December 2015

WIRO (WorkCover Independent Review Office) procedural review examined by the NSW Supreme Court

A recent decision of the Supreme Court in The Trustees of the Sisters of Nazareth v Simpson [2015] NSWSC 1730 examines the powers of WIRO to set aside a work capacity decision (WCD) by way of procedural review. 

Background

The insurer made a WCD in relation to a worker who had been paid more than 130 weeks of weekly benefits, was assessed as having some capacity for work, but was not working for 15 or more hours pw (in fact, not working at all) or earning at least $173 pw.  The decision to reduce her payment to nil was made with reference to s 38(3).  Based upon certificates of capacity to the effect that the worker was able to work 20 hours pw, the insurer found that the worker had capacity.

A merit review to WorkCover confirmed the WCD.  The worker applied to WIRO for procedural review.  She made no submissions which went to the procedures followed by the insurer in making the WCD, instead focussing on how her claim had been managed generally by the insurer over its life and how the injury had affected her life.

First procedural review by WorkCover Independent Review Officer (WIRO)

The Delegate of WIRO identified 2 aspects of the WCD which warranted the decision being set aside.  Firstly, the insurer had calculated a figure reflecting what the worker was capable of earning.  There was no explanation as to how that figure was arrived at, and the Delegate said that the worker was entitled to know.

Secondly, in the notice of its WCD the insurer simply reproduced s 59A(3) without explaining how that provision would operate to entitle the worker to payment of medical expenses should she again become entitled to weekly compensation.  The insurer had otherwise explained the operation of s 59A(2).  Interestingly, in acknowledging the (then) uncertainty around how that section would be interpreted, the Delegate observed that “it is unlikely the insurer could do any more” in explaining how s 59A(2) operated.  But the notice hadn’t explained the operation of s 59A(3).

The Delegate found that the insurer had failed to comply with the Guidelines in relation to these 2 issues and that as a result the WCD must be found to be invalid and set aside.

Supreme Court challenge

The insurer applied to the Supreme Court to quash the WIRO procedural review.

In reviewing the operation of s 38(3), Davies J observed that the section was enlivened when (1) a worker has received more than 130 weeks of weekly compensation; (2) had capacity to work; but (3) was not working at least 15 hours pw, or earning at least $173 pw.  To that extent it wasn’t relevant that the insurer also calculated a dollar figure that it adjudged to be the worker’s ability to earn. 

In relation to the treatment of s 59A(3), Davies J said the provision speaks for itself.  No further explanation was required and the Guidelines require an insurer to reference the legislation, but not to explain the legislation.

Davies J also said that it would be legally unreasonable if every failure to follow Guidelines could invalidate an insurer’s decision.  Provided that an insurer has asked itself the correct questions, and that it has provided reasons in a way that explains the matters set out in the Guidelines, then it is difficult to see why an “incidental failure” should result in invalidity.  It must be procedural error leading to procedural unfairness to justify setting aside a WCD.

The end result was that the Delegate’s decision to invalidate the WCD was set aside and an order also made that WIRO re-determine the matter.

Second procedural review by WIRO

Davies J delivered his decision on 23 November 2015.  Later the same day a different WIRO Delegate delivered a further procedural review.

The Delegate acknowledged the decision of Davies J but then proceeded to invalidate the WCD on a different ground.  The insurer had made its WCD on 15 December 2014 and attached a surveillance report dated 11 December 2014.  In that context it wasn’t possible for the insurer to have advised the worker of this piece of evidence (the “fair notice call”) at least 2 weeks before making the WCD.  The Delegate said that this amounted to procedural unfairness sufficient to set aside the WCD.

Comment

In its second procedural review WIRO has got the wording right when the Delegate speaks of “procedural unfairness” as the basis for setting aside the WCD.  But it remains the case that there was evidence, in the form of certificates of capacity from the NTD, which certified that the worker had capacity to work 20 hours pw.

It remains to be seen whether the insurer takes this further procedural review back to the Supreme Court and, if it does, whether the Court would view the issue over the surveillance report as something which goes to procedural fairness, or as “incidental” to the decision? 

Conclusion

This decision is important because it spells out that procedural error must be an error which results in procedural unfairness in order to set aside a WCD.  Not every failure will fall into that category so as to invalidate a WCD.  According to Davies J, an incidental failure should not invalidate a WCD.

WIRO’s immediate response in this particular claim hasn’t delivered a different outcome for this insurer, but it would be hoped that a more pragmatic approach to procedural review will follow this decision.

Author: Gary Forster