The Impacts of NSW Workers’
Compensation Legislation 2012
The Study
Unions NSW and Macquarie University jointly funded
this project to:
1. review the justifications for the 2012 legislative
changes;
2. gather preliminary evidence as to how the changes
are impacting injured workers in NSW; and
3. establish benchmarks and an ongoing methodology
for evidence collection that will enable monitoring of
the continuing impact of the changes until December
2015.
Methodology
The research for this report was conducted in three stages.
1. Desktop review of regulations, available statistical data,
and case law.
2. Eleven semi-structured, face-to-face, qualitative interviews
were conducted with officials from trade unions (IWSN,
CFMEU, AMWU and NSWNMA), as well as AIGroup) and
three legal practitioners. WorkCover declined the
opportunity to participate.
3. Six individual case studies were conducted with workers
who had been affected by the workers’ compensation
changes.
Justifications
The Joint Select Committee on the NSW Workers’
Compensation Scheme, which informed the changes in
2012, found that there were seven reasons why the
scheme had reached an estimated $4.1 billion deficit:
1.Work injury damages liability was increasing.
2.The increase in top-up payments for permanent
impairment lump sums.
3.The increasing cost of medical treatment.
4.Injured workers remaining on weekly benefits for longer
periods.
Scheme Expenditure Direct to Claimant
$6,000
$5,000
Scheme expenditure
Million $
$4,000
$3,000
Scheme expenditure:
Direct to claimant,
Australia
$2,000
Scheme expenditure:
Direct to claimant, NSW
$1,000
$0
Scheme Expenditure for Services Provided to Claimant
$3,000.0
$2,500.0
Million $
$2,000.0
$1,500.0
$1,000.0
$500.0
$0.0
Scheme expenditure:
Services to claimant,
Australia
Scheme expenditure:
Services to claimant,
NSW
More justifications
5. Poor management of claims by scheme agents.
6. A substantial increase in the costs of managing
the Scheme by the WorkCover Authority.
7. A significant reduction of over 30 per cent in
premiums from 2005 to 2011, which
substantially reduced scheme revenues thereby
eroding the assets available to counterbalance
the Scheme’s liabilities.
The 2012 changes
• Provision to reduce weekly benefits according to insurers’
perceptions of work capacity.
• Increases to the statutory upper limits on weekly benefits.
• Changes to the calculation of average weekly earnings.
• Abolishing paid legal advice regarding capacity to work
decisions.
• Restrictions on access to compensation for:
–
–
–
–
journey injuries;
heart attacks and strokes;
nervous shock for families of severely injured workers;
lump sum claims.
Weekly payments
•Increase in the statutory weekly payment rate.
•Change the way earnings prior to injury are calculated to include overtime
and shift work. This benefits those who work overtime and shifts, however
the calculations are confusing, leaving scope for workers to be shortchanged.
•Increase in the percentage wage limits paid after 26 weeks (if the injured
worker meets work or incapacity for work requirements).
•Insufficient safeguards surrounding the procedures for work capacity
decisions providing opportunities for insurers to unilaterally and unfairly
reduce weekly benefits. The result is the potential to erode or eliminate the
benefits described above.
•Prohibition of payment for legal advice on work capacity decisions,
effectively denying injured workers legal support with their weekly payment
entitlement.
•Termination of weekly payments when workers reach retirement age
(presently 65 years of age) regardless of when injury occurred.
Weekly payments - impact
the new definition of suitable employment is killing them... we’ve got
guys who’ve been in construction for 40 years, the employer
terminates them, they don’t know how to use a computer, reading
and writing is really difficult, English itself is difficult and the insurer
says to them, ‘You can be a sales representative.’.. These are not
really achievable goals for our workers, but that doesn’t matter and
just like that, their payments are gone. They’re stuck trying to figure
out what they’re going to do, but they’re applying for 15-20 jobs a
week, nobody is going to hire them because they’re on workers’
compensation, they’ve had an injury. The only way they can even
look at getting a job is by hiding that, and if you’re asked you have to
disclose it.
(Hayward, 2013)
Work capacity decisions- impact
They kind of leave you hanging in limbo. Just dealing with this review
is so stressful. You can’t focus on anything else. It’s a horrible way to
live. I shouldn’t even be going through this because [the payments]
were court awarded and it should have just stayed in place, when I
was trying to get back out there to get some sort of work capacity, I’m
still trying.
(Case study 5- injured worker)
I’ve been told that when I get my work capacity decision I’ll need to go
to Centrelink – the decision is already made
(Case study 4- injured worker)
[When the WCD commences]To be just on Centrelink I won’t have
enough to survive. There’s just no way. I’ll be able to cover the roof
over my head and immediate bills and none of the other ones and
forget about food and petrol. I honestly don’t know.
(Case study 5- injured worker)
Medical
•Entitlements to medical treatment cease 12
months after weekly entitlements are terminated.
This leaves workers bearing high costs of necessary,
post-injury follow-up treatments, surgeries,
prostheses and other aids.
•New pre-approval requirements can delay
necessary treatments, which can cause
deterioration in injury or treatment withheld until
entitlement period ends.
Journey claims
•Compensation for personal injury
received by a worker on any journey
arising out of or in the course of
employment is no longer claimable
unless there is a real and substantial
connection between the employment
and the accident or incident.
Other claims
•Claims for heart attacks, strokes and nervous
shock payments to families of the severely
injured are now excluded.
•Claims for lump sum payments have been
restricted, including lump sum claims for
injuries that preceded the legislative changes
(this could change depending on the outcome
of Goudappel v ADCO).
WorkCover Independent Review Officer (WIRO)
•There is now potential for workers to have this additional port of call
for help with resolving problems with their workers’ compensation
claims.
•WIRO has the potential to improve the quality and clarity of written
communication from insurers to injured workers on the basis of WIRO
judgments of work capacity decisions.
•The WIRO now possesses unique powers to regulate, monitor and
enforce standards of legal practitioners.These benefits are tempered
by the prohibition of payments to legal practitioners advising on work
capacity decisions.
•WIRO can conduct independent research and advise the Minister on
findings arising from research or services provided to injured workers.
Return to work
•Increased and expanded obligations of injured workers to
return to work.
•These measures are only counteracted on the employer
side by augmented powers for WorkCover inspectors to
issue employer improvement notices to employers not
complying with their workplace injury management and
provision of suitable duties responsibilities (but an absence
of evidence of increased inspections), the creation of the
Safety, Return to Work and Support Board, and a return to
work pilot program.
Return to work - impact
All I want is to be able to get back on my feet and to do the things that I used to do without any
problems.
(Case study 1 – injured worker)
We don’t want to be on compo or Centrelink... We want to be back at work.
(Injured worker, IWSN meeting 14-10-13)
Employment wise, no one wants to give you a go... Your self esteem just gets chiselled away
and you start to question yourself, you really go, “Do I have the capacity? Do I have the
capabilities?” You start to go, “Maybe I’m not that smart! Maybe I can’t really do anything!”
You know, the family will just disintegrate.
(Case study 3 – injured worker)
It was like a no-win situation. Everything I tried I failed at. I was trying to be proactive about it
and organised [the employment] myself but it didn’t work out.
(Case study 5 – injured worker)
I’d love to be back out there and not have to deal with this, not have to be trying to ring around
and find out what I can do. It’s so stressful. I’d rather just get up and go to work and have a
quality of life, be happy, not have to deal with this, have more money financially. Even the
[weekly payment] is nowhere near what I was earning before.
(Case study 5 – injured worker)
Perceived bullying
•The legislated changes enhance the potential for insurers
to bully and harass workers by delaying approval for
medical treatments, pressuring workers to attend any
number of medical assessments at short notice and at
various locations.
•The changes do not harness pre-existing problems with
bullying and harassment, such as persistent verbal threats
from insurers and non-responsiveness from WorkCover.
•The only positive change for workers is the strengthened
responsibility for insurers to provide written notice before
changing entitlements.
Perceived bullying - impact
It’s like, well you injured yourself, we can really destroy you, we can
stuff your mind up, we can make you untrusting, doubt yourself, bring
your self-esteem right down, basically rubbish you to the point where
you think the only way to fix it is to kill yourself.
(Case study 3 – injured worker)
The way I see it is: I’ve done everything in my power to help myself.
They’ve done everything in their power to make life difficult.
(Case study 4 – injured worker)
GIO and the rehab people kept on ringing me up, demanding I do this,
demanding I do that... I got threatened by the case manager, who said to me,
‘You will do what I say or you will not get your knee replaced.’
(Case study 6 – injured worker)
It’s an adversarial system that sets up this, ‘We’re going to get you any way we
can’ kind of thing.
(Case study 6 – injured worker)
Conflicts of interest
•The WorkCover Authority of NSW is both the nominal
insurer, and regulator.
•Contracted insurers and licensed self-insurers have a
responsibility to compensate injured workers and assist
them to recover and return to work, but they are mandated
to maximise profits.
•Independent medical examiners (doctors) and
rehabilitation providers are paid by the insurers.
•Legal practitioners have had incentives to encourage
multiple claims and to protract legal claims. These issues
have been substantially minimised by the legislated
changes.
Transparency and public accountability
•Since 2010 there has been a significant reduction in the
publicly available information from WorkCover NSW
regarding compensated injury and illness.
•Between 1998 and 2010, WorkCover NSW publicly
released detailed information via annual Statistical
Bulletins. These bulletins are no longer available.
•This has diminished opportunities for public discussion,
independent assessment and accountability of operators
of the scheme.
Concluding remarks
•Weekly benefits: individuals whose workplace injury has
left them with chronic and debilitating conditions struggle
to receive appropriate weekly payments after 130 weeks.
• Medical treatment: Workers who succeed in returning to
work are losing access, after only 12 months, to the critical
medical care and equipment they require to address long
term medical consequences of work injury or illness.
•Return to work: the revised Acts place significant
demands on workers, yet fail to strengthen corresponding
requirements on employers.
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Workers Compensation Changes