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PRESEN...
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Origin...
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Worker...
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obliga...
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Sectio...
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WorkCo...
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That m...
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[2] We...
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[8] A...
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The l...
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(2) A...
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(a) a...
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(i) t...
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Part ...
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(c) t...
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27A C...
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In Ne...
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consi...
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COMPL...
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REVIE...
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Once ...
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provi...
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If th...
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(b) a...
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The W...
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The i...
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Claus...
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The d...
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INDEP...
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Appli...
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I set...
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“The ...
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As wi...
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Kim Garling - Workcover Independent Review Office - Impact of work capacity assessment on claims management

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delivered the presentation at the 2014 Return to Work Forum.

The 2014 Return to Work Forum brought together speakers from multiple sectors to share best practice in return to work, injury management and rehabilitation.

For more information about the event, please visit: http://bit.ly/returntowork14

Published in: Recruiting & HR
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Transcript of "Kim Garling - Workcover Independent Review Office - Impact of work capacity assessment on claims management"

  1. 1. Page 1 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au PRESENTATION BY KIM GARLING NSW WORKCOVER INDEPENDENT REVIEW OFFICER TO THE INAUGURAL RETURN TO WORK FORUM July 2014 Rendezvous Grand Hotel Melbourne “Supporting our workers towards safe, productive and sustainable return to work”
  2. 2. Page 2 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Origins of Compensation for employment injuries The concept of some form of compensation for a worker who is injured in the course of her or his employment is over 4,000 years old. The general concept of compensating employees who were injured in the course of their employment is first recorded in 2050 BC in the city state of Ur which was in ancient Sumeria (present day Iraq) when Ur-Nammu who was the King of the city state issued Nippur Tablet No 3191. There were some 40,000 tablets recovered from that era. This law provided for compensation for injury to a worker’s specific body parts. For example, the loss of a thumb was worth one-half the value of a finger. Similar systems existed and were contained in Hammurabi’s Code in 1750 BC as well as in ancient Greek, Roman and Chinese law. The common denominator in most if not all of these early schemes was lump sum compensation for specific injuries. The legendary English pirate Henry Morgan who in the mid 1600’s had a ship’s constitution that provided for the “recompense and reward each one ought to have that is either wounded or maimed in his body, suffering the loss of any limb, by that voyage.” The loss of a right arm was worth 600 pieces of eight; the left arm 500; right leg 500, left leg 400 and so forth. The modern workers compensation movement has been traced to an initiative of Otto Von Bismarck, Chancellor of the German Empire who introduced a program to provide workers with assistance in the event of an accidental injury, sickness or old age. The Sickness Bill became law in 1883 and the Accident Bill in1884. The Sickness Insurance law paid indemnity to workers with job related injuries for up to 13
  3. 3. Page 3 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au weeks (for the first 4 weeks at 50% of prior wages, from the fifth week the benefit was 66.7% with 50% paid by the sickness fund and 16.7% by the accident fund).. After this 13 week period the accident funds, financed entirely by employers, continued the benefits at 67% for workers who were totally disabled. The benefit rate for permanently disabled workers that needed constant care was 100%; for partial disabilities the 66.7% rate was scaled for the percentage of loss in earnings capacity. The first enactment in relation to workers compensation in NSW was the 1910 Act which incidentally provided that the compensation monies could not be the subject of any claim and were protected in the same way as today. Section 7 of that Act provided that a widow could lose her entitlement to a death benefit if she was drunk or neglected her children !! Current Compensation Scheme in New South Wales The current legislation in New South Wales is contained in two principal Acts: Workers Compensation Act 1987 Workplace Injury Management and Workers Compensation Act 1998 There are a number of other Acts for specific purposes and these include: Workers Compensation (Dust Diseases) Act 1942 Workers Compensation (Bush Fire, Emergency and Rescue Services) Act 1987 There is also a Regulation:
  4. 4. Page 4 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Workers Compensation Regulation 2010 The Scheme regulator is the WorkCover Authority of NSW which has issued a number of Guidelines some of which are said to operate as delegated legislation. The principal Guidelines which impact upon lawyers are: Claiming Compensation Benefits Work Capacity Internal Reviews and Merit Reviews The principal Acts have been regularly amended since their introduction and the most recent reforms were in June 2012. The 1987 Act has now been amended 106 times and the 1998 Act 51 times.1 In New South Wales, the Compensation Scheme had prior to June 2012, been managed on a loss making basis and had accumulated unfunded liabilities in excess of $4billion. It is important to remember that these statistics are compiled by actuaries and are estimates rather than actual. The Scheme Actuary (PwC) has to estimate the cost of all monies paid out at any time in the future (some 50 years) from a workplace incident causing injury in the year ended 30 June. While the WorkCover Insurance Fund is held on statutory trust for the benefit of workers and employers2 it is not well recognised that Employers have an 1 Presentation by Mr R Parsons, Registrar, NSW Workers Compensation Commission 2 Section 154D(2) of the 1998 Act
  5. 5. Page 5 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au obligation to contribute to the deficit (by way of premiums, levies etc) but also have the right to participate in the distribution of any surplus3. The Fund cannot be applied to Consolidated Revenue so the NSW Government (other than in its role as an Employer) is unable to benefit from any accumulated surplus. The NSW Government convened an Upper House Enquiry which produced a report with various recommendations and then in June 2012, the Government introduced into the Parliament the Workers Compensation Legislation Amendment Bill 2012 which contained very significant reforms to the WorkCover Scheme which were designed to reduce the deficit in the scheme and provide workers with a sustainable level of benefits. The 2012 reforms introduced by the New South Wales government were designed to provide quick and easy access to compensation for workers genuinely injured in the course of their employment with benefits that were clearly defined. The emphasis in the reforms was on ensuring that those persons more seriously injured would be more generously compensated. It is important to appreciate that the scheme for compensating workers injured in the course of their employment in New South Wales is a government funded model and is not an insurance scheme. It appears that as a result of the 2012 reforms the NSW WorkCover Fund reversed its deficit by 30 June 2013 and that by 30 June 2014 there will be an accumulated surplus in the Fund of over $2bn. 3 Section 154D(3) of the 1998 Act
  6. 6. Page 6 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Section 14 of the 1998 Act established the WorkCover Authority of NSW (“WorkCover”). It is a corporation and is a statutory body representing the Crown. It has the following general functions: Section 22(1) The general functions of the Authority are: (a) to be responsible for ensuring compliance with the workers compensation legislation and the work health and safety legislation, (b) to be responsible for the day to day operational matters relating to the schemes to which any such legislation relates, (c) to monitor and report to the Minister on the operation and effectiveness of the workers compensation legislation and the work health and safety legislation, and on the performance of the schemes to which that legislation relates, (d) to undertake such consultation as it thinks fit in connection with current or proposed legislation relating to any such scheme as it thinks fit, (d1) to monitor and review key indicators of financial viability and other aspects of any such schemes, (e) to report and make recommendations to the Minister on such matters as the Minister requests or the Authority considers appropriate. Section 23 of that Act sets out 16 specific functions. WorkCover has functions which relate to the Work Health and Safety legislation as well as the Workers Compensation Scheme. This paper relates only to the functions relevant to the Workers Compensation Scheme. WorkCover is governed by the Safety Return to Work and Support Board which covers the various compensation authorities such as the Motor Accidents Authority, Dust Diseases and Lifetime Care Authority as well as WorkCover. The WorkCover Authority is now part of the Office of Finance & Services in the new Treasury cluster.
  7. 7. Page 7 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au WorkCover has a dual role as the regulator and the insurer as there is a single insurer being the Nominal Insurer. Section 154A of the 1987 Act established a Workers Compensation Nominal Insurer and Section 154B set out its functions. These are very general: Functions of Nominal Insurer (1) The Nominal Insurer is taken to be a licensed insurer as if it were the holder of a licence in force under Division 3 of Part 7 and as if that licence were not subject to any conditions. (2) The Nominal Insurer has such functions as may be necessary or convenient for enabling the Nominal Insurer to function and operate to the fullest extent as a licensed insurer. (3) Without limiting subsection (2), the Nominal Insurer may issue directions to any employer with respect to the insurance arrangements of the employer. (4) The Nominal Insurer has such other functions as may be conferred or imposed on the Nominal Insurer by or under this or any other Act or law or by the regulations. (5) The liabilities of the Nominal Insurer as insurer under a policy of insurance can only be satisfied from the Insurance Fund and are not liabilities of the State, the Authority or any authority of the State. Section 154C provided that WorkCover acts for the Nominal Insurer. Section 154D established the Fund which is known as the “Workers Compensation Insurance Fund”. Section 154E provides for the monies to be received and the expenses to be paid from that Fund. All monies received from employers together with investment returns are paid into the fund and all expenses of operating the WorkCover Scheme are paid from that single fund.
  8. 8. Page 8 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au That means that from that fund are paid the weekly benefits and lump sum benefits for injured workers together with the medical treatment costs. Also paid from that fund are the costs of maintaining the WorkCover Authority, the cost of managing the claims, the cost of the Workers Compensation Commission, the costs of the various providers in relation to medico legal reports, as well as the costs of the lawyers acting for the claims managers and the costs of the lawyers acting for the injured worker. In order to manage the processing of applications for compensation by injured workers WorkCover has contracted with seven insurance companies to manage the claims on behalf of the fund. These companies are known as Scheme Agents and are described in the legislation as Insurers. In addition WorkCover has licensed 60 employers to be self insurers and therefore to manage their own liability for compensation. These include the New South Wales government departments. There are also six specialised insurers which are groups of employers with similar interest. The self and specialised insurers meet the cost of their claims and do not have access to the Fund but do pay a contribution towards the cost of the Scheme. THE 2012 REFORMS The main reforms introduced by the Workers Compensation Legislation Amendment Act 2012 were: [1] Entitlement to weekly payments depends upon whether an injured worker has some work capacity or not.4 4 Work Capacity is dealt with later in this paper.
  9. 9. Page 9 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au [2] Weekly payments calculated by reference to the worker’s pre injury average weekly earnings (piawe) to a maximum of $1,838.70 (indexed biannually). [3] During the first entitlement period (weeks 1 to 13) the worker receives 95% of their piawe. [4] During the second entitlement period (weeks 14 – 130) an injured worker with no current work capacity receives 80% of their piawe but if the worker has returned to work for not less than 15 hours per week then she or he receives 95% less actual earnings. [5] The third entitlement period (weeks 131 to 260) the worker receives 80% of their piawe if he or she has no work capacity but if the worker has work capacity then in order to receive weekly benefits the worker must have returned to work for not less than 15 hours per week and be earning at least $155. [6] After 260 weeks the injured worker is not entitled to receive any weekly payments unless the worker is found to be “seriously injured”. For this purpose a worker is deemed to be seriously injured if they have been assessed as having a permanent impairment over 20%. However, ironically, the worker who has work capacity must still have returned to work (refer paragraph 5). [7] Medical benefits cease twelve months after the claim was first made unless weekly payments are paid or payable. The benefits cease twelve months after the last weekly payment.
  10. 10. Page 10 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au [8] An injured worker may only be assessed once for the purpose of determining the degree of whole person impairment. [9] The jurisdiction of the Workers Compensation Commission is limited to disputes about liability, medical treatment and permanent impairment assessment. [10] Workers who have had Work capacity decisions are limited to an administrative review process. [11] Lawyers are excluded from providing advice on the reviews of work capacity decisions.5 [12] A new theoretical definition of “suitable employment” was introduced. These amendments affected existing injured workers even where there had been a previous award by the Commission or its predecessor the Compensation Court. THE WORK CAPACITY CONCEPT Prior to 1 January 2013, disputes about whether an injured worker was fit to return to work, whether there was suitable employment available and the correct amount of weekly compensation were determined through the formal adversarial procedures of the Workers Compensation Commission and the parties were legally represented. 5 Lawyers are precluded from charging for such work or being paid.
  11. 11. Page 11 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au The legal costs of successful claimants were met by the Insurers and the lawyers were not entitled to charge the injured worker. These costs although apparently paid by the Insurers were in fact paid from the WorkCover Authority Fund (or by Self insurers). The 2012 reforms established a formal structure for an injured worker to be continually assessed as to their work capacity and accordingly to receive the weekly benefit (if any) appropriate to their capacity for work. The work capacity test is another novel test for injured workers in this state. It is a significant change from the previous criteria. Previously the test was one of fitness for work. That was usually measured by the medical profession. The other major change was that under the previous system there was generally one attempt to measure fitness and thereby obtain a finding as to fitness while under the new scheme capacity could be altered weekly where appropriate. The Insurer is now obliged to undertake a robust assessment of the capacity of an injured worker for work and also to have regard to suitable employment. The decision is one for the insurer relying on a range of information not just the determination of the treating doctor. The definition of “suitable employment” has also been changed to a theoretical one rather than a practical one. Section 44A of the 1987 Act refers to work capacity assessments: Work capacity assessment (1) An insurer is to conduct a work capacity assessment of an injured worker when required to do so by this Act or the WorkCover Guidelines and may conduct a work capacity assessment at any other time.
  12. 12. Page 12 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au (2) A work capacity assessment is an assessment of an injured worker’s current work capacity, conducted in accordance with the WorkCover Guidelines. (3) A work capacity assessment is not necessary for the making of a work capacity decision by an insurer. (4) An insurer is not to conduct a work capacity assessment of a seriously injured worker unless the insurer thinks it appropriate to do so and the worker requests it. (5) An insurer may in accordance with the WorkCover Guidelines require a worker to attend for and participate in any assessment that is reasonably necessary for the purposes of the conduct of a work capacity assessment. Such an assessment can include an examination by a medical practitioner or other health care professional. (6) If a worker refuses to attend an assessment under this section or the assessment does not take place because of the worker’s failure to properly participate in it, the worker’s right to weekly payments is suspended until the assessment has taken place. Section 43 of the 1987 Act defines the work capacity decision: 43 Work capacity decisions by insurers (1) The following decisions of an insurer (referred to in this Division as work capacity decisions) are final and binding on the parties and not subject to appeal or review except review under section 44 or judicial review by the Supreme Court: (a) a decision about a worker’s current work capacity, (b) a decision about what constitutes suitable employment for a worker, (c) a decision about the amount an injured worker is able to earn in suitable employment, (d) a decision about the amount of an injured worker’s pre-injury average weekly earnings or current weekly earnings, (e) a decision about whether a worker is, as a result of injury, unable without substantial risk of further injury to engage in employment of a certain kind because of the nature of that employment, (f) any other decision of an insurer that affects a worker’s entitlement to weekly payments of compensation, including a decision to suspend, discontinue or reduce the amount of the weekly payments of compensation payable to a worker on the basis of any decision referred to in paragraphs (a)–(e). (2) The following decisions are not work capacity decisions:
  13. 13. Page 13 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au (a) a decision to dispute liability for weekly payments of compensation, (b) a decision that can be the subject of a medical dispute under Part 7 of Chapter 7 of the 1998 Act. (3) The Commission does not have jurisdiction to determine any dispute about a work capacity decision of an insurer and is not to make a decision in respect of a dispute before the Commission that is inconsistent with a work capacity decision of an insurer. WorkCover issued a Guideline for Work Capacity Decisions which was for Insurers to follow in making a work capacity assessment and then a decision. The initial version referred to the necessity to follow the principles set out in a publication described as the “Best Practice Decision Making Guide”. Unfortunately it was never published. The effect was to invalidate work capacity decisions until the next version of the Guideline was published. However there was no publicity about this very significant defect so very few injured workers took advantage of the opportunity to have the decisions overturned on review. The real change that is starting to emerge is that most workers have some capacity for work and therefore have limited entitlement to weekly payments. When that is combined with the limited theoretical suitable employment test the result is that weekly payments will be much harder to obtain. The suitable employment definition is: suitable employment, in relation to a worker, means employment in work for which the worker is currently suited: (a) having regard to:
  14. 14. Page 14 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au (i) the nature of the worker’s incapacity and the details provided in medical information including, but not limited to, any certificate of capacity supplied by the worker (under section 44B), and (ii) the worker’s age, education, skills and work experience, and (iii) any plan or document prepared as part of the return to work planning process, including an injury management plan under Chapter 3 of the 1998 Act, and (iv) any occupational rehabilitation services that are being, or have been, provided to or for the worker, and (v) such other matters as the WorkCover Guidelines may specify, and (b) regardless of: (i) whether the work or the employment is available, and (ii) whether the work or the employment is of a type or nature that is generally available in the employment market, and (iii) the nature of the worker’s pre-injury employment, and (iv) the worker’s place of residence. In the event that the worker is unhappy with that decision there is a right of review through an administrative process. The Workers Compensation Commission no longer makes a decision contrary to a work capacity decision and the lawyers are excluded from the review process. Lawyers may still advise on the preparation for a work capacity assessment but the injured worker has to meet that cost. ESTABLISHMENT OF THE OFFICE OF WIRO As part of these reforms the office of the Independent Review Officer (“WIRO”) was established. This Office is a novel one. An office with these functions does not exist elsewhere in the world. I was appointed as the initial WIRO on 1 September 2012 and the office commenced operations on 1 October 2012.
  15. 15. Page 15 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Part 3 of Chapter 2 of the Workplace Injury Management and Workers Compensation Act 1998 (“1998 Act”) provided for the establishment of the office. Section 24 of the 1998 Act provides: 24 Appointment of Independent Review Officer (1) The Governor may appoint a WorkCover Independent Review Officer. (2) The Independent Review Officer holds office for such term not exceeding 5 years as may be specified in the instrument of appointment, but is eligible (if otherwise qualified) for re- appointment. (3) The office of Independent Review Officer is a full-time office and the holder of the office is required to hold it on that basis, except to the extent permitted by the Governor. (4) The Independent Review Officer is entitled to be paid: (a) remuneration in accordance with the Statutory and Other Offices Remuneration Act 1975, and (b) such travelling and subsistence allowances as the Minister may from time to time determine. (5) The office of Independent Review Officer is a statutory office and the provisions of the Government Sector Employment Act 2013 relating to the employment of Public Service employees do not apply to that office. (6) Persons may be employed in the Public Service under the Government Sector Employment Act 2013 to enable the Independent Review Officer to exercise his or her functions. The functions of the WIRO are set out in Section 27 of that Act: 27 Functions of Independent Review Officer The Independent Review Officer has the following functions: (a) to deal with complaints made to the Independent Review Officer under this Division, (b) to review work capacity decisions of insurers under Division 2 (Weekly compensation by way of income support) of Part 3 of the 1987 Act,
  16. 16. Page 16 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au (c) to inquire into and report to the Minister on such matters arising in connection with the operation of the Workers Compensation Acts as the Independent Review Officer considers appropriate or as may be referred to the Independent Review Officer for inquiry and report by the Minister, (d) to encourage the establishment by insurers and employers of complaint resolution processes for complaints arising under the Workers Compensation Acts, (e) such other functions as may be conferred on the Independent Review Officer by or under the Workers Compensation Acts or any other Act. Section 27C of the 1998 Act also requires the IRO to prepare an annual report which is to be tabled in Parliament. The first Annual Report for the period to 30 June 2013 has been tabled in Parliament recently and is available on the WIRO website. The Minister for Finance & Services has also conferred upon the Office the responsibility for the operation of the Independent Legal Assistance Review Service (“ILARS”) COMPLAINTS ABOUT INSURERS One of the fundamental reasons why the office was established was to deal with complaints by injured workers about the conduct of their claim by Insurers. The WIRO therefore is now the agency with the statutory responsibility for enabling injured workers to ensure that the insurers deal with their claims promptly and fairly. Section 27A & B of the 1998 Act deal with the function of complaints about Insurers:
  17. 17. Page 17 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au 27A Complaints about insurers (1) A worker may complain to the Independent Review Officer about any act or omission (including any decision or failure to decide) of an insurer that affects the entitlements, rights or obligations of the worker under the Workers Compensation Acts. (2) The Independent Review Officer deals with a complaint by investigating the complaint and reporting to the worker and the insurer on the findings of the investigation, including the reasons for those findings. The Independent Review Officer’s findings can include non- binding recommendations for specified action to be taken by the insurer or the worker. (3) The Independent Review Officer is to deal with a complaint within a period of 30 days after the complaint is made unless the Independent Review Officer notifies the worker and the insurer within that period that a specified longer period will be required to deal with the complaint. (4) The Independent Review Officer may decline to deal with a complaint on the basis that it is frivolous or vexatious or should not be dealt with for such other reason as the Independent Review Officer considers relevant. 27B Requirement to provide information (1) The Independent Review Officer may require an insurer or a worker who has applied for review of a work capacity decision of an insurer to provide specified information that the Independent Review Officer reasonably requires for the purposes of the exercise of any function of the Independent Review Officer. (2) It is a condition of an insurer’s licence that the insurer comply with a request for the provision of information under this section. (3) The Independent Review Officer can decline to deal with a complaint if the worker who makes the complaint fails to comply with a request to provide information to the Independent Review Officer. (4) The Authority must provide the Independent Review Officer with such information as the Independent Review Officer reasonably requires and requests for the purposes of the exercise of any function of the Independent Review Officer.
  18. 18. Page 18 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au In New South Wales each year there are about 100,000 workplace incidents which result in an injury of some sort to an employee. About 70% of the workplace incidents result in relatively minor injuries which involve less than five working days off work. These generally do not result in any formal claim being made for compensation other than for medical expenses. There is then about 30,000 injured workers who have to deal with their employer and insurer in relation to the workplace incident and the management of their injury and their return to work. Each of those individuals has the right to complain to the WIRO about the handling of their claim by the insurer. All complaints are considered, whether as preliminary enquiries or as a matter which requires more attention. Complaints are received either by telephone through our 13wiro (13 94 76) contact number or by email, post or in person. To date the vast majority of the complaints have been received through by telephone. Many of these have been at the suggestion of the lawyers acting for the injured worker. In the period to 30 June 2014 I have received over 6,000 contacts but have only commenced to conduct a few formal investigations because with cooperation from the insurers I have been able to solve all of the complaints sometimes for the benefit of the injured worker and often to confirm that the conduct of the insurer is quite reasonable. Apart from attempting to deal with complaints from individual injured workers it is also important for the WIRO to recognise any systemic issues that emerge from a
  19. 19. Page 19 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au consideration of the various complaints and the office maintains a vigilant watch on the trend of the complaints. The Independent Review Officer can investigate and report on any complaint but can only make a non-binding recommendation for the worker and the insurer to consider. To date there has not been any necessity to undertake a formal report. My office has compiled a Protocol for the handling of Complaints which has been accepted by the insurers and the process is that my office will send what is described as a Preliminary Enquiry to the insurer seeking comment about the circumstances as described by the injured worker. I do not adopt the circumstances as correct merely the information provided. The insurer is requested to respond with a brief answer to ascertain whether it is possible to reach a satisfactory solution quickly. This has been very successful, again because of the cooperation of the insurers. On the next page is a diagram showing how the complaint process is presently managed. I have had lodged on the WIRO website the details of a variety of the complaints matters dealt with my office during January 2014. This will be updated each month to demonstrate what the outcomes of the complaints have been.
  20. 20. Page 20 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au COMPLAINT RECEIVED WIRO ASSESS THE ISSUE AND INFORMATION PROVIDED 1.0 2.0 WIRO DETERMINES THE NATURE OF THE CASE 3.0 COMPLAINT IS OUT OF JURISDICTION OR DECLINED 4.0 END12.0 PRELIMINARY ENQUIRY – REQUEST FOR INFORMATION FROM INSURER 5.0 REQUEST IS RESOLVED INFORMALLY 6.0 END FURTHER ENQUIRY – FURTHER INFORMATION IS REQUESTED 7.0 REQUEST IS RESOLVED INFORMALLY 8.0 END INVESTIGATION– FORMAL PROCEDURE LEADING TO A REPORT WITH FINDINGS AND RECOMMENDATIONS 9.0 CASE CLOSED 11.0 END 12.0 12.0 12.0 FOLLOW UP RECOMMENDATIONS10.0
  21. 21. Page 21 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au REVIEW OF WORK CAPACITY DECISIONS The second function conferred upon the WIRO is that of reviewing decisions by insurers of work capacity decisions. The Work Capacity Decision process (a) The injured worker must give notice of the injury to the employer (Section 254 of the 1998 Act). (b) The Insurer has a duty to commence weekly payments within 7 days of the initial notification of injury (Section 267 of the 1998 Act) 267 Duty to commence weekly payments following initial notification of injury (1) Provisional weekly payments of compensation by an insurer are to commence within 7 days after initial notification to the insurer of an injury to a worker, unless the insurer has a reasonable excuse for not commencing those weekly payments. (2) A person does not have a reasonable excuse for not commencing those weekly payments unless the person has an excuse that the WorkCover Guidelines provide is a reasonable excuse. (3) The payment of provisional weekly payments of compensation under this section is on the basis of the provisional acceptance of liability by the insurer for a period of up to 12 weeks determined by the insurer having regard to the nature of the injury and the period of incapacity. (4) The acceptance of liability on a provisional basis does not constitute an admission of liability by the employer or insurer under this Act or independently of this Act. (5) An insurer who fails to commence weekly payments of compensation as required by this section is guilty of an offence.
  22. 22. Page 22 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Once the Insurer accepts provisional liability then it must calculate the amount of the compensation payable by way of weekly payment and then give notice to the injured worker in accordance with Section 269 of the 1998 Act. The decision by the Insurer which determines the weekly benefit payable to the injured worker in the first twelve weeks is pursuant to Section 36 of the 1987 Act (which for some reason refers to thirteen weeks) is a work capacity decision and allows the injured worker to seek a review through the new process. . The fundamental principle adopted by the reforms is the undertaking of a robust work capacity assessment which is intended to be a review of the workers functional, vocational and medical status which enables the insurer to determine the worker’s ability to return to work either with the pre injury employer or at another place of employment. The process which is required in order to transition a claimant to the new benefits scheme has four steps: (a) The Insurer is required to inform the injured worker that a work capacity assessment will be undertaken after 14 days and to explain that to the injured worker what will be involved in that assessment what the possible outcome is. The insurer should inform the injured worker that he or she is entitled to put forward additional material to assist with the assessment.
  23. 23. Page 23 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au This notice is to be given preferably by telephone or in person. It is then to be confirmed in writing to the worker. This “fair notice” provision is contained in the Work Capacity Guidelines issued by the WorkCover Authority. As such it does not have the compulsion of law but is persuasive. It is part of the procedural requirements that must be followed by the Insurer. (b) The insurer then undertakes a work capacity assessment pursuant to which the insurer considers such of the following information which is available: Any reports from treating medical practitioners Any formal WorkCover certificate of capacity Any medico legal report Any injury management consultant report The workers self-report of their abilities and any other information provided by the worker, Any reports from a workplace rehabilitation provider, return to work plans, functional capacity evaluation reports, vocational assessment reports, and job seeking information This is in addition to any other information which the insurer may have collected including surveillance reports and the like. It is also important to note that the worker must attend and participate in any evaluation required as part of the work capacity assessment. Failure to do so results in the automatic suspension of the weekly benefits. (Section 44A(6) of the 1987 Act). This
  24. 24. Page 24 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au provision is particularly harsh as it does not rely upon the discretion of the insurer but results from the wording of the section. It is automatic. Having considered all this information the insurer is required then to make an assessment of the current capacity for work of the injured worker. Paragraph 5.3 of the Guidelines requests the Insurer to communicate the work capacity decision to the injured worker by telephone or in person to explain the decision and its effect on the injured worker. The Review Process The 2012 reforms introduced a new process for review of work capacity decisions which removed lawyers and the Workers Compensation Commission from the decision making and replaced that system with an administrative procedure which no longer permitted personal attendance upon the decision maker and relied on the documents provided to the Insurer. There is now a four step procedure to be followed. The first step is the making of a work capacity decision by the Insurer. The injured worker may if he or she wishes seek a review of that decision through an internal review by the Insurer of its own decision.
  25. 25. Page 25 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au If that is still seen as unsatisfactory then the injured worker may seek what is described as a merits review by the WorkCover Authority. The final step is to seek a procedural review by WIRO. The relevant section is: 44 Review of work capacity decisions (1) An injured worker may refer a work capacity decision of an insurer for review: (a) by the insurer (an internal review) in accordance with the WorkCover Guidelines within 30 days after an application for internal review is made by the worker, or (b) by the Authority (as a merit review of the decision), but not until the dispute has been the subject of internal review by the insurer, or (c) to the Independent Review Officer (as a review only of the insurer’s procedures in making the work capacity decision and not of any judgment or discretion exercised by the insurer in making the decision), but not until the dispute has been the subject of internal review by the insurer and merit review by the Authority. (2) An application for review of a work capacity decision must be made in the form approved by the Authority and specify the grounds on which the review is sought. The worker must notify the insurer in a form approved by the Authority of an application made by the worker for review by the Authority or the Independent Review Officer. (3) The following provisions apply to the review of a work capacity decision when the reviewer is the Authority or the Independent Review Officer: (a) an application for review must be made within 30 days after the worker receives notice in the form approved by the Authority of the insurer’s decision on internal review of the decision (when the application is for review by the Authority) or the Authority’s decision on a review (when the application is for review by the Independent Review Officer),
  26. 26. Page 26 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au (b) an application for review by the Authority may be made without an internal review by the insurer if the insurer has failed to conduct an internal review and notify the worker of the decision on the internal review within 30 days after the application for internal review is made, (c) the reviewer may decline to review a decision because the application for review is frivolous or vexatious or because the worker has failed to provide information requested by the reviewer, (d) the worker and the insurer must provide such information as the reviewer may reasonably require and request for the purposes of the review, (e) the reviewer is to notify the insurer and the worker of the findings of the review and may make recommendations to the insurer based on those findings (giving reasons for any such recommendation), (f) the Independent Review Officer must also notify the Authority of the findings of a review and the Authority may make recommendations (giving reasons for any such recommendations) to the insurer based on those findings, (g) recommendations made by the Authority are binding on the insurer and must be given effect to by the insurer, (h) recommendations made by the Independent Review Officer are binding on the insurer and the Authority. (4) A review of a work capacity decision does not operate to stay the decision or otherwise prevent the taking of action based on the decision. (5) The Commission is not to make a decision in proceedings concerning a dispute about weekly payments of compensation payable to a worker while a work capacity decision by an insurer about those weekly payments is the subject of a review under this section. (6) A legal practitioner acting for a worker is not entitled to be paid or recover any amount for costs incurred in connection with a review under this section of a work capacity decision of an insurer.
  27. 27. Page 27 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au The WorkCover Authority has issued Guidelines which refer to the internal review by the Insurer (Section 44(1)(a)). Although these are described as: “Guidelines for work capacity decision Internal Reviews by Insurers and Merit Reviews by the Authority” they can only be binding in respect to the Internal reviews because of the provisions of Section 376(1) of the 1998 Act and its reference to Section 44(1)(a) of the 1987 Act. These are not binding on the Merit review process and it is not clear what relevance they have in that process. The most recent version of the Review Guidelines is those issued in October 2013. It is anticipated that a further Guideline will be issued in August 2014. The relevant provisions of these Guidelines appear at Chapters 5 and 6 in Division 2. The interaction between the Act, the Regulations and the Guidelines are as follows: Section 44(1)(a) of the 1987 Act states that an injured worker may refer a work capacity decision of an insurer for review by the insurer in accordance with the WorkCover Guidelines within 30 days after an application is made. Section 44(2) requires the application for review to be in the form approved by the Authority and must specify the grounds on which the review is sought. There is no reference in the Act to the time for lodgement of the application for internal review. However the Guidelines suggest it should be as soon as practicable. The first major dilemma that arises in this process is what is encompassed by the words “review of a decision”. The Guidelines state that the Internal Reviewer may seek additional information from the injured worker in order to determine the review. This raises an interesting question in respect to whether the review is of the decision or of the injured worker’s rights and entitlements.
  28. 28. Page 28 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au The insurer must make a review decision within 30 days of the receipt of the application. Having conducted the internal review the Insurer is then obliged by Section 44(3)(a) to provide the injured worker with a decision in the form approved by the Authority. MERIT REVIEW The 1987 Act provides that the injured worker may refer a work capacity decision for review by the WorkCover Authority (as a merit review of the decision) but not until the dispute has been the subject of internal review (Section 44(1)(b)). Section 44(3)(b) permits a review by the WorkCover Authority of the insurer’s work capacity decision where the insurer has failed to conduct an internal review and then notified the worker within the 30 day time frame. This raises another interesting question. Where the insurer has carried out the internal review but has failed to notify the worker within the time limit does this give the injured worker the right to seek a Merit Review ?. This is further complicated by the reference in the Review Guidelines in Chapter 9 to applications to the Authority for Merit Review which provides at clause 9.3 that the Authority may decline to review a decision if the internal review process has not been finalised. One assumes that can only mean that such an application is made within the 30 days but then the injured worker would not know what the decision was to seek a review.
  29. 29. Page 29 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Clause 7.2 states that an application for merit review must be lodged by the injured worker within 30 days of receiving the internal review decision of the insurer. This recognises the provision of Section 44(3)(a) which provides that an application for review must be made within 30 days after the worker receives notice of the internal review decision. Where the internal reviewer has made a decision but failed to notify the worker in the proper form then there does not appear to be any time limit for seeking a review by the Authority. The Merit Reviewer is by virtue of Section 44(3)(c) permitted to decline to review a decision where the application is frivolous or vexatious or where the worker has failed to provide information requested by the reviewer. The Authority currently has significant delays within this process and decisions have been taking up to 300 days instead of the prescribed 30. PROCEDURAL REVIEW Apart from judicial review by the Supreme Court the final level of review is by the WorkCover Independent Review Officer but that review is limited by the restrictions in Section 44(1)(c) of the 1987 Act. WIRO may review the procedures of the insurer in making the original work capacity decision but not any judgment or discretion in reaching that decision. As at 30 June 2014 there have been 180 review decisions made by my office.
  30. 30. Page 30 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au The decisions are published on the WIRO website in a redacted format except where the worker has given his or her consent. EMPLOYER/INSURER DISPUTE RESOLUTION This function of the WIRO is to encourage the establishment by insurers and employers of complaint resolution processes for complaints arising under the Workers Compensation Acts. While at present complaints by injured workers about insurers and their decisions is managed through the complaints process that WorkCover has established together with the ability to complain to the WIRO, this function fills a gap and concentrates on those disputes which may arise between employers and insurers. There is no statutory mechanism which dictates how these disputes are to be resolved and the challenge is for WIRO to come up with a resolution process which is satisfactory to all the relevant parties. While there is a requirement for Scheme Agents (as distinct from Self Insurers) to maintain a level of communication with the employer and that often occurs in relation to return to work programs there does seem to be an issue where there is a marked difference of opinion between what the employer considers to be an injury and the proper treatment and what the scheme agent determines. There have been a number of examples brought to our attention and there have also been extensive discussions with industry and with insurers generally to determine the best way of developing this process.
  31. 31. Page 31 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au INDEPENDENT LEGAL ASSISTANCE AND REVIEW SERVICE Prior to the 2012 Reforms it had been the practice in this state for the injured worker to have his or her legal costs met by the insurer except in certain very limited circumstances and the worker did not have to bear the risk of paying for the costs of the insurer. The NSW Parliament brought in an amendment to the existing legislation which required each of the parties to any dispute about compensation to bear their own costs and in no circumstances could costs be awarded against either the injured worker or the insurer. (Section 341 of the 1998 Act) At first glance this was considered to apply only in proceedings before the Workers Compensation Commission however upon further reflection it also extends to court challenges. In order to maintain assistance to injured workers to meet their legal costs in relation to claims for compensation the Minister for Finance & Services determined to establish what is in effect a legal aid fund.6 That fund is managed and operated through WIRO. Lawyers who wish for their clients to participate in this Service are required to make application to WIRO and submit details of their experience. Each individual lawyer is then required to enter into an agreement for the provision of legal services to WIRO and to acknowledge that they respect and agreed to conform to the objectives and policies of the Service. 6 Section 23(1)(q) of the 1998 Act
  32. 32. Page 32 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Applications for funding of matters before the commission are required to be submitted on the approved form and the lawyers within the ILARS group review and assess its merit. The statistics are available on the website however there are approximately 850 approved legal service providers throughout the state. There have been about 22,000 applications for assistance of which about 21,000 have been approved and 1,000 declined. The most common reason for an application being declined is the lack of any cogent reasoning as to the reasonable prospects of the claimant. The majority of these are for funding in relation to applications for lump sum compensation. It is very important to observe that this Fund is subject to scrutiny by the NSW Auditor General, the Independent Commission against Corruption as well as the Police. Any irregularity must be reported. An application for legal assistance is made on the form available on the website. It is designed to enable the applicant lawyer to cut and paste from the initial letter of advice to the injured worker. As my office is paperless the form is to be submitted by email together with the appropriate attachments in support of the application. Given that a lawyer seeking funding for a client will usually have experience in this field I have been astonished at the poor performance of many lawyers. There is far too often a lack of attention to detail and also to even consideration of basic facts.
  33. 33. Page 33 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au I set out below an indication of the type of statistical information available from my database: ENQUIRY & REPORT FUNCTION The other function conferred by the 2012 reforms is for WIRO to inquire into and report to the Minister on such matters arising in connection with the operation of the Workers Compensation Acts as the Independent Review Officer considers appropriate or as may be referred to the Independent Review Officer for inquiry and report by the Minister. In the second reading speech when the bill was before the Parliament, the Minister for Finance and Services made the following statement:
  34. 34. Page 34 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au “The WorkCover Independent Review Officer will have the dual roles of dealing with individual complaints and overseeing the workers compensation scheme as a whole. It will be an important accountability mechanism for the workers compensation scheme.” As at the date of this paper the Minister has not referred any matters for enquiry and report however the office has a number of significant projects in progress which may if seen to be of assistance result in a report to the Minister. IMPACT OF THE REFORMS ON CLAIMS MANAGEMENT BY INSURERS It is now two years since the reforms were introduced into the NSW Parliament. These were radical and important. The emphasis of the reforms was to make more resources available for seriously injured workers and to encourage those workers who were capable of working to return to the workforce. As I have set out earlier, the major changes to the management of claims were:  Introduction of work capacity assessments to determine eligibility for weekly payments.  Establishment of the WorkCover Independent Review Office  Administrative review process to challenge work capacity decisions of insurers which excluded lawyers from participating.  Limited time periods for weekly payments unless the injured worker had returned to work  Introduction of an impairment threshold for lump sum compensation.  Parties to pay their own legal costs in every case.
  35. 35. Page 35 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au As with any reform program and particularly where the reforms were introduced within a short time frame there will always be unintended consequences. The NSW WorkCover Authority through its Insurance Division had the responsibility for the implementation of the reforms. The nature of claims management should have changed. This was an entirely new method of dealing with claims by injured workers. Insurers now had an obligation to make a work capacity decision at the start of the claim process except in limited circumstances. Insurers then had to make regular work capacity assessments through the life of a claim while the injured worker remained with limited work capacity. Fitness for work was no longer relevant to an entitlement to weekly payments. I should make it clear that some 70% of incidents in New South Wales lead to less than seven days off work as a result. My comments are directed to the other 30% and then to those where there is some dispute about entitlements. During 2013, there were about 8,000 applications lodged with the Workers Compensation Commission which involved disputes about claims by injured workers. That has declined, and the lodgements so far in 2014 have been steady at about 400 per month. This reflects the impact of the administrative review process which deals with the disputes around earnings and capacity. The early statistics record a trend of an increased return to work and at an earlier stage. While some unions and some lawyers scream for a return to the “old days” this trend appears to provide little support.
  36. 36. Page 36 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au The cost of processing a disputed claim for weekly payments through the Workers Compensation Commission was regularly in excess of the amount in dispute and in the majority of matters well in excess. The costs of processing a dispute about the quantum of lump sum compensation for whole person impairment was regularly in excess of the amount in dispute. There was another major reform which has been slowly gaining momentum as its significance becomes better known. That was the introduction of a new office with statutory responsibility for dealing with “complaints” by injured workers about the manner in which their claim for entitlements was being handled by the insurer. My office now well known as WIRO has a statutory obligation to deal with complaints from injured workers about their entitlements and the conduct of their claim by the insurer. I have set out on my website www.wiro.nsw.gov.au a summary of the outcomes of the matters dealt with through my Complaints Group. As I indicated earlier in this presentation this style of dispute resolution has provided a quick easy and efficient method of resolving disputes where there appears to be a reasonable outcome available. One example, is that of an injured worker who was unsure as to whether the insurer had made a correct assessment of the pre injury earnings and therefore an incorrect calculation of his weekly payments. Within the 48 hour protocol period the insurer accepted that it was in error and had made payment of the difference which was in excess of $50,000.
  37. 37. Page 37 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au This is an insight into a new way of resolving matters of concern to injured workers. Equally where my office is of the view that the insurer has acted promptly and correctly the injured worker should be satisfied that an impartial independent group has considered the matter and provide a quick and accurate response. However, there were significant errors in the implementation program which primarily arose from a determination to impose on the insurers a method of managing claims which unfortunately was contrary to the provisions of the legislation. While the message was that return to work was beneficial and important the dispute process did not really recognise this as a fundamental principle. There were many workers receiving small amounts of weekly compensation for decades. Their ability to work was rarely reviewed and that these recipients were in effect lost in the system. The reforms introduced by the government were radical in that the focus (at least in theory) was upon the ability of the injured worker to return to work. The education of the insurers was undertaken by WorkCover and was seriously flawed. This may be attributable to the rapid passage of the legislation and the short timeframe for the introduction of the work capacity assessment and decision process. However, two years on, there is still a major reluctance by insurers to understand and to utilise the work capacity process. It is difficult to fathom why this has occurred. It may be due to existing systems not being updated. It may be that case managers are comfortable with the existing method of resolving disputes.
  38. 38. Page 38 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au Part of the reluctance by insurers may result from poorly drafted legislation which appears to be a result of a lack of understanding as to what the Government intended. The first issue surrounded the difference between a work capacity “assessment” and a work capacity “decision”. Much of the information provided by WorkCover immediately following the reforms related to the importance of making a proper “assessment” of the capacity of an injured worker for work. This was confused with the need to make a work capacity decision. Emphasis was placed upon the need to comply with administrative law principles and in effect write a carefully considered judgment. This approach overlooked the reality which was one of the important decisions was to assess earnings – hardly the stuff of high court practice. My experience is that the insurers have been very slow to change and I am seeing claims handling under the old concepts still being adopted. Documentation which is now obsolete is still being used by insurers. Despite the difficulties with the reform legislation and with its implementation the unavoidable trend is that injured workers have returned to work much earlier and those who were considered long term claimants have taken the challenge and returned to work. This is in my view reflection that because the entitlement to weekly payments depends on a positive measurement of capacity and not simply on a medical practitioner simply issuing a certificate of unfitness the injured workers have become very aware of the benefit of actually returning to the workforce.
  39. 39. Page 39 of 39 Level 4, 1 Oxford Street, Darlinghurst NSW 2010 T: 13 9476 contact@wiro.nsw.gov.au www.wiro.nsw.gov.au That is also a recognition that the multiple options of jobs and work is much more flexible than in the past and injury is no longer a barrier. KA Garling

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