Johnson v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT Decision No. 88 195 HELD AT TAURANGA IN THE MATTER of The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an Appeal pursuant to Section 91 of the Act BETWEEN IVAN GEORGE JOHNSON Appellant (Appeal No. DCA 37/95) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 31st day of July 1995 APPEARANCES Appellant in person Ms J L Johnston for respondent DECISION OF JUDGE D A ONGLEY This is an appeal against refusal to meet the cost of specialist medical treatment on grounds that the proposed treatment does not meet the criteria of r 11 of the Accident Rehabilitation and Compensation Insurance (Specialist Costs) Regulations (No. 2) 1990. The ground for refusing payment is that it would not have restored the appellant to his principal economic activity nor have enabled him to undertake remunerated employment. The appellant suffered two accidents causing personal injury. On 10 April 1990 when aged 64 he fell at work injuring his left knee joint. Before that he had suffered progressive osteoarthritis affecting his spine and knees and to a lesser degree his hips. He made a slow recovery and was placed on the waiting list at - 2 - Waikato Hospital for left knee replacement. The operation was carried out on 31 August 1992, after a wait of about 18 months. He made a slow convalescence complicated by infection and during the month following his operation he experienced severe pain in his right hip and thigh. Epidural spinal steroid treatment was not effective in relieving his symptoms and on 25 January 1993 he had a hip replacement-operation. That operation may have been successful, but on 12 August 1993 the appellant unfortunately suffered a fall and strained his right hip prosthesis. Since that fall he has experienced instability in both his left knee and right hip, causing severe pain and limitation of movement. The appellant had worked as a school bus driver until the time of his knee replacement after which he had been unable to bend his knee sufficiently to resume bus driving. He claimed that he would have been able to undertake selective employment after the knee replacement if the knee had stabilised. When he underwent the hip operation he was not working but was ready to work once his knee had recovered. When he fell on 12 August 1993 he was still having trouble with his knee replacement but he maintains that he would otherwise have been able to work. That is a factor that he considered the Corporation had failed to have proper regard to when assessing the potential cost effectiveness of further surgery to his knee. The Corporation relied on r 11 of the Specialist Costs regulations and refused to meet the cost of further surgery. Part of the regulation is set out below: 11. Conditions applying to payments for surgical procedures - (1) The Corporation shall not make any payment in respect of any procedure specified in Part II of the schedule to these regulations unless - (a) The treatment is provided (i) In a licensed hospital; or (ii) In the case of items marked in the Schedule with an asterisk ("), in a private hospital or in the registered specialist's rooms; and (b) The prior approval of the Corporation to the performance of the procedure has been obtained. (2) Except as provided in subclause (3) of this regulation, the Corporation shall not give the approval referred to in subclause (1) of this regulation unless it is satisfied that it is necessary for the due restoration of the claimant to his or her principal economic activity or would enable the complainant to undertake remunerated employment that the treatment be provided. The following medical evidence was available to the Corporation: 1. 22 May 1994 - ARC 43 certificate from Mr Gray that the appellant had a loose and probably infected hip replacement and may require a two stage procedure involving removal of the prosthesis and reinsertion after control of suspected infection. 2. 20 September 1994 - C15 certificate by his general practitioner Dr N A Philip certifying chronically and permanently disabled by unstable left knee joint replacement and right hip joint replacement (awaiting decision on revision of the prosthesis). - 3 - The Corporation then issued a decision dated 6 October 1994 stating: "We are unable to pay private surgery costs in limited circumstances. Generally it must be first established that immediate surgery is necessary to help a person to return to work or study, or to resume essential household duties which their injury prevents them from carrying out. In this case you do not meet the principle economic activity criteria. This means that we are unable to approve payment of private surgery costs." The means by which the criteria had been applied were not specified. The appellant viewed himself as being able to return to limited work, being remunerated employment within the meaning of r 11(2). He produced a letter from his former employer stating that if he was fit and able he would still be employed as a driver, but in fact it is quite unlikely that he could drive again. A photocopy of the letter had an added remark that other work would be available to him. The provenance of that additional note was unclear. The appellant acknowledged that he could no longer drive because his knee would not permit him to operate manual transmission buses. There was no recorded enquiry by the Corporation into the appellant's prospect of returning to employment, either on other duties with his former employer or for some other employer. The Corporation's officers appear to have assumed, probably because of the appellant's age and other medical problems, that he would not have been able to obtain work even if his hip was repaired. The Corporation was wrong in making a decision without investigating availability of employment. It is important to note that under r 11(2) there is no cost-effectiveness test; it does not matter, for example, that the claimant may not have many working years left. On 15 November 1994 the Corporation sent the appellant another letter confirming its earlier decision and explaining its reasons more fully as follows: "Turning firstly to the question of private hospital costs, the Corporation is able to approve these costs in limited circumstances, generally where an injury is restricting a person in their principal economic activity and surgery will enable them to return to employment or normal economic function. In the circumstances surrounding your claim your employment ceased prior to the hip injury of 13 August and specialist medical comment indicates the primary reason for your incapacity as longstanding degenerative arthritis. The Corporation is not satisfied that the requested surgery will restore you to your principal economic activity and there we must regretfully decline this request." The reference to degenerative arthritis did not follow from the material on the Corporation's file. The appellant was working despite his arthritis right up until his knee operation. The material also tends to indicate that the appellant is determined to work if he can. That is confirmed by the impression which I have gained at the hearing of this appeal. I am satisfied that the application for surgical payments is genuinely motivated by a determination to resume work. At the review the following additional medical material was available: - 4 - 1. 7 October 1994 - Letter from Dr Philip setting out the surgical history and stating: "An outside opinion from Mr R V Jackson, orthopaedic surgeon agrees that specialist revision of the (R) hip joint is needed as soon as possible. An assessment of the hip problem has been obtained from Prof D H Gray, orthopaedic super specialist of Auckland. He could tackle the problem privately in Auckland but cannot guarantee the cost, nor the number of surgical procedures." 2. 25 October 1994 - Letter from Dr Philip requesting urgent decision about the appellant's right hip prosthesis, stating that he was in so much pain that surgical intervention was critical. Dr Philip nominated Prof D H Gray of Auckland to undertake the complicated extremely specialist revision and gave the view that the operation could not be performed by a less experienced surgeon. The transcript of the review hearing on 7 December 1994 does not contain any useful evidence of work available to the appellant once his hip was repaired. However the Review Officer found that if the hip was repaired the appellant would still be unable to return to his principal economic activity of bus driving. That was the reason for his confirming the Corporation's decision. The Review Officer did not consider the second question in r 11(2), that is to say whether the treatment would enable the appellant to undertake remunerated employment. That question appears to have been neglected throughout, yet there is some evidence that work would be available and that evidence warrants further enquiry. The proposed surgery is of a kind specified in r 11 and payment by the Corporation depended on the Corporation being satisfied about the requirements of the regulation. Reg 11(2) is difficult to understand. First, looking at the alternative pre- conditions together, the subclause may be intended to mean that the Corporation shall not give the approval unless it is satisfied that that it is necessary that the treatment be provided for the due restoration of the claimant to his or her principal economic activity or to enable the complainant to undertake remunerated employment. But if the pre-conditions are split up, the second one would read "unless it is satisfied that it .. would enable the complainant to undertake remunerated employment that the treatment be provided". That does not make sense grammatically. However the auxiliary verb "would" might import a more stringent test in the case of other remunerated employment, that is to say that the treatment can be reasonably predicted to enable the complainant to undertake remunerated employment. If that is the test, then the likely effectiveness of the treatment would have to be considered and also the likely availability of employment if the treatment is successful. The interpretation question does not call for an answer in this decision, but as I am going to refer the matter back to the Corporation, the question of probability of further employment could assume importance when the Corporation reconsiders the matter. I find that the Corporation has failed to have regard to the correct considerations under r 11 of the Specialist Costs Regulations and the failure has not been corrected on review. The appeal is allowed and the decision refusing payment is set aside. - 5 - The matter is referred back to the Corporation for urgent consideration of the appellant's application for approval of further surgery. The appellant will have costs of $600 on this appeal. The appellant did not want to return to Waikato Hospital because he had lost confidence in the surgeon who attended him there. It is not the purpose of this appeal to decide whether there were objective grounds for that loss of confidence. The appellant has valid medical reasons for preferring Prof Gray as the surgeon to perform the revision and after the complications in his recovery and his loss of confidence in his former surgeon it would seem proper to give effect to his choice of surgeon if that is practical. DATED at WELLINGTON this 18- day of August 1995 D A Ongley District Court Judge