Rogers v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT AUCKLAND Decision No. |0 /98 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act BETWEEN JOHN ROGERS (Appeal No. DCA 123/97) Appellant AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 25th day of November 1997 APPEARANCES 2 Mr R B Hucker and Miss A M Aitken for appellant Miss K Tahana for respondent DECISION OF JUDGE M J BEATTIE The issue in this appeal is whether the Corporation's decision of 13 December 1996, made pursuant to s.67A of the Act, to revoke two earlier decisions whereby the Corporation had firstly approved payment for the purchase of a cochlear implant system for the appellant and secondly that it would cover normal repair costs and maintenance relating to the said implant system, was correct. Background Facts The appellant, now aged 73, sought cover under the Act in May 1993 for noise induced hearing loss arising from his employment. At the time he sought cover he was found to be suffering from profound bilateral hearing loss. Conventional hearing aids and various assistive listening devices were of no benefit to him as his hearing loss was so severe. In conjunction with North Shore Audiology Limited he was being considered for the Cochlear Implant Programme as a means of rehabilitation. In 1994 he was examined by Dr Robert Gunn, an Otolaryngologist and Dr Gunn reported to the Corporation on 5 April 1994 as follows: "I saw Mr Roger today in connection with his industrial deafness. He has a profound bilateral hearing loss and has tried extremely powerful hearing aids without any benefit whatsoever. He is now virtually isolated, in that he is unable to use a phone, and finds it impossible to converse other than by lip reading. 3 Potentially he is an excellent candidate for a cochlear implant operation, which basically is a kind of implanted hearing aid, which would give him useful hearing and would be an extremely suitable mode of rehabilitation for him. Cochlear implants are expensive, of the order of $25,000 for the device, but in view of his extreme hearing disability and in the absence of any other possible mode of rehabilitation, it is important that he be implanted as soon as possible. On this basis I would like to apply for funding to carry out a cochlear implant on him. The surgery would be carried out at Greenlane Hospital, but the device itself would need to be funded by ACC. I look forward to hearing from you". By letter of 27 May to Dr Gunn the appellant's case manager sought further information as the proposed cochlear implant was "somewhat of a test case for me". By letter dated 30 June 1994 Dr Gunn replied to that request for further information and his letter is as follows: "RE: COCHLEAR IMPLANTS In answer to your questions: 1. The exact nature of a cochlear implant procedure. It is an operation designed for people with no functioning hair cells in the cochlear, that is to say no mechanism for changing sound waves into electrical signals for transmission down the nerve of hearing. In Mr Roger's case, the ACC has accepted that noise has been responsible for the loss of hearing. In this situation, the loudest hearing aid gives no hearing whatsoever, and the only possible means of rehabilitation is to fit a cochlear implant. This is an implanted device with a series of electrodes that are fed into the inner ear. There is also an externally worn speech processor and microphone. It enables the person to hear by direct electrical stimulation of the hearing nerve fibre. 2. Likely outcome. People with cochlear implants in this situation generally do extremely well. Virtually all of our adult implantees in the New Zealand programme are back in normal jobs, and most are able to converse on the telephone etc. Before we would carry out such a procedure on Mr Rogers, there are a number of special tests which are carried out to guide us as to whether he is likely to be a good implant candidate. There is no point us carrying out these tests unless we know that we will have the funding available for an implant should the test show that he is likely to do well with one. 3. Details of previous case Many hundreds of people have now been implanted at various centres around the world. The New Zealand programme, which is based in Auckland, has now implanted about twenty five people, and is currently implanting about seven per year. These people have hearing losses from a variety of causes, and the only failure within the New Zealand programme was in someone who proved to have new bone formation in the inner ear, such that a conventional implant was not able to be used, and a much cruder single channel implant inserted, which predictably did not give as much useful hearing. In general, we regard the hearing ability of an implantee to be roughly the equivalent of someone with a 70-90dB hearing loss who is wearing a good hearing aid, remembering that a cochlear implantee can hear nothing with any hearing aid. As mentioned above, a cochlear implant is the only possible way of restoring any hearing for Mr Rogers, and if a decision is made not to implant him, effectively that means that he will never hear anything again. If there are any further details I can supply, please let me know". There then followed memoranda passing between the appellant's case manager and the manager support services at Head Office. The memoranda emanating from the Takapuna office of ACC where the appellant's file was being administered indicate that both his case manager and her team leader were very supportive of being able to allow the appellant to have the proposed implant. By letter of 5 August 1994 the Corporation gave Mr Gunn approval to go ahead and carry out the necessary tests that were referred to in his letter of 30 June. By memorandum dated 11 October 1994 from Head Office general manager, operations to the Takapuna Branch manager of the Corporation, advice was given that the request for the cochlear implant be declined for the reason "procedure is being carried out through public health system. Cochlear implant will be not be implanted in the course of a procedure specified in Part II of the Schedule to the Specialists Costs Regulations". That decision was advised to Dr Gunn who replied by letter of 31 October as follows: "Thank you for your letter of October 19th. I see there must have been some misunderstanding from your head office regarding Mr Roger's proposed cochlear implant. I understand from your letter that the procedure was declined 'as the procedure is to be done through the public health system'. The application for funding was not for the cost of the surgery itself, as this can of course be done in a public hospital. There is no public hospital funding for the device itself, which is of course the most expensive part of the whole business. There is currently no government funding through the RHA's for adults for cochlear implants, and if an adult is to benefit from an implant, it can only be either self-funded in the case of people whose hearing loss is not due to accidents, or alternatively funded by the ACC if the hearing loss is accepted as being related to an accident or an occupational disease. I would be grateful if this could be looked into and await your reply with interest". 6 Further discussions occurred between Dr Gunn and the appellant's case manager and as a consequence by letter of 16 January 1995 the appellant's case manager advised Dr Gunn as follows: "I am pleased to notify you that ACC has granted approval for your application for Mr ] Rogers to receive a cochlear hearing aid at the quoted cost of $25,000. I look forward to receiving the invoice for reimbursement". The file is not clear as to when the cochlear implant was inserted but it would seem to be towards the end of May 1995. Prior to the operation taking place the appellant sought an assurance from the Corporation that it would cover the costs of ongoing maintenance and repairs. He sought that assurance before proceeding with the operation and by letter of 25 May from his case manager to Dr Gunn the appellant was given the advice that the Corporation agreed to pay normal repair and courier costs, however it would not be responsible for payment of batteries. The next event of relevance is an invoice dated 30 May 1995 from the Deafness Research Foundation Inc for the sum of $25,400 for "supply of one cochlear implant and associated speech processor". That account was duly paid by the Corporation on 21 August 1995. From the evidence given by the appellant as the review hearing it is clear that the implant was a success and the appellant's quality of life has improved immeasurably and he is now able to engage in normal social intercourse and is an active member of his local RSA Bowling Club and is a member of its committee. It is possible that this particular file would have remained closed had it not been for the appellant approaching the Corporation in October 1996 with a view to the Corporation funding insurance cover for damage and repair to his system. He had provided the Corporation with a letter from the New Zealand Cochlear Implant Programme, which had been established by the Deafness Research Foundation, 7 which itemised the equipment which he had as part of his cochlear implant system and which was there described as an implantable hearing aid device. The value of the various pieces of equipment for which insurance cover was sought amounted to AU$8,691. It was at this point that the Corporation revisited its decision regarding the supply of the cochlear implant system to the appellant and which culminated in its decision letter of 13 December 1996 which dated at follows: "As requested, I am writing to you to confirm the issues we discussed regarding the payment by the Corporation for your cochlear implant. Your file has been audited by Head Office, Wellington and the Takapuna Office have been advised that we have made 2 incorrect decisions on the claim. As advised by Head Office:- First Decision On 16 January 1995, Takapuna Branch Office notified Mr Gunn, Otolaryngologist of the approval of Mr Rogers' cochlear implant. However, the Corporation is unable to approve cochlear implants on the following basis: A cochlear implant is fixed into the spiral cavity of the inner ear during a spiral procedure. The Schedule to Accident Compensation (Specialists Costs) Regulations (No. 2) 1990 does not provide for the payment of the procedure required to implant a cochlear implant. The only operations listed in the Schedule are myringotomy and myringoplasty, which only involve the ear drum. We have been advised that the radical mastiodectomy and tympanoplasty is required to insert a cochlear implant, and this procedure is considerable more complex and 8 completely different in nature than those provided for in the Schedule. It would therefore not be possible to approve this procedure under Regulation 5 of the Specialists Costs Regulations. Furthermore, Regulation 6 of the Prescribed Artificial Limbs, Aids and Prosthetic Appliances Costs (PALAPAC) Regulations 1990 provides the following: 'No payment shall be made under these Regulations in respect of any artificial aid in the nature of an implant unless it is implanted in the course of a procedure specified in Part II of the Schedule to the Accident Compensation (Specialists Costs) Regulations (No.2) 1990 (S.R. 1990/233) and the Corporation has approved payment under those Regulations for that procedure'. (Emphasis added). ACC is unable to pay for the implantation of a cochlear implant within the confines of the existing treatment Regulations. Therefore, ACC was in error in approving Mr Rogers' cochlear implant. Second Decision In a letter dated 25 May 1995 Takapuna Branch Office notified Mr Gunn, Otolaryngologist, that ACC would pay for normal repair and courier costs of Mr Rogers' cochlear implant. A verbal decision was issued to Mr Rogers on 24 May 1995. As we are revising our first incorrect decision on the basis that we do not pay for cochlear implants, we are also unable to pay for any associated costs. This decision also needs to be revised under Section 67A. Following our discussion, I intend to submit a request to Head Office that the debt is remitted under Section 77 of the Accident Rehabilitation and Compensation Insurance Act 1992. 9 To assist me with my submissions, as discussed, could you please advise me of your current financial position. i.e. Details of current income Copy of weekly budget List of assets I was pleased to see how well you looked and to hear how the cochlear implant has enabled you to enjoy your life again and how much it has assisted in your social rehabilitation". The appellant sought a review of that decision and by decision dated 11 April 1997 the review officer, after considering the provisions of s.27 of the Act and the Accident Compensation Prescribed Artificial Limbs, Aids and Prosthetic Appliances Costs (PALAPAC) Regulations 1990 and the Accident Compensation (Specialists Costs) Regulations (No.2) 1990 concluded the following: "... on application of the relevant regulations with respect to cochlear implants, it is firstly established that unless they are implanted in the course of a procedure specified in Part II of the previously mentioned Specialists Costs Regulations, ACC is prevented from paying for such costs. Secondly, the PALAPAC Regulations restrict payments for artificial aids, which also include cochlear implants, unless such a procedure is contained within Part II of the Schedule to the Specialists Costa Regulations. Even if Regulation 5 of the Specialists Costs Regulations was applied to Mr Rogers' situation, Regulation 5(b) directs that ACC shall only contribute towards such costs having regard to the maximum amounts payable for similar procedures under Part II of $25,000 plus, which is the cost of a cochlear implant. 10 Needless to say, there is nothing under Part II of the Schedule which comes anywhere near the cost of a cochlear implant. Moreover, my reading of the Schedule does not indicate that there is a similar procedure to that for cochlear implanting. Therefore, the issue of regulation 5 under the Specialists Costs Regulations does not have any application to the issue under construction. Consequently, whilst sympathetic to Mr Rogers' situation, I believe the Corporation's original decisions in January and May 1995 were indeed incorrect, and that the decision of 13 December 1996 is, on the fact of it, incorrect". Relevant Statutory Provisions 26. OBJECTIVE OF SOCIAL REHABILITATION - (1) The objective of social rehabilitation is to restore the independence of a person to the extent that the person's independence has been lost by personal injury covered by this Act. (2 ) In this Act 'social rehabilitation' includes, without limitation ... ()Provision of, or payment for, wheelchairs and any other aids and appliances likely to assist independence in daily living. 27. TREATMENT AND PHYSICAL REHABILITATION (1 ) The Corporation shall contribute to the cost of any treatment, service, physical rehabilitation, related transport, or certificate (in this section called a purchased service), in respect of personal injury that is covered by this Act - 11 ( a) To the extent required or permitted by regulations made under this Act". The Accident Compensation (Prescribed Artificial Limbs, Aids and Prosthetic Appliances Costs) Regulations 1990 provide inter alia: "4 . CORPORATION TO PAY CERTAIN COSTS - (1) Subject to these regulations, the Corporation shall pay the costs payable by any claimant for any item (and its normal repair or renewal) less any subsidy payable by a Regional Health Authority in respect of that item, where the item is prescribed by a registered specialist for the claimant as a result of personal injury. 5. Hearing Aids 1) Except as provided in subclause (2) of this regulation, nothing in these regulations shall apply in respect of any hearing aid unless the hearing aid is - (a) A hearing aid in respect of which the relevant regional health authority would have made a payment if the hearing aid had been required in respect of a condition that was not personal injury; and (b) Supplied on the recommendation of an audiologist. 6 Restriction on payments - No payment shall be made under these regulations in respect of any artificial aid in the nature of an implant unless it is implanted in the course of a procedure specified in Part II of the Schedule to the Accident Compensation (Specialists Costs) Regulations (No.2) 1990 (S.R. 1990/233) and the Corporation has approved payment under those regulations for that procedure". The Accident Rehabilitation and Compensation Insurance (Social Rehabilitation - Aids and Appliances) Regulations 1992 provides by Reg 7: 12 "7 . Scope of aids and appliances - (1) Subject to subclauses (2) to (5) of this regulation, without otherwise limiting the scope of aids and appliances that may be approved, the aids or appliances that the Corporation or exempt employer may approve shall include aids and appliances of a kind specified in the First Schedule to these regulations. (2) Subject to subclause (3) of this regulation, the Corporation shall not, and an exempt employer shall not be obliged to, approve payment for the purchase of any aid or appliance of a kind described in the Second Schedule to these regulations. (3) The Corporation or exempt employer may approve, subject to these regulations, on the recommendation of the person who undertook the assessment, payment for the purchase of an aid or appliance of a kind specified in the Second Schedule to these regulations where the Corporation or exempt employer is satisfied that the payment is a cost effective alternative to paying to the claimant future costs of attendant care, home help, or child care. (4) No payment shall be approved under these regulations for the purchase of an aid or appliance of a kind specified in the Third Schedule to these regulations. (5) No payment shall be made under the Accident Compensation (Prescribed Artificial Limbs, Aids, and Prosthetic Appliances Costs) Regulations 1990 for the purchase of an aid or appliance of a kind specified in the First Schedule or Second Schedule to these regulations". Appellant's Submissions Mr Hucker for the appellant made three principal submissions each intended to establish that the Corporation did have authority to agree to and make payment of the cost of the cochlear implant. The first submission was that the provisions of the Social Rehabilitation - Aids and Appliance Regulations so permitted. He submits that Regulation 7 recognises that there may be a class of aid or appliance that is not covered in any of the Schedules to the Regulations but for which approval may be granted. He submits that the 13 cochlear hearing aid falls within that class of aids and appliances coming within Regulation 7(1), that is it is of a type that does not fall within the first, second or third Schedules to that Regulation. In so far as the third Schedule to those Regulations is concerned he submits that Item 9 in that Schedule namely "aids or appliances designed for the treatment or physical rehabilitation of a person" is not applicable as the purpose of the provision of the cochlear hearing aid was to achieve independence in daily living rather than being a form of treatment or physical rehabilitation. He submitted that the implant was provided to ameliorate the effects of the personal injury by accident and was not related to treatment or physical rehabilitation. In the alternate, Counsel secondly submitted that there was authority under Regulations 4 and 5 of the PALAPAC Regulations and that the cochlear implant was a hearing aid device in terms of Regulation 5 rather than an implant under the more restricted Regulation 6. Counsel's third submission was that in the event of it being held that Regulation 6 of the PALAPAC Regulations applied in that it was an artificial aid in the nature of an implant then he submitted it was one implanted in the course of a procedure specified in Part II of the Schedule to the Specialists Costs Regulations. Respondent's Submissions Miss Tahana for the respondent submitted that Regulation 7(4) of the Social Rehabilitation Aids and Appliances Regulations and Item 9 of the Third Schedule there to clearly precludes those Regulations being applicable to permit payment. She submits that "treatment" can be palliative as well as curative and that it is incorrect to say that a surgically implanted device is not "treatment" within the ordinary meaning of that word. 14 She further submits that the cochlear implant is of a type that sensibly falls within the PALAPAC Regulations rather than the Aids and Appliance Regulations which are confined in the main to everyday aids and appliances connected more directly with social rehabilitation whereas the PALAPAC Regulations are concerned principally with more specialised aids and appliances. Counsel further submits that the PALAPAC Regulations cannot be used to provide authority for payment. She submits that Regulations 5 and 6 of those Regulations do apply and that as under Regulation 6 the implant was not inserted in a surgical procedure specified in Part II of the Schedule to those Regulations, it cannot be so authorised. She refers to 6 procedures listed in the Schedule which relate to ear operations and notes that none of those procedures would allow for the implantation of a cochlear implant. She submits that the insertion of such an implant requires radical mastoidectomy tympanoplasty procedures and that neither of these are provided for in the Schedule. Decision I find that in order to come to a decision on this issue it is essential to establish exactly what it was that the appellant, through his specialist Dr Gunn, sought of the Corporation back in 1994. After reviewing the Corporation's file and considering the submissions which have been made both to this Court and to the Review Officer I consider the essential issue has been lost sight of. It is true that a plethora of Regulations which are supposedly meant to be the working 'nuts and bolts' of the Act sometimes manage to submerge the particular issue. In this case s.26 of the Act is designed to provide social rehabilitation, that is the provision of aids and appliances likely to assist independence in daily living of a person who has suffered personal injury by accident. As I have noted in the narrative of background facts, the appellant was seeking to have the Corporation purchase a device which for whatever reason has been described as a cochlear 15 implant. It is stated by Dr Gunn to be an implanted device with a series of electrodes that are fed into the inner ear. There is also an externally worn speech processor and microphone. It enables the person to hear by direct electrical stimulation of the hearing nerve fibre. It is a device which enables profoundly deaf people such as the appellant, who cannot be helped by conventional hearing aids, to improve their communication abilities. Instead of making sounds louder like a conventional hearing aid, it provides electrical stimulation direct to the inner ear which the brain interprets a sound. The National Audiology Centre described cochlear implants as hearing aids. They are approved as such by the National Audiology Centre for funding in the same way as other types of hearing aid. Evidence from the National Audiology Centre was produced to this Court establishing that it was an approved hearing aid, such approval having been given on 3 August 1992. Nowhere in the appellant's request through his specialists was there any request to cover the costs of surgery connected with the implant. Thus it was only the device itself that was being sought to be provided and paid for by the Corporation. Dr Gunn in his letter indicated that the implant would be inserted in a public hospital at no cost to the Corporation and the file discloses that that is exactly what did occur. The only cost that the Corporation has been required to make is the payment to the National Audiology Centre for the device itself. For this reason I find that the appropriate Regulations are the PALAPAC Regulations 1990. Regulation 4 requires the Corporation to pay the costs for any artificial aid where it is prescribed by a registered specialist. It has not been argued that the criteria for Regulation 4 to apply have not been met. Similarly Regulation 5 relating to hearing aids also applied. The medical evidence is that it meets the criteria required in 5(1). 16 In view of the findings of fact which I have made regarding what precisely it was that was being asked of the Corporation, I find that the more general restrictive provision of Regulation 6 of the PALAPAC Regulations does not apply. The method by which the cochlear implant was to be inserted was not a question for the Corporation to consider, or more particularly to approve, as it was not a procedure that it was being asked to approve the cost of. It was not being called upon to meet any such cost. The Accident Compensation (Specialists Costs) Regulations 1990 were promulgated for the purpose of setting out the amounts and the conditions under which the Corporation would pay for treatment by specialists. The Regulations are structured so that the Corporation keeps control over specialists costs of treatment and a schedule for various surgical procedures and the costs thereof are set out in Part II. Regulation 5A states that the Corporation shall not contribute to the costs of any treatment where the treatment is provided or obliged to be provided by any Crown Health Enterprise. Although there was no evidence before this Court directly addressing this particular point it was clear from the documents and the submissions made by Dr Gunn that no claim was being made by any specialist under these Specialists Costs Regulations and that the operation was going to be conducted in a public hospital at no cost to the appellant or the respondent. I find that Regulation 6 of the PALAPAC Regulations simply ties in with the purposes of the Specialist Costs Regulations so that if an artificial aid was to be implanted involving some costly surgical procedures it couldn't be so provided unless the costs of the surgical procedures had been approved under those Regulations. In other words a claimant could not claim for the costs of the artificial aid and have those costs include the costs of fitting it by implant under the PALAPAC Regulations where there had been no prior consultation for approval of the surgical costs. Here there is no such claim for the costs of any surgical procedures and therefore Regulation 6 does not apply. 17 In having found as I have that the Corporation's decision to agree to payment was so authorised under the PALAPAC Regulations, it is unnecessary for me to consider the alternate argument submitted by counsel for the appellant but in terms of completeness I would indicate that I would have ruled that the provisions of the Social Rehabilitation - Aids and Appliance Regulations would not have assisted the appellant as despite the seemingly general scope of Reg 7(1) - "without otherwise limiting the scope of aids and appliances that may be approved" I find that 7(4) which prohibits approval for any payment for aids or appliances of a kind specified in the Third Schedule, would include a cochlear implant. I find that Item 9 of that Third Schedule, namely aids or appliances designed for the treatment or physical rehabilitation of a person, correctly describes the nature of the cochlear implant. The appellant's submission that physical rehabilitation must be considered separately from social rehabilitation overlooks the fact that the definition of 'aids or appliances' for the purposes of the Regulation clearly includes social rehabilitation when it talks of it being an item likely to assist a person with a disability to achieve independence in daily living. That phrase is indeed almost identical to the wording in s.26 which spells out the objectives of social rehabilitation which includes the provision of aids and appliances likely to assist independence in daily living. It was the original decision of the Corporation that it did have power and authority to approve payment for the provision of the cochlear implant to the appellant although when it so did it never actually spelt out what precisely the source of that power and authority was. It was the subsequent decision of the Corporation made under s.67 A of the Act that it had no such power or authority that this Court has reviewed by way of appeal. For the reasons given I find that the Corporation did have the power and authority to make the original decision of approval and that its subsequent decisions revoking same because it claimed it did not have such power were therefore wrong. 18 As I have found that the basis for its decisions under s.67A were incorrect, those decisions made by the Corporation under s.67 A of the Act are hereby revoked. The appellant has sought costs in relation to this appeal and in the circumstances and I direct that costs be payable by the respondent to the appellant in the sum of $850 together with such disbursements and fixed by the Registrar. DATED at WELLINGTON this 29 thday of January 1998 Deathe MJ BEATTIE District Court Judge dca12397.doc(sh)