March 2017

Insurer wins first judicial review case brought by a worker against a work capacity decision

On 2 March 2017 Justice Wilson of the Supreme Court of NSW delivered a decision in Hallmann v National Mutual Life Association of Australasia Limited [2017] NSWSC 151.

Background and issues

This was the first case in the NSW workers compensation system where a worker sought judicial review of a work capacity decision of an insurer. Previously the worker was unsuccessful in applications for internal, merit review and procedural review of the work capacity decision. Bartier Perry appeared for the employer and insurer in the proceedings.

The worker argued the insurer was barred from conducting a work capacity assessment and making a work capacity decision as he was a ‘seriously injured worker’. He submitted a number of medical reports from treating specialists containing very high assessments of WPI - well above 30% WPI. As the deemed date of injury was before 2002, the insurer did not have any WPI assessments and previous Medical Appeal Panel decisions only provided modest assessments under the old table of disabilities.

The worker argued the only medical evidence before the insurer about his level of WPI was the assessments of his treating specialists and, therefore, there was no medical evidence of the WPI being below 30%  -  so the insurer must have erred in determining it was not satisfied his level of impairment was likely to be more than 30%. He also argued the insurer's reasons for concluding his level of impairment was not likely to be more than 30% were inadequate.   

Judgment

Justice Wilson said that although the second defendant, CGU Workers Compensation (NSW) Limited, is a private company, when making decisions relevant to work capacity and entitlement to weekly compensation payments it exercises statutory powers as an agent of the Nominal Insurer, pursuant to sections 154A, 154B and 154G of the 1987 Act. Further, she said  section 43(1) of the Act appears to contemplate judicial review. Her Honour therefore proceeded on the basis the decisions challenged by the worker were amenable to judicial review.

Justice Wilson said that, to exercise judicial review, the court must be satisfied there has been jurisdictional error, such as a mistaken assertion or denial of jurisdiction, or a misapprehension of the nature and extent of jurisdiction: Kirk v Industrial Court (2010) 239 CLR 531 at [72].

Justice Wilson said the dispute turned largely on the construction of the former section 32A(c) of the Act - the third limb of the definition of a ‘seriously injured worker’, which provided:

“[…] Seriously injured worker means a worker whose injury has resulted in permanent impairment and:

(a)……………………, or

(b)……………………, or

(c) the insurer is satisfied that the degree of permanent impairment is likely to be more than 30%.”

Justice Wilson noted the worker asserted that to make a determination a worker is not a ‘seriously injured worker’ the insurer must be positively satisfied the worker's whole person impairment is not more than 30%. Her Honour said: “This, however, inverts the language of the provision. What is required is a state of satisfaction that the degree of impairment is likely to be more than 30%". Justice Wilson noted the insurer was entitled, and in specific instances required, to conduct a work capacity assessment unless ‘satisfied’ that the level of impairment ‘is likely to be more than 30%'.

Justice Wilson said the prohibition on conducting a work capacity assessment turned on the determination of whether a worker is a ‘seriously injured worker’. Her Honour said it is not necessary for the insurer to reach a state of satisfaction about the worker's level of impairment as a prerequisite to the conduct of a work capacity assessment.

Justice Wilson said: “The plaintiff submits that there was no evidentiary or rational basis for the insurer to be satisfied other than that the plaintiff's level of impairment was likely to exceed 30%; however, the statute does not require specific evidence as to the level of impairment.”

Justice Wilson observed  there was a large volume of material before the insurer, including expert medical evidence to the effect that the worker's symptomatology was not a complication of ME/CFS. Justice Wilson said this evidence, coupled with the objective fact the worker was able to undertake work as a university tutor, was evidence available to the insurer in concluding it was not satisfied that the worker's level of impairment was likely to be more than 30%.

Justice Wilson went on to say while there was also medical evidence contrary to that of the insurer’s main ME/CFS expert, much of what was relied upon by the worker was strident, apparently partisan and lacking in balance. She said the insurer was not obliged to accept it or rely upon it when considering the state of satisfaction contemplated by the legislation. Her Honour said it was not the state of satisfaction or otherwise of the Court that determined the matter.

Justice Wilson said she was unable to conclude that the decisions under review were unsupported by evidence, or not open to a rational decision maker. The reasons given by the insurer for the decisions were succinct, but a lengthy explication was not required. The Court held the insurer’s reasons recorded its lack of satisfaction that the level of impairment was likely to be more than 30%. Her Honour said there was sufficient exposure of the reasoning process to allow the decision to be understood. Justice Wilson dismissed the plaintiff’s summons.

Comment

This decision will prove to be a helpful authority to insurers in future matters where injured workers may seek to challenge work capacity decisions on the basis they were ‘seriously injured workers’ or ‘workers with highest needs’ at the time of the decisions.

It is not surprising the Supreme Court concluded an insurer is not obliged to accept the worker's medical evidence when considering the state of satisfaction contemplated by the legislation. However, it was helpful Her Honour found the Act does not require specific evidence as to the level of impairment prior to an insurer conducting a work capacity assessment.

What does this decision mean for insurers?

As long as an insurer’s conclusion that the level of impairment is not likely to be more than 30% is supported by some evidence and would have been open to a rational decision maker, it seems likely the Supreme Court will find error has not been established and will decline to exercise its powers of judicial review.

The ‘state of satisfaction’ of the insurer about whether a worker is likely to suffer from more than 30% WPI presents a ‘high bar’ for a worker to overcome. An insurer does not have to accept the worker’s medical evidence of the degree of WPI and can even reach a state of satisfaction when it does not have its own assessment of the level of WPI or when there is no specific evidence of the level of WPI. Nonetheless, insurers should still comply with SIRA Guidelines and icare NSW directives in relation to the conduct of work capacity assessments and work capacity decisions.

 

Author: Mark Underwood