Adaptation is more than work history

Rose v Insurance Australia Limited trading as NRMA Insurance [2025] NSWSC 134

In Brief

• The concept of adaptation is concerned with repeated failure to adapt to stressful circumstances and requires consideration of more than the Claimant’s work history.
• Procedural fairness requires that the Claimant be notified of potential adverse finding as to credit based on a report if such use of the report is not apparent to the Claimant.

Facts

The Supreme court handed down its decision in Rose v Insurance Australia Limited trading as NRMA Insurance [2025] NSWSC 134 on 4 March 2025.

The Claimant suffered injuries in a motor vehicle accident in November 2017. His degree of permanent impairment caused by his psychological injury was assessed by the Medical Review Panel at not greater than 10%.

The Claimant was working prior to the accident. After the accident, the Claimant was not working because work was not available. He attempted to undertake studies and an apprenticeship but failed. He also had problems with driving.

In conducting its PIRS assessment, the Panel referred to “employability” instead of “adaptation” as required by the Motor Accident Permanent Impairment Guidelines (the “Guidelines”). The Panel considered only the Claimant’s work history.

In addition, the Panel placed significant weight on a neuropsychological assessment report, which found that the Claimant exaggerated his cognitive impairment. The Panel did not raise with the Claimant how it intended to make use of the neuropsychological assessment.

The Claimant sought judicial review of the Medical Review Panel’s decision.

Supreme Court’s Reasons

Acting Justice Schmidt provided a succinct summary of the relevant principles at paragraph [17] of the judgment.

Applying those principles, Acting Justice Schmidt found that the Panel erred in three respects:

1. The Panel did not assess the Claimant’s adaptation as required by the Guidelines.
2. The Panel did not provide sufficient reasons.
3. The Panel did not afford the Claimant procedural fairness because it did not raise the importance of the neuropsychologist’s report with the Claimant.

Adaptation

Acting Justice Schmidt observed that the Panel’s reasons referred to “employability” instead of “adaptation”. Her Honour found this to be more than a misuse of terminology as the Panel did not consider the Claimant’s circumstances apart from work, which is inconsistent with the concept of adaptation as set out in the Guidelines.

Her Honour refers to clause 1.210 of the Guidelines, which states:

Adaptation (also called deterioration or de-compensation in work or work‑like settings) refers to the repeated failure to adapt to stressful circumstances.

Her Honour found that this required the Panel to consider more than the Claimant’s work history.

Her Honour found that, as the Claimant had been in and out of employment following the accident and was unsuccessful in his attempt to study, clause 1.221 of the Guidelines was applicable. This clause provides that:

Where adaptation could not be assessed by reference to work or a work-like setting, consideration must be given to the injured person’s usual pre-injury roles and functions such as caring for others, housekeeping, managing personal/family finances, voluntary work, education/study or the discharge of other obligations and responsibilities.

Effectively, her Honour found that consideration is to be given to the Claimant’s post-injury roles and functions outside of work where he was unemployed after the accident.

In addition, her Honour highlighted that the assessment of the PIRS categories is concerned with the change which had resulted from the Claimant’s injury.

In summary, her Honour stated that adaptation is to be assessed by reference to (at [60]):

• (i) The Claimant’s deterioration or de-compensation in work or work-like settings and his repeated failure to adapt to stressful circumstances.
• (ii) Changes in the Claimant’s lifestyle, activities and habits as a result of the psychiatric injury, taking into account variations in the Claimant’s lifestyle due to age, gender, cultural, economic, educational and other factors.

Her Honour found that, to assess adaptation in this case, the Guidelines require that the Claimant’s problems with studying and driving be considered together with work history (at [61]).

Her Honour explained that the ability to drive is relevant for the assessment of adaptation because it impacts the Claimant’s ability to obtain and retain employment (at [67]).

Her Honour found that the Panel did not comply with the Guidelines because it only considered the Claimant’s work history.

Insufficient Reasons

Acting Justice Schmidt found that the reasons the Panel gave to explain its rating of the Claimant’s adaptation were too short to show its path of reasoning (at [81]).

Her Honour found that the Panel’s reasons for its rating of the Claimant’s social and recreational activities were also inadequate. It was unclear why the Panel considered that the Claimant had underreported his social activities and why the Claimant was assessed as class 2 instead of class 3.

Her Honour stated that similar problems exist with the Panel’s reasons for other aspects of the PIRS scale but did not elaborate.

Procedural Fairness

Acting Justice Schmidt noted that the Panel did not raise with the Claimant how it intended to make use of the neuropsychological assessment which found that he had exaggerated his cognitive impairment.

Her Honour cited the case of Kioa v West (1985) 159 CLR 550 and confirmed that procedural fairness requires attention to be drawn to a critical issue or factor on which the Panel’s decision was likely to turn, so that the Claimant had an opportunity to deal with it.

Her Honour distinguished the case of Frost v Kourouche [2014] NSWCA 39 on the facts and found that the Claimant was not on notice of the potential use of the neuropsychological assessment. In the Claimant’s case, the neuropsychologist included a reservation in her report stating that while the Claimant’s test results were not explained by the neurological, physical or psychological injuries he had sustained, it was possible that he may have suffered cognitive deficits secondary to psychiatric disorder or pain, the causation of which was outside her expertise.

Her Honour considered that it was due to this reservation that the Insurer had not relied on the neuropsychological assessment in its submissions. Given the reservation and the Insurer’s submissions, the use of this assessment in considering the Claimant’s credit was not apparent to the Claimant and the submissions prepared for the Claimant also did not deal with this assessment.

In these circumstances, her Honour found that the Panel’s failure to raise the neuropsychological assessment with the Claimant resulted in practical injustice.

In conclusion, Acting Justice Schmidt found that there was a real possibility that the Panel may come to a different conclusion if the Claimant had been given an opportunity to deal with the neuropsychological report or if the Panel had considered adaptation in accordance with the Guidelines.

Her Honour set aside the Panel’s certificate and remitted the matter to the President of the PIC.

Key Learnings

This decision highlights that the assessment of adaptation requires a consideration of the Claimant’s deterioration or de-compensation in work or work-like settings and any repeated failure to adapt to stressful circumstances.

In applying the Guidelines, the Supreme Court made the following findings:

1. The Supreme Court interpreted clause 1.221 of the Guidelines as applicable to situations where the Claimant was unemployed after the accident, and requiring the consideration of the Claimant’s post-injury roles and functions outside of work.
2. The Supreme Court stated that the Claimant’s ability to drive is relevant for the assessment of adaptation because it affects his ability to obtain and retain employment.

The Supreme Court’s finding in relation to procedural fairness in this case hinged on the fact that the Panel’s use of the neuropsychological report was not apparent to the Claimant due to the reservation contained in the report.