AGY-2773 | Commission of Inquiry into Workers Compensation Common Law Matters

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Background In June 2000 J Della Bosca, the Minister for Industrial Relations announced a number of workers compensation reforms. The changes he proposed mainly emphasised injury management and return to work strategies, the removal of cross subsidies in premium rate setting, reducing the Work cover scheme deficit, and streamlining the dispute resolution process. The Commission of Inquiry regarding Workers Compensation Common Law Matters was established as part of these reforms. (1) The Commission was established by letters patent on June 6 2001. Justice Terry Sheahan was appointed to conduct the inquiry by letters patent on 15 August 2001. (2) The terms of reference of the commission were to: (1) Recommend the appropriate threshold for "serious and permanent injury" necessary to recover damages at common law in the Work cover scheme, consistent with the available measures of impairment in the statutory workers compensation scheme, and maintaining access to Common Law claims under the Workers Compensation Act 1987 (No. 70, 1987) (as amended) Injury Management and Workers Compensation Act 1998 (No.85, 1998) for seriously injured workers. (2) To examine more efficient ways to process Common Law Claims under the Workers compensation legislation mentioned under Terms of Reference No.1 (3) To identify ways to reduce unnecessary costs and inefficiencies under the processing of Common Law Claims under the Workers Compensation legislation. (4) To identify ways to reduce the incentive for pursuing Common Law Claims under the Workers Compensation legislation. (3) Duration of the Commission Advertisements to make submissions to the inquiry were placed in all the daily newspapers on 30 June 2001. The inquiry held its first hearing on 18 July 2001 (4). The period of the commission was extended on request of Justice Terry Sheahan on 15 August, to the 31 st of August 2001 , in order to compile the final report. The Commission was assisted in its work by the formation of an Expert Reference Group, and Inquiry Advisory group. (5) 51 written submissions were received from organisation as diverse as The Australian Psychological Society, The Aust Law Group of law firms, and SIMS Metal Ltd. 12 presentations were heard over the course of the inquiry, including The Combined Employers, Queensland Law Society, Australian Plaintiff Lawyers Association, Law Society of NSW, and Work cover NSW. (6) Findings Terms of Reference No. 1 and 4 recommendations: (A) That Common Law actions available to workers against employers be limited to recovering only economic damages, relevantly defined under s 151I Workers Compensation Act 1987 (No. 70, 1987) Act (as amended) as past economic loss of earnings, and future economic loss due to deprivations or impairment of earning capacity. (7) Common law claims required the worker to prove "fault" on the part of the employer. The right to sue an employer for " Common Law" damages was abolished under s. 149 of the Workers Compensation Act 1987. The Workers Compensation (Benefits) Amendment Act 1989 (No.133, 1989), Schedule 1 subsequently restored common law rights for workers in a modified form. (8) (B) That economic loss damages remain "Capped", and that they be calculated only to age 65, and that they may be taken as a " structured settlement". (9) A structured settlement was basically the staggering of lump sum entitlements over a specific period of time. (10) (C) That only workers assessed to have a whole person impairment of 20% or more should be entitled to make a claim for economic loss or damages. (11) "Whole person impairment" was assessed from a percentage impairment of the body system involved for example, lower limbs, spine, respiratory system, psychiatric and psychological disorders, cardiovascular system, the skin and their percentage impairment of the body system is then converted to a percentage of "Whole person impairment" .(12) (D That requirements of "Election"’ be repealed, but that recovery of economic loss damages preclude the receipt of any further statutory benefits. (13) Under Division 4 Part 3 of the Workers Compensation Act of 1987 injured workers were required to elect whether to claim Common Law Damages, or to make a claim for permanent loss, under the statutory benefits scheme. The statutory benefits scheme did not require the employee to prove" Fault" on the part of their employer. Elections were either through the commencing of proceedings in order to recover damages in Common Law, or to elect in favour of permanent loss compensation by commencing proceedings in the Compensation Court. Elections were generally irrevocable, however an election to claim permanent loss could be revoked with the leave of the court if the workers condition deteriorated. (14) (E) That as soon as the scheme’s financial position permitted, indexation of s. 66 benefits was to be reinstated, and the maximum amount recoverable under the combined operation of s. 66 and 67 be increased gradually to $26 500,000 and indexed thereafter. (15) s.66 of the Workers Compensation Act 1987 ( No.70 1987) defined the compensation of workers for permanent injuries, and s.67 compensated workers for pain and suffering as a result of injuries incurred at work. Pain and suffering could mean actual pain, or distress and anxiety as a result of injuries. (F) That all claims in respect of 'Non Economic losses' be dealt with under s. 66 and 67 of the Workers Compensation Act 1987 (No. 70, 1987). (G) That a limited right to claim benefits in respect of the cost of "Gratuitous domestic care:"Griffiths v Kerkemeyer" be provided for in only the statutory scheme, upon strict conditions. This case was heard in the High Court of Australia in 1977. The judgment brought down regarding the case encompassed a number of points. Firstly, the Plaintiff (or person making the claim) should be able to claim in the cost of their care service provided gratuitously (freely) by relative or friends. Secondly, that cost of their claim should not be prejudiced by the fact that they not receiving care from a hospital or nursing home which would charge them for that service. (16) (H) That the government maintain pressure on the Commonwealth Government to reform the tax laws to facilitate ‘Structured settlements." Terms of reference No 2 and 3 recommendations. (I) Those common law actions for employment injuries are dealt with normally by the District Court, but without injuries. (J) That compliance with a pre-litigation process was to be managed by the proposed Workers Compensation Commission, and aimed at early and cost effective settlement of the claim. (17) The prelitigation process was to commence with assessment of the extent of the workers injuries, according to the Workers Compensation Act 1987 (No. 70,1987), and progressing through a process of mediation. If mediation was not successful then proceedings could be commenced by the filing in the District Court of those documents previously served, plus a certificate of refused or unsuccessful mediation, once court proceedings were underway the parties could still pursue further mediation. (18) (K) As range of procedural reforms and new rules regarding legal costs. A Plaintiff must succeed in establishing permanent loss or earning capacity to recover costs of his/her Common Law Claim. The inquiry ended with the publishing of the final report on the 31 August 2001. Footnotes (1) Appendix F, Issues Paper p.1 in Final Report of the Commission of Inquiry into Workers Compensation Common Law Matters, 31 August, 2001 from http://www.sheahan.inquiry.nsw.gov.au/ (Website accessed 01/07/2002) (2) Appendix A, Letters Patent June 6 and 15 August, 2001 in Final Report of the Commission of Inquiry into Workers Compensation Common Law Matter (3) Final Report of the Commission of Inquiry into Workers Compensation and Common Law Matters p.1 (4) Presentation on 8 July, 2001 by Austlaw firms to Commission of Inquiry into Workers Compensation Common Law Matters p.2 and 3 citied from http://www.sheahan.inquiry.nsw.gov.au/ (Website accessed 02/07/2002) (5) Op Cit p.6 (6) Ibid Appendix G and H (7) Ibid p 1 and 11 (8) Ibid p.9 -10 (9) Ibid p.1 and 11 (10) Ibid p.14 (11) Ibid p. p1 and 11 (12) ‘How can I claim compensation for pain and suffering’ from http://www.workcover.nsw.gov.au /subsites/faq (Website accessed 15/07/2002) (13) Op Cit p 1 and 11 (14) Callinan, R ‘ The future of the NSW Worker’s Compensation Scheme. ‘ Briefing paper 8/2001 p. 5 from http://www.sheahan.inquiry.nsw.gov.au/ (Website accessed 01/07/2002) (15) Op. Cit p.1 and 11 (16) Griffiths Vs Kerkermeyer (1977) 139 CLR 161 High Court of Australia http://www.austlii.edu.au/cgi-bin/ (Website accessed 09/07/2002) (17) Op Cit p. 1 and 11 (18) Ibid p.44