Rehabilitation regrets: defect in drafting of MAIA favours alleged fraudulent claimant

20 May 2015 Topics: Insurance

The Queensland Supreme Court has recently ruled that once an insurer agrees to fund a claimant’s reasonable and appropriate rehabilitation pursuant to section 51 of the Motor Accident Insurance Act 1994 (Qld) (‘MAIA’), that decision cannot be rescinded, even in circumstances where strong later acquired evidence indicates probable fraud on behalf of the claimant.

The applicant was 16 years old when he sustained catastrophic injuries in a motor vehicle accident on 25 September 2013. The vehicle in which the applicant was travelling contained his two parents and two siblings. Police attending the accident scene were suspicious as to who was driving the vehicle. The applicant’s version of events was always that his father was driving.

The respondent insurer, mindful of the applicant’s youth and disabilities, was prepared to meet the reasonable and appropriate cost of the applicant’s rehabilitation pursuant to section 39(1)(a)(iv) of the MAIA without admitting liability. Minimal police documentation was available at the time of this decision.

Police investigations were subsequently further advanced, and it was revealed that an extensive amount of blood all over the driver’s side airbag belonged to the applicant, not his father. This was consistent with evidence that it was the applicant who suffered facial injuries and abrasions whereas the applicant’s father did not have injuries that would readily account for his bleeding to such an extent as was shown in the photographs. Police photographs also depicted the driver’s side seat in a position consistent with the person driving having been removed through the rear of the vehicle.

As a result of these investigations, the respondent insurer decided to cease rehabilitation services. The applicant brought an application for injunction to stop the cessation of rehabilitation.

The respondent insurer relied on section 24AA of the Acts Interpretation Act 1954 (‘AIA’), which states that if an Act authorises or requires the making of a decision, the power included the power to amend or repeal the decision. Her Honour noted section 39(1)(a) MAIA does not require the insurer to make a decision to grant rehabilitation, and if an insurer could change its decision to provide rehabilitation when it wished pursuant to section 24AA AIA, there would seem little room for the application of section 51(7)(b) MAIA.

Justice Dalton noted that the physical circumstances of the crash site and DNA evidence made a strong case that it was the applicant rather than his father who was driving. However, Her Honour also noted there would be no definitive finding as to whether or not there had been fraud until a trial.

The applicant had no assets and did not offer any security to the respondent insurer, should it incur loss due to the injunction. The respondent insurer had already expended a significant sum on rehabilitation and any further amount spent would likely be lost.

However, Her Honour took account of medical opinions that stated there was some hope of improvement and it was important for the applicant to receive rehabilitation care up to the second anniversary of the subject accident. She thought it would be tragic if the applicant lost some chance of medical improvement because he could not afford therapy, and this could not be measured in monetary terms.

Justice Dalton found the balancing of convenience very difficult, but found the latter factor weighed most heavily in her discretion. She ordered the respondent insurer was enjoined from ceasing any rehabilitation services pursuant to section 51(3) MAIA until the second anniversary of the accident.

This decision has illustrated a defect in the drafting of the rehabilitation provisions in the MAIA. The legislation does not allow for circumstances where an insurer has been induced by fraud. As a result, insurers will no doubt err on the side of caution when making rehabilitation decisions in the early stages of claims. The practical effect will mean in some cases seriously injured claimants will be refused rehabilitation by an insurer in any matters where there is evidence that suggests the claimant may not be successful on liability.



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