November 2003

Workers Compensation Law Update - new legislation to implement insurance reform

Workers Compensation Amendment (Insurance Reform) Bill 2003

This Bill passed through the Parliament on 19 November and is currently awaiting assent. Once the Bill is proclaimed to commence it will implement several of the major changes to the workers compensation system recommended in the McKinsey Report.

"31 December 2003 will mark the end of the Compensation Court of NSW ...."

The object of the Bill is to amend the Workers Compensation Act, 1987 to set up a new framework for workers compensation insurance arrangements.

Once proclaimed, the following changes will come into effect :

  • A Workers Compensation Nominal Insurer will be established as a statutory legal entity that will operate as a licensed insurer in place of the existing managed fund licensed insurers. The Nominal Insurer will issue workers compensation policies of insurance and deal with claims under those policies as an insurer. The Nominal Insurer will become the insurer under every policy of insurance issued by current managed fund insurers.
  • The WorkCover Authority will act for the nominal insurer. Anything done by the WorkCover Authority on behalf of the Nominal Insurer is taken to be done by the Nominal Insurer.
  • A Workers Compensation Insurance Fund will replace the existing managed funds of licensed insurers and will be the fund into which workers compensation insurance premiums will be paid and from which claims for workers compensation (and associated common law claims) will be paid by the Nominal Insurer. The administrative costs of the Nominal Insurer will also be paid out of the Insurance Fund. Employers will be entitled to participate in the distribution of any surplus from the Insurance Fund and are responsible for meeting any deficit in the Insurance Fund by means of fixing premiums, levies and contributions.
  • The Nominal Insurer may enter into agency arrangements for the appointment of corporations to act as scheme agents for the Nominal Insurer. A Scheme Agent will be subject to the direction and control of the Nominal Insurer. Remuneration of the Scheme Agents will be paid out of the Insurance Fund.
  • The existing managed fund licensed insurers will continue to act as agents for the Nominal Insurer in respect of policies of insurance that they have issued until other arrangements are made.
  • The Uninsured Liability and Indemnity Scheme currently administered by the Authority will be replaced with a scheme under which the Nominal Insurer becomes the insurer for claims made against uninsured employers and which provides for the subsequent reimbursement of the insurance fund.

Practical aspects of transfer of proceedings from Compensation Court to Workers Compensation Commission

The Compensation Court of New South Wales will cease operation on 31 December 2003.

It is anticipated that all cases will be reached by the Court prior to that time provided they are ready for hearing by 30 November 2003.

A "not ready" list was established by the Court for all matters that had no reasonable prospect of being ready for hearing by 30 November 2003. Previously, an application could be made to the Chief Judge to restore a case in the "not ready" list to a hearing list. However, those cases will no longer be restored to the list and will be transferred to the Commission on 1 January 2004.

Any cases that have been marked "not reached" on the day listed for hearing have been placed in a Short Notice list in an attempt to finalise as many of these cases as possible prior to the end of the year. Those cases will be allocated a new hearing date on 5 days notice.

Voluntary Transfer

Pursuant to section 225 of the Workers Compensation Regulation 2003, a claimant can elect to transfer proceedings from the Workers Compensation Court to the Commission by completing an election form. On receipt by the Commission of the election, the claim will be treated as a new claim. The consent of the employer or insurer is not required to make an election. Neither the Commission nor the Court has any discretion or power to refuse to accept an election. Pursuant to clause 6A of Part 18C of Schedule 6 of the 1987 Act, the Compensation Court ceases to have jurisdiction in respect of the claim once the claim becomes a new claim.

The Commission will attend to the physical transfer of the court file and all relevant documents for the purpose of facilitating the hearing and determination of proceedings on the claim by the Commission.

Costs

The claimant’s solicitor is entitled to a fee of $500.00 where an election is made to transfer a matter to the Commission. However, legal costs in cases that are transferred from the Court to the Commission will be calculated on the old costs scale system for all work done prior to the transfer and thereafter calculated in accordance with Schedule 6 of the Workers Compensation Regulation 2003.

Compulsory transfer

All cases that have not been listed will be automatically transferred to the Workers Compensation Commission on 1 January 2004.

It is not clear whether the proposed transfer of matters that are part heard by the Compensation Court on 31 December 2003 will be transferred to the District Court rather than the Commission.

We anticipate a decision will be made on this aspect shortly.

31 December 2003 will mark the end of the Compensation Court of NSW and the complete ascendancy of the Workers Compensation Commission as the forum for workers compensation dispute resolution in New South Wales.

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