Draper v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 321 199 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act BETWEEN KEITH DRAPER of Taupo Appellant (Appeal No. DCA 217/99) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent RESERVED JUDGMENT OF JUDGE A W MIDDLETON ON THE PAPERS I have received submissions from Mr J Miller, counsel for the appellant and from Mr S D Galloway, counsel for the respondent, with the request that I issue a decision on the papers. The issue is whether the respondent was correct to decline to reimburse the appellant for surgical costs incurred without the prior approval of the respondent. The appellant lodged a claim for cover for mesothelioma with the respondent on 17 June 1998. The problem resulted from his exposure to asbestos in the course of his work at the Wairakei Power Station. The exposure occurred during a period in 1965 at which time no precautions were taken with the handling of asbestos as it was not then known to have harmful effects. In May 1998 the appellant was referred to a thoracic and vascular surgeon, Mr R Blair, who reported to the appellant's general practitioner on 15 May 1998 that a "CT scan (14.5.98) confirms the presence of pleural masses in the left lateral chest wall and also a collection of fluid in the left base". Dr Blair considered that the appearances "might be asbestos with a mesothelioma". On 9 June 1998 as a result of recommendations from Mr Blair the appellant underwent a "video-assisted 2 thoracoscopic aspiration of pleural fusion and biopsy of mass on the left lateral chest wall". Dr Blair considered that the findings at operation were consistent with a mesothelioma. On 29 June 1998 the appellant lodged a claim with the respondent for cover for a gradual process disease or infection. At the same time he included an application to recover the cost of the surgery which had been carried out and was not covered by his private health insurance. The respondent accepted the appellant's claim for cover for which he was paid subsequent medical costs and also an independence allowance. On 30 September 1998 the respondent notified the appellant that his application for reimbursement of the surgery costs was declined because he had not obtained the prior approval of the respondent. The appellant applied for a review of that decision which was unsuccessful. It is against that decision which the appellant now appeals. While the review officer relied on the decision in Walsh (1996) 1 BACR 250, Mr Miller submitted that the facts in Walsh can be distinguished from the facts and circumstances in this particular case. Mr Miller submitted that in Walsh the appellant had suffered a personal injury caused by an accident when a fish bone stuck in his gullet. In that case the High Court concluded that there was no absurdity in compelling the appellant to comply with the Regulations requiring prior approval for private hospital treatment even in cases of emergency. He submitted that in this case it was not possible to make an application prior to the treatment because the exact nature of the appellant's problem was not known until after the operation had been completed and it was found that he suffered mesothelioma. He submitted that in a case such as this it was inconceivable that the legislature intended to penalise the claimant by requiring him to obtain prior approval. Mr Miller submitted that in the present case it was open to the Court to insert the words "except in a case of personal injury where prior permission was impossible to obtain beforehand" which would avoid the intention of the legislature being defeated. Alternatively, he submitted that the costs incurred by the appellant were costs properly incurred in establishing his entitlement. Mr Galloway submitted that the position is governed by Regulations 5 and 11 of the Accident Compensation (Specialists Costs) Regulations (No. 2) 1990 and by s. 156 of the Act. He submitted that the procedure given to this appellant does not appear in Part II of the Regulations but whether or not the issue is decided under Regulation 5 (where the operation is not on the schedule) or Regulation 11 (where the operation is on the schedule) it is still necessary to obtain the prior approval of the respondent before payment can be made. He submitted that on the basis of Walsh it is not open to the Court to imply the insertion words in the Regulations suggested by Mr Miller. Mr Galloway also referred to the decision of this Court in LGS (254/99) in which the factual situation was somewhat similar to the present case in that that appellant had elected to receive private hospital surgical treatment as a result of which she suffered complications for which she was later granted cover for a medical misadventure. In that case the Court considered itself to be bound by the decision in Walsh. In LGS the appellant did not become entitled to cover until after the surgical 3 treatment in the private hospital. The original treatment in the private hospital was undertaken on the appellant's election and she only came within the ambit of cover with the respondent after the result of the treatment demonstrated a medical misadventure. However, the Court considered that it was still necessary to obtain the prior approval of the respondent before the respondent could be required to pay for the costs incurred. Regulation 5 states: "Where the only reason that the Corporation does not pay any costs under these regulations is that the procedure is not specified in Part II of the Schedule to these regulations, the Corporation may nevertheless pay those costs in accordance with the following rules: (a) The Corporation must be satisfied, before the procedure is performed and having sought the comments of the appropriate professional group for the specialty concerned, that the procedure is necessary and appropriate for the claimant, and is likely to be more effective than any procedure specified in Part II of the Schedule to these regulations: (b ) The Corporation shall pay such amount as it considers appropriate in the particular case, having regard to the maximum amount payable for procedures that are specified in Part II of the Schedule to these regulations that are of similar complexity: (c) Where any payment is made under the authority of this regulation, no payment in respect of any procedure carried out at the same operation shall be paid under Part II of the Schedule to these regulations: (d) Where payment is made under the authority of this regulation, no payment shall be made for any routine pre-operative or post-operative consultation." Regulation 11 states: "(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-- In a licensed hospital; or (i1 ) In the case of items marked in the Schedule with an asterisk (*), 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 claimant to undertake remunerated employment that the treatment be provided. 4 (3) The Corporation shall give the approval referred to in subclause (1) of this regulation where-- (a) The procedure is specified in Part II of the Schedule to these regulations under the heading "Plastic Surgical Procedures"; and (b) The Corporation is satisfied, after obtaining such assessments as the Corporation considers necessary (which assessments shall be obtained at the expense of the Corporation), that without the completion of the procedure the claimant would not be able to participate in the normal social activities that might be expected for that claimant. (4) Nothing in this regulation shall apply in respect of-- (a) Any procedure in Part II of the Schedule to these regulations that is marked with a cross (**); or (b) Any procedure that is discovered to be necessary to perform, and is performed, during the course of any approved treatment." Section 156 states: '(1) The Corporation shall perform such functions and duties and have such powers as are conferred or imposed on it by or under this or any other Act. (2) The Corporation shall also have such powers as are necessary or expedient to enable it to perform its functions and duties. (3) Without limiting subsection (2) of this section, the Corporation has power to contract with the Crown, any department of State, or any other person or organisation for the performance of any of its functions or duties or the exercise of any of its powers." I agree with Mr Galloway's submission that irrespective of whether the operation comes within Regulation 5 or Regulation 11, the requirement is that before the respondent can be called upon to meet the costs it is necessary for the appellant to obtain the respondent's prior approval to the procedure. In Walsh Justice Salmon referred to the statement by Lord Scarman in Stock v Frank Jones (Tipton) Ltd [1978] 1 All ER 948 in which he said: "If the words used by Parliament are plain, there is no room for the 'anomalies' test, unless the consequences are so absurd that, without going outside the statute, one can see that Parliament must have made a drafting mistake. If words 'have been inadvertently used', it is legitimate for the court to substitute what is apt to avoid the intention of the legislature being defeated: per Mackinnon LJ in Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd [1978] Ch 174, 201. This is an acceptable exception to the general rule that plain language excludes a consideration of anomalies, ie mischievous or absurd consequences. If a study of the statute as a whole leads inexorably to 5 the conclusion that Parliament has erred in its choice of words, eg used 'and' when 'or was clearly intended, the courts can, and must, eliminate the error by interpretation. But mere 'manifest absurdity' is not enough: it must be an error (of commission or omission) which in its context defeats the intention of the Act." I agree with Mr Miller that in this case it was impossible for the appellant to know that he had suffered a personal injury caused by the gradual process disease or infection until after the date of operation. I also agree that until these costs were incurred the appellant had no opportunity to establish entitlement. Mr Miller submitted that it was inconceivable that the legislature intended to penalise the appellant by requiring prior approval when it was impossible to obtain. I agree with Mr Miller's submission that the tenor of the legislation and the reports in regard to asbestos based claims is that the medical costs of establishing a claim ought to be recoverable. While I agree with that sentiment, I take the view that at the time the Regulations were promulgated the Court must accept that the legislature intended them to say exactly what they do say. It may well be that situations like this were not contemplated and I agree that it does appear to be unfair that the appellant should be denied reimbursement of the medical costs of establishing his claim because of the failure of legislature to contemplate a situation such as his. However, I do not consider that this Court has the authority or power to depart from the very clear findings of the High Court in Walsh and accordingly the appeal is dismissed. As I have indicated, I consider that the mandatory nature of the regulations can create an injustice. I consider that the result of this decision should be referred to the appropriate Minister with a view to amending the regulations to cover an eventuality such as has occurred in this case. DATED at WELLINGTON this 12 day of November 1999 A W Middleton District Court Judge dca21799.doc(rd)