Australia: Following up from Hochbaum – revisiting the proper construction of section 39 of the Workers Compensation Act 1987

Last Updated: 28 November 2019
Article by Mick Franco and Jessica Maiuolo

There is no entitlement to weekly payments for an injury after an aggregate period of 260 weeks where a weekly payment has been paid or is payable, unless the worker's permanent impairment resulting from the injury is more than 20% WPI [s39].

President Phillips issued a decision in RSM Building Services Pty Ltd v Hochbaum [2019] NSWWCCPD 15 ("Hochbaum"), dealing with section 39. He found the proper construction of section 39(2) is to restore a worker's entitlement to weekly compensation at the point in time an Approved Medical Specialist (AMS) assesses the degree of permanent impairment resulting from the injury to be more than 20%. In other words, weekly payments can only be re-instated from the date WPI is determined by the AMS; the date of the Medical Assessment Certificate (MAC). This means arrears in weekly compensation from cessation under section 39 to the date of the MAC are not payable.

Only weeks after this decision, the same issue was considered in Technical and Further Education Commission t/as TAFE NSW v Whitton [2019] NSWWCCPD 27 ("Whitton").


The facts were similar to Hochbaum.

The worker suffered a right wrist injury on 2 November 1999. Liability was accepted and the insurer made weekly payments of compensation. The worker returned to work on suitable duties before ceasing work altogether in around 2001.

Her payments ceased on 25 December 2017 after the aggregate period of 260 weeks under section 39 of the 1987 Act.

The worker was assessed by an AMS who issued a MAC on 18 June 2018, certifying her as suffering 32% WPI for the injury. Weekly payments were reinstated from the date of the MAC, 18 June 2018. The insurer declined to make payments for the period between 25 December 2017 and 18 June 2018.

The worker challenged this decision in the Workers Compensation Commission. The worker was awarded weekly payments of compensation for the period in dispute.

On Appeal

The appeal was determined by President Phillips. The issue on appeal was the same as in Hochbaum; namely, whether a worker is entitled to weekly payments of compensation after the expiry of an aggregate period of 260 weeks and before the worker has been assessed by an AMS as suffering more than 20% WPI.

President Phillips examined the arbitrator's reliance on the decision in Kennewell v ISS Facility Services Australia Limited t/as Sontic Pty Ltd ("Kennewell"), which concerned the application of clause 28C of Schedule 8 of the Workers Compensation Regulation 2016 ("2016 Regulation").

Clause 28C of Schedule 8 of the 2016 Regulation says section 39 of the 1987 Act does not apply to an injured worker if an injury has resulted in permanent impairment and:

  1. An AMS has been unable to provide a WPI assessment as a worker has not reached maximum medical improvement (MMI) and therefore the degree of permanent impairment is not fully ascertainable; or
  2. The insurer concedes permanent impairment is likely to be more than 20% (whether or not the degree of permanent impairment has previously been assessed).

In Kennewell, the worker's entitlement to weekly payments ceased on 25 February 2018 at the expiration of the aggregate period of 260 weeks, pursuant to s 39(1) of the 1987 Act. The worker was assessed by an AMS on 6 April 2018, who declined to make an assessment of permanent impairment because permanent impairment was not fully ascertainable. The AMS did not think the worker had reached MMI.

The arbitrator in Kennewell held section 39 did not apply because the worker was an existing recipient of weekly payments of compensation and because the worker had not reached MMI, pursuant to clause 28C of Schedule 8 of the 2016 Regulation. Ultimately, payments of weekly compensation were resumed from the day they were cut off by the insurer under section 39, that is, 25 February 2018.

The arbitrator in Whitton relied on the decision in Kennewell to rule that, once section 39 is found to not apply, there is no time limit on the worker's entitlement to compensation, but rather, it continues without interruption beyond the 260 week limit (subject to the application of section 38 of the 1987 Act), until the worker has reached MMI.

The arbitrator added that section 39 does not have any time limits and if the Parliament wanted to limit payments of workers compensation from the 260 week period until after obtaining an AMS assessment of 20% WPI, it could have done so. In other words, the arbitrator found the Parliament's intention was not to limit payments of weekly compensation after 260 weeks to periods after the AMS assessment of more than 20% WPI.

President Phillips disagreed. He ruled the arbitrator failed to properly construe section 39, in particular the effect of section 39(3) which says the degree of permanent impairment that results from an injury is to be assessed as provided by section 65 of the 1987 Act, in other words, the AMS process.

The President reiterated his finding in Hochbaum, namely the application of section 39(2) is contingent on a worker satisfying the requisite degree of permanent impairment resulting from the injury. He said the critical question to ask is at what point does section 39(1) not apply?

The answer to this question falls on whether there is a time restriction contained within section 39(2) of the 1987 Act, which says section 39 does not apply where a worker's permanent impairment is more than 20%. President Phillips found that it did. In effect, once section 39 is found to apply, the only way it's operation can be lifted is for the worker to obtain a MAC assessment of more than 20% WPI.

In other words, in the absence of a MAC assessment more than 20% WPI, the Commission can't award weekly payments of compensation beyond the aggregate period of 260 weeks.

This decision also confirms the conclusion in Hochbaum, namely, that arrears in weekly compensation from the date of cessation under section 39 to the date of the MAC are not payable. However, the issue is currently being tested on appeal and it remains to be seen whether the decision in Hochbaum will be overturned.

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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