'Crazy decision': Injured motorcyclist locked in battle with insurers for months
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'Crazy decision': Injured motorcyclist locked in battle with insurers for months

Reforms to the compulsory third party insurance system in NSW have been a “complete disaster” in curbing the “aggressive” and “adversarial” approach taken by some insurers to deny payments to motor accident victims, the Australian Lawyers Alliance has warned.

Reforms to the compulsory third party insurance system in NSW may be cutting innocent victims off from benefits before they are fully recovered.

Reforms to the compulsory third party insurance system in NSW may be cutting innocent victims off from benefits before they are fully recovered.Credit:Craig Abraham

The conduct includes letters written by insurers containing “false” information or making “legally incorrect” decisions to deny claims, it has been alleged.

“Some CTP insurers appear to have little recognition that they now bear any obligation to treat claimants in a fair, frank and honest fashion,” the alliance wrote in a submission to a parliamentary inquiry into changes, which came into effect last December.

It comes as a Herald investigation can reveal concerns that the new system is reducing the scope of court payouts to the most seriously injured, cutting innocent victims off from benefits before they are fully recovered and putting insurers in charge of adjudicating their own disputes.

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But the Berejiklian government defended the reforms, arguing money had been diverted from legal fees and insurer profits back to the injured.

The insurance industry also hit back, rejecting suggestions of a “systematic problem” with its conduct and stressing there would be teething issues while the new scheme was in its infancy.

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On Monday, the Herald documented the plight of a motor accident victim awarded $2 million in court, following a decade-long battle with Allianz Insurance in which he was extensively surveilled and accused of “exaggerating” debilitating injuries.

Truck driver Deniz Cimen also had a bruising encounter with the industry after an accident on Wisemans Ferry Road last December.

The 28-year-old was on his motorcycle when he was struck by a car, suffering spinal damage, a slipped disc and shoulder and knee injuries.

Even though Mr Cimen was not at fault, it took “months and months” until he was given the green light by GIO to undergo surgery.

“They just weren’t playing ball with me,” he said.

The major blow came when Mr Cimen was told that his psychological injuries were only minor – and he could not claim damages for them – despite serious physical injuries.

Mr Cimen appealed and the matter went to an internal review, conducted by the insurer. Next, the internal review officer was on the phone, asking him “all sorts of weird questions”.

“I felt like he was interrogating me,” Mr Cimen recalled.

The officer used the contents of the conversation to uphold the insurer’s decision and overrule the medical diagnosis of Mr Cimen’s treating psychologist.

It was only when solicitor Philip Scroope, of Gajic Lawyers, intervened that GIO reversed the decision.

Mr Scroope, who acted pro bono, said there were serious procedural concerns around the evidence the review officer had chosen to consider.

“Mr Cimen is a truck driver by trade and a second-generation Australian with no experience with the legal process whatsoever,” he said.

“The insurance company has made a crazy decision that would have kept him out of his claim, had it not been challenged.”

GIO is owned by the Suncorp Group. Personal injury executive general manager Christopher McHugh said the company had apologised and corrected its processes.

“At no point was the claimant disadvantaged by our mistake, as it occurred during the statutory period, so they were receiving benefits,” he said.

Mr McHugh accused lawyers groups of having a “vested interest” in maintaining the old “adversarial system”.

“It routinely saw many lawyers pursuing low-impact collisions with claimants having no observable injuries in order to maximise lump-sum payments,” he said.

The industry watchdog is the State Insurance Regulatory Authority (SIRA). A spokesperson defended the new internal review process as best practice and widely used within the insurance and financial services industries.

“The internal review process is designed to allow injured people to challenge the insurer’s decision quickly and simply,” they said.

But the NSW president of the Australian Lawyers Alliance, Andrew Stone, SC, slammed it as a “complete waste of time” to ask an insurer to “change its mind”.

Mr Stone cautioned that insurers had “different levels of combativeness” but said there were areas in which they were “trying it on”.

“It has certainly been the experience of those representing the injured that, over the past few years, insurers are making excessive allegations of contributory negligence,” he said.

He urged SIRA to publish data comparing insurer performance in areas such as complaints, so the public could make informed choices when purchasing green slips.

“I buy my policy based on which insurer would handle the claim if I had an accident and my family was injured,” he said.

The Australian Lawyers Alliance supplied an “untrue and misleading” letter to the parliamentary inquiry in which an insurer told a claimant they would not be able to recover legal costs spent in pursuing a claim.

The inquiry has also heard concerns from the NSW Bar Association that the removal of lawyers from the process of resolving less serious claims has thrust people into “unequal contests” with giant insurance companies.

Stuart Green believes he was only compensated for his injuries when a law firm intervened.

Stuart Green believes he was only compensated for his injuries when a law firm intervened. Credit:Elesa Kurtz

Canberra man Stuart Green believes he would not have been compensated for injuries sustained in an accident in NSW without the intervention of law firm Slater and Gordon.

Under the new system, a claim has to be submitted within 28 days of an accident, or on the next business day should the time limit expire on a weekend.

Mr Green snapped multiple bones in a motorcycle accident in February. He received the paperwork from his GP as the deadline fell, on a Sunday. He lodged his claim first thing on Monday morning.

But NRMA denied the payout, affirming its decision upon internal review. When lawyers intervened the matter went to a hearing, which ruled in Mr Green’s favour.

The self-employed mortgage broker was forced to live off a credit card for the month he was unable to work and felt “aggrieved” by the experience.

“The period of time I really needed help – and that system is there to help people – it was refused to me,” he said.

A spokesperson for Insurance Australia Group (IAG), which owns NRMA, put the dispute down to “challenges” with the introduction of the reforms.

“IAG shared the outcome of the dispute resolution with other insurers with the view of reducing duplication of this error and we are now in the process of reviewing claims made prior to this point of clarification,” she said.

A SIRA spokesperson said it conducted ongoing monitoring and targeted audits of insurers and intended to publish data comparing numbers of insurer complaints.

Finance Minister Victor Dominello said there had been fewer than 30 complaints regarding claims management under the new scheme.

Finance Minister Victor Dominello said there had been fewer than 30 complaints regarding claims management under the new scheme.Credit:Peter Rae

“The new scheme presents a significant culture change for insurers … SIRA is working with insurers to ensure the shift in culture occurs and will act on any inappropriate conduct.”

Finance Minister Victor Dominello said there had been fewer than 30 complaints regarding claims management under the new scheme, while more than 5000 claims had been made.

“There was a higher degree of friction between lawyers and insurers in the old scheme and the cost of this was borne by motorists through higher premiums,” he said.

Mr Dominello added the focus was on “early intervention”, with fast-tracked payments covering lost income and medical expenses for the injured.

“The biggest winners under the new scheme are motorists who have had their green slips significantly reduced, with Sydney motorists saving $157 on average this year.”

The scheme has introduced automatic benefits for six months – covering medical expenses and lost wages for anyone deemed to have a “minor injury”. Soft tissue and psychological injuries make up the lion’s share of such claims.

People are eligible regardless of fault, opening the scheme up to an additional 7000 drivers for the first time.

But the Law Society warned the new minor injury definition appeared to have given rise to a significant reduction in damages claims, by bundling people out of the system before they were fully recovered.

Victims with injuries that were “in no way minor” in terms of impact were facing “significantly harsher” treatment, it said.

“Insurers have classified injuries such as disc protrusions to the cervical or lumbar spine as … minor, despite those injuries preventing a claimant from returning to employment at, or at period approaching, the 26-week mark,” the organisation wrote in its submission to the parliamentary review.

Campbell Fuller, from the Insurance Council of Australia, said nearly all people determined to have a “minor” injury were expected to recover within six months, with the insurer able to approve treatment beyond that time for the “small number” who had not.

Partner at Carroll and O’Dea Lawyers Olivia Mailian.

Partner at Carroll and O’Dea Lawyers Olivia Mailian.

The Australian Lawyers Alliance put the number who would not have recovered closer to 50 per cent and argued the insurers were unlikely to use their discretion to continue payments.

Mr Fuller acknowledged “teething issues” with the new system but said it had multiple checks and balances to protect the interests of injured people.

“The ICA does not agree that there are any systematic issues of inappropriate insurer conduct,” he said.

Olivia Mailian, partner at Carroll and O’Dea Lawyers, said cutting an injured person off from treatment would shift costs on to the federal government.

“Someone with a bulging disc in their spine could require surgery at 12 months,” she said. “If you’re losing wages, you’re going to access Centrelink and Medicare benefits.”

Innocent parties with severe injuries who ended up in the court system would lose out, Ms Mailian warned, because they were now only entitled to two categories of compensation: economic loss and “pain and suffering” payments.

“Under the old scheme you used to be able to sue for things like commercial care and care provided by family,” she said.

In cases where less than $75,000 is recovered in the courts, lawyers are no longer entitled to seek solicitor-client costs.

“That means that we effectively would not be able to take on clients with smaller claims, because we’re not entitled to bill them for the complete work we have done,” Ms Mailian said.

Mr Dominello said there was “no evidence” of costs being passed on to other social support systems, and said the opposite was likely to occur because at-fault parties were now entitled to benefits.

Carrie Fellner is an investigative reporter for The Sydney Morning Herald.

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