July 2012

Workers Compensation Update #2 - Lump Sum Impairment Claims

Topic:  Lump Sum Impairment Claims

1. The amendments

Impairment claims

Changes to lump sum entitlements are outlined in Schedule 2 of the Workers Compensation Legislation Amendment Act 2012 (“the Amending Act”).

The new section 66:

There is no entitlement to compensation under section 66 unless the degree of permanent impairment that results from “an injury” is greater than 10% WPI.  (Section 66(1)).  This also includes claims for hearing loss.  (Section 69A is repealed by the Amending Act).
 
Only one section 66 claim can be made in respect of the permanent impairment that results from “an injury”.  As such, further claims in relation to the same injury will no longer be permitted. (Section 66(1A)).
 
There will no longer be an entitlement to lump sum compensation for pain and suffering.  The former section 67 has been repealed.

2. When did these changes commence?

Under the transitional provisions, the lump sum amendments only apply to “a claim for compensation” made on or after 19 June 2012.   For claims made before 19 June 2012, the previous provisions apply.  (Schedule 12, clause 15).

3. How will the amendments operate in practice?

The transitional provisions refer to “a claim for compensation” made on or after 19 June 2012.  There will be debate as to whether "a claim for compensation" means the lump sum amendments apply to (a) any claim for compensation made on or after 19 June 2012,  or, (b) only lump sum claims made on or after 19 June 2012.

If (a) applies, this could mean a claim for lump sum compensation made on or after 19 June 2012 for an injury where a claim for weekly compensation or medical expenses was made before 19 June 2012, will not be subject to the lump sum amendments.  If (b) applies, the amendments will apply to all lump sum claims made on or after 19 June 2012, regardless of whether a claim for any other type of compensation in respect of the injury was made before 19 June 2012.

WorkCover commentary suggests (b) is the preferred view, but this will be the subject of a test case in the next 6 - 8 months. There will be no certainty until there is a Deputy Presidential or Court of Appeal decision on this point.

If we assume the lump sum amendments apply to all lump sum claims made on or after 19 June 2012 then:

  • If a worker has not received a previous section 66 lump sum for the injury and the current WPI assessment is below 11% WPI, the claim can be disputed on the basis the worker has not reached the new section 66(1) threshold.
  • If a worker has received a previous section 66 lump sum for the injury, there will be no further entitlement or right to AMS referral.  The claim can be disputed under section 66(1A). 
  • If a worker has not received a previous section 66 lump sum for the injury and the worker has a report with an assessment of 11% WPI or greater in respect of "an injury", the worker will have the right to have the claim referred to an AMS.
  • In claims for WPI (further hearing loss), there is a new or fresh deemed date of injury since the previous impairment settlement or award, provided there has been additional noisy employment since the previous settlement or award.  As there is a new deemed date of injury, a worker could be entitled to additional impairment compensation under section 66(1) if the worker obtains an AMS assessment which, when aggregated with the previous assessment of WPI (hearing loss) or BHI, totals 11% WPI or greater.

4.  Anticipated Claimant Strategies and Potential New Areas of Dispute

Section 66(1A) refers to permanent impairment that results from “an injury”.  There will probably be debate about the meaning of “an injury” and whether a secondary injury, such as a bowel condition from analgesics taken to treat a lumbar spine injury, is a separate “injury” or “pathology” to the primary injury, and therefore can be assessed separately if the worker has already received section 66 compensation for the primary injury (eg. the lumbar spine injury).

The operation of this section could be tested by workers who have already received section 66 lump sums in respect of a primary injury who may, at a later date, claim a further lump sum for a secondary injury.  Claimants may attempt to argue the secondary injury is a new and separate “injury” or pathology to the primary injury, thereby avoiding the operation of section 66(1A).  It is doubtful that this argument will succeed.  It is likely to be considered in a Deputy Presidential decision in the next year.

The lump sum amendments could result in increased and repeated section 66 claims based on nature and conditions / aggravation of disease injury allegations, to overcome section 66(1A).

We illustrate this by an example below:

  • A worker makes a section 66 claim for a nature and conditions / aggravation of a disease injury (deemed DOI July 2012) and does not reach 11% WPI after an AMS assessment. 
  • The worker continues working for the same or different employer performing onerous, labour-intensive duties.
  • The worker makes a further section 66 claim based on a nature and conditions / aggravation of disease injury, over a longer period of onerous/labour intensive work with a new, later deemed date of injury under section 16 of the 1987 Act.  Because this will be a “new injury”,  section 66(1A) will be overcome and the worker will be entitled to a second shot at an AMS assessment to reach the 11% WPI threshold.

It remains vital for insurers to deal with nature and conditions / aggravation of disease claims properly.  Insurers need to be mindful of cases where claims are presented with “globalised” WPI assessments, where there are separate frank incidents, in an attempt to subsume the frank injuries within a nature and conditions / aggravation of disease injury allegation.

IME doctors should be asked to provide assessments which apportion impairment between the different frank injuries and any nature and conditions/aggravation of disease injury.  Insurers should ensure section 66 claims are referred to an AMS to provide separate WPI assessments for each separate injury.  The question of aggregation of WPI assessments can be reserved until after the MAC has issued.  Only an Arbitrator has jurisdiction to determine whether aggregation applies (not the AMS).

5. Conclusion – Tips for Insurers

Insurers should be looking to dispute section 66 claims made on or after 19 June 2012 where:

  • The worker has received a previous section 66 lump sum in respect of the same injury.
  • The insurer’s medical assessment is less than 11% WPI.
  • Impairments from multiple injuries are artificially aggregated or globalised into a single WPI assessment, to exceed the 11% WPI threshold.
  • A WPI (further hearing impairment claim) is made but the total WPI, when added with the section 66 lump sum previously paid, does not reach or exceed 11% WPI.

Bartier Perry is presenting a series of seminars on the recent amendments during August - contact events@bartier.com.au  for further information.

Author: Mark Underwood.