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Findings and recommendations on merit review 013/18

Our Reference: 013/18

Decision

  1. In accordance with s43(2)(a) and s44BB of the Workers Compensation Act 1987 (‘the 1987 Act’), the State Insurance Regulatory Authority (‘the Authority’) does not have jurisdiction to undertake a merit review in this matter as the decision referred for review is not a work capacity decision.

Background

  1. The worker sustained a psychological injury during the course of their employment with their pre-injury employer.
  2. The Insurer issued the worker with a notice under s74 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) in September 2017. Within the notice, the worker was advised that the Insurer disputed liability for the psychological injury sustained on the basis that the injury was ‘…wholly or predominantly caused by reasonable disciplinary and performance appraisal action or proposed by the employer…’. The Insurer sought to rely on s11A(1) of the 1998 Act.
  3. The worker made an application for merit review dated October 2017 which was received by the Authority on even date. The application has been made in the form approved by the Authority and specifies the grounds on which the review is sought.

Legislation and guidelines

  1. The legislative framework governing work capacity decisions and reviews is contained in the:
    • Workers Compensation Act 1987 (the 1987 Act);
    • Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act);
    • Workers Compensation Regulation 2010 (the Regulation);
  2. S44BB of the 1987 Act provides for a merit review of a work capacity decision of the Insurer, by the Authority.
  3. S43 of the 1987 Act defines a ‘work capacity decision’ and clarifies what is not considered to be a ‘work capacity decision’.
  4. S11A of the 1987 Act states that no compensation is payable for psychological injury caused by the reasonable actions of an employer.
  5. S74 of the 1998 Act directs that an insurer must give notice to the claimant if liability is disputed in respect of a claim or any aspect of a claim.
  6. S287A of the 1998 Act provides an opportunity for the worker to request an insurer to review a claim after the insurer has disputed the claim or an aspect of it.

Submissions on jurisdiction

  1. In the application for merit review by the Authority, the worker has not provided any submission in respect of the issue of jurisdiction.
  2. In the reply to the application for merit review by the Authority, the Insurer makes the following submissions relating to the issue of jurisdiction:
    • The Insurer ‘…submits that The Merit Review Service does not have jurisdiction in respect of this claim as a Work Capacity decision has not been made.
    • The worker has alleged that the Insurer issued a WCD in August 2017, relating to the suitable employment. The Insurer has no record of a Work Capacity Decision being made at this time.’
    • The Insurer ‘…issued a s74 Notice declining liability pursuant to s11A of the 1987 Act.’
    • The Insurer ‘…has not made a Work Capacity Decision, in accordance with s43, that is capable of review.

Reasons

  1. S44BB of the 1987 Act provides for a merit review of a work capacity decision of the Insurer, by the Authority. An injured worker may refer a ‘work capacity decision’ of an Insurer for review by the Authority under section 44BB(1)(b) of the 1987 Act.
  2. Section 43(1) of the 1987 Act defines ‘work capacity decision’ as follows:
    1. a decision about a worker’s current work capacity,  
    2. a decision about what constitutes suitable employment for a worker,  
    3. a decision about the amount an injured worker is able to earn in suitable employment,  
    4. a decision about the amount of an injured worker’s pre-injury average weekly earnings or current weekly earnings,
    5. a decision about whether a worker is, as a result of injury, unable without substantial risk of further injury to engage in employment of a certain kind because of the nature of that employment,  
    6. any other decision of an insurer that affects a worker’s entitlement to weekly payments of compensation, including a decision to suspend, discontinue or reduce the amount of the weekly payments of compensation payable to a worker on the basis of any decision referred to in paragraphs (a)-(e).  
  3. S43(2) of the 1987 Act provides that the following decisions are not work capacity decisions:
    1. a decision to dispute liability for weekly payments of compensation,  
    2. a decision that can be the subject of a medical dispute under Part 7 of Chapter 7 of the 1998 Act. (Emphasis added)
  4. The worker has stated in their application for merit review by the Authority that the original work capacity decision is dated August 2017. However, the Insurer has stated that there is no record of a Work Capacity Decision being made at this time.
  5. The worker has further stated in their application for merit review by the Authority that the Insurer’s internal review decision was received in September 2017. The documents provided by the Insurer in their reply to an application for merit review by the Authority, include correspondence sent to the worker dated September 2017 advising that liability for the psychological injury sustained is disputed.
  6. The correspondence sent by the Insurer dated September 2017 is titled ‘Notice under section 74 of the Workplace Injury Management and Workers Compensation Act 1998’. The title of the correspondence and the content of the correspondence refer to the Insurer’s liability, it cannot be construed as a Work Capacity Decision.
  7. Within the correspondence dated September 2017, the Insurer states that liability for the worker’s psychological injury is disputed on the basis that it is considered to be wholly or predominantly caused by reasonable disciplinary and performance appraisal action taken or proposed by the employer.
  8. The Insurer then refers to, and relies on, s11A(1) of the 1987 Act which states that no compensation is payable in respect of a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer. The Insurer then details the following reasons as to their reliance on s11A(1) of the 1987 Act:
    • The worker first consulted their GP for a psychological injury in July 2017, after the worker had been issued with a show cause notice. The condition was due to behaviour directed to [the worker] by their supervisor’
  • The worker’s psychiatrist reported that they were distressed by a Performance Improvement Plan which commenced in March 2017
  • The worker was the subject of a customer complaint and was issued with correspondence providing an opportunity to respond to the allegations
  • The worker was issued with a show cause notice in relation to substandard performance identified in the Performance Improvement Plan
  • In determining that the psychological injury sustained by the worker was wholly or predominantly caused by reasonable action taken or proposed to be taken by their employer, the Insurer has made the decision to dispute liability for weekly payments of compensation.
  • The Insurer’s correspondence to the worker dated September 2017 is a s74 notice in accordance with the 1998 Act and is a decision regarding liability for the psychological injury. It is not a work capacity decision that falls under s43(1)(a)-(f) of the 1987 Act. It is a decision to dispute liability for weekly payments of compensation. Section 43(2)(a) provides that this is not a work capacity decision.
  • Therefore, I find that the Insurer’s correspondence to the worker dated September 2017 is not a work capacity decision under s43 of the 1987 Act.
  • As outlined above, s44BB(1) of the 1987 Act provides that an injured worker may only refer a ‘work capacity decision’ of an Insurer for review by the Authority.
  • Accordingly, the correspondence dated September 2017 cannot be referred for merit review under s44BB(1) of the 1987 Act.

With regards to the above, the worker has not referred a ‘work capacity decision’ to the Authority for review. The Authority therefore does not have jurisdiction to undertake a merit review under section 44BB(1) of the 1987 Act.

Merit reviewer
Merit Review Service
Delegate of the State insurance regulatory authority