Funding Treatment Costs in NSW CTP Lump Sum Settlements
A threshold injury under the Motor Accident Injuries Act 2017 (NSW) includes a soft tissue injury and a psychological or psychiatric injury that is not a recognised psychiatric illness (adjustment disorder and acute stress disorder are the usual examples; s 1.6 and Motor Accident Guidelines Part 5).
A lump sum settlement under the NSW Compulsory Third Party (CTP) scheme may include funding for future treatment costs resulting from a motor accident. This funding is not automatic and must be supported by medical evidence showing that treatment is likely to be required beyond the initial recovery period. The Motor Accident Injuries Act 2017 (MAIA) governs all CTP claims in NSW, including those made on or after 1 December 2017. Claims made before that date may be governed by the Motor Accidents Compensation Act 1999, but the current scheme is MAIA.
The settlement offer must reflect the reasonable and necessary cost of treatment to address injuries sustained in the accident. This includes physiotherapy, medical consultations, allied health services, and specialist care. The allocation of funds to treatment is part of the overall settlement negotiation and must be clearly documented.
How Treatment Funding Is Determined in a Settlement Offer
SIRA and insurers assess treatment needs by reviewing medical reports, treatment histories, and recommendations from treating practitioners. A formal treatment plan from a medical practitioner is required to support a funding request. The plan must detail the type, frequency, and expected duration of treatment.
Funding for treatment in a lump sum is not a separate account or drawdown facility. The total lump sum is structured to include a defined amount for treatment, which may be paid directly to a provider or released to the claimant under a formal agreement. The claimant remains responsible for ensuring treatment is received, documented, and used as intended.
SIRA’s approach is to ensure compensation is proportionate to actual need. Where treatment is expected to continue for more than 12 months, or involves specialist care, the settlement must reflect that need. The claimant may be asked to provide a detailed treatment plan to support the funding request.
Factors That Influence Treatment Funding
The amount allocated to treatment depends on several factors:
- The nature and severity of injuries, particularly if they involve chronic pain, spinal injuries, or neurological conditions.
- The duration and type of treatment recommended by medical practitioners.
- The claimant’s age, occupation, and pre-accident health status.
- Whether treatment is expected to continue beyond the 52-week statutory benefits period under MAIA.
- The presence of a threshold injury and whether it limits eligibility for damages.
In Greater Sydney, access to healthcare is generally good, but the cost and availability of treatment may still affect settlement offers. Insurers and SIRA assess treatment needs based on what is reasonable and necessary, not what is desired.
Practical Steps Before Accepting a Settlement Offer
Before accepting a lump sum offer, claimants should:
- Obtain a written treatment plan from a treating medical practitioner detailing the expected duration and type of treatment.
- Request a breakdown of the lump sum offer, including the portion allocated to treatment costs.
- Confirm whether treatment funds are to be paid directly to providers or released to the claimant.
- Retain all medical records, correspondence with insurers, and documentation of treatment costs.
- Seek independent medical advice if the treatment plan or settlement offer is unclear.
A settlement offer that does not include a reasonable allocation for treatment may not fully cover future needs. If treatment is ongoing, a claimant should not accept a lump sum that does not reflect the long-term cost of care.
Time Limits and Dispute Options
There is no fixed deadline for accepting a lump sum offer under MAIA. However, a claim must be made within three years of the accident date. Failure to make a claim within this period may bar the right to compensation.
If a claimant disagrees with a settlement offer, they may request a review from SIRA or seek independent legal advice. Disputes about treatment funding can be resolved through SIRA’s dispute resolution process or, if necessary, by applying to the NSW Civil and Administrative Tribunal (NCAT).
When to Seek Independent Advice
Every claim depends on its own facts. To request contact about your circumstances, complete the quick, no obligation enquiry form.