Australia: Navigating the tangled web of changes to the Workers Compensation Act in NSW.

Last Updated: 23 October 2017
Article by Peter Lleonart

The 2012 amendments to the Workers Compensation Act legislation have resulted in significant reduction in benefits together with procedural and practical obstacles for many injured workers in New South Wales (NSW). Navigating through the tangled web can be problematic, however as time has passed some rays of light have emerged.

Introduced into Parliament with limited consultation with stakeholders, the amendments attacked both monetary benefits of injured workers and the means by which injured workers were able to access benefits in the event of a dispute. Justifying its approach, the then O'Farrell Government pointed to an unsustainable deficit in the WorkCover Fund from which most benefits are paid, with a particular focus on long term recipients. Despite arguments (subsequently vindicated) that the deficit was largely a reflection of the cyclical changes in the value of the Fund and that the volume of claims in NSW was in fact in decline, the Government moved ahead with radical change.

The resulting amendments, applying to workers in NSW other than front line police and emergency workers, included a restriction on the payment of weekly compensation for most injured workers by way of income support for 2.5 years or 5 years in certain cases; restriction on claims for medical and treatment expenses to 1 year, except for very serious injuries and; the introduction of a threshold of above 10% whole person impairment for the payment of any lump sum compensation in relation to any permanent impairment. Crucially the Government also removed the jurisdiction of the Workers Compensation Commission in relation disputes concerning working capacity. Such dispute resolution was replaced with a review process, in which workers were expected, without legal representation, to lodge an application for review of the decision and make application for further review to the WorkCover Authority and to attempt to achieve an outcome despite the ability of insurers to bring to bear potentially unlimited financial resources against them.

The practical outcome of these amendments is that large numbers of workers have become disentitled to compensation. Most severely affected are those with injuries that are moderately to seriously disabling, for example workers with spinal or orthopedic injuries who do not reach the required thresholds as to permanent impairment. Such workers may be unable to return to occupations for which they have training and experience or may have made genuine attempts to seek alternative work and been unsuccessful. However because they are found to have a capacity for some work, are no longer entitled to weekly income support, thereby shifting responsibility from the state based WorkCover fund onto the Commonwealth social security system. For those who have managed to retain their benefits from 2012 to date, as the 5 year limitation approaches in December 2017, their benefits will also expire.

The responses to the harshness of the 2012 changes have included legislative amendments that have addressed in a limited fashion the absurdity of the legislation in its original form. The difficulty faced by opponents of the 2012 changes was that the amendments did not apply with immediate effect and instead came into operation incrementally over a period of some years, with the result that political responses have been somewhat muted. However following a Parliamentary Inquiry in 2014, amendments to the legislation were made in 2015 and 2016 that included the following:

  1. Increases in the limitation period during which claims for medical expenses can be claimed from 1 year to 2 years and either 5 years or unlimited where the whole person impairment reaches 11% or 21% respectively.
  2. Exclusion from time limits for claims for medical expenses in relation to hearing aids, artificial aids and secondary surgery.
  3. Limited funding for legal representation in relation to work capacity disputes.
  4. An exception to the one lump sum claim rule, enabling one further claim for lump sum permanent impairment compensation to be made where a claim had been made prior to the 2012 amendments and where the condition has since deteriorated.

Furthermore certain judicial interpretations and determinations from the Workers Compensation Commission have in some cases restricted the scope of the amendments and enhanced the rights of injured workers. In particular in Sabanayagam v St George Bank [2016] NSWWCCPD 3(21/1/16), the Court of Appeal held that a dispute notice issued by an insurer that is not notified as a work capacity decision will not be characterized as such, even if such a notice includes a decision concerning a workers capacity for employment. As such the Commission will retain jurisdiction in such cases in which a dispute notice includes mixed liability and capacity aspects, thereby avoiding the difficulties associated with the adequacy of legal representation and presentation of cases in the work capacity review process. Furthermore in the matter of Noel Anderson v City of Canada Bay Council [2014] NSWWCC424, an arbitrator of the Commission found that a prosthetic knee was an "artificial member" for the purposes of the amending regulation and therefore excluded knee replacement procedures from the time limits that otherwise apply in relation to claims for medical expenses.

Such responses to some extent represent a clawing back of rights that prior to 2012 were previously available to injured workers. While such further amendments and interpretations go some way, in a piecemeal fashion to restoring lost benefits, injured workers face a landscape that remains difficult and unpredictable. Practical solutions can often be found with persistence and patience. This makes it essential that injured workers obtain competent and strategic legal advice. Much does depend on the often arbitrary system of assessment of whole person impairment that is critical to determining time limitations and ultimately the quantum of benefits that may become available. This is particularly the case where there is a finding of 15% or more whole person impairment where negligence can also be found , which will open the pathway to what remains the very valuable entitlement to common law damages that may enable an injured worker to find a satisfactory escape route from the uncertainties of the statutory scheme. However for those remaining in the statutory scheme the hope is that further legislative reform will return the scheme towards its objects of providing adequate financial, medical and other benefits for injured workers.

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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