What does “reasonable and necessary in the circumstances” mean?

In Brief

• An Insurer is liable to pay for treatment and care if it relates to the injury caused by the motor accident and is reasonable and necessary in the circumstances.

Facts

On 6 September 2024, the Personal Injury Commission published its decision in El-Kazzi v Insurance Australia Limited t/as NRMA Insurance [2024] NSWPICMP 591.

The Claimant was involved in a motor vehicle accident on 9 November 2019. He alleged sustaining injuries to his cervical spine and both shoulders as a result of the accident.

The Claimant sought perineural blocks, a cervical discectomy and fusion.

At first instance, a PIC Medical Assessor determined the proposed treatment related to the injury caused by the motor accident and were reasonable and necessary in the circumstances.

The Insurer sought a review.

Relevant Provisions

Section 3.24 of MAIA provides:

1. An injured person is entitled to statutory benefits for the following expenses (treatment and care expenses) incurred in connection with providing treatment and care for the injured person —

• (a) the reasonable cost of treatment and care,
• (b) reasonable and necessary travel and accommodation expenses incurred by the injured person in order to obtain treatment and care for which statutory benefits are payable,
• (c) if the injured person is under the age of 18 years or otherwise requires assistance to travel for treatment and care, reasonable and necessary travel and accommodation expenses incurred by a parent or other carer of the injured person in order to accompany the injured person while treatment and care for which statutory benefits are payable is being provided. 

2. No statutory benefits are payable for the cost of treatment and care to the extent that the treatment and care concerned was not reasonable and necessary in the circumstances or did not relate to the injury resulting from the motor accident concerned.
3. The Motor Accident Guidelines may provide for —

• (a) circumstances in which the cost of treatment and care is taken to be reasonable for the purposes of this section, and
• (b) circumstances in which treatment and care is taken to be reasonable and necessary for the purposes of subsection (2).

The Review Panel’s Reasons

The Panel confirmed:

95. The words “in the circumstances” in the context of whether the treatment is “reasonable and necessary” must refer to the Claimant’s particular circumstances. This follows Schedule 2 of the MAI Act which refers to treatment “provided or to be provided to the Claimant”.

96. The test of “reasonable and necessary in the circumstances” does not direct attention to the relationship between the accident and the treatment. That issue arises from considering whether treatment “relates to the injury caused by the accident.”

The Panel determined:

1. The proposed treatment relates to the injury caused by the motor accident because the accident materially contributed to the permanent aggravation of the Claimant’s degenerative cervical spine condition which was detected on several MRI scans.
2. The onus is on the Claimant to establish the proposed treatment is both “reasonable and necessary”.
3. The Claimant failed to establish the surgery and nerve blocks are reasonable and necessary for the following reasons:

• Alternative non-invasive treatment options were available other than surgery which could improve the Claimant’s condition.
• The Claimant was reluctant to pursue the nerve blocks and the surgery.
• The Claimant demonstrated no radiculopathy, no unrelenting pain and no worsening of neurological symptoms which would support surgery or nerve blocks.
• The evidence does not demonstrate the benefits of surgery exceed the risk of failure and an adverse outcome.

The Panel, therefore, found the Insurer was not liable to pay for Claimant’s surgery and nerve blocks as a statutory benefit.

Key Learnings

This decision looks at what “reasonable and necessary in the circumstances means” and confirms that there are three questions:

• Is the treatment related to the injuries sustained in the accident?
• Is the treatment reasonable?
• Is the treatment necessary?

If a response to any of the three questions is a “no” then the Insurer is not liable to pay for the treatment and care as a statutory benefit.

If you have a query relating to any of the information in this case note, or would like to discuss a similar matter of your own, please don’t hesitate to get in touch with CTP Insurance Special Counsel Helen Huang today.

Additional McCabes Resources

• MC PIC Decision of the Week
• MC MAIA Toolkit
• The Proper Lookout Podcast
• MC Ready Reckoner