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; and3. 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

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 short-changed.•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 - impactthe 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- impactThey 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 - impactAll 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 - impactIt’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.