Workers' Compensation Scheme Overhauled in NSW

The Workers Compensation Legislation Amendment Bill 2012 passed through the Lower House of New South Wales Parliament in the early hours of Friday, 22 June, 2012. The amendments to the Legislation represent the most radical transformation of the scheme undertaken in this State since the Workers Compensation Act was proclaimed in 1926.

The amending legislation has a retrospective effect. It applies to all claims made before or after the 19 June, 2012.  Most of the amendments commenced from 1 January, 2013.  The amendments apply to the following:

Weekly Compensation

• The amendments create a three tiered entitlement regime for periods consisting of the first 13 weeks, after injury, then weeks 14-130 and weeks 131 onwards.

• Workers assessed with a Whole Person Impairment (WPI) pursuant to the WorkCover Guidelines of 20% WPI or less are entitled to receive weekly compensation for a maximum of 5 years, with their entitlements subject to ongoing review throughout that period.

• Any worker assessed with a greater than 20% WPI will have a prima facie entitlement to receive weekly compensation to statutory retirement age, but subject to ongoing review.

• From 1 January, 2013, every injured worker in receipt of weekly benefits will be the subject of a Work Capacity Assessment by the insurer on or before 30 June, 2014. The insurer will choose the doctor to make the Work Capacity Assessment and, on receipt of the report, the insurer makes the Work Capacity Decision. The following are defined to be Work Capacity Decisions:

– a decision about a worker’s current capacity for employment
– a decision about what constitutes suitable employment
– a decision about the amount the injured worker is able to earn in suitable employment
– a decision about the amount of an injured worker’s pre-injury average earnings, or current weekly earnings
– any other decision of an insurer that affects the worker’s entitlement to weekly compensation, including any decision to suspend, discontinue or reduce the amount of weekly benefits.

• If the worker is dissatisfied with the insurer’s work capacity assessment, or decision, the Workers Compensation Commission has no jurisdiction to hear that dispute. The worker can request a review by the Workcover Independent Review Officer (WIRO). The worker is not entitled to legal representation to assist with that review. If the worker is still dissatisfied with the decision by WIRO the worker can appeal to the Administration Division of the Supreme Court but would be subject to an adverse costs order in the event that the appeal failed.

• For workers who have been “timed out”, or have been certified completely fit for work, there are special provisions if those workers require subsequent surgery. The insurer is liable to pay for the surgery and for a maximum of 13 weeks of total incapacity thereafter.

Lump Sum Compensation

Prior to 19 June 2012, if a worker was left with permanent impairments as a result of an injury at work, the worker was entitled to lump sum compensation pursuant to Section 66 of the Workers Compensation Act.  For injuries that occurred prior to 1 January 2002, the Act provided details of various disabilities and injuries to individual body parts together with the amount of compensation they were entitled to claim.  For injuries after 1 January 2002, the Act provided a set of guidelines to assess the worker's 'Whole Person Impairment', or WPI, and the injured worker would receive a fixed amount relevant to the scale of their WPI.

This Section has now been amended.   From 19 June 2012, if a lump sum compensation claim has not been duly made prior to that date, injured workers can only obtain lump sum compensation if they have a greater than 10% WPI .  This restriction excludes a large number of injured workers who have quite serious permanent impairments.

In the past injured workers were also entitled to receive additional lump sum compensation for pain and suffering if they had suffered more than a 10% WPI, however this allowance for pain and suffering has been abolished under the new Amendments.

An injured worker can now only make one claim for lump sum compensation for a permanent impairment.  If, for instance, a worker injures his or her knee and has an operation to that knee, but might at some stage in the future require a total replacement, that worker would have to carefully consider whether to bring a claim for lump sum compensation following the first operation, or whether to wait for the total knee replacement to bring the lump sum claim.
There has been significant debate surrounding these Amendments to the Act and controversy concerning whether the changes should apply to workers who had made a claim prior to 19 June 2012. 

Two test cases have recently proceeded through the courts regarding the Amendments and workers, and lawyers alike, are waiting to hear the outcome of an Application for Special Leave to Appeal to the High Court of Australia in one of the cases.  Once the High Court has heard the Application (likely to be in September 2013) we will be in a better position to determine whether workers injured prior to 19 June 2012 will be able to bring further claims for lump sum compensation as their condition deteriorates.

If you have made a claim for compensation and were injured prior to 19 June 2012, you can read our summary of the test cases here.   We will keep you informed as matters progress.

Medical and Related Treatment Expenses

Treatment expenses will now only be paid for 12 months after the claim for compensation was first made, or 12 months after the last payment of weekly compensation, whichever is the latter.

A worker who has a greater than 30% WPI, is defined as a seriously injured worker. That worker is not subject to any restriction on treatment expenses.
For the vast majority of other workers, anyone who is 20% WPI or less, they can only receive weekly compensation for a maximum of five years and treatment expenses for one year thereafter. They will then cease to be entitled to recover the cost of medical treatment from the insurer.

There is an exception, for workers who require a subsequent operation. They can receive up to an additional 13 weeks of weekly benefits, and the cost of the further operation and subsequent rehabilitation, but then they cease to be entitled to ongoing medical expenses.

There are also a number of changes to the general entitlement to medical treatment and in particular:
• the treatment or service cannot be provided without prior approval of the insurer (except in the first 48 hours after the injury)

• the treatment or service must be given or provided by a person appropriately qualified to provide the treatment

• the insurer is not obliged to pay for treatment if it is not given or provided in accordance with the Workcover Guidelines

• the insurer is not obliged to pay for the treatment if the treatment or services provided by a health practitioner whose registration (under any relevant law) is limited or subject to any condition imposed as a result of a disciplinary process or who is suspended or disqualified from practice

• treatment such as physiotherapy, hydrotherapy, chiropractic treatment or remedial massage therapy must be prescribed by the workers’ Nominated Treating Practitioner (NTP). The NTP must seek approval from the insurer, in advance, and prescribe a course of treatment and advise the insurer as to the regularity of the treatment, the area to be treated and the fact that the treatment is a  consequence of the work injury. The NTP might prescribe, for instance, that the worker have
chiropractic treatment to his or her back, once a week for eight weeks and that the need for the treatment results from the work injury. The insurer would approve that course of treatment, and at the end of that course, the NTP must review the worker and if the NTP feels that the worker needs additional treatment, prescribe a further course of treatment.

Unless these guidelines and regulations are followed, the insurer is not obliged to pay for the treatment.

If the NTP makes a request for treatment, the insurer must approve it within 21 days. If the insurer refuses to pay for the treatment, they must provide a written notice pursuant to Section 74 of the Workers Compensation Act, setting out the reason for declining to approve the treatment and that decision can be reviewed by the Workers Compensation Commission on an expedited basis.

If the insurer does not make a decision regarding the approval within 21 days, the worker can refer the matter to the Claims Assistance Service (CAS) at the WorkCover Authority and lodge a complaint. The worker should call CAS on 13 10 50 and once CAS receives a complaint, it must investigate the complaint and report back to the worker within three working days. The insurers only manage claims on behalf of WorkCover. They are subject to Claims Handling Guidelines and CAS enforces these Guidelines.

Journey Claims

Prior to the 19 June, 2012, workers were covered for benefits from the time they left their home until they arrived at work and for their return journey.
The amendments have sought to abolish journey claims however, due to uncertainty regarding the wording of the Section, there is serious doubt as to whether journey claims have in fact been abolished. There will have to be a test case to establish whether workers are still covered on their journey to and from work. Even under the current legislation, each claim must be carefully judged on its particular facts.

Costs

Prior to 19 June, 2012 if a worker received an adverse decision from the insurer, and wished to take that dispute to the Workers Compensation Commission, the insurer was obliged to pay the worker’s legal costs, pursuant to a prescribed scale, if the worker was successful.

From 1 April, 2013 any worker who makes an application to the Workers Compensation Commission must pay his or her own legal costs, regardless of whether the worker wins or loses.

These costs amendments were moved by the Christian Democratic Party (the Reverend Fred Nile) when the Bill was debated in the Upper House. There was subsequently a significant outcry regarding the inequity of these costs rules.  Insurers, and their legal representatives, will be funded by the WorkCover Authority but the workers, even if they are successful, must pay their own legal fees.

In response to the furore regarding legal costs, the Government has set up a Legal Aid scheme which is referred to as the Independent Legal Advice Review Service (ILARS). An injured worker can make an application for a grant of aid to that organisation and, if it grants aid, the worker’s solicitor is paid, by ILARS, at the rate prescribed by the cost regulations in the Act. How this system will be administered however, and what level of bureaucracy will be involved to obtain a grant of aid,
remains to be seen.

Heart Attack and Stroke Injuries

The provisions regarding workers who suffer heart attack and stroke injuries have been extensively amended. A worker suffering a heart attack or stroke, in addition to proving that the condition is an injury under the new definition of injury, is also required to prove that the employment gave rise to a significantly greater risk of the worker suffering the injury had the worker not been employed in the employment of that nature.
Each case must be considered on its own particular facts, but the clear intention of the amendments is to make it much more difficult for workers to claim compensation in the event of a heart attack or stroke.

Disease Injury

The amendments insert a new definition for a disease injury and now provide that a disease contracted by a worker in the course of his or her employment is only compensable if the employment was the main contributing factor to contracting the disease. Previously work had to be a substantial contributing factor.

The clear intention is to make it more difficult for injured workers to claim that their disease has been caused and/or materially aggravated by work.

The Government’s stated reason for extensively amending the Workers Compensation Act was that the scheme was underfunded and in deficit, and it relied on certain actuarial projections to support its position. Whether the assumptions made by the actuaries were correct, and whether the deficit within the scheme was as large as the Government alleged, is a matter for debate.

The amendments will significantly reduce benefits payable to injured workers in this State and, presumably eliminate the strain on the WorkCover Authority’s coffers. It will be interesting to see whether the premiums paid by employers will be reduced to reflect the much lower benefits paid to injured workers.

The amending legislation has a mandatory review after two years. Many members of State Parliament are being contacted by disgruntled constituents who have been adversely affected by the recent changes. Hopefully, there may be some consideration to rolling back the amendments when this review is undertaken.

More Information

For more information on the Workers Compensation Legislation, contact Accredited Specialists in Personal Injury Law Steve Groves or Arthur Fogarty at Lamrocks Solicitors.  Call 02 4731 5688 or email litigation@lamrocks.com.au