GN 3.10 Section 39 notification

Published: 12 August 2019
Last edited: 12 August 2019

Application: This guidance does not apply to exempt workers

Overview

Section 39 of the Workers Compensation Act 1987 (1987 Act) provides that weekly payments are available for a maximum (aggregate) period of 260 weeks (five years) unless a worker has been assessed as having a degree of permanent impairment of more than 20 per cent.

Providing early notification prior to cessation of weekly payments helps workers prepare for their benefits ceasing and make alternative arrangements.

The operation of section 39 can be complex. Insurers should consider encouraging impacted workers to seek independent legal advice early to properly understand the significance of an assessment of the degree of permanent impairment on their entitlements under the Acts and at common law.

This guidance looks at the operation and application of section 39 including calculating 260 weeks of weekly payment entitlements, assessing permanent impairment and ceasing weekly payments after 260 weeks. Consideration is also given to a worker's entitlements if they once again become entitled to weekly payments.

S17. Section 39 Notification
Principle
Workers affected by the 260-week limit to weekly payments will be provided with appropriate notice before the cessation of weekly payments.

Calculating 260 weeks of entitlement

What does aggregate mean?

When calculating an aggregate period of 260 weeks of weekly compensation, this could be either consecutive or non-consecutive weeks.

What is an entitlement week?

Any week in which a payment of weekly compensation has been made or is payable (including part of a day, or a full day), is counted as one week of entitlement.

When does an entitlement week start?

A ‘weekly payment of entitlement’ commences on the day of the worker’s first incapacity (total or partial) from a work related injury that results in a weekly payment of greater than $nil. A week is counted over the following seven-day period.

What constitutes a week will vary for each worker - there is no set period (i.e. Sunday to Saturday).

Example: a worker has no current work capacity as a result of an injury, and receives weekly payments of compensation commencing from Wednesday. The worker’s week will therefore commence from Wednesday, to the following Tuesday.

When does the 260 week entitlement week commence?

Under workers compensation legislation, the weekly payment count start date depends on when the worker was injured and made a claim.

For a claim made prior to 1 October 2012 (known as an ‘existing claim’), the 260-week count commenced from 1 January 2013.

For a claim made on or after 1 October 2012, the 260-week count commences on the worker’s first day of incapacity.

Informing the worker of the total number of weeks paid

Throughout the life of the claim, the insurer should communicate regularly with the worker, employer and stakeholders regarding the number of weeks paid.

Workers affected by the 260-week (five year) limit to weekly payments should be provided with appropriate notification well before the cessation of weekly payments. Communication should clearly state how the insurer has counted the entitlement weeks so that it can be easily understood.

The information provided should include:

  • a summary of all payments
  • how many entitlement weeks have been paid, or are payable
  • when a worker’s weekly payments are projected to cease.

If there is any disagreement between the worker and the insurer as to the total number of entitlement weeks (paid or payable), this should be discussed and resolved well in advance of the worker reaching 260 weeks of weekly payments.

Insurers should have appropriate systems and controls in place to ensure accurate payment of weekly payments that:

  • prevent weekly payments beyond 260 weeks, where it is determined there is no ongoing entitlement
  • allow weekly payments to be paid beyond 260 weeks where it is determined there is an entitlement.

Permanent impairment and section 39

To determine whether a worker will be assessed as having a degree of permanent impairment of more than 20 per cent, and therefore satisfy the exemption in section 39(2) of the 1987 Act, insurers should engage with workers early so that permanent impairment assessments are undertaken well in advance of the 260-week limit.

The permanent impairment assessor must be listed on the SIRA website as a trained assessor of permanent impairment for each body system they are assessing.

The insurer should communicate to the worker (and employer where relevant) the outcome of the permanent impairment assessment and what this means in terms of entitlement to weekly payments of compensation, as well as reasonably necessary medical treatment and services thereafter.

Where the worker needs a support person, the insurer should (where possible) provide the information verbally direct to the worker, or in person (in addition to confirming in writing).

The insurer should ensure that the worker is fully informed of their right to seek independent legal advice.

Complying agreements

Legislation does not expressly prohibit parties from negotiating and reaching agreement on the degree of permanent impairment.

Where the degree of permanent impairment is agreed to be more than 20 per cent, this can be relied on for the purposes of section 39(2) of the 1987 Act. In this instance, the worker’s entitlement to weekly payments may continue after 260 weeks, subject to meeting the requirements as outlined in section 38 of the 1987 Act.

Refer to Standard of practice S21. Negotiation on degree of permanent impairment for information regarding the negotiation of the degree of permanent impairment.

Workers living overseas

The workers compensation legislation provides for workers who cease to reside in Australia to continue to receive weekly payments of compensation while overseas in certain circumstances (refer to section 53 of the 1987 Act).

There are often good reasons for a worker to move overseas post-injury including access to family support. Some workers have no choice and visa restrictions linked to employment mean they no longer have a right to live in Australia if they are unable to work.

Insurers should carefully consider how and when they will assess these workers’ degree of permanent impairment for the purposes of section 39. While some injuries, for example a psychiatric assessment, may be conducive to a video consultation, other injuries would not generally be able to be assessed by video consultation due to the necessity to carry out a physical examination.

Insurers should plan ahead and communicate in a transparent manner with their overseas workers to ensure these workers’ entitlements are determined in accordance with the legislation.

Workers who decline to attend a permanent impairment assessment

If a worker chooses not to attend the medical examination, then the insurer may not be able make a decision regarding their current degree of permanent impairment and the worker’s entitlement to weekly payments may cease once the 260-week limit is reached.

The insurer should provide the worker with the reasons for the appointment, and potential consequences for non-attendance at the time that the appointment is made.

The worker should also be strongly encouraged to seek independent legal advice to properly understand the significance of an assessment of the degree of permanent impairment on their entitlements under the Acts and at common law.

Deemed ‘high needs’ workers

For the purposes of section 39 of the 1987 Act, a worker’s degree of permanent impairment must be assessed as provided by section 65 of the 1987 Act regardless of whether the worker is deemed by the insurer to be a ‘high’ or ‘highest needs’ worker in accordance with section 32A of the 1987 Act.

This applies unless the worker is an ‘existing recipient’, that is, a worker who was in receipt of weekly payments immediately prior to 1 October 2012.

Special provisions for ‘existing recipients’ of weekly payments – 2012 amendments

Special provisions apply to workers who were in receipt of weekly payments immediately before 1 October 2012 (‘existing recipients’). These provisions took effect from 1 October 2012.

Section 39 of the 1987 Act does not apply to an ‘existing recipient’ if the injury has resulted in permanent impairment and:

  • 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
  • the insurer is satisfied that the degree of permanent impairment is likely to be more than 20 per cent (whether or not the degree of permanent impairment has previously been assessed).

See clause 28C, Part 2A, Schedule 8 to the Workers Compensation Regulation 2016 (2016 Regulation) – Special provisions for existing recipients of weekly payments – 2012 amendments.

A worker who is deemed to have more than 20 per cent permanent impairment or has not reached maximum medical improvement, may later cease to be entitled to weekly payments if they are subsequently assessed as having permanent impairment of 20 per cent or less.

Clause 28D, Part 2A, Schedule 8 to the 2016 Regulation also permits one further assessment of the degree of permanent impairment in respect of existing recipients.

The further permanent impairment assessment is for the purposes of Part 3 Compensation - benefits of the 1987 Act. Accordingly, if a further assessment takes place under this provision, and determines that the worker has a particular degree of permanent impairment, then this assessment will also be relevant when determining, for example, the worker’s access to reasonably necessary medical treatment and services.

Claims for lump sum compensation: further claims

Workers who made a claim for lump sum compensation before 19 June 2012 are also eligible to make one further lump sum compensation claim (clause 11, Part 2A, Schedule 8 of the 2016 Regulation.

A claim for lump sum compensation should only be made when the worker has reached maximum medical improvement.

Depending on the circumstances, it is therefore possible that a worker may be entitled to two further assessments of their degree of permanent impairment, that is:

  1. an assessment for the purposes of a further lump sum compensation claim (see clause 11, Schedule 8 of the 2016 Regulation, and
  2. an assessment for the purposes of Part 3 of the 1987 Act (see clause 28D, Schedule 8 of the 2016 Regulation).
Matilda Cruises v Sweeny [2018] NSWWCCPD 37

This decision considered the nature of referral for assessment of the degree of permanent impairment pursuant to clause 11 and Part 2A of Schedule 8 of the 2016 Regulation; and the application of clause 28D of Part 2A of Schedule 8 of the Regulation.

The worker suffered an injury to his right knee in the course of his employment in November 2004. A Medical Assessment Certificate (MAC) in 2007 certified 12 per cent whole person impairment (WPI). He was assessed again in 2012 with a MAC certifying 12 per cent WPI, and he was assessed again in April 2017 with another MAC finding 12 per cent.

The insurer applied section 39 and ceased weekly payments at the end of 2017. The worker underwent a total knee replacement in December 2017. Before the Commission, the insurer argued:

  • section 322A prima facie does not allow further assessments where there is a MAC in existence
  • the 'amending' regulation (Part 2A) allows a further assessment for 'existing recipients' for the purposes of Part 3 of the 1987 Act (weeklies, medical and lump sums)
  • for the purposes of the current matter, that further assessment resulted in the MAC dated 24 April 2017. It was pursuant to clause 11 of the Regulation and related to the further lump sum claim. This was the one further assessment allowed under clause 28D(3). It was binding regarding the extent of the respondent’s permanent impairment, a medical dispute could no longer arise: section 322A(2) of the 1998 Act.

In his decision, DP Snell held that the referral for assessment in 2017 was pursuant to clause 11 and not Part 2A of the Regulation. The worker, therefore remained entitled to a 'further assessment' based on Part 2A of the Regulation and the Arbitrator’s decision to remit the matter for referral to an Approved Medical Specialist (AMS) to assess whole person impairment was confirmed.

Workers with pre-2002 date of injury

A worker with a date of injury between 30 June 1987 and 31 December 2001 is assessed using a permanent impairment compensation table commonly referred to as the Table of Disabilities.

For injuries on or after 1 January 2002, workers are assessed using the NSW Guidelines for the evaluation of permanent impairment, 4th Edition, 1 April 2016 (the Guidelines).

Workers who suffered a psychological injury prior to 1 January 2002 had no entitlement to permanent impairment compensation (section 66 lump sum compensation) under the Table of Disabilities.

In the matter of Mrinal Datta v Universal Consultancy Services Pty Limited [2018] NSWWCC 223, the Commission considered the meaning of section 39 as it applies to workers who have no entitlement to permanent impairment compensation for their injury. That is, whether the fact that the worker had no entitlement to permanent impairment compensation for the subject injury, prevented the worker accessing weekly compensation past 260 weeks.

Mrinal Datta v Universal Consultancy Services Pty Limited [2018] NSWWCC 223

Mrinal Datta, the worker, suffered injury in the course of his employment with Universal Consultancy Services Pty Limited (the employer), on 3 February 2001.

The worker was assaulted while travelling between premises at which the employer carried on its business.

The worker suffered significant physical injuries including bilateral displaced fractures of the lower jaw in the assault. He underwent several surgical procedures in respect of his physical injuries. He has not recovered from those injuries. He also suffered significant psychological injuries.

The worker was assessed on behalf of the employer by an oral and maxillofacial surgeon who expressed the opinion that the worker suffered 17 per cent WPI for his physical injuries. He was also assessed on behalf of the employer by a psychiatrist who expressed the opinion that he suffered 44 per cent WPI for his psychological injuries. The psychiatrist carried out that assessment in accordance with the regime under the Guidelines and AMA 5.

The worker was also assessed by a psychiatrist at the request of his solicitor – that assessment was also undertaken in accordance with the Guidelines and AMA5 and found 26 per cent WPI as a result of psychological injury.

Mr Datta reached his 260-week entitlement period in December 2017. Notwithstanding their own assessment of 44 per cent WPI, the insurer declined to pay any further weekly compensation because Mr Datta did not have any entitlement to lump sum compensation for his psychological injury.

The Arbitrator considered the provisions in the 1987 Act that rely on an assessment of the degree of whole person impairment before compensation or further compensation is payable. Following an analysis of the text of the legislation he went on to conclude:

…it is unnecessary that the workers have an entitlement to receive compensation for non-economic loss before there is a referral for a determination of the extent of permanent impairment under any or all of these sections.

He went on to order the matter be remitted to the Registrar for referral to an Approved Medical Specialist to assess the worker’s degree of whole person impairment resulting from primary psychiatric injury on 3 February 2001 for the purposes of section 39.

Cessation of weekly payments

Section 39 of the 1987 Act provides that a worker’s entitlement to weekly payments will cease when a worker has received 260 weeks of weekly payments unless the worker has been assessed as having a degree of permanent impairment of more than 20 per cent (or, for existing recipients, one of the exceptions apply).

The worker should already have been made aware of the operation of the 260-week limit throughout the life of the claim, however, the insurer is still responsible for informing the worker (verbally and in writing) of the effect of section 39 of the 1987 Act and the impact this will have on their entitlements.

Insurers should carefully consider those workers who have been identified as high risk, and what support may be required when communicating cessation of entitlements.

For these workers, appropriate communication may require the involvement of a support person, and/or health or legal representative.

Section 39 notice prior to cessation at 260 weeks

Insurers should ensure the worker is informed well in advance of the cessation of entitlement to weekly payments.

Additionally, where other support services are available that may help a worker adjust to the end of their entitlement to weekly payments, details should be provided to the worker.

Where appropriate, insurers should encourage workers to inform themselves of what Centrelink payments and services may be available.

Notice after 260 weeks

Workers who previously met the requirements of the 2016 Regulation (existing recipients) and are subsequently assessed as having permanent impairment of less than 21 per cent, will no longer have an entitlement to weekly payments.

Insurers should give verbal and written notice to the worker of at least two weeks prior to the cessation of weekly entitlements due to section 39. This is to ensure that the worker is fully informed, noting that the entitlement to medical and related expenses of up to five years will commence from the date weekly payments stop being payable.

Re-commencing weekly payments after 260 weeks (five years)

If a worker’s entitlement to weekly payments has ended due to the operation of section 39 of the 1987 Act, the worker may become eligible for payments again following an assessment of degree of permanent impairment greater than 20 per cent.

However, the worker does not have an entitlement to weekly compensation for the 'gap period', that is, the period between the worker becoming disentitled as a result of the operation of section 39 and the date of the later favourable assessment (an assessment of greater than 20 per cent).

Case Study

A worker with a 2010 date of injury had their 260-week count begin on 1 January 2013. The insurer wrote to the worker in May 2017 advising the worker’s entitlement to weekly benefits would cease in December 2017 as a result of the operation of section 39.

The insurer arranged for the worker to be assessed as to degree of whole permanent impairment (WPI) with a finding of 13 per cent.

The worker sought their own assessment and in October 2017 served the insurer with an assessment of 28 per cent WPI. The worker’s assessment included a number of body parts that the insurer disputed were part of the compensable injury.

The insurer maintained their assessment of 13 per cent and gave effect to section 39 resulting in the worker’s benefits ceasing in December 2017 (because of the 260-week limit).

In the meantime, the worker lodged a dispute in the Workers Compensation Commission.

As liability was in dispute (the disputed body parts), the matter was referred to an Arbitrator. The matter proceeded to arbitration with some findings in favour of the worker.

The parties were unable to come to an agreement regarding the degree of permanent impairment and the matter was referred to an Approved Medical Specialist to provide a binding assessment regarding the degree of permanent impairment. The Medical Assessment Certificate (MAC) found 22 per cent WPI.

The insurer re-commenced weekly payments from the date of the MAC.

The Presidential decision in RSM Building Services Pty Ltd v Hochbaum [2019] NSWWCCPD 15 (Hochbaum) concerns the application and interpretation of section 39 of the 1987 Act.

The question before the President can be expressed as follows - if the assessment of degree of permanent impairment of greater than 20 per cent is made at a point in time after the cessation of the aggregate 260-week period, is the worker entitled to the back payment of compensation between the cessation date and the later date of the favourable assessment (that is, an assessment of permanent impairment greater than 20 per cent)?

Following a detailed statutory interpretation of section 39 and other relevant provisions, it was held that the worker was not entitled to backpay.

Note: The Presidential decision in Hochbaum has been appealed to the NSW Court of Appeal.

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