AAI Limited t/as AAMI v Shoyeb (NSWPICMAP 2025)

Link to decision

Link to video

Key Takeaways

The foreshadowed changes to the Workers Compensation Act (WCA) involve the insertion of a ‘reasonable and necessary’ test for the payment of medical and related treatment expenses.

The ‘reasonable and necessary’ test is a significantly more demanding test than the existing ‘reasonably necessary’ test, and is a two-step assessment considering whether treatment is both reasonable and necessary.

Guidance with respect to the ‘reasonable and necessary’ test can be found in decisions of the Motor Accidents Division of the Personal Injury Commission (PIC) as the test is consistent with that used in the Motor Accident Injuries Act 2017.

Brief Facts

The claimant was involved in a motor accident on 26 November 2021 and alleged injuries to his neck, back and right knee. He made a claim for statutory benefits against the CTP insurer of the ‘at fault’ motor vehicle, which was accepted. At the recommendation of the claimant’s GP, MRIs were undertaken to the neck, back and right knee in or about early to mid-2022.

Due to ‘worsening symptoms’ the claimant was referred for further MRIs of the neck, back and right knee in late 2023. The CTP insurer disputed the proposed imaging and the claimant referred the dispute to a Medical Assessor (MA) of the Motor Accident’s

Division of the PIC who determined the proposed imaging was ‘reasonable and necessary’.

The CTP insurer appealed the decision to a Medical Appeal Panel (MAP).

Judgment

The MAP summarised the authorities with respect to determining whether treatment was ‘reasonable and necessary’. Quoting the well-known authority of Diab the MAP noted that the phrase ‘reasonable and necessary’ was a ‘significantly more demanding test’ than the test as to whether treatment was ‘reasonably necessary’.

The MAP stated that the more stringent ‘reasonable and necessary’ test required them to consider whether the proposed MRIs were both;

1. Reasonable; and
2. Necessary.

Treatment is considered ‘reasonable’ if its purpose and potential effect is to alleviate the consequences of injury, considering indicia such as the appropriateness of the proposed treatment, its cost, and its acceptance by medical experts as being appropriate and likely to be effective.

The MAP, quoting Rose and Diab, noted that ‘necessary’ involved being ‘indispensable, requisite, needful, that cannot be done without’ or something ‘that cannot be dispensed with’.

The MAP did not consider that further MRIs of the neck, back or right knee were reasonable, nor were they necessary in the circumstances of the claimant’s injuries and complaints.

The proposed imaging was not reasonable and necessary as the claimant did not complain of new or changed neurological symptoms, they were unlikely to alter the treatment regime of the claimant’s injuries, and it was unnecessary to have further scans when the original scans were performed less than two years prior with no clear alteration in the nature of the claimant’s symptoms.

Further, the claimant’s treating practitioner, who had recommended the imaging, had not stated any diagnostic hypothesis being tested, but rather persistence of pain with no clear indication of new symptoms.

The MAP revoked the MA’s decision and determined that the proposed MRIs to the neck, back and right knee were not reasonable and necessary.

Implications

The foreshadowed insertion of the ‘reasonable and necessary’ test into the NSW workers compensation legislation is a significantly more demanding test than the existing test as to whether treatment is ‘reasonably necessary’.

It will involve two distinct assessments, one as to whether the treatment is reasonable, and secondly whether it is necessary. Foreseeably, treatment may be reasonable, but not necessary and vice versa.

Upon commencement of the test within the workers compensation sphere, insurers will need to carefully consider both assessments (that is whether the treatment is both reasonable and necessary) when determining whether it is appropriate to approve proposed treatment.