Issuu on Google+

The reforms introduced by the NSW state government on 19 June 2012 significantly affect injured workers’ entitlements to compensation and the way in which claims are managed by insurers, scheme agents and employers. The amending legislation received assent on 27 June 2012 [Act No. 53 of 2012], however, there are still a number of amendments awaiting proclamation of a commencement date. The following provides an overview of some of the more significant changes.

Weekly Compensation Awaiting proclamation to commence The regime for determining weekly benefits has been completely revised. The entitlement to weekly benefits will depend on whether the injured worker is assessed as having either no current work capacity (rather than total incapacity) or a current work capacity (rather than partial incapacity for work).

ClientUpdate

Reforms to the NSW Workers Compensation Scheme

Insurers will need to have regard to a number of ‘factors’ to calculate the appropriate rate of weekly benefits that are also based on specified post injury periods of incapacity (entitlement periods). Many injured workers will receive weekly benefits for up to 2.5 years (130 weeks) but any ongoing entitlement beyond that will depend on how an insurer assesses the worker’s capacity to work. An injured worker’s entitlement to weekly benefits will cease after 5 years unless he or she is assessed as having greater than 20% WPI. The accompanying Summary of weekly payments provides a guide to how weekly benefits are calculated.

Work capacity assessment An insurer is required to conduct a work capacity assessment of an injured worker. A work capacity assessment is an assessment of an injured worker’s current work capacity, to be conducted in accordance with WorkCover Guidelines. Work capacity assessments on existing claims must be made within 12 months of commencement of amending Act. A seriously injured worker (more than 30% WPI) is not to undergo work capacity assessment unless the insurer thinks it appropriate and the worker requests it.

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

1


Work capacity decisions Insurers can make work capacity decisions with regard to various matters set out in s43 that are similar to relevant considerations under the former s40. A work capacity assessment is not necessary for the making of a work capacity decision by an insurer. The decision will be final and binding on the parties except for the avenues of review as specified under s44 or judicial review by the Supreme Court. Section 44 provides that the worker may refer the decision for review by: (a)

internal review by the insurer (must be undertaken within 30 days of application by worker); then

(b)

merit review of the decision by the WorkCover Authority; and then

(c)

review by Independent Review Officer such review being limited to the insurer’s procedures in making the work capacity decision and not the exercise of any judgment or discretion.

Other provisions The entitlement to weekly payments will cease when the worker reaches retirement age. Section 52A (not suitably employed and not seeking suitable employment) has been deleted. For existing claims, the amendments will not have any practical effect until 3 months after a work capacity assessment is conducted (but this does not apply to seriously injured workers i.e. more than 30% WPI). A transitional amount of $906.25 (that may be adjusted) will be used as the amount of the pre-injury AWE to determine the rate of weekly benefits payable to existing recipients after they become subject to the amendments.

ClientUpdate

Reforms to the NSW Workers Compensation Scheme June 2012

For claims for incapacity made after the amendments, the amendments will apply immediately regardless of when the injury occurred or the original claim was made.

Permanent impairment compensation Commenced on assent 27.06.12 - applies to claims for compensation made on or after 19.06.12 A worker must have greater than 10% WPI to be entitled to any lump sum compensation. No compensation is payable for pain and suffering – s67 omitted as well any reference to pain and suffering throughout the Act. Only one claim can be made for permanent impairment compensation that results from an injury regardless of whether the worker subsequently undergoes surgery.

Commutations Awaiting proclamation to commence The amendments contemplate some moderation of the preconditions for commutations by Regulations that are yet to be announced where the Authority is satisfied that it is appropriate in the circumstances of the case especially where the lump sum is not inadequate and not excessive.

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

2


Certification by an independently instructed legal practitioner that the worker has been fully advised of the legal implications of agreement is not required if an employer or insurer has certified that the worker has waived the right to independent legal and financial advice: s87F (2A).

Medical and related expenses Awaiting proclamation to commence No changes to the definitions contained in section 59 of the Workers Compensation Act 1987. Workers are generally entitled to medical expenses for the periods during which they are receiving weekly benefits but otherwise limited to: (a)

12 months after a claim for compensation in respect of the injury was first made.

(b)

12 months after the worker ceased to be entitled to weekly payments of compensation.

These amendments do not apply to seriously injured workers (greater than 30% WPI). An existing claim will be deemed to have been made immediately before commencement (27.06.12). The periods for which weekly benefits were paid prior to commencement (27.06.12) will not be considered for the purposes of determining when the worker’s section 60 benefits cease. Commenced on assent 27.06.12 — applies only to expenses incurred after commencement No liability to pay for any medical treatment or service, or related travel where: (a)

The insurer has not given prior approval for the treatment or service (does not apply to first 48 hours).

(b)

The person administering the treatment is not appropriately qualified.

(c)

The treatment is not in accordance with any conditions imposed by the WorkCover Guidelines.

(d)

The person administering the treatment is subject to a disciplinary process under the relevant law.

ClientUpdate

Reforms to the NSW Workers Compensation Scheme June 2012

The amendments do not apply to expenses incurred prior to commencement.

Journey Claims Commenced on assent 27.06.12 – applies to injury received on or after 19.06.12 The section now includes a further requirement that for daily journeys to and from work, there must be a real and substantial connection between the employment and the accident or incident. The wording of the further requirement is expected to be the subject of varying interpretations as to its practical effect particularly having regard to the provision in the South Australian legislation on which the provision is based and the parliamentary debate that surrounded its introduction. All claims related to journeys to and from work occurring on or after 19.06.12 will require careful consideration before accepting / declining liability.

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

3


Reforms to the NSW Workers Compensation Scheme June 2012

Commenced on assent 27.06.12 – applies to injury received on or after 19.06.12

Heart attacks / strokes Injuries in the nature of a heart attack or stroke are only compensable where the nature of the employment concerned gave rise to a significantly greater risk of heart attack or stroke than had the worker not been employed in employment of that nature. Section 9B(2) provides comprehensive definitions, including medical terminology, of those conditions that will be categorised as a heart attack or stroke. Anticipate disputes as to which occupations are particularly stressful or physically demanding and can be considered as resulting in a significantly greater risk of injury. Will expert opinion be required on the calculation of the increased risk?

Disease injuries s4 The definition of disease has been narrowed so that it will only be a work related injury if the employment was the main contributing factor to the contraction of the disease. It will also be necessary for the employment to be the main contributing factor where it is alleged that the employment aggravated, accelerated, exacerbated or resulted in a deterioration of the disease. Consideration of the concept of ‘main contributing factor’ is in addition to the requirement under s9A that employment must be a substantial contributing factor to the injury.

ClientUpdate

Heart Attacks / Disease Injuries

Query whether many disease injuries will be excluded by the new definition. There are no amendments to s15 and s16 of the 1987 Act which determine the deemed date of injury in disease cases. The amended definitions for heart attacks, strokes and diseases apply to all injuries sustained on or after 19 June 2012.

Work Injury Damages Threshold Commenced on assent 27.06.12 – applies to claims made on or after 19.06.12 The new section 314(3) of the 1998 Act provides that acceptance ‘by the person on whom a claim for work injury damages is made’ (that is, the insurer) of a degree of permanent impairment for a section 66 claim also constitutes acceptance of the degree of permanent impairment for the purposes of a claim for work injury damages. This means that if an insurer accepts a section 66 claim for 15% WPI or more, then the insurer cannot then raise a threshold dispute under section 151H should the worker later claim work injury damages. However, section 314(3) provides that the agreement is binding only on the ‘person on whom a claim for work injury damages is made’. There is no reference to the agreement being binding on the worker. The addition of section 314(3) gives legislative force to WorkCover’s Operational Instruction 1.15 which states that if the level of permanent impairment assessed for a section 66 claim is at or above 15%, then the work injury damages threshold ‘is to be determined without the worker being required to undergo another assessment of permanent impairment.’

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

4


Section 322A of the 1998 Act provides that there can be only one assessment of the degree of permanent impairment of a worker, and that a medical assessment certificate given in connection with that assessment is the only medical assessment certificate that can be used in any dispute. Section 322A applies to both parties and is consistent with section 314(3). However, because section 314(3) applies only to insurers, situations may arise where a worker and insurer agree to a certain percentage of whole person impairment for a section 66 claim, but the worker later applies for a medical assessment certificate for the purposes of determining the work injury damages section 151H threshold (e.g. because of subsequent surgery). This would not offend either section 314(3) or section 322A, but would only arise where no medical assessment certificate was obtained for the section 66 claim.

Nervous Shock Commenced on assent 27.06.12 – applies regardless of DOI or date of claim A new section 151AD of the 1987 Act prevents claims for pure mental harm (commonly referred to as ‘nervous shock’) by relatives or dependants of a deceased or injured worker unless their injury is also a work injury. Accordingly, unless the relative or dependant is also a worker of the relevant employer, no claim for damages for nervous shock can be made. This amendment does not apply to court proceedings for ‘nervous shock’ damages commenced before 19 June 2012.

RTW Obligations Awaiting proclamation to commence

ClientUpdate

Reforms to the NSW Workers Compensation Scheme June 2012

A worker who has a current work capacity must make a reasonable effort to return to work in suitable or pre-injury employment with their pre-injury employer or another employer – s48. This extends the previous obligation to finding work with another employer. Section 48A replaces the previous section 57 (suspension of weekly benefits for non-compliance) so that an insurer may suspend, terminate or cease and determine the entitlement to weekly benefits. This section gives the insurer more options when dealing with non-compliance. A worker may refer any dispute under this section to the Workers Compensation Commission by filing an expedited assessment or an Application to Resolve a Dispute.

Costs Awaiting proclamation to commence Each party is to bear their own costs in relation to a claim for compensation s341 of the 1998 Act. The Workers Compensation Commission will no longer have any power to make any costs orders. The following sections relating to costs have been removed the 1998 Act: •

Sections 341 - Costs to be determined by Commission

Sections 342 - Costs unreasonably incurred

Sections 343 - Restrictions on recovery of solicitor/client costs

Sections 345 - Costs penalties where appeal is unsuccessful

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

5


Workers’ solicitors are not entitled to any costs for reviewing a work capacity decision (in order to determine a worker’s weekly benefits). The amendment does not apply to proceedings commenced in the Workers Compensation Commission before commencement of the amendment. Amendments to Schedule 6 of the Workers Compensation Regulation have not yet been released. The 2012 amendments DO NOT apply to police officers, paramedics or firefighters

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

ClientUpdate

Reforms to the NSW Workers Compensation Scheme June 2012

Level 44, 2 Park Street, Sydney NSW 2000 | T: 02 8257 5700 | F: 02 9264 5600 Employers Liability | Corporate & Commercial | Insurance & Financial Services | Banking Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

www.turkslegal.com.au

6


Reforms to the NSW Workers Compensation Scheme June 2012

Summary of weekly payments Entitlement period 1

Total — No current work capacity

Partial — Current work capacity

Weeks 1 to 13

(AWE x 95%) – D, or MAX – D whichever is the lesser

(AWE x 95%) – (E + D), or MAX – (E + D) whichever is the lesser

Entitlement period 2

Total — No current work capacity

Partial — Current work capacity and has returned to work for 15 or more hours pw

Partial — Current work capacity and has returned to work for less than 15 hours pw or has not returned to work

Weeks 14 to 130

(AWE x 80%) – D, or MAX – D whichever is the lesser

(AWE x 95%) – (E + D), or MAX – (E + D) whichever is the lesser

(AWE x 80%) – (E + D), or MAX – (E + D) whichever is the lesser

Entitlement period 3

Total — No current work capacity likely to continue indefinitely

Partial — Current work capacity and:

i.e. not able to return to pre-injury work but able to return to work in suitable employment

• • • • • Weeks 131 to 260

(AWE x 80%) – D, or MAX – D whichever is the lesser

has applied in writing for continuation of payments has returned to work for 15 or more hours pw receiving at least $155 pw current weekly earnings, and likely to continue indefinitely to be unable to increase current weekly earnings subject to review upon work capacity assessment

(AWE x 80%) – (E + D), or MAX – (E + D) whichever is the lesser

No entitlement after 260 weeks unless worker assessed with more that 20% whole person impairment (in which case the same rates apply as in weeks 131 to 260)

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

Level 44, 2 Park Street, Sydney NSW 2000 | T: 02 8257 5700 | F: 02 9264 5600 Employers Liability | Corporate & Commercial | Insurance & Financial Services | Banking www.turkslegal.com.au


Reforms to the NSW Workers Compensation Scheme June 2012

Summary of Reforms to the NSW Workers Compensation Scheme AREA

MAIN CHANGES

IN FORCE?

APPLIES TO?

• •

Completely new regime See accompanying Summary of weekly benefits table

O

Not in force

• • •

No pain and suffering No compensation unless greater than 10% WPI Only one claim can be made (i.e. no ‘top up’ claims for WPI)

P

Claims made on or after 19.6.2012

Payable only if prior approval obtained from insurer, with limited exceptions

P

Any medical expenses incurred on or after 27.6.2012

Entitlement to medical expenses cease 12 months from date claim was first made, or 12 months after weekly benefits cease, unless greater than 30% WPI

O

Not in force

Heart attacks / strokes

The nature of the employment concerned must have given rise to a significantly greater risk of heart attack or stroke in order for compensation to be payable

P

Injuries received on or after 19.6.2012

Disease

Compensation payable only if employment was the main contributing factor

P

Injuries received on or after 19.6.2012

Journey claims

Must be a ‘real and substantial connection’ between the employment and the accident or incident in order for compensation to be payable

P

Injuries received on or after 19.6.2012

O

Not in force

P

Claims made on or after 19.6.2012

P

All claims unless Court proceedings commenced before 19.6.2012

Weekly benefits

Lump sums

Medical expenses

• Commutations

Impact not known, as refers to ‘regulations’ which are yet to be issued Anticipated restrictions on commutations will be relaxed

Work injury damages

Determination of WPI for s66 claim binding on insurer when determining if worker satisfies threshold to pursue a work injury damages claim

Nervous shock

No entitlement to damages for relatives unless they were also a ‘worker’ •

Costs

No entitlement for worker’s solicitor to charge any costs for acting in a work capacity dispute. No power for Commission to order costs in most matters, meaning workers will bear their own legal costs, even where successful.

O

Not in force

Note: This paper was prepared in June 2012 and there have been amendments to the legislation since then.

Level 44, 2 Park Street, Sydney NSW 2000 | T: 02 8257 5700 | F: 02 9264 5600 Employers Liability | Corporate & Commercial | Insurance & Financial Services | Banking www.turkslegal.com.au


Reforms to the NSW Workers Compensation Scheme