10 March 2010
Psychological injury in the workplace: fact finding is not disciplinary enquiry or performance appraisal
In this bulletin we review a recent case (Hobden v South East Illawarra Area Health Service, 8 February 2010) which deals with the evidence required for employers to establish a defence under section 11A(1) of the Workers Compensation Act.
Section 11A(1) of the Act provides a worker is not entitled to compensation if he or she suffers psychological injury and that injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by the employer relating to the worker’s transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers. When contesting a psychological injury claim under this section, the onus of proving the defence falls upon the employer.
The worker was employed as an endorsed enrolled nurse. In the course of her work she administered insulin to a patient with unstable blood sugar levels. The administration of the drug was inappropriate and resulted in the patient suffering a hypoglycaemic episode. The worker failed to inform the registered nurse on duty about her actions.
The employer's initial response to the incident involved communications between the worker and the nursing unit manager. The employer's response focused on eliciting information about the incident, provision of information to the patient's husband and encouraging the worker to return to work. That was followed by a formal fact finding meeting involving the worker and the medical stream manager who was required to make recommendations to management regarding the worker’s performance, discipline and/or dismissal. He had no authority to carry out his recommendation. He did not counsel the worker in regard to her performance, although he assured her the employer would look into a number of concerns raised by her.
Fellow members of staff became aware of the incident. The nursing unit manager admitted she had spoken to a couple of other nurses about it and cautioned them about administering insulin. She had spoken to staff in general about mistakes. The employer’s evidence suggested it was necessary, appropriate and reasonable to discuss incidents and errors with other staff for educational purposes. However, the worker says she was told about some critical comments regarding her performance by other staff members.
The worker suffered psychological injury. The employer admitted the worker suffered a psychological injury and that employment was a substantial contributing factor to the injury. The employer defended the claim on the basis the psychological injury was predominantly caused by reasonable actions with respect to performance appraisal and/or discipline within the meaning of section 11A(1) of the 1987 Act. The employer succeeded before the arbitrator.
On appeal by the worker, President Keating accepted the evidence established the worker exceeded her clinical responsibility but he concluded the employer had failed to establish a defence under section 11A.
His Honour reviewed the evidence in determining whether the circumstances causing the psychological injury could be classified as performance appraisal or discipline under section 11A(1). The employer took a series of steps following the incident. However, none of them involved counselling the worker about her mistake, suggesting ways of improvement, managing her work performance or reprimanding her for her mistake. Rather, His Honour considered the communications and meetings between the worker and the employer’s representatives amounted to fact finding and investigation into the incident rather than discipline or performance appraisal. They were, essentially, preliminary to the employer disciplining or performance appraising the worker.
Therefore, it was concluded the employer had not established the section 11A defence. The worker succeeded on appeal.
In this case, the section 74 dispute notice served by the employer did not adequately identify the action or actions the employer relied upon as having been the whole or predominant cause of psychological injury under section 11A. President Keating considered the dispute notice was not sufficient and did not comply with the requirement of section 74 as it failed to particularise the issues and the reasons for the decision or specify which of the various parts of section 11A(1) was relied on. As a minimum the notice should have referred to discipline or performance appraisal rather than just referring generally to section 11A.
Emphasising the importance of a properly particularised section 74 dispute notice, President Keating echoed the comments by Deputy President Bill Roche in Sydney Night Patrol and Inquiry Co Pty Limited v Spasevski  NSW WCC PD 7. In that case, Deputy President Roche held broad brush assertions in a dispute notice do not comply with section 74 of the Workplace Injury Management Act, 1998. The insurer is required to identify the reason it disputes liability and the issues relevant to the decision. He concluded generalised denials of entitlement to compensation or the practice of generally referring to multiple sections of the legislation is unacceptable and must cease.
The decision is a reminder to ensure the insurer/employer has sufficient evidence before a claim for psychiatric injury is disputed under section 11A because the employer is burdened with the onus of proof. In the absence of sufficient evidence it is open to the Commission to conclude the defence under section 11A is not established.
The dispute notice must be accurate and set out appropriate issues, particulars and reasons relating to the dispute without making broad brushed assertions.