July 2010

Lump sum compensation for workplace injury - assessing impairment & deducting for previous injury

An assessment of impairment for lump sum compensation or work injury damages must take into account any relevant deduction for previous injury or pre-existing condition or abnormality. If the extent of a deduction is difficult or costly to determine it is to be assumed the deduction is 1/10 of the impairment.

Cole v Wenaline Pty Limited considered how a previous injury should be taken into account when determining impairment following a subsequent injury. Justice Schmidt held any deduction under section 323 depends on evidence of impairment suffered. Even if a previous injury was asymptomatic, if it is concluded that it contributed to the impairment present after the second injury, it must lead to a deduction. Assumptions should not be made and evidence must be considered to determine the level of impairment following further injury, and whether a proportion of that impairment is due to a previous injury.

Initial proceedings

Mr Cole worked as a farm labourer. He injured his back manoeuvring a 44 gallon drum of fuel in October 2005. He underwent lumbo-sacral discectomy in February 2008. He claimed permanent impairment compensation.

The worker sustained a previous back injury in 1976 for which he had surgery at the same spinal level. There was evidence of ‘occasional niggling back pain and stiffness’ subsequent to the earlier injury.

The main issue to be determined was how the 1976 injury should be taken into account when assessing the 2005 injury which occurred at the same level (L5/S1).

The AMS made the following assessment:

  • Lumbar Category DRE III: 10%WPI
  • Persistence of radiculopathy post-operation: 3%WPI
  • Interference to ADLs: 3%WPI
  • Sub total: 16%WPI
  • Section 323: 1/2 deduction for previous back injury for which he had surgery at the same spinal level. There was evidence of ‘occasional niggling back pain and stiffness’.
  • Total: 8%WPI

Appeal Panel

An appeal from the decision of the AMS was referred to an Appeal Panel.

There was no issue that the impairment came within DRE category III ‘lumbo-sacral injury or complaint due to ongoing radiculopathy’ and no contest as to the assessment of the worker’s 16% WPI. There was no issue that the earlier injury in 1976 arose for consideration under section 323.

The majority of the Appeal Panel upheld the AMS assessment of 16% WPI and ruled it should be reduced by half because of a ‘pre-existing injury, condition or abnormality’ relative to the 1976 injury and its surgical aftermath even though he had achieved a good result from that surgery. There was impairment present prior to the second injury and it must have contributed to the ultimate impairment, thus requiring a substantial deduction under section 323.

Arbitrator Bruce McManamey, a member of the Appeal Panel, disagreed and said no deduction pursuant to section 323 should be made for the following reasons:

  • There is no evidence of residual radiculopathy following the 1976 surgery
  • There is no evidence that the worker suffered any restriction in his activities of daily living prior to injury on 20 October 2005
  • There is no evidence that the prior surgery contributes to either the current residual radiculopathy or the current restriction in activities of daily living.

Nevertheless, the decision of a majority of the members of an Appeal Panel is the decision of the Appeal Panel, and the appeal was therefore dismissed.

Supreme Court

The worker sought judicial review in the Supreme Court arguing the appeal panel fell into legal error in the application of section 323. Justice Schmidt considered the Appeal Panel majority assumed that, even though treatment of the first injury in 1976 had succeeded, it must have contributed to the impairment after the second injury.

Justice Schmidt held that section 323 does not permit assessment to be made on the basis of an assumption or hypothesis that, once a particular injury has occurred, it will always ‘irrespective of outcome’, contribute to the impairment following a subsequent injury.

Justice Schmidt determined that the ½ deduction applied by the Appeal Panel majority for the prior injury was not logical. He held that the majority conducted its assessment on a basis inconsistent with what section 323 required. The worker’s judicial review application was accordingly upheld.

How does this effect section 323 deductions?

The decision of Cole v Wenaline Pty Limited is significant to the application of section 323 of the 1998 Act. Assumptions should not be made when determining the necessary deduction due to a prior injury or pre-existing condition or abnormality. Section 323 requires a conclusion on the evidence that the prior injury, pre-existing condition or abnormality caused, or contributed to, the resulting impairment. It further requires any continuation to be assessed based on evidence.

Author: Mick Franco