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Should a permanently injured worker lose payments while waiting for assessment? Which case won?
01 Jul | Which Case Won

Should a permanently injured worker lose payments while waiting for assessment? Which case won?

by Digby Dunn, Forster

The Facts

Worker falls while pushing wheelbarrow and suffers injury

The initial injury happened in December 2000, when the worker fell while pushing a wheelbarrow. He suffered a significant injury to his right leg and ankle. The workers compensation insurer accepted liability and paid treatment expenses and ongoing weekly benefits from that point on, as well as a lump sum payment for permanent injury about four years after the incident.

The leg injury continued to give the man problems. In 2012 he had a serious fall when the injured leg gave way, resulting in a broken wrist and a significant back injury. Under workers compensation law, these consequential further injuries are treated as being part of the initial work injury.

The insurer continued paying weekly benefits on the basis that the man was unable to work as a result of the injuries and made a formal decision in 2013 that he had “no work capacity”, meaning that he would continue to receive weekly compensation benefits into the future.

Changes to workers compensation laws in NSW and introduction of “five-year rule”

In 2012 some major changes were made to workers compensation laws in NSW, including a new 260-week limit on payment of replacement income. This is loosely referred to as the five-year rule, because for people with long-term injuries receiving continuous payments, the 260-week limit works out to five years.

Payments before 2013 were not counted toward this new limit, with the result that thousands of long-term injured workers got a nasty Christmas present in 2017, when their workers compensation benefits were cut off.

Threshold of 20% Whole Person Impairment

The only way in which people with long-term injuries could continue to receive compensation benefits after the five-year cut off period was if they could establish through medical evidence that their permanent injury exceeded a “20% of Whole Person Impairment” threshold.

The worker was ultimately certified at 21%, but it took until 16 July 2018 to obtain that formal assessment. Weekly payments of workers compensation benefits resumed from 16 July 2018, but the insurer refused to pay benefits for the intervening period from 25 December 2017 to 16 July 2018.

The worker brought proceedings seeking an order that the insurer was liable to back-pay him for the six month period.

casea
The case for the insurance company
  • Our specialist doctor assessed your injuries as 5% Whole Person Impairment, well below the 20% threshold.
  • We immediately resumed paying you weekly compensation benefits as soon as your injuries were officially certified as satisfying the 20% threshold.
  • Until your injuries were officially certified at 21% Whole Person Impairment, you had no entitlement to ongoing weekly compensation payments.
  • We are not required to make any payments for the six month period, since the five-year limit cut off your benefits until you satisfied the official test to enable your payments to resume.
  • The payments system requires certainty, to test on any particular day whether you qualify for payments or not.
  • Official certification of permanent impairment cannot act retrospectively to satisfy that test.
caseb
The case for the worker
  • My inability to work hasn’t changed. I still couldn’t work during those six months, so I had no income.
  • My permanent injuries didn’t go away and then come back when certified. They were there the whole time.
  • My specialist doctor assessed me as having 49% Whole Person Impairment, well over the 20% threshold.
  • The official certification confirmed that I satisfied the 20% threshold, so the five year cut-off did not apply.
  • Therefore I should have been paid for the six months when my compensation payments were stopped.
  • Workers compensation laws are beneficial legislation, so they should be interpreted to the benefit of injured workers.

So, which case won?

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Case A Case B

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b81%

Expert commentary on the court's decision

Digby DunnDirector
“The president of the Workers Compensation Commission accepted the insurance company’s argument that operation of the workers compensation payment scheme requires certainty, otherwise there would be an unpredictable risk regarding when considerable back payments might be triggered.”
Initial decision by arbitrator in favour of worker

In the initial case of Frank Hochbaum v RSM Building Services Pty Ltd [2019] NSWWCC 31, the arbitrator decided in favour of the worker.

The insurance company was ordered to pay the missing six months of compensation benefits, with the arbitrator finding that once the 20% threshold is satisfied, the five year limit never applied, so the worker was entitled to be paid benefits for the entire period when his payments were stopped while he waited for the official certification of his impairment.

Insurance company successfully appeals arbitrator’s decision

The insurance company appealed and the government (State Insurance Regulatory Authority) also joined in the appeal case to argue about the interpretation of this legislation. On 18 April 2019, the president of the Workers Compensation Commission decided the appeal case RSM Building Services v Hochbaum [2019] NSWWCCPD 15 in favour of the insurance company.

The president determined that in the Workers Compensation Act 1987, section 39 as a whole must be interpreted in the present tense. This meant that the five year limit applied at all times from Christmas 2017 onwards, until the worker satisfied the criteria for further weekly payments to be made, by obtaining official certification that his injuries were greater than 20% Whole Person Impairment.

As a result, the worker had no entitlement to weekly compensation benefits during the intervening six months while waiting for completion of the official assessment process.

No need to interpret amendments to workers comp laws to benefit of injured workers

The president of the Workers Compensation Commission accepted the insurance company’s argument that operation of the workers compensation payment scheme requires certainty, “that it must be ascertainable on any given day whether section 39 applies to a specific worker”, otherwise there would be an unpredictable risk regarding when considerable back payments might be triggered.

The president also decided that the 2012 amendments to the workers compensation laws, including the five-year limit under section 39, were inserted as a cost-saving measure and were not beneficial provisions, so did not need to be interpreted to the benefit of the injured worker.

Decision has serious implications for workers compensation scheme and injured workers

This case has far-reaching consequences for many aspects of workers compensation claims. It hinders the ability of a worker to reach agreement with an insurance company to settle a permanent impairment claim.

It gives a strong incentive to insurers to delay the assessment process while they are not paying weekly benefits, knowing that they will not be required to back-pay for the delay. And it increases pressure on workers to rush for an early official assessment, despite the lifetime one-claim limit.

Appeal lodged against decision of Workers Compensation Commission

At the time of writing, a holding appeal has been lodged in the Court of Appeal, so there may be further consideration of these important matters.

To give one example, there was almost no mention in this decision of the well-established legal principles that first, the entitlement to compensation flows from the event of injury, and secondly, that permanent impairment compensation is fixed by the date of injury, regardless of the date of assessment or hearing.

It would seem an odd result to tell a worker who has lost a hand that he hasn’t actually suffered any loss until the injury is officially certified, months or years later.

Impact on insurance companies vs impact on injured workers

Likewise, giving priority to the potential uncertainty of when insurance companies might be required to make substantial back-payments seems to ignore the much more significant impact upon injured workers of not having those payments in the meantime, and being forced to wait months without payment, now without any prospect of ever seeing that money.

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