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Section 38A – Timing is everything

September 4, 2019

Background

 

The 2015 amendments to the Workers Compensation Act 1987 (‘the Act’), whilst arguably not as sweeping or broad as those taking place in 2012, brought with them some substantial changes relating particularly to what would now be known as ‘workers with highest needs’.

 

Under the definition contained within section 32A of the Act, a ‘worker with highest needs’ means a worker whose injury has resulted in permanent impairment and:

 

(a) the degree of permanent impairment has been assessed for the purposes of Division 4 to be more than 30%, or

 

(b) an assessment of the degree of permanent impairment is pending and has not been made because an approved medical specialist has declined to make the assessment on the basis that maximum medical improvement has not been reached and the degree of permanent impairment is not fully ascertainable, or

 

(c) the insurer is satisfied that the degree of permanent impairment is likely to be more than 30%.

 

Importantly, section 38A of the Act also introduces somewhat of a protection for workers with highest needs. This section reads as follows:

 

(1) If the determination of the amount of weekly payments of compensation payable to a worker with highest needs in accordance with this Subdivision results in an amount that is less than $788.32, the amount is to be treated as $788.32.

 

In essence, this section indicates that if a worker with highest needs is able to establish that they are entitled to some amount in terms of weekly benefits, and that amount is less than the amount indicated within the section (initially $788.32, but indexed within the Benefits Guide biannually), then their entitlement to weekly benefits is determined to be the amount as so indexed.

 

There are several questions that arise from this peculiar section, two of which will be addressed here.

 

The first question is related to the apparently strange result that occurs in circumstances where a worker with highest needs is left with a residual capacity for work which allows them to continue to be gainfully employed. This leads to the question as to what takes place in circumstances where the particular worker would be entitled to an amount pursuant to s 38A, but the combination of said entitlement and their actual earnings exceeds their pre-injury average weekly earnings (PIAWE)?

 

This question was examined in the matter of Vostek Industries Pty Ltd v White [2018] NSWWCCPD 47, in which it was decided that Mr White, a worker who exhibited a whole person impairment of 32%, would be entitled to the relevant scheduled s 38A payment in addition to his actual earnings of $984.50.

 

The import of this section was further explored in the recent Court of Appeal case of Hee v State Transit Authority of New South Wales [2019] NSWCA 175, in which the Court allowed the appeal (by a 2-1 majority) of the worker who took issue with the determination of the Arbitrator that he was not entitled to any payments under s 38A, having not made out an entitlement to same.

 

In his judgment, White JA pointed out that it could not be determined from the section itself, nor apparently from the intention of the drafter of the relevant section, as to whether the strange result that a worker would be entitled to weekly benefits that would cause his combined earnings, both through his actual earnings and the weekly benefits payments, to exceed his PIAWE. However, in His Honour’s view, the section itself was not ambiguous, and any interpretation other than the one as noted above would be outside of the scope of judicial interpretation.

 

As such, whether or not this was an intended consequence of the legislature in drafting this provision, it is a result which is unlikely to be altered or changed within the intervention of further amendments to the legislation itself.

 

The second question that arises from the interpretation of this section is when a worker is to be considered to be a ‘worker with highest needs’.

 

In this regard, we note that the matter of Kennewell v ISS Facility Services Australia Limited t/as Sontic Pty Limited [2018] NSWWCC 216 concerned the question of back pay when a claimant’s whole person impairment was not fully ascertainable, i.e. when their condition had not yet reached maximum medical improvement. Although this matter related to a claim in respect of s 39, it appears that the principle enumerated within said decision, being that a worker would be entitled to back payment whilst an assessment of whole person impairment was ‘pending’, i.e. following when an AMS declines to conduct an assessment of impairment on the basis that the worker’s condition had not reached maximum medical improvement.

 

More recently, the decision of Technical and Further Education Commission t/as TAFE NSW v Whitton [2019] NSWWCCPD 27 involved very similar circumstances to the matter of RSM Building Services Pty Ltd v Hochbaum [2019] NSWWCCPD 15, which also dealt with the period for which a worker would be entitled to claim weekly benefits after having satisfied the provisions of s 39 of the Act.

 

In both matters, it was argued on behalf of the worker that, following being determined by an AMS to have satisfied the provisions of s 39 in terms of the entitlement to weekly benefits following the expiry of the relevant 260-week period, the worker ought to be entitled to back-payment of weekly benefits to the date of the expiry of said period.

 

In Whitton, Counsel for the Worker’s argument that s 39 ought to be construed beneficially was rejected on the basis that the assertion that the Act was ‘beneficial legislation’ does not mean that every provision or amendment to a provision has a beneficial purpose or is to be construed beneficially, and that the purpose of the provision must be identified.

 

As such, the President reiterated his finding in Hochbaum is contingent on the worker satisfying the requisite degree of ‘permanent impairment resulting from the injury’, and that this pre-condition of the legislative provision was not fulfilled until such a time as the AMS had determined that the worker did in fact suffer from an above-threshold level of whole person impairment.

 

Similarly, the President also determined that the worker did not attain the status of a ‘worker with highest needs’ until such a time as the AMS made his determination and the MAC was issued.

 

Lessons

 

The cumulative effect of the above decisions is that a worker is not entitled to any payments in relation to s 38A until such a time as he or she has been determined, either by agreement or within a MAC, that they do in fact satisfy the requisite threshold in respect of same, except in circumstances where the AMS has declined to make an assessment due to the worker’s condition having not reached MMI. In such a case, once the worker reaches MMI and an assessment is made, the payments ought to be back-dated to the date of the original MAC.

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