Understanding the Psychiatric Injury Threshold in NSW CTP Claims
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).
In New South Wales, a psychiatric injury may qualify for compensation under the Compulsory Third Party (CTP) insurance scheme if it meets the legal threshold set out in the Motor Accident Injuries Act 2017 (MAIA). This threshold is not based on the severity of the psychological symptoms alone, but on whether the injury results in a permanent impairment that meets the criteria for a 'threshold injury'. For psychiatric injuries, this means the person must have a whole person impairment (WPI) of at least 10% caused by the motor accident. The injury must also be clinically diagnosed and supported by medical evidence, including assessments from a qualified mental health professional.
The threshold applies equally to psychological injuries and physical injuries. It is not sufficient that a person experiences anxiety, depression or post-traumatic stress following a motor accident. The injury must be shown to be a direct result of the accident and not attributable to pre-existing conditions or unrelated life events. Where a psychiatric injury does not meet the threshold, the person may still access treatment and care benefits under the CTP scheme, but will not be eligible for damages or weekly income payments.
Funding for Treatment and Care in CTP Claims
If a psychiatric injury meets the threshold, treatment and care benefits are available under the CTP scheme administered by the State Insurance Regulatory Authority (SIRA). These benefits cover the cost of mental health treatment, including therapy, counselling, psychiatric assessment and medication, as long as the treatment is deemed reasonable and necessary in relation to the injury.
Treatment must be provided by a registered medical practitioner or a qualified mental health professional. The claimant must obtain a treatment plan from their treating practitioner, which outlines the nature, duration and purpose of the treatment. This plan must be submitted to the CTP insurer for approval. The insurer is required to fund treatment that is consistent with the Motor Accident Injuries Regulation 2017 and the SIRA Motor Accident Guidelines.
Funding is not limited to a single provider or treatment type. A claimant may access a range of services, including cognitive behavioural therapy, trauma-focused therapy, and medication management, as part of a coordinated treatment plan. The insurer must approve treatment that is evidence-based and aligned with best practice standards in mental health care.
Practical Steps to Access Treatment Funding
To access treatment funding under the CTP scheme, a claimant should take the following steps:
- Seek medical assessment from a registered mental health professional as soon as possible after the accident.
- Obtain a formal diagnosis and a treatment plan that links the injury to the motor accident.
- Submit the treatment plan and supporting medical evidence to the CTP insurer, who is responsible for approving and funding the treatment.
- Keep detailed records of all treatment sessions, correspondence with the insurer, and any out-of-pocket expenses.
Photographs of the accident scene, witness statements, and a police report (if available) may help establish the circumstances of the accident, particularly if the claim is disputed. Evidence of a change in mental health status since the accident, such as a decline in work performance or social withdrawal, may also support the claim.
Time Limits and Procedural Requirements
There is no fixed deadline for making a claim for treatment and care benefits under the CTP scheme, but delays may affect the insurer’s ability to assess the claim or provide timely approval. It is advisable to notify the insurer of a psychiatric injury as soon as it is diagnosed.
If the insurer refuses to fund treatment, the claimant may request a review under the CTP scheme. If the review is unsuccessful, the claimant may apply to the Civil and Administrative Tribunal (NCAT) for a determination. The claimant must have a valid treatment plan and medical evidence to support the application.
A claimant who has not yet received a formal impairment assessment may still access treatment under the scheme, but the insurer may require a medical assessment before approving long-term or intensive treatment.
When Independent Legal Advice May Be Useful
A psychiatric injury claim may become complex if there is a dispute about the cause of the injury, the extent of the impairment, or the insurer’s refusal to fund treatment. In such cases, independent legal advice can help clarify rights and obligations under the MAIA and SIRA guidelines.
A claimant may also benefit from legal advice if they have a history of mental health issues, as the insurer may argue that the current injury is not new or was not caused by the accident. A legal professional can assist in gathering evidence to demonstrate the causal link between the accident and the psychological injury.
Hypothetical Example
A 38-year-old woman was a passenger in a car that was struck from behind while stopped at a traffic light. She sustained no physical injuries but developed severe anxiety and panic attacks in the weeks following the incident. After assessment by a psychiatrist, she was diagnosed with post-traumatic stress disorder (PTSD) and assigned a WPI of 12%. The treating psychiatrist provided a treatment plan including weekly cognitive behavioural therapy and medication. The CTP insurer approved the treatment and funded all services under the scheme. The claimant was able to access care without out-of-pocket costs, as the treatment was deemed reasonable and necessary.
Next Steps
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