Australia: Workers compensation changes in NSW leave injured workers in the lurch

Last Updated: 17 October 2016
Article by Grant Avery

A study by Macquarie University has found changes the government made to the NSW workers compensation scheme four years ago have given only limited help to injured workers wanting to return to work.

Professor Ray Markey of the university's Centre for Workforce Futures led the study, titled The Impact on Injured Workers of Changes to NSW Workers' Compensation: June 2012 Legislative Amendments. The study examined the process by which injured workers return to work and the obstacles they face in doing so.

Cost savings achieved by cutting compensation payments to injured workers

The government's rationale for revamping the scheme in 2012 was that it was in crisis, with a reported deficit of $4.1 billion. However, by October 2013 the government reported that the scheme was no longer in deficit, even though employers had been granted a 7.5 per cent reduction in compensation premiums in the interim.

Unfortunately, the change in the scheme's finances was achieved mainly by dramatically cutting the compensation available to ill and injured workers. Heart attacks and strokes are no longer covered. Neither are payments for nervous shock experienced by the families of seriously injured or deceased workers.

Furthermore, injured workers stop being entitled to be compensated for the cost of medical treatment as early as two years after they stop receiving weekly payments, which means that the cost of any necessary additional medical treatment has to be borne by the worker themselves, the public health system and ultimately, the taxpayer.

According to the report, the proportion of the cost of workplace injury and illness borne by workers and their families has increased from 43.7 per cent in 2001 to 73.9 per cent in 2009. Over the same period, the proportion of the cost borne by employers has fallen from 24.8 per cent to 16 per cent.

Decline in transparency of WorkCover scheme

Two other disturbing changes introduced by the new legislation were the ban on payment for legal advice regarding insurers' work capacity decisions – meaning that workers have to deal with the insurance company on their own and no longer have access to an independent compensation commission to appeal an insurer's decision – and a sharp decline in the publicly available information from WorkCover NSW regarding compensated injury and illness.

Regrettably, the deliberate opaqueness which now surrounds the WorkCover scheme equates to decreased accountability of operators of the scheme.

Employer obligations to find suitable duties for injured workers

It is important for injured workers to be able to return to the workforce in whatever capacity they can, for their wellbeing, both physically and psychologically, as well as for the economy.

However, the report found that some employers are not complying with their obligations to help insurers find suitable duties for injured workers. Too often, a worker's return to the workplace is obstructed by bureaucratic red tape and the reluctance of insurers and employers to find places for workers who have been injured. Payment for realistic retraining options is often refused. The inability to return to work can have a devastating effect on the worker and their entire family.

The report concluded that self-insured employers are able to self-regulate and thus focus on ways to drive injured workers out of their employment, rather than devising injury management plans to provide them with suitable duties.

Anecdotal evidence supplied by workers who were interviewed for the report also points to the reluctance of employers to employ anyone who has ever made a workers compensation claim of any type.

Rather than blaming employers for providing unsafe workplaces where workers can suffer injury, the tendency in Australia is to blame the worker, label them as a "bludger" and assume that they are almost certainly rorting the system. In effect, the injured worker becomes a pariah and is consigned to the scrapheap.

Delays in insurer approvals of medical treatment

A significant change introduced by the new workers compensation legislation is that injured workers need to obtain pre-approval from the insurer before they can attend medical appointments or have surgery.

It is a fact that insurers' interests diverge from the objective of returning injured workers to work. Instead they focus on the prime objective of maximising profit by minimising and delaying medical treatments and finding ways to decline liability.

According to the report, the practical outcome is that insurers can delay approval and therefore compensation for medical treatment indefinitely. Obviously, such delays will often lead to a further deterioration of the worker's health.

Bullying and harassment of injured workers by insurance companies

The report found bullying and harassment of injured workers by insurance companies is a problem that undermines workers' confidence and acts against the likelihood of them returning to work.

It cited the case of one worker who needed special orthopedic shoes after a steel bar fell on his feet. The WorkCover insurer took 18 months to approve the special shoes. In the meantime the insurer told him time and again that he had to look for work, despite knowing he could not do the work without the orthopedic shoes.

In another case, a truck driver who injured his back tried setting up his own business organising deliveries, but WorkCover rejected the proposal as the insurer could not monitor his earnings. He was out of work for more than five years.

Grim parallels between WorkCover changes and the CTP scheme proposed for NSW

If the characteristics of the new workers compensation scheme sound familiar, that might be because they have much in common with changes to the compulsory third party (CTP) insurance scheme which have recently been proposed for NSW and which have received significant press coverage in recent months. (See Proposed reforms to NSW CTP scheme to disadvantage accident victims and safeguard insurers' profits.)

Cutting compensation to those who are injured, forcing them to deal with insurers on their own without legal support, putting decisions about medical treatment solely in the hands of insurers, leaving those who are injured no option but to rely on Medicare and Centrelink – is any of this starting to sound familiar?

Grant Avery
Workers compensation
Stacks Law Firm

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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