Responding to increasing psychological injury claims in workers compensation
18 October 2022
By SIRA Chief Executive Adam Dent
I recently had the privilege of appearing before the Standing Committee on Law and Justice 2022 Review of the Workers Compensation scheme hearing focused on the increase in psychological injury claims.
Today, around 11 per cent of all active NSW workers compensation claims relate to a psychological injury, compared with six per cent a decade ago.
People that have a psychological injury are less likely to return to work and more likely to experience an adversarial claims journey.
While much of the public discourse has focused on the growth in these claims, the interface between the workers compensation system and mental health is far more complex than that.
In fact, the group that experience the worst outcomes are those with a physical injury that require psychological services as part of their recovery.
People with a physical injury claim lose, on average, six weeks of work. For psychological claims, the average lost time is 20 weeks. Alarmingly, people who access psychological services after a physical injury are off work for an average of 31 weeks.
The reality is that poor mental health is more prevalent among the workers compensation cohort than the broader working population. A recent Australian Council of Social Services report showed that one in 10 wage earners in Australia report high or very high levels of psychological distress. SIRA’s own Customer Experience research showed that one in five people with a workers compensation claim had a probable mental illness based on the Kessler 6 scale.
Making a claim in any compensation scheme can lead to worse health outcomes. Factors such as high case manager turnover, low workforce capability, investigations, delays in decision-making and accessing treatment, can all contribute to psychological distress.
In designing a new workers compensation scheme, as was recommended by the McDougall Review, we have an opportunity to respond to the changing nature of workplace injuries, and to address the elements of the system that can cause or exacerbate mental health conditions.
In the meantime, people who have mental ill health must be better supported by the current workers compensation system. There is a wealth of evidence that tells us how to do that. In simple terms, high quality case management delivers better outcomes for all injured workers and is particularly important where mental health is a factor.
There is plenty that insurers can and should be doing. For example, they can screen for the risk of delayed return to work and psychological distress, and they can develop tailored pathways and hyper care arrangements where those risks exist. Insurers can also minimise exposure to friction points by focusing on the right things early in the claim. Insurers can also make attracting, training and retaining capable case managers a top priority.
SIRA has taken a range of steps to improve the prevention and management of psychological injury claims, including now actively considering case manager credentialling to lift the standard across the industry.
We have provided evidence-based advice and set expectations through Guidance note 2.3 (Managing claims for workers with a psychological injury), and Standards of Practice 33 (Managing psychological injury claims) and 34 (Return to work and early intervention).
We are building the capability of health providers and targeting employers through a range of advisory, compliance, and enforcement efforts.
SIRA is also piloting an outbound assistance service in the workers compensation scheme, similar to what already operates effectively in the CTP scheme. We are partnering with a number of insurers that agreed to participate, and the early indication is that workers value the contact and feel more confident about managing and navigating their claim as a result.
Getting good outcomes for workers who have mental ill health is challenging for many reasons. But it is the core role of the system I regulate to help people recover and return to work, regardless of the nature of their injury. At a minimum, my expectation is that all insurers follow the evidence and lean into this issue.