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NEWS & EVENTS Supreme Court: Claims costs not within employers control to be excluded The issue before the Supreme Court was whether the claim costs should have been deducted from the claim levy window for the years 2007/2008 and 2008/2009. The worker sustained a right arm injury on 23 August 2005 and subsequently returned to work and sustained a left arm injury while trying to undertake suitable duties on 4 November 2005. While Justice Kelly did not accept all of the arguments put by counsel, the end result was a win with the decision of the Levy panel being set aside being remitted to the Panel to consider a fresh decision in light of her reasons. In essence her reasons included the question of the obligation on the Panel to consider excluding claim costs for injuries that were not within the control of the employer. She said at para 64: "The Review Panel does not appear to have addressed at all the fact that, on its own findings, the terms of the return to work plan were so restrictive that it was almost inevitable that the first work would suffer an injury to the other shoulder. The employer was bound by the terms of the return to work plane. In a very real sens it was not a matter within the control of the employer. It seems to me that a question does arise in these particular circumstances whether it was reasonable or just to penalise the employer when, as happened here, the inevitable occurred and the employee suffered a further injury". She goes on to say: "...in my view the fact that the employee was injured in the course of a rehabilitation and return to work plan which on any sensible view of the matter was foredoomed to fail was a very relevant consideration and ought to have been taken into account by the Review Panel.".
Davey Decision 21/7/11 The Full Supreme Court has handed down its decision in the matter of Davey , which was a decision that concerned the operation of section 35B of the Workers Rehabilitation and Compensation Act and the discontinuance of weekly payments after the third period of entitlement - sometimes referred to as the "130 weeks provisions". Before the Full Court was a decision of the Full Bench of the Workers Compensation Tribunal that had held that the Corporation had not followed the correct procedure in applying section 35B of the Act. The Tribunal had held that there had been a denial of natural justice in applying the provisions in that:
Deputy President Hannon in the Tribunal had taken the view, based on the High Court decision in Annetts v McCann (1990) 170 CLR 596, that where a statute confers power on a statutory body to destroy, defeat or prejudice a person's rights, as in this case - entitlement to income maintenance, then the rules of natural justice should regulate the exercise of that power unless they are plainly excluded by the words of the Act. Justice Gray, who wrote the lead judgement in the Supreme Court, carefully examined the provisions of section 35B and noted that there was certainly the ability to discontinue payments of income maintenance after the third period of entitlement but that there were a number of provisions contained within section 35B that enable the worker to seek a review of the determination as well as the operation of section 35C that entitled the worker to have the determination referred to the Medical panel for an opinion. He also examined the powers of the Tribunal in the light of the submission of the Corporation that the Tribunal had erred in concluding that any non-compliance with the rules of natural justice rendered the determination of WorkCover voidable and, in making such a finding, it had denied itself the opportunity to consider the substantial merits of the dispute being whether the worker had a current capacity for work. This is a critical argument because in the history of the Tribunal there had been a number of cases where a preliminary argument was raised about the validity of the notice and a ruling on this issue alone had lead to the Tribunal excluding any further argument on the matter. The most recent decision on this point is Rundle v WorkCover [2006] SAWCT 12, wherein the Full Bench of the Tribunal held that where there was jurisdiction to set aside a notice or determination on the ground of procedural irregularity, it could proceed to do so without dealing with a review of the merits of the decision. In other words if the notice or determination was ruled to be defective then you would need to re-issue the determination to enliven the dispute between the parties. In summary, Gray J held that there was no breach of procedural fairness in Mr Davey's case and that the dispute before the Tribunal required the matter to be dealt with by way of a review of the substantial merits of the case, namely whether the worker had a current work capacity. Gray J was satisfied that having regard to all of the provisions throughout the Act, from the issuing of the determination under section 35C, the reassessment process contained in that section, the referral provisions under section 35C, through to the notice of dispute process including the reconsideration process, that the entire process is a procedurally fair process. Sulan and Duggan JJ both concurred with the decision of Gray J. The decision is of course open to an appeal to the High Court so we will need to be mindful of that possibility, however the decision as it now stands, along with the decisions in Webb, Creek, Yaghoubi and Campbell suggest that the major planks of the amendments of 2008 have come through the judicial review process unscathed. There may be an issue about the scope of the binding nature of the opinion of the Medical Panel and the role of the Tribunal but, in the writer's view, this is not fatal to one of the primary objectives of the amendments being achieved, namely a discontinuance procedure being in place at the end of 130 weeks based simply on the worker's current capacity for work. When the 130 week process is considered together with the current policy of the Corporation regarding redemptions, we should be able to see in the next twelve months whether the current approach will have any measured impact on the unfunded liability. To read the full decision se attached WorkCover v Davey [2011] SASCFC 66.pdf
Self Medication – Substance Abuse bars Compensation 30/6/11 The case of Seal v Transfield Services (Australia) Pty Ltd[i] has finally been laid to rest with the worker recently losing his application to special leave to appeal to the High Court. The facts of the matter are that the worker’s weekly payments for an accepted claim for right shoulder and neck disabilities had been discontinued on the basis that the worker’s substance abuse comprised a breach of his obligation of mutuality. The worker’s ability to resume work and remain in regular suitable employment was compromised by the worker drinking almost a full bottle of scotch and several beers and smoking seven cones of marijuana daily. In the first instance the Workers Compensation Tribunal accepted the worker’s argument that his substance consumption was due in part to pain management. On appeal, the Full Bench Workers Compensation Tribunal rejected the worker’s argument that the substance abuse was in response to his pain experience and in the nature of “self-medication”. It upheld the self-insured employer’s determination to discontinue weekly payment. The worker’s appeal to the Supreme Court of South Australia was subsequently dismissed. His Honour Justice Gray held that the worker was “unfit to be able to attend to light duties by reason of long standing and continuing substance abuse. The problems associated with his substance abuse were not caused by work; they resulted from personal lifestyle choices that he had made over many years.” Breach of Mutuality The concept of breach of mutuality is reflective of the breakdown in the relationship of the contract of employment and can involves matters such as serious and wilful misconduct on the part of the worker, failure to undertake or attend rehabilitation or return to work appointments, supervening serious medical condition (depending on whether the worker is partial or total and whether suitable employment is being offered), moving interstate or overseas, and other conduct proscribed by section 36(1a) of the Workers Rehabilitation and Compensation Act. The Full Supreme Court emphasised that there are no fixed categories of mutuality, rather that any conduct which is inconsistent with a worker being ready and willing to maximise his or her residual employability can amount to a breach of the obligation of mutuality. Kourakis J noted: “Where it is reasonably possible to return a worker to work, it would be repugnant to the Act’s objectives and to commonly accepted ethical standards to reward the worker who engages in conduct which obstructs his or her return to work with the benefit of the deeming provision. The obstruction which may amount to a breach of mutuality need not be limited to a condition which totally incapacitates a worker. Any conduct which is inconsistent with the degree of co-operation expected of a worker to exploit his or her remaining capacity will suffice”. As such a breach would not arise in the case of occasional or minor substance abuse. However if it was ongoing and debilitating to such an effect that it limits the employment prospects of the injured worker then it will be one that will be regarded as a breach of the obligation of mutuality in this case. Workers Compensation not Social Security His Honour also made an important observation of general principle in relation to the role of a workers compensation scheme. In his opinion, it is a fundamental principle of workers compensation entitlements that they compensate injured workers only to the extent of the work caused incapacity and not unrelated barriers to employment. His Honour observed:- It would, in my view, be inconsistent with the purpose of the Act, and the legislative history of the workers compensation Acts it replaced, to construe s35 ... in a way which extended the scope of the Act beyond the provision of compensation for work caused injury. If weekly payments were made on the basis of total incapacity when the cause of that total incapacity was a supervening disability which was not work related, the payments would be social security payments and not payments of workers compensation. [i] [2010] SASCFC 44, case run by Gilchrist Connell
Clarity regarding the referral process to the Medical Panel? 28/6/11 The long awaited decisions in Yaghoubui and Campbell were delivered by the Full Supreme Court yesterday. The cases were jointly heard by the Full Bench and concerned certain questions of law that had been referred to the Supreme Court by the Full Bench of the Workers Compensation Tribunal. The questions referred can be distilled as follows:
As with any case, one of the parties was not going to be satisfied with the answers to the above questions. In essence, the majority of the Full Bench (Gray and Sulan JJ) held that the answers to the first two questions were yes - unqualified. The dissenting decision of White J made a distinction between the need to make such a referral after the matter has been referred to judicial determination where it was necessary to make a determination or a re-determination as opposed to simply exercising the power for gathering evidence to be adduced before the Tribunal. In relation to the third question the majority held that the Medical panel is not impermissibly conferred judicial power by Part 6C and there remains a genuine adjudicative function to be undertaken by the Tribunal independent of the executive and legislature. As such the Medical Panel is not a judicial body. It's "opinion is intended to supplement the process of the primary decision maker" - refer paragraph 59 of the judgment of Gray and Sulan JJ. The answer to the final question was that because the reference in section 98(H)(4) of the Act was to a "body or person", this section therefore did not apply to the Tribunal and that this provision did not fetter or limit the power of the Tribunal to deal with a matter on its own merits especially in relation to cases where there are disputed facts or law. In this regard the Full Bench were able to distinguish the matter from the High Court decision in Maurice Blackburn Cashman v Brown [2011] HCA 22 regarding a similar provision of the Victorian legislation where the wording of the referral section to the Medical Panel and its binding nature refers to "court, body or person". There were an number of important comments and observations about the operation of Part 6C made by the Full Bench, in particular about the nature of the power of referral to the Medical Panel, the role of the compensating authority once a notice of dispute is lodged and the extent to which the medical opinion can be decisive. It remains to be seen whether the respective parties to the proceedings will be satisfied by the judgment and whether there are further legal challenges. It seems that the answers to the questions may have resulted in not satisfying any of the parties and that there are a number of issues that may require further clarification or action, such as:
Comment on Section 58B Providing suitable employment to an injured worker is not an easy task. It is not just a matter of making up a job in order to comply with the statutory obligation as some would suggest. No doubt this view is taken based on the decision on Longyear Australia Pty Ltd v Workers Rehabilitation and Compensation Corporation [1995] SASC 4951. The decision of King CJ in this case is often misquoted and misunderstood. The key passage of the decision states: "Ms Layton has submitted that the basic thrust of the delegates' reasoning indicates a misconstruction of section 58B. She has contended that it cannot be regarded as reasonably practicable to provide suitable employment if no suitable position is available in the sense of the evidence of a vacancy. She has contended that it is a misapplication of the section to deduce reasonable practicability from the size of the employer's business operation and its clerical staff. The primary obligation is to provide suitable employment. If unqualified, that obligation would undoubtedly require the creation of a position if no suitable vacancy existed. It seems to me that whether the qualification of reasonable practicability relieves the employer of the obligation to create a position must depend upon the circumstances." This does not necessarily make it a mandatory statutory obligation to create a position. Rather one needs to consider a number of issues before any such job can be offered. What are these issues? It is submitted that following the amendments to Section 58B of the Act in 2008, the Act now provides a much clear concept of what "suitable employment" requires especially now that there is a definition of what suitable employment is - contained section 3 of the Act, that includes: (a) the nature of the worker's incapacity and previous employment; (b) the worker's age, education, skills and work experience; (c) the worker's place of residence; (d) medical information relating to the worker that is reasonably available, including any medical certificate or report; (e) if any rehabilitation programs are being provided to the worker; (f) the worker's rehabilitation and return to work plan. It is then open to the employer to prove that it is not able to provide such employment on the specific grounds set out in section 58B(2), these being: (a) it is not reasonably practicable to provide employment in accordance with that subsection – with the onus of establishing that lying in any legal proceedings on the employer; or (b) the worker left the employment of that employer before the commencement of the incapacity for work; or (c) the worker terminated the employment after the commencement of the incapacity for work; or (d) the employer currently employs less than 10 employees, and the period that has lapsed since the worker become incapacitated for work is more than 1 year. It may be that there are good economic and financial reasons that can be established to justify why it is it is not reasonably practicable for the worker to be provided with suitable employment. It may be that there are ongoing industrial issues that make placement of the worker in a particular area difficult. Additionally the operation of Fair Work Principles under Federal law make it imperative that workers, injured or otherwise, are placed in positions within an Industrial framework that enables the appropriate rate of pay to be paid. It should also be noted that since 1 July 2008, Section 58B(3) of the Act permits an assessment of the appropriate rate to be paid to a worker who is undertaking suitable employment in circumstances where the worker is undertaking alternative or modified duties that fall outside the worker's original contract of service. For example if a truck driver suffers an injury to the lower back, one needs to consider the criteria in section 3 of the Act in order to determine whether there are duties that will be suitable for the worker, say as a clerical officer. If the salary level is lower than what the worker is receiving, the employer is able to pay the appropriate rate with the worker being entitled to claim a top-up component from WorkCover.
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