Prepared by William Duddy
We are pleased to publish, for your general information, this series of papers on the upcoming changes to the workers compensation system. These papers contain an overview of some of the significant features of the Return to Work Act 2014, along with some commentary. These papers contain our opinion on how the new legislation might operate but the information below does not constitute legal advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. If you would like Duddy Shopov to assist you, please contact our office on (08) 8110 5555 for further information and to arrange an appointment.
Entitlement to Compensation
The purpose of this paper is to address the entitlement to compensation under the Act, once it has been established that an injury is compensable.
Medical Expenses etc. – Part 4 Division 2
A worker is entitled to be compensated for costs of services that are reasonably incurred in consequence of having suffered a work injury.
Section 33(2) then details the “species” of such “medical services”.
The way Section 33 is framed also carries forward the concept that “recovery/return to work services” must be “approved” and in Section 33(9) it is specifically provided that approved recovery/return to work services is a reference to such services being provided by a person who has an agreement with the Corporation for the provision of those services. This power is delegated to a self-insured employer pursuant to Section 134.
Importantly, Section 33(17) also provides that in relation to certain classes of services, a worker can effectively pre-apply for approval. (This overcomes the Cristea type argument that the worker must incur an expense for the Tribunal to have jurisdiction and the consequence practice of dispute proceedings for a Plan or Program making provision for such medical services.) Regulation 22 contemplates that a specific application must be made and the only “species” of medical costs which does not apply to this process is approved recovery/return to work services.
Section 33(20) effectively sets a “sunset” on the entitlement to medical and like expenses. If the worker does not have an entitlement to receive weekly payments in relation to a work injury for a continuous period of 12 months or has not had any entitlement to receive weekly payments and a period of 12 months has expired, then costs incurred after such periods do not give rise to an entitlement under the Act.
However, this provision does not apply in relation to a seriously injured worker, nor does it apply in relation to any therapeutic appliance required to maintain the worker’s capacity. As the definition of “therapeutic appliance” in Section 3 includes a hearing aid, the liability for such appliances continues irrespective of the sunset clause in Section 32(20). However, there is also another qualification to the sunset on medical expenses and that relates to surgery, medical, nursing or medical rehabilitation costs where application has been made before the end of the sunset period that it is indeed reasonable and appropriate for surgery or other services to be provided after the end of the sunset period (Section 33(21)).
Weekly Payments/Income Support
If a worker suffers an injury that results in incapacity for work, the worker is entitled to weekly payments at 100% of the worker’s notional weekly earnings for a period of 52 weeks, and thereafter at 80% of notional weekly earnings for a further 52 week period.
Section 39(3) specifically provides that a worker has no entitlement to weekly payments in respect of a work injury after the end of the period of 104 weeks from the date on which the incapacity for work first occurs. Therefore entitlement is measured by duration of incapacity – see also Section 4(11) and Section 4(12).
However, Section 40 provides that where the worker undergoes surgery approved by the self-insured employer then the worker is also entitled to supplementary income support payments for up to 13 weeks, if after the two year period.
In the case of seriously injured workers the entitlement is at 100% for the first year, and then 80% thereafter for the balance of the worker’s working life (to adjusted retirement age).
The Act then provides for an economic adjustment to weekly payments (Section 47) for seriously injured workers, an adjustment due to change from original arrangements pursuant to Section 45 of the Act (for example, in relation to a non-cash benefit), and a review of weekly payments process pursuant to Section 46 of the Act.
Section 5 sets out the criteria required to determine average weekly earnings, and is fundamentally based on the formula that has been in place since 2008 – namely the average weekly amount that the worker earned during the period of 12 months preceding the relevant date (being the date of injury) in employment.
Section 50(7) provides that weekly payments may be suspended during any period for which the worker applies, and takes, annual leave. This also applies in relation to a worker who is absent from Australia for a period of in excess of 28 days (Section 51).
Section 48 of the Act sets out the machinery by which a reduction or discontinuance of weekly payments can be undertaken and if such a step is taken, then on application to the Tribunal, the operation of the decision is suspended until the matter first comes before a member of the Tribunal following which the Tribunal as it thinks fit may further suspend the operation of the decision, vary or revoke it.
Division 5 – Section 53 retains the ability of the parties to redeem the liability to make weekly payments, consequent upon professional, financial and medical certification.
A seriously injured worker may entertain redemption negotiations for weekly payments, subject to the “election” we have previously discussed in relation to seriously injured workers and their potential right to pursue an action at common law.
Further, Section 54 retains the provision in relation to a redemption of liability associated with medical expenses, but this cannot apply in relation to seriously injured workers (Section 54(2)) and such a redemption only requires professional advice and medical certification (not financial advice).
Permanent Impairment Lump Sums
The Return to Work Act contemplates two potential entitlements to lump sum payments in Section 56 and Section 57.
In Section 56, so long as a worker is assessed as having a degree of whole person impairment of 5% or more, then the worker has an entitlement to a lump sum payment in accordance with the schedule. Such an entitlement does not arise in relation to a psychiatric injury or consequential mental harm or noise induced hearing loss.
An entitlement to a lump sum for whole person impairment “economic loss” contains a loading having regard to the worker’s age and is designed to compensate by way of loss of future income.
The second form of lump sum payment arises pursuant to Section 57 of the Act for “non-economic loss”. A worker must assess at 5% or more, and has no entitlement in relation to a psychiatric injury or consequential mental harm.
If a trauma gives rise to two or more work injuries, then they may be treated as one pursuant to the Impairment Assessment Guidelines and the Act specifically provides that only one claim can be made under the Act in respect of any impairment or impairments that result from one or more injuries arising from the same trauma.
Where a worker dies as a result of a work injury, a domestic spouse or domestic partner (as defined) is entitled to weekly payments equal to up to 50% of the notional weekly earnings of the deceased in the event of total dependency, or some lesser percentage in the event of partial dependency.
A dependant and orphaned child is entitled to weekly payments up to 25% or some lesser percentage of the notional weekly earnings of the deceased worker.
A non-orphaned dependent child is entitled to weekly payments up to 12.5% or some lesser percentage of the notional weekly earnings of the deceased.
Section 59(1)(d) also provides that dependant relative (as defined) is also entitled to compensation by way of weekly payments as may be determined by the Corporation (this is delegated power pursuant to Section 134 of the Act). The Act retains a power to commute a liability to pay weekly payments, but only if the actuarial equivalent of the weekly payments does not exceed the prescribed sum.
Weekly payments made on account of the death of a worker are reviewed pursuant to Section 60 of the Act.
Section 61 also retains the entitlement to a lump sum payment in the event of the death of a worker as a result of a work injury. Section 61 then sets out a series of formulas that effectively relate to the division of the prescribed sum between a partner, child and other dependents.
Section 62 retains the liability to pay for the cost of a funeral (as per the regulations) and also continues the entitlement to counselling services.
It can be seen from the foregoing summary that whilst the Return to Work Act puts a definitive timeframe on entitlement to weekly payments and medical expenses (except for seriously injured workers), there is indeed a consequent “trade off” in terms of entitlement to lump sums in two forms – economic loss and non-economic loss.
Put another way, certainty and finality in relation to weekly payments and medical expenses is at the expense of enhanced lump sum payments.
For injuries that develop gradually (Section 188), it is important that the date of injury and the date of incapacity be fixed because that is the pivot from which time will run in determining when the entitlement to weekly payments and medical and like expenses expires.