What to Do When an Insurer Refuses CTP Treatment: Understanding 'Reasonable and Necessary'

Recovering from a motor vehicle accident is challenging enough without the added stress of having critical medical treatment declined by the insurer. Under the NSW Compulsory Third Party (CTP) scheme, injured persons are entitled to payment for medical treatment, rehabilitation, and care services, provided that the insurer deems those services to be "reasonable and necessary."

When an insurer refuses to fund a treatment requested by your treating doctor—such as a course of physiotherapy, psychological counseling, or surgery—it can halt your recovery. Understanding why these decisions are made, the strict criteria insurers must follow under the Motor Accident Injuries Act 2017, and the steps you can take to dispute a refusal is crucial for protecting your health and your rights.

The phrase "reasonable and necessary" is the cornerstone of treatment approvals in the NSW CTP scheme. An insurer is not obligated to pay for any and all treatments; they are only liable for expenses that meet this specific legal and clinical threshold.

For a treatment to be considered reasonable and necessary, it must generally satisfy several criteria:

• Directly Related to the Accident: The need for the treatment must arise directly from the injuries sustained in the motor vehicle accident, not from a pre-existing or unrelated condition.
• Appropriate and Effective: The treatment must be a recognized, evidence-based medical intervention likely to improve your condition, assist your recovery, or maintain your current level of functioning.
• Cost-Effective: The cost of the treatment must be proportionate to the expected benefit.
• Provided by an Appropriate Professional: The service must be delivered by a suitably qualified and registered health practitioner.

The State Insurance Regulatory Authority (SIRA) Motor Accident Guidelines, particularly Part 4 (Treatment, Rehabilitation, and Care), govern how insurers must manage treatment requests.

The Guidelines emphasize a recovery-at-work and active rehabilitation approach. Insurers are required to respond to treatment requests promptly. If an insurer intends to decline a request, they must do so in writing, clearly outlining the reasons for the refusal, referencing the medical evidence they relied upon, and explaining your right to dispute the decision. They cannot arbitrarily refuse treatment without clinical justification.

Insurers typically refuse treatment requests based on opinions provided by their internal medical advisors or an Independent Medical Examination (IME). Common reasons for refusal include:

• Lack of Medical Evidence: The treating doctor’s request did not provide sufficient detail regarding your symptoms, diagnosis, or how the proposed treatment will facilitate recovery.
• Pre-Existing Conditions: The insurer believes the treatment is directed at an age-related degenerative condition or an injury that existed before the accident.
• Excessive Treatment: The insurer determines that you have already received an adequate amount of treatment (e.g., 50 sessions of physiotherapy) and further sessions are no longer driving clinical improvement.
• Non-Evidence-Based Therapies: The requested treatment is considered experimental or alternative, lacking robust clinical evidence to support its efficacy.
• Threshold Injury Limits: If your injury has been classified as a "threshold injury" (soft tissue or minor psychological), treatment entitlements are generally limited in duration, and the insurer may argue that further treatment beyond that period is not authorized. (Note: A threshold injury determination is distinct from a WPI assessment).

If you receive a notice declining treatment, do not panic. The decision is not necessarily final. You should immediately take the following steps:

1. Review the Notice Carefully: Read the insurer's reasons for refusal. Note the date of the letter and the 28-day deadline to request a review.
2. Contact Your Treating Doctor: Share the insurer's decision with the doctor or allied health professional who requested the treatment. They need to understand why it was declined so they can formulate a response.
3. Continue Urgent Care Through Medicare/Private Health: While the dispute is ongoing, you may need to rely on Medicare, your private health insurance, or self-funding to continue critical care. Keep all receipts; if your dispute is successful, you may be reimbursed.

To successfully challenge a refusal, you must counter the insurer's evidence with strong medical support of your own. Your treating general practitioner (GP) or specialist is your best advocate here.

Ask your doctor to provide a detailed supplementary report that specifically addresses the insurer's reasons for refusal. The report should explicitly state:

• How the injury is related to the accident.
• Why the specific treatment is clinically justified.
• The expected outcomes (e.g., return to work, reduction in pain medication).
• Why the treatment meets the SIRA criteria for being "reasonable and necessary."

Once you have gathered the supportive medical evidence, you must formally dispute the decision by requesting an Internal Review from the insurer.

• You generally have 28 days from receiving the refusal notice to lodge the request.
• The insurer must assign an independent reviewer who was not involved in the original refusal.
• The reviewer will assess your new medical evidence alongside the original file and issue a new decision, typically within 14 days.

If the Internal Review upholds the refusal of treatment, the internal dispute process is exhausted. Your next step is to lodge a dispute with the Personal Injury Commission (PIC) for a Medical Assessment.

At the PIC, an independent Medical Assessor will review all documentation and likely examine you in person. The Medical Assessor’s determination on whether the treatment is reasonable and necessary is binding on the insurer. If the PIC rules in your favor, the insurer must fund the disputed treatment.