the third defendant, there were two obvious errors. The first, seemingly a typographical one, was where the third defendant incorrectly recorded that the certificate of Dr Long, who undertook the impairment assessment, was dated 14 July 2014, rather than the correct date of 14 July 2012.
The second obvious error was that the third defendant recorded that the post‑operative report of Dr Kohan dated 18 November 2013, was before both of the assessors, Dr Long and Dr Wong in 2012. Self-evidently it could not have been. It was a post-operative report. The assessments of the treatment dispute and the impairment dispute were both carried out prior to the surgery undertaken by Dr Kohan. The certificates setting out the determinations of these two assessors were also issued before the surgery was undertaken, and the report of Dr Kohan was written.
On 6 May 2014, QBE drew the attention of the third defendant to these two errors and properly invited her to reconsider her decision.
On 14 May 2014, the third defendant wrote to the parties acknowledging her error. She said: "There has clearly been an error on my part as Proper Officer. The [judgment in] Minister for Immigration and Multicultural Affairs v Bhardwha (2002) CLR 597 is relevant to this matter and is authority for the proposition that where a decision can wholly be accepted as invalid by reason of jurisdictional error, a decision maker has, at law, not yet discharged his or her statutory function and may 'revisit' that decision without a court order. In this case there has clearly been a jurisdictional error as I have not appropriately considered all the information provided to me and have denied procedural fairness to the claimant. In view of this it is my intention to revisit my determination." The Proper Officer invited further submissions from both parties.
On 17 June 2014, the third defendant determined the application for further assessment with respect to the impairment dispute. The third defendant decided that the impairment dispute would be referred for further assessment.
On 18 June 2014, the third defendant determined the application for further assessment of the treatment dispute. She rejected Ms Jovanovic's application for further assessment of that dispute.
It is necessary to note the bases upon which the Proper Officer acted with respect to these two more recent decisions.
With respect to the decision on the impairment dispute, on 17 June 2014, the third defendant said this: "Medical Assessor Long, in his certificate dated 14 July 2014 (sic) assessed cervical spine - soft tissue injury, lumbar spine - soft tissue and left leg - referred pain from back, as causally related to the accident assessing the lumbar spine at 5% whole person impairment. In making his determination, he considered the certificate of assessment issued by MAS Assessor Wong dated 7 February 2012 where he found the L4/L5 decompression surgery plus spinal fusion with internal fixation of the lumbar spine as recommended by Dr Saeed Kohan, neither causally related to the accident or reasonable and necessary. Additional Relevant Information The application for further assessment is made on the basis of additional relevant information and deterioration of injuries. … The report of Dr Kohan dated 18 November 2013 also evidences the surgery and is relevant purely for that purpose. It is clear that in the WPI dispute, Assessor Long found that the injuries to the cervical and lumbar spine and left leg were causally related to the motor vehicle accident, and that the lumbar spine attracted a WPI of 5% … There has now been a subsequent change to the lumbar spine injury by the claimant undergoing surgery to her lumbar spine. The evidence provided by the claimant's solicitors in relation to the surgery is clearly additional and relevant and relates to an injury caused by the accident. Assessor Long in coming to his determination clearly considered the certificate of assessment and opinion of Dr Wong issued in the treatment dispute, and still found that the claimant had a whole person impairment of the lumbar spine caused by the motor vehicle accident."
In dismissing the application for reassessment of the treatment dispute, the Proper Officer on the next day, 18 June 2014, said this: "The application for further assessment is made on the basis of further, additional relevant information and deterioration of injuries. … The applicant, in their initial submissions, did not demonstrate how the additional information or deterioration of the injuries capable of materially altering the outcome of the previous MAS assessment. … Claimant's further submissions dated 11 March 2014 note that Medical Assessor Wong had only to assess the causation and reasonable and necessary component of the treatment dispute and not causation of the injuries with regard to whole person impairment which was the purview of Medical Assessor Long. … I note the respondent's submissions in which they state that the only medical opinion related to causation of the spinal surgery undergone by the claimant was that of Dr Kohan in his report dated 18 November 2013. The opinions of Dr Kohan dated 19 May 2011 was before Medical Assessor Wong, therefore it can be argued that it cannot be considered as new information. Whereas the opinion of Dr Kohan dated 18 November 2013, can be considered new information, however in my opinion it does not address the issue of causation. … Having once again considered all material provided by both parties in this matter and revisited my previous decision, I am still not satisfied that the applicant has demonstrated how the deterioration of the injury, and the additional relevant information about the injury is such as to be capable of having a material effect on the outcome of the previous assessment, in this instance from surgery being not causally related to causally related. Despite the fact that the claimant has undergone surgery which is conducted by a neurosurgeon and the applicant relying on this surgery, the hospital notes including recent MRI imaging of the spine and the report of Dr Kohan dated 18 November 2013, to constitute additional evidence; these alone do not demonstrate causation with regards to the surgery. A statement that the claimant has undergone an L4/5 L5/S1 anterior fusion is not a demonstration of causation of spinal injury. I am not satisfied that the applicant has demonstrated that the surgery undertaken by the claimant is now causally related or that the additional information provided by the applicant is such as to be capable of having a material effect on the outcome of the previous assessments as required by s 62(1A) of the Motor Accidents Compensation Act 1999."
In the meantime, an application had been made to the Claims Assessment and Resolution Service ("CARS") for assessment of Ms Jovanovic's damages. The matter was allocated to a Claims Assessor, Mr Broomfield who is the fourth defendant. He is not a medically qualified person.
It is convenient to record, here, that in addition to the CARS application, the impairment dispute had, on 17 June 2014, been referred by the Proper Officer of the MAA for further assessment. The treatment dispute had not been referred for further assessment.
The MAS made arrangements for the impairment dispute to be further assessed by Dr Bodel on 22 August 2014. Dr Bodel is the fifth defendant in the proceedings. An appointment was made for Dr Bodel to carry out that assessment on 22 August 2014.
Whilst this was happening, the CARS application was listed for a preliminary conference, by telephone, on 1 July 2014. On 2 July 2014, the fourth defendant recorded in a report of that preliminary conference, the following: "I expressed concern now that the whole person impairment is to be assessed by Assessor Bodel, which includes the impairment of the lumbar spine. If Dr Bodel is satisfied that the fusion has been occasioned by the injuries sustained in the accident, then implicitly a causation finding will be made which would be in effect, incompatible with the causation finding made by MAS Assessor Wong in February 2012. In my view in ultimately assessing this matter, I would be bound by both certificates that have the potential to have incompatible causation findings. In those circumstances in my view, it is appropriate to exercise my power under s 62(1)(b) [of the Motor Accidents Compensation Act 1999], and have Dr Bodel undertake a further assessment of the treatment dispute that has previously been assessed by MAS Assessor Wong. The reason for such in part relates to the potential avoidance of a further delay in the event that MAS Assessor Bodel assesses WPI based on the fused spine, the cost of which could not be allowed in accordance with MAS Assessor Wong's certificate. I do propose to exercise my powers and have the Proper Officer place before MAS Assessor Bodel a further consideration of the treatment dispute undertaken by Dr Wong to ensure that when I am assessing this matter I do not have potentially two incompatible certificates at which time I would anticipate the claimant would be agitating to have me then refer the matter for a further assessment of the treatment dispute. I am mindful of the objects of the Act to ensure particularly in the background of the delays occasioned to date, that there is no further unnecessary delay in having another dispute revisited by the medical assessment service after Dr Bodel undertakes a further assessment of whole person impairment."
The fourth defendant then called for further submissions and adjourned the preliminary conference to 9 July 2014.
Further submissions were made by QBE opposing such a course. The report of the next preliminary conference by the fourth defendant, dated 9 July 2014, included the following: "… the Proper Officer in respect to the treatment dispute, namely, whether the anticipated fusion surgery at that time was reasonable and necessary, was not satisfied that there was evidence demonstrating how the deterioration of injury or additional relevant information about that injury was capable of having a material effect on the outcome of the previous assessment which she indicated 'in this instance the need for such surgery not being causally related to the injury sustained'. I infer from the Proper Officer's decision that, whilst there was source material available upon which such opinion could have been given, as a consequence of that additional information comprising that source material, that she did not have the benefit of any such additional material and accordingly was not in a position to sanction the referral in terms of s 62 of MACA. Contrary to the insurer's solicitor's submission, I am not disagreeing with the decision of the Proper Officer, but rather I am proposing to have Dr Bodel (who has been appointed to further assess the claimant's whole person impairment) undertake a further assessment of the treatment dispute to avoid a 'possible' situation when I am to assess this matter after Dr Bodel's whole person impairment assessment potentially with incompatible causation findings. That is to say, in the event that Dr Bodel reassesses the lumbar spine finding that the fusion was occasioned by the injury sustained in the accident, at either 20% or 25% being DRE IV or DRE V, then in the absence of the treatment dispute being considered by him, I will be bound by the assessment of MAS Assessor Wong who found that the need for such fusion was not caused by the injuries sustained in the accident. In the event Dr Bodel does sanction the fusion as having been caused by the accident, then it would be in my view inevitable the treatment dispute would have to be reassessed, as I would be bound certainly in the assessment of non-economic loss by Dr Bodel's causation finding, and would similarly be bound by MAS Assessor Wong's finding and hence would be prohibited from awarding the cost of the fusion as treatment expense. Being mindful of the objects of the Act, it appears to be an appropriate exercise of my discretion to have the proper officer refer for a further assessment of the treatment dispute and proposed to do so pursuant to s 62(1)(b)."
On 14 July 2014, the fourth defendant wrote to the third defendant, saying: "I would be grateful if you would arrange for the requisite material relating to the treatment dispute with the resultant certificate and reasons of Assessor Wong be forwarded to Assessor Bodel to undertake a further assessment of that treatment dispute and to invite the parties to provide any additional material they wish to put before Assessor Bodel relating to that dispute."
On 31 July 2014, the third defendant wrote to the parties with respect to that request. That letter said: "The CARS assessor has referred the dispute for further assessment to MAS pursuant to s 62(1)(b) of the Motor Accidents Compensation Act as amended and Chapter 15 of the Medical Assessment Guidelines. The CARS assessor is satisfied there are good reasons to exercise his discretion to refer the matter back to a MAS assessor for further assessment. This application is made on the basis of causation and reasonable and necessary, and that a further assessment of the treatment dispute be undertaken to ensure any prospect of an incompatible causation finding is avoided. Whether the L4/L5 anterior lumbar discectomy and fusion surgery is as a consequence of the subject motor vehicle accident is a matter for the MAS assessor to determine. The matter will now be referred for further medical assessment of the dispute relating to treatment: Whether L4/5 anterior lumbar discectomy and fusion as performed by Dr Saeed Kohan on 20 July 2013 is causally related to the injury sustained in the subject accident. Whether L4/5 anterior lumbar discectomy and fusion as performed by Dr Saeed Kohan on 20 July 2013 is reasonable and necessary in relation to the injury sustained in the subject accident. In accordance with clause 14.12 of the Medical Assessment Guideline for further assessment, this will involve consideration of all aspects of the original assessor's assessment afresh, and will include all injuries assessed by the original assessor and any additional injuries listed on the application will apply."
The second defendant, MAA, has agreed to defer allocating the dispute to a medical assessor pending this Court's determination of these proceedings. Accordingly, the date fixed for assessment with the fifth defendant, Dr Bodel, did not go ahead.
Shortly afterwards, on 14 August 2014, QBE commenced these proceedings.

Did the Third Defendant Fall into Error?

The commencement point for consideration here is that the original two certificates which were issued in 2012 were either not challenged, or not successfully challenged. Certainly, proceedings had not been commenced in this Court to challenge the validity of either of the certificates.
So that, as at December 2013, when Ms Jovanovic first lodged an application for further assessment of both the treatment and impairment disputes, there was in place the two 2012 certificates which were accepted by the parties as legally valid and correct.
The treatment certificate held that the proposed spinal surgery was neither reasonable nor necessary in the circumstances and, further, that the surgery did not relate to the injuries caused by the motor accident. It necessarily follows that whilst ever that certificate remained valid, the surgery and any consequences of it, were not compensable under the MACA.
The certificate with respect to impairment which found a soft tissue injury of the lumbar spine, concluded that whilst there was such an injury caused by the motor accident, it gave rise to a five per cent impairment, and together with other injuries (about which there is no present dispute), this meant that a whole person impairment of more than 10 per cent was not established. The only rational view which could be taken of the state of Ms Jovanovic's health, in light of these two valid certificates, was that she suffered from a soft tissue injury in the lumbar spine area, which injury did not affect, or involve, any injury to the lumbar spine itself.
The additional material which the third defendant had upon which to consider whether or not to refer the matter for reassessment was relevantly the report of Dr Kohan dated 18 November 2013.
Before that material could be used as a basis for the referral of the matter for further medical assessment, the MACA required that the third defendant be satisfied that: 1. there was additional relevant information about the injury; and 2. that additional information was such as to be capable of having a material effect on the outcome of the previous assessment.
Dr Kohan's report of 18 November 2013, specifically eschews providing any information about whether the treatment related to any identifiable or specific injury caused in the motor vehicle accident on the one hand, or was the consequence of chronic degenerative changes on the other hand. Dr Kohan simply reported the following on this issue: "During the surgery there was no specific finding that could suggest injury versus chronic degenerative changes, in particular in her case, given that her surgery was performed some years after the initial injury."
Dr Kohan had earlier drawn attention, as I have noted above, to the fact that the best evidence was Ms Jovanovic's history and radiological findings. However at the time that the two certificates for treatment and impairment were issued in 2012, Ms Jovanovic's history and radiological findings were available to both assessors. That material could not constitute additional relevant material.
Therefore, in her decision-making, the third defendant needed to consider in respect of the application for reassessment, whether the paragraph of Dr Kohan's report which I have just extracted, represented additional relevant information which was capable of having a material effect on the outcome. It was the only material in that report which was capable of coming within that statutory concept.
To come within the definition of "additional relevant information", such information must be additional to that which is already known. The mere re‑statement of existing information, or the mere expression of similar information in different words, is not capable of constituting additional relevant information: Alavanja v NRMA Insurance Ltd [2010] NSWSC 1182 at [43] per Davies J; Garcia v Motor Accidents Authority of New South Wales [2009] NSWSC 1056 at [38] per Rothman J.
The question which this Court needs to determine is not whether it would itself characterise the material as relevant additional information, but rather whether the Proper Officer's opinion that it was relevant additional information was properly formed according to law.
In QBE Insurance (Australia) Ltd v Miller [2013] NSWCA 442 at [17] Basten JA (with whom Ward JA and Young AJA agreed) said: "If it is the state of satisfaction of the officer which is the precondition to referral, that satisfaction can be reviewed for relevant legal error. On the other hand, if the precondition is the proper characterisation of the material relied on, then the aggrieved party can invite a judge to determine, in judicial review proceedings, whether or not that precondition is satisfied. It is sometimes said that each of these approaches involves a 'jurisdictional fact'. A categorisation adopted by Gummow J in Minister for Immigration and Multicultural Affairs v Esagtu [1999] HCA 21; (1999) 197 CLR 611 at [130]."
Further, in the judgment at [36], Basten JA said: "Once it is accepted that the characterisation of the information is a matter to be considered in the first instance by the Proper Officer, not one to be determined by this Court afresh on a judicial review application, the review proceedings are limited to determining whether the Proper Officer's opinion has been properly formed according to law: … The critical question is thus: 'whether the determination was irrational, illogical and not based on findings or inferences of fact supported by logical grounds.' ..."
QBE submits that it was completely illogical for the third defendant to refer the impairment dispute for further assessment, while declining to refer the treatment for the same further assessment. It submits that logically and rationally, neither or both had to be referred for further assessment.
QBE goes on to submit that the only rational decision which could have been made by the third defendant was to refer neither of the disputes because the additional material, being the report of Dr Kohan, was not capable of constituting additional information about the injury and, in particular, the causation of the injury.
Importantly, QBE says, once the third defendant accepted that the contents of the report of Dr Kohan did not constitute additional information of the kind necessary, as a threshold matter, to permit her to refer the treatment dispute for reassessment, such a conclusion could only be reached upon a basis which included as a fundamental proposition that the injury to the lumbar spine was not causally related to the accident.
In those circumstances, QBE submits that it was erroneous and irrational to refer the impairment dispute for further assessment.

QBE Insurance (Australia) Ltd v Jovanovic

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Cases Cited (6)

Cited By (1)