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 specific review deadline stated in that notice (28 days is common, but not universal).
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.

Quick answer for most claimants: treatment refusals are often reversible when you file on time, respond to each refusal reason directly, and anchor your evidence to function outcomes (work capacity, pain-medication reduction, and day-to-day activity tolerance).

The first two weeks after a refusal are usually the difference between a clean review path and months of avoidable delay. Use this checklist to keep evidence and deadlines aligned:

• Day 1-2: Pin the decision and review clock. Save the refusal letter, identify the exact treatment declined, and record review due dates in one tracker.
• Day 2-5: Re-brief your treating team. Give your GP/specialist the refusal reasons and ask for a targeted report that answers each point directly.
• Day 3-7: Build a single indexed bundle. Include treatment request, certificates, recent notes, imaging, medication history, and a short chronology of clinical progression.
• Day 5-10: Connect treatment to work-capacity risk. Where relevant, link treatment refusal evidence to paused return-to-work plans, weekly benefits pressure, and function decline.
• Day 10-14: File review-ready submissions. Lodge internal review with issue-led headings so the reviewer can map each disputed reason to supporting evidence quickly.

For pathway alignment, pair this page with internal review, PIC stream selection, and weekly payments stopped if treatment refusal is beginning to affect income support.

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."

It also helps to build an indexed evidence bundle rather than sending loose records. In practice, stronger treatment disputes often include the refusal letter, the original treatment request, updated treating certificates, recent clinical notes, imaging, and a short chronology showing what treatment has already been tried. If the refusal is affecting work capacity or delaying return to work, connect the treatment issue to weekly payments stopped and capacity for work dispute evidence so the insurer cannot treat the medical issue in isolation.

A treatment refusal does not always mean it is clinically safe to wait. Where delay creates material risk, claimants often continue treatment through Medicare, private health, or self-funding while the dispute is reviewed. Keep invoices, referrals, treatment notes, and pharmacy records in one indexed pack so reimbursement can be claimed if the refusal is later overturned.

Ask your treating doctor to state clearly what deterioration is likely if treatment is delayed. That one paragraph often becomes the bridge between immediate care decisions and later reimbursement arguments.

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

• Use the deadline in the refusal notice and applicable rule (many matters use a 28-day window, but not all do).
• 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.

One practical issue that causes delay is filing the wrong dispute stream. Treatment refusals usually sit in the medical stream, but a claim can still have separate merit-review issues running at the same time, such as PAWE calculation, stopped weekly payments, or other administrative benefit decisions. Before filing, compare Merit Review vs Medical Assessment so the medical dispute goes into the right PIC pathway and the supporting evidence answers the right legal test.

Claimants often lose time because their evidence is strong but poorly structured. A practical fix is to build every review submission under four fixed headings that mirror the legal test used by insurers and PIC assessors.

1. Causation: show when symptoms began or worsened after the crash, and separate accident injury from pre-existing conditions.
2. Necessity: explain why this treatment is required now, including likely deterioration if treatment is delayed.
3. Effectiveness: define measurable goals (walking tolerance, sleep interruption, medication reduction, work capacity) and review dates.
4. Proportionality: compare treatment cost, duration, alternatives tried, and expected clinical benefit in one table.

This format improves reviewer readability and makes it easier to reuse the same bundle if the dispute escalates to PIC medical assessment.