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Findings and recommendations on merit review 001/16

Date of Decision: August 2016

Our reference: 001/16

Decision

1. The State Insurance Regulatory Authority (the Authority) does not have jurisdiction under section 44BB(1)(b) of the Workers Compensation Act  1987 (the 1987 Act) to review the matters referred to it by the worker in his application for merit review dated July 2016.

2. The Insurer’s decision dated May 2016 was a decision to dispute liability for weekly payments of compensation. That is not a work capacity decision pursuant to section 43(2)(a) of the 1987 Act. As the Authority is only able to review work capacity decisions of an insurer under section 44BB(1)(b) of the 1987 Act, it does not have jurisdiction to undertake a merit review of the decision dated May 2016.

Background

3. In February 2016, the Insurer issued a notice under section 74 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) dated the same date disputing liability for weekly payments of compensation, medical, hospital and rehabilitation expenses related to the injury the worker sustained on the date of injury.

4. In May 2016, the Insurer issued a “Written Advice of a Work Capacity Decision and its Outcome pursuant to section 43 and 54(2)(a) of the Workers Compensation Act 1987” by way of letters (notices) dated May 2016. The Insurer declined liability for the worker’s injury under section 33 of the 1987 Act through these notices

5. The worker made an application for internal review by the Insurer in May 2016. In June 2016, the Insurer conducted an internal review of the decision dated February 2016 and decided to overturn the decision

6. The Insurer also conducted an internal review of the decision dated May 2016 in June 2016. They decided to “maintain” that decision and referred again to section 33 of the 1987 Act

7. The worker made an application for merit review by the Authority. The application was received by the Authority in July 2016. The application has been made in the form approved by the Authority and specifies the grounds on which the review is sought.

Legislation and Guidelines

8. The legislative framework governing work capacity decisions and reviews is contained in the:

  • Workers Compensation Act 1987 (the 1987 Act);
  • Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act);
  • Workers Compensation Regulation 2010 (the Regulation)

9. Section 43 of the 1987 Act describes a “work capacity decision”.

10. Section 44BB of the 1987 Act provides for merit review of a work capacity decision of the Insurer, by the Authority.

Submissions on jurisdiction

11. In respect to the Authority’s jurisdiction to review this matter, the worker made no submissions.

12. In an email to the Authority dated July 2016, the Insurer submits:

  • the Insurer confirms that the work capacity decision dated June 2016 [sic] relates to a decision pursuant to section 43(1)(f) of the Workers Compensation Act 1987 only
  • there have been no decisions made or reviewed pursuant to section 43(1)(a)-(e) of the Workers Compensation Act 1987
  • the decision, as stipulated in the internal review decision dated June 2016, was intended to encompass section 33 of the Workers Compensation Act in light of the Presidential decision of Sabanayagam v St George. This had previously been contained in the section 74 notice, however, following the above decision, had been encompassed within a work capacity decision, the subject of this review
  • on this basis, the Insurer queries whether the Merit Review Service has jurisdiction to review a matter of liability

Reasons

13. An injured worker may refer a “work capacity decision” of an Insurer for review by the Authority in accordance with section 44BB(1)(b) of the 1987 Act.

14. Section 43(1) of the 1987 Act defines work capacity decision as follows:

  1. a decision about a worker’s current work capacity
  2. a decision about what constitutes suitable employment for a worker
  3. a decision about the amount an injured worker is able to earn in suitable employment
  4. a decision about the amount of an injured worker’s pre-injury average weekly earnings or current weekly earnings
  5. 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
  6. 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)

15. Section 43(2) of the 1987 Act provides that the following decisions are not work capacity decisions:

  1. a decision to dispute liability for weekly payments of compensation,
  2. a decision that can be the subject of a medical dispute under Part 7 of Chapter 7 of the 1998 Act.

16. On the outset I note that the Insurer issued a notice under section 74 of the 1998 Act in February 2016. The Insurer stated:

We have reviewed your claim and advise that liability for the injury alleged to your cervical spine (neck) on [date of injury] is disputed from the [February 2016].

This decision means that you have no further entitlement to weekly compensation or medial [sic, medical], hospital and rehabilitation expenses from the [February 2016].

17. The Insurer set out the grounds of the dispute as follows:

  1. the injury alleged did not arise out of or in the course of your employment within the meaning of s4 and s9 of the Workers Compensation Act 1987 (“the 1987 Act”)
  2. in the alternative, your employment was not a substantial contributing factor to the injury alleged within the meaning of s9A of the 1987 Act
  3. further, and in the alternative and in the event that the alleged injury is in the nature of a disease process, your employment was not the main contributing factor within the meaning of s4(b)(i) and/or s4(b)(ii) of the 1987 Act
  4. in the alternative, the effects of any work-related injury have fully resolved, with the result that you no longer suffer an injury within the meaning of s33 of the 1987 Act
  5. any incapacity you may have had or may now have does not result from any such injury within the meaning of s33 of the 1987 Act
  6. any treatment has not been and is not now reasonably necessary by reason of any such injury within the meaning of s60 of the 1987 Act

18. Upon reviewing the worker’s application for merit review by the Authority dated July 2016, I note that the worker has referred the Insurer’s decision dated June 2016 which I note is the Insurer’s internal review decision of the Insurer’s “work capacity decision” in May 2016.

19. In May 2016, the Insurer issued “Written Advice of a Work Capacity Decision and its Outcome pursuant to section 43 and 54(2)(a) of the Workers Compensation Act 1987” by way of notices dated May 2016.

20. I note that the Insurer stated in its notice dated May 2016:

I have made a work capacity decision that you are no longer entitled to weekly payments of compensation under section 36 of the Workers Compensation Act 1987.

You have not been paid weekly payments under section 37 of the Workers Compensation Act 1987, as your claim has been disputed from [February 2016]. This work capacity decision is to confirm this status.

CGU have made a work capacity decision which will result in discontinuation of your weekly payments, effective [May 2016]. This decision has been made because:

  • Any other decision of an insurer that affects a worker’s entitlement to weekly payments of compensation (section 43(1)(f) of the Workers Compensation Act 1987);

The issues relevant to the decision are:

Section 43(1)(f) of the Workers Compensation Act 1987; 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:

Your claim has been disputed as of [February 2016]. As such, you have no entitlement to weekly compensation.

As you are no longer experiencing any incapacity (either partial or total) for work, you no longer have an entitlement to weekly payments. Section 33 of the Workers Compensation Act 1987 requires that you either be partially or totally incapacitated as a result of the injury in order to obtain weekly benefits compensation.

21. I also acknowledge that the Insurer stated in its notice dated May 2016:

I now confirm a work capacity decision has been made resulting in your weekly payments being discontinue from $956.67 to $nil.

This decision will take effect on [May 2016].

22. The worker applied for an internal review of the Insurer’s “work capacity decision” of May 2016. The Insurer conducted an internal review in June 2016.

23. I note the Insurer stated in its notice dated June 2016:

A section 74 notice was issued on [February 2016] denying liability of your claim.

Following the decision of Sabanayagam v St George Bank Limited [2016] NSWWCCPD 3, you requested an internal review of the section 74 notice dated [February 2016]. The outcome of that review overturned the section 74 notice.

In light of the above decision, a ‘work capacity assessment’ was also commenced on [April 2016]. This is defined by section 44A of the Workers Compensation Act 1987 as an assessment of a worker’s current work capacity and conducted in accordance with the WorkCover Guidelines. This assessment can be undertaken at any time during your claim and may or may not result in a work capacity decision being made. This assessment was completed on [May 2016] resulting in a work capacity decision being made.

After careful consideration of your application, pursuant to Section 43(1)(f) of the Workers Compensation Act 1987, we wish to advise that an internal review decision has been made resulting in CGU maintaining the Work Capacity Decision dated [May 2016].

On this basis, I have determined that you have made a full recovery and have the capacity to return to your pre-injury employment. As you are no longer experiencing any incapacity (either partial or total) for work in line with section 33 of the Workers Compensation Act 1987, you no longer have entitlement to weekly payments of compensation.

24. However, the Insurer’s reference to a “work capacity decision” in the notices dated May 2016 and the internal review dated June 2016 is misconceived. The decision made in May 2016 was plainly a decision to dispute liability for weekly payments of compensation under section 33 of the 1987 Act. Such a decision is not a work capacity decision according to section 43(2)(a) of the 1987 Act.

25. Section 33 of the 1987 Act states:

If total or partial incapacity for work results from an injury, the compensation payable by the employer under this Act to the injured worker shall include a weekly payment during the incapacity.

26. A worker must establish that “total or partial incapacity for work results from an injury” for an employer to be liable to make weekly payments of compensation “during the incapacity”. If an insurer disputes that any incapacity for work results from an injury then it is a decision to dispute liability for weekly payments of compensation. Plainly, that was the Insurer’s dispute in its notices dated May 2016.

27. The Insurer’s decision to dispute liability for weekly payments was made plain in its notices dated May 2016 and again in the internal review dated June 2016. The entitlement provisions under sections 36 and 37 of the 1987 Act could not be engaged because the Insurer had not accepted liability for weekly payments of compensation from February 2016. Therefore, there were no work capacity decisions made in respect of an entitlement to weekly payments of compensation from May 2016.

28. An insurer cannot maintain a dispute about liability for weekly payments under section 33 of the 1987 Act and make a work capacity decision about a worker’s current work capacity under section 43(1)(a) of the 1987 Act for the same weeks.

29. That view is supported by the definition of “current work capacity” and “no current work capacity” in section 32A of the 1987 Act:

current work capacity, in relation to a worker, means a present inability arising from an injury such that the worker is not able to return to his or her pre-injury employment but is able to return to work in suitable employment

no current work capacity, in relation to a worker, means a present inability arising from an injury such that the worker is not able to return to work, either in the worker’s pre-injury employment or in suitable employment

30. Both definitions refer to a “present inability arising from an injury” such that the worker is not able to return to pre-injury employment. It follows that an insurer must have accepted that “total or partial incapacity for work results from an injury” to make a decision about a worker’s current work capacity in relation to a weekly payment of compensation.

31. In this case, the Insurer did not make a work capacity decision (implied or otherwise) in May 2016 or June 2016. It was a dispute about liability for weekly payments (from February 2016).

32. Also, the Insurer was incorrect to characterise its decision in June 2016 as an internal review under section 44BB(1)(a) of the 1987 Act. If the Insurer intended to conduct a review of its decision of May 2016 to dispute liability for weekly payments it should have done so again under section 287A of the 1998 Act, as it did when it reviewed the decision about liability dated February 2016.

33. I acknowledge the Insurer’s email to the Authority dated July 2016:

The decision, as stipulated in the internal review decision dated [June 2016], was intended to encompass section 33 of the Workers Compensation Act in light of the Presidential decision of Sabanyagam v St George. This had previously been contained in the section 74 notice, however, following the above decision, had been encompassed within a work capacity decision, the subject of this review.

34. It is clear on the above provisions of the 1987 Act that a decision to dispute liability for weekly payments of compensation is not a work capacity decision under section 43(1) of the 1987 Act.

35. I am not satisfied that any work capacity decision was made in respect of weekly payments of compensation from May 2016. Rather, the Insurer made a decision to confirm the status of the decision of February 2016, which is the decision to dispute liability for weekly payments of compensation under section 33 of the 1987 Act. Therefore, the Authority does not have jurisdiction to undertake a merit review in accordance with section 44BB(1)(b) of the 1987 Act.

Merit Review Officer - Merit Review Service
Delegate of the State Insurance Regulatory Authority