Radulovic v Multiweld Engineering Pty Ltd [2000] NSWCC 49; (2000) 20 NSWCCR 598 (18 August 2000)

Last Updated: 23 July 2001

[2000] NSWCC 49; (2000) 20 NSWCCR 598

RADULOVIC v MULTIWELD ENGINEERING PTY LTD

[2000] NSWCC 49

Compensation Court of New South Wales: Walker J

11 July 2000 (H)

18 August 2000 (J)

Workers compensation - Medical or related treatment - Calculation of cost - Meaning and scope of expression "the customary charge made in the community for the treatment to persons other than workers" - Onus of proving claimed amount is excessive - Alternative ways of resolving issue - Workers Compensation Act 1987 (NSW), s 61

Words and phrases - "customary charge" - Workers Compensation Act 1987 (NSW), s 61(1)

Words and phrases - "community" - Workers Compensation Act 1987 (NSW), s 61(1)

Words and phrases - "persons other than workers" - Workers Compensation Act 1987 (NSW), s 61(1)

J.A. Anderson, for the applicant

T.M. Wardell, for the respondent

Cur adv vult

WALKER J:

The claim

1 Vojko Radulovic claims medical expenses pursuant to s 60 of the Workers Compensation Act 1987 (the Act) in respect of injuries to his back and legs.

2 The basis of his claim is that arising out of and in the course of his employment with the respondent as a carpenter he injured his back and consequently his legs lifting a steel beam on 13 January 1995.

The issues

3 Mr Wardell for the respondent puts in issue the appropriate quantum for the applicant's claim pursuant to s 60 in respect of the physiotherapist services of Bronwyn Tallis. There were also fees outstanding to the Health Insurance Commission, to Sandra Gilbert physiotherapist and for medical services by Dr Nicolic but they were not in dispute.

4 Relying on s 61(1) of the Act, Mr Wardell submits that I should find that Ms Tallis's fees are not reasonably appropriate to the treatment given. He does not make this submission on the usual basis of the reasonable necessity for the treatment. Rather he contends that the fees exceed "the customary charge made in the community for the treatment to persons other than workers".

5 Mr Anderson for the worker nevertheless asks the Court to find that the nature and extent of the treatment was reasonably necessary.

Matters for determination

6 The matters to be determined are:

1. Does the respondent or the worker bear the onus of proof to establish under s 61(1) that the physiotherapy fees charged exceeded "the customary charge made in the community for the treatment to persons other than workers". Has that onus been discharged?

2. What is the meaning of the phrase "the customary charge made in the community for the treatment to persons other than workers"? In particular what is the true meaning of the terms:

(a) "Customary charge"

(b) "Community"

(c) "Persons other than workers"

3. Was the nature and extent of the physiotherapy treatment afforded to Mr Radulovic reasonably necessary?

The evidence

Bronwyn Megan Tallis

7 Bronwyn Megan Tallis gave evidence that she is a legally qualified physiotherapist carrying on her practice at Fairfield Heights. She told the Court that her practice treated the applicant.

8 Ms Tallis said that on 13 September 1999 she received a facsimile from GIO Workers Compensation (NSW) Ltd concerning amongst other things the fee scale applicable in Mr Radulovic's case. The relevant part of the facsimile reads, "The attached charges sent to the worker are his responsibility. GIO pay the agreed fee as per your Association's schedule. If you wish to recover from Mr Radulovic please discuss this matter with him".

9 Ms Tallis said that on 15 September 1999 she wrote to the GIO attaching a copy of the Australian Physiotherapy Association recommended fee schedule for 1999 and asserting her fees were considerably less than those recommended up to June 1999 and coincided with the schedule thereafter.

10 Ms Tallis told the Court that the Australian Physiotherapy Association was the professional body regulating physiotherapists. It has both State and Federal branches and inter alia recommends schedules of fees on a biannual basis.

11 Ms Tallis told the Court that it is her practice to charge the recommended fees. However, she provides a discount to cash customers.

12 Ms Tallis said that because of his multiple disabilities Mr Radulovic's treatment sessions last 1 hour. Half of that time he has a therapist working "hands on" and the rest of the time he is working on machines.

13 Ms Tallis said that as part of her service she provides to each patient clean bed linen, hygiene wipes, massage oils, replacement of hygiene fluids, paper face towels and draping linen.

14 Ms Tallis said that although Mr Radulovic's treatment requires work on different parts of his body, she complies with her Association's schedule and charges a single fee for the multiple service. Ms Tallis said that in arriving at her fee she takes into account the cost of running her practice.

Cross-examination of Ms Tallis

15 Mr Wardell put to Ms Tallis that the Australian Physiotherapy Association withdrew its recommended fee schedule after action taken by the ACCC. She had no knowledge of that suggestion.

16 Mr Wardell asked Ms Tallis about the role of Mr Merve Tallis in the practice. She replied that Merve Tallis was her manager involved in administrative duties including assessing the costs of the practice. He reads all the material from the Australian Physiotherapy Association and private practitioners and manuals on the physiotherapy market. Ms Tallis said she reasonably engages in meetings within the practice to discuss fees as well as attending meetings of the Association where such matters are discussed.

17 Mr Wardell asked Ms Tallis whether she was aware that there was a fee recommended by WorkCover. She said she knew it existed but didn't know what it was.

18 Ms Tallis told Mr Wardell that she was aware of ongoing negotiations between WorkCover and the APA concerning fees. She agreed that it was up to the individual physiotherapists to fix their fees based on the costs of running their business.

19 Ms Tallis said she was aware of what other physiotherapists were charging from discussions with other physiotherapists in her area. She said that her fellow practitioners fees were much higher than hers. She said she based her fees on the cost of the treatment to ensure the business was viable.

Mervyn Ralph Tallis

20 Mervyn Ralph Tallis gave evidence that he is Bronwyn Tallis's father and employed by her to manage her practice for the past 2.5 years.

21 He said he had taken an active role in analysing practice overheads and management costs and that the overall administration costs represented $16.50 per patient. The practice does not charge more than the fee recommended by the APA. He recommended to the practice that from 1 June 1999 they should adjust the fee to that recommended by the APA because until then the practice had been losing money.

22 Mr Tallis said he was aware of the fees charged by other local physiotherapists. He said the Tallis practice charges higher fees. However, the other practices only provide the treatment on the basis of a 15 minutes session. They charged $37 for 15 minutes, while the Tallis practice charges $48.40 for a 1-hour session.

23 Mr Tallis told Mr Wardell that he was aware of those charges because practices at Penrith and Fairfield had faxed them to him. He was unaware of how many physiotherapy practices were in a 10 km radius from the Tallis practice.

24 Mr Tallis agreed that $37 has been the rate recommended by WorkCover to insurance companies since 1992. He had heard that the APA had withdrawn its fee recommendation after discussions with the ACCC.

25 Mr Tallis told the Court that the costs of maintaining the practice had increased substantially since 1992 particularly because of the impact of increases in workers compensation insurance premiums, rents and salaries.

Anna Bray

26 The respondent called Anna Bray, who is the team leader of WorkCover Injury Management Branch.

27 Part of her duties is to ascertain appropriate fees for physiotherapy treatment. She told the Court that WorkCover negotiates increases in its recommended fees with the APA. Submissions are made by the APA to WorkCover who assesses them and a recommendation is then made to the WorkCover Board.

28 The criterion applied in the assessment is to require a demonstration that the fee increase is warranted because it is based on the customary charge within the community.

29 Ms Bray said the WorkCover Board has not recommended the gazettal in a schedule to the Act of fees for physiotherapy. In 1992 it recommended to Workers Compensation Insurance a maximum fee of $37 to be paid for a standard consultation. Ms Bray said a standard consultation was "anything other than the initial assessment". Even if 12 hours a day needs to be spent on treatment in a session the recommended fee is still $37.

30 Ms Bray then outlined discussions that had occurred between WorkCover and the APA since 1994. No agreement has been reached.

31 Mr Wardell asked Ms Bray what data was required by WorkCover to be included in the APA submission. She said a survey of current market rates of services to persons other than workers. Ms Bray said that WorkCover's view was that the most appropriate method of determining the rate is to survey private practitioners or health funds. The 1994 survey by the APA was rejected because it was based on a cost-plus methodology.

32 I asked Ms Bray what WorkCover considers the term "community" to mean. She replied that it has been interpreted as the NSW community previously. WorkCover takes the view that it should be a Statewide average, not differentiating between city and country areas.

33 Ms Bray agreed that the word "community" could be interpreted as narrowly as a single suburb or town. Ms Bray was not able to assist the Court on the basis WorkCover arrived at its 1992 fee schedule recommendations. She agreed that "there would be an expectation that costs have increased since 1992".

The law

34 Section 61(2) of the Act empowers the prescription of regulations to fix the cost of any particular medical or related treatment under the Act. The legislature, however, has not seen fit to pass such regulations in respect of physiotherapy services.

35 The 1926 Act used the expression "in the same community" and this led to narrow interpretation of the word "community" confining it to "the community in which employees of the particular employer resided": see Jaeger v Muswellbrook Coal Co Ltd [1928] 2 WCR (NSW) 35.

36 Perdriau J revisited the question in Newcastle Hospital v Government Dockyard [1929] 3 WCR (NSW) 15. In response to the worker's submission that "community" was an area or district from which patients were drawn to the local hospital, Perdriau J held:

I am of the opinion that "community" for the purposes of subsection (5) must be regarded as the industrial community of the State, as distinct from the non-industrial community.

37 In Gordon v Commissioner for Railways [1946] 20 WCR (NSW) 20, Rainbow J had to construe s 10(4)(b) of the 1926 Act which read:

(b) the customary charge made in the community for such treatment to persons other than workers.

38 There was no evidence before him as to what the customary charge might be and he resolved the question by determining the sum reasonably appropriate having regard to the reasonable necessity for the treatment.

39 In Sisson v AF Toll Pty Ltd [1962] 36 WCR (NSW) 231 Rainbow J was provided with evidence in the form of the Australian Physiotherapy Association's rates for treatment of all patients. The relevant rate for a private patient was £1 1s, but Rainbow J found that was not reasonable for workers compensation patients and fixed an amount of 18s 6d.

40 I turn next to the case law on s 61(1) of the 1987 Act.

41 In Ebert v Department of Education (NSW) [1991] NSWCC 2; (1991) 14 NSWCCR 626, Burke J held at 633C:

Section 60(1) provides that the respondent is liable to pay "the cost" of such treatment or service. No cost, no liability.

That approach equates "cost" with "charge". It suggests that "cost" refers only to a money charge or debt incurred as a quid pro quo for the service. ... Section 61(1) looks to "such amount as is reasonably appropriate to the treatment given. Even where there is an actual charge made, the employer may not necessarily be liable to meet it if it be inappropriate in the circumstances.

42 Then at 634G Burke J said:

... one looks at the type of service provided, the periods for which they are provided and the cost of acquiring those services from other sources in the community such as the District Nursing Service, Home Care and the like.

43 The suggestion here is that "community" equates with "district" at least in a country area where the worker lived.

44 In Australian Brain Injury Institute Ltd v Hyteco (NSW) Pty Ltd, NSWCC, No. 6756/98, 29 May 1998, unreported, Moran J found that the charges to patients at the Institute could not be said to be a customary charge made in the community within the meaning of s 61(1). He went on to say:

I find that to ascertain the customary charge made in the community by visiting therapists for the treatment to persons other than workers the Court should consider the evidence how many more hours was it necessary for the worker to have therapy over and above the therapy normally given to patients in hospital.

45 In Mamolea v Hyteco (NSW) Pty Ltd, NSWCC, No. 8844/95, 5 May 1999, unreported, Moran J further considered s 61(1) in respect of physiotherapy treatment. There a number of issues were addressed about the reasonableness of the cost of physiotherapy including:

¨ Whether the use of senior physiotherapists whose charges were higher was justified.

¨ Whether it was necessary to bring in physiotherapists from outside the institution at greater costs.

46 Moran J in the end decided the matter on the basis of the reasonableness of the charges, not the definition of community.

47 In Olsen v Our Lady of Loreto Nursing Home [1999] NSWCC 13; (1999) 17 NSWCCR 557, Burke J held that in determining the "customary charge" of treatment within the meaning of s 61(1), regard is to be had to the nature and frequency of the services, whether the engagement of the service provided was part-time, full-time, or casual and the subsidiary benefits attaching to each category of employment. At [60] he said:

That [i.e. s 61(1)] effectively poses a question of the usual rate in the metropolitan area for casual services of this type. (My emphasis.)

48 In Elliott v Warringah Shire Council, NSWCC, No. 34023/99, 18 June 2000, unreported, Neilson J was confronted with the circumstance of a GP charging $38.50 per hour which was slightly less than the AMA's recommended rate for a short consultation. However, all that was involved in the service was an injection and the submission was that the charge was excessive.

49 Neilson J held that the respondent had not led evidence to establish what was the customary charge in the community. However, he found such evidence in respect of a claim for psychological counselling where the psychologist had charged $200 per hour and there was evidence before Neilson J that the current recommended rate from the Australian Psychological Society was $150, Neilson J reduced the claim to that rate.

50 I draw the following conclusions from this case law:

1. He who asserts must prove. The onus of proving the customary charge made in the community for the treatment to persons other than workers rests on the employer disputing the charge. In the absence of evidence establishing the customary charge, the Court will nevertheless proceed to order payment of the amount provided it has been established that the amount is reasonably appropriate to the treatment given.

2. There is a lack of consensus among judges of this Court as to the meaning of the term "customary charge made in the community".

3. In determining whether a charge is appropriate, the Court is entitled to consider factors such as the duration and complexity of the treatment.

Community

51 There being disagreement as to the meaning of the phrase "customary charge made in the community for the treatment to persons other than workers", I propose to reach my own conclusion as to its construction.

52 The Macquarie Dictionary 3^rd ed defines "community" as":

1. A social group of any size whose members reside in a specific locality, share government and have a cultural and historic heritage.

53 It is clear from this definition that in appropriate circumstances the whole of NSW or indeed Australia could properly be described as a "community". It was suggested by Perdriau J some 70 years ago that the NSW legislature would not be contemplating a community wider than the state of NSW. However, in these days when one considers border towns such as Tweed Heads, Albury, Queanbeyan and Broken Hill, it is obvious that the concept of community in Australia will often cross State borders when it comes to the provision of medical services. To my mind the key factors here are the nature of services being provided and the catchment area reasonably available to workers to access services of that particular kind.

54 If the legislature meant for the community to be the State of NSW, or even the Sydney Metropolitan Area as suggested in Olsen's case, then surely it would have been simple enough to say so. I take the view that the word "community" has been deliberately chosen because Parliament recognised that in the reality of modern life the availability of medical services and the cost of those services varies greatly throughout localities within the State of NSW. The accessibility of particular services such as physiotherapy for members of a community could well depend on many factors including distance; geographic obstacles such as mountain ranges and rivers; transport linkages; the availability of hospitals and local pricing policies of those providing the service.

55 I have reached the conclusion that Perdriau J is correct when he defines "community" to mean "the worker's community" although in the 21^st century to limit it to the workers "industrial community" would, in most industrial situations, no longer be a meaningful description.

Customary charge

56 The Macquarie Dictionary 3^rd ed defines "customary" relevantly as:

2. of or established by custom rather than law.

57 It would appear that instead of regulating to fix fees, the legislature's intention was to arrive at a charge that is determined by the habits and usages of the worker's community. In a free enterprise economy the market mechanism is usually determinative of what is described in health jargon as "the most common fee".

58 Accordingly I would construe "customary charge" to mean the fee most commonly charged for that particular medical service in the worker's community.

Persons other than workers

59 The word "worker" is a term defined by s 4 of the Workplace Injury Management and Workers Compensation Act 1998. "Persons other than workers" are presumably other members of the community who use the particular medical service in question.

60 The wording of s 61(1) of the Act, to my mind, represents a recognition by the legislature of the pricing practice in the health industry which puts a premium on treatment for workers compensation patients and expresses a clear policy intention to put a stop to that trade practice by linking the fees to those payable by persons other than workers.

61 There is also a recognition that cost structures will vary considerably throughout a State the size of NSW. In my opinion, the intent of the legislature in using the term "community" is to recognise that fees will necessarily vary in areas, for example, where rents are very high or distance imposes heavy travel costs.

62 It appears to me that what s 61(1) requires is a determination by the Court on a case-by-case basis of:

1. what the particular worker's community is, and

2. what is the fee most commonly charged to non-workers in that community when it comes to receiving the medical service in question.

63 If the worker lived in Broken Hill and required specialised physiotherapy, Adelaide may well be the place that persons other than workers find it necessary to travel to for such services. On the other hand, if the service required is straightforward physiotherapy, then no doubt Broken Hill itself would be the relevant community. What is obvious is that the Sydney Metropolitan area would not be a Broken Hill worker's community.

64 Mr Radulovic lives at Canley Vale within the City of Fairfield and travels to nearby Fairfield Heights for his physiotherapy. It could well be that a majority of people in the City of Fairfield obtain such services locally but there is not a skerrick of probative evidence before me that would establish that fact. Nor is there any evidence tendered by the respondent as to what Mr Radulovic's community is or for that matter what is the customary charge to persons other than workers in that community.

65 All the Court has before it is a schedule of fees recommended to insurers by the WorkCover Authority in 1992. Ms Bray did not know the basis of the process by which those recommended fees were fixed in 1992. All that is known is that there have been unsuccessful negotiations with the Australian Physiotherapy Association to reach agreements on the fees since 1994.

66 It is clear from the evidence that it has been the practice of the Australian Physiotherapy Association to recommend to its members increases to its fees biannually and that several such recommendations have been made since 1992. It is also clear that individual physiotherapists are free to fix any fee they deem appropriate. Indeed the evidence strongly suggests that the ACCC has intervened to prevent collusion between the WorkCover Authority and the Association on the fixing of prices.

67 The onus of proof of the "customary charge made in the community for the treatment to persons other than workers" has long been established to fall on the employer asserting the charge to be excessive.

68 Taking all the evidence into consideration on the balance of probabilities, I find that the employer's onus has not been discharged.

Were the charges reasonably necessary?

69 In the cases I have reviewed, notably Gordon, Mamolea and Olsen, this Court has taken the approach that, if the employer fails to establish that the charge for the medical service exceeds the customary charge in the community for non-workers, then the case should be resolved under s 60(1) by deciding whether or not the physiotherapy fees were reasonably appropriate to the treatment given.

70 Olsen's case held that in determining this question "regard should be had to nature and frequency of the services provided". In Elliott's case taking a similar approach Neilson J regarded it as appropriate to apply the rate recommended for that type of service by the relevant professional association. The evidence before me is that at no time did Ms Tallis charge more than the rate recommended by the Australian Physiotherapy Association.

71 The principles applicable in determining whether the service was reasonably necessary here were listed by Burke J in Rose v Health Commission (NSW) [1986] NSWCC 2; (1986) 2 NSWCCR 32 at 47 and are:

1. Prima facie, if the treatment falls within the definition of medical treatment ... it is relevant medical treatment for the purposes of [the] Act ....

2. ... [T]hat presumption is rebuttable ... [by] show[ing] that the particular treatment afforded is not appropriate [or] is not competent to alleviate the effects of injury ....

3. Any necessity for relevant treatment results from the injury where its purpose and potential effect is to alleviate the consequence of injury.

4. It is reasonably necessary that such treatment be afforded a worker if this Court concludes, exercising prudence, sound judgment and good sense, that it is so. That involves the Court in deciding, on the facts as it finds them, that the particular treatment is essential to, should be afforded to, and should not be forborne, by the worker.

5. In so deciding, the Court will have regard to medical opinion as to the relevance and appropriate of the particular treatment, any available alternative treatment, the cost factor, the actual or potential effectiveness of the treatment and its place in the usual medical armoury of treatments for the particular condition.

72 Dr Bleasel in his report of 2 February 2000 lists Mr Radulovic's current symptoms and disabilities as follows:

¨ numbness and incontinence of bladder and bowel function,

¨ headaches coming from the cervical-thoracic region,

¨ pain in shoulder blades,

¨ pins and needles in the hands,

¨ numbness from waist down,

¨ no power on plantar flexion--unsteady gait,

¨ no penile sensation or erection.

73 Dr Bleasel assesses Mr Radulovic's current back impairment at 50 per cent with a 40 per cent loss in each leg and 100 per cent loss of sexual function and an 80 per cent loss of bowel and bladder function.

74 Ms Tallis reports on 4 August 1999 that Mr Radulovic attended four times a week for physiotherapy involving tissue massage, joint mobilisations and electrotherapies all aimed to improve lumbar spine ROM. Three times a week he attended physiotherapy-assisted exercise to improve lumbar spine cone stabilisation, lower back strength and to improve gait and balance. He also needs physiotherapy to improve his bladder and bowel functions.

75 It is apparent from this evidence that Mr Radulovic's physiotherapy needs cannot be met by the usual 15 minute for $37 treatment recommended by WorkCover. He has multiple disabilities and different parts of his body require treatment in different ways. It would have been possible for Mr Radulovic to visit one of the practices mentioned by Mr Tallis in his evidence that charge $37 for a 15-minute session, but I cannot agree that such cursory treatment would meet the needs of his particular case.

76 Taking all the evidence into consideration on the balance of probabilities, I determine that it is reasonably necessary for Mr Radulovic to undergo an hour rather than a 15-minute session and that $48.40 is a reasonably appropriate fee for such a service.

77 Accordingly, to use Burke J's legal mantra, I find that Ms Tallis's particular treatment was essential, should be afforded and should not be forborne by Mr Radulovic.

Findings

1. The respondent bears the onus under s 61(1) of proving "the customary charge made in the community for treatment to persons other than workers".

2. The respondent has failed to discharge that onus.

3. Where the respondent fails to discharge its onus under s 61(1), the Court can proceed to determine the claim under s 60(1) and order payment if the amount was reasonably appropriate to the treatment given.

4. The treatment delivered by Ms Tallis was essential, should be afforded at the rate charged by Ms Tallis and should not be forborne by Mr Radulovic.

[At [78] his Honour made awards not calling for report - Ed]

Solicitors for the applicant: Martin Bell & Co

Solicitors for the respondent: PW Turk & Associates