GN 8.1 Insurer decision and decision notice requirements

Published: 12 August 2019

Last edited: 1 March 2021

- GN 8.1 Insurer decision and decision notice requirements

Application: This guidance applies to exempt workers

Overview

Insurers make decisions determining a worker’s entitlement to workers compensation benefits. Where a decision is made to dispute liability in respect of a claim, or discontinue or reduce weekly payments of compensation, the insurer is required to comply with certain requirements outlined in the workers compensation legislation. This includes how the insurer is to give notice of the decision, and what information is to be included in the notice.

This guidance provides an overview of the types of insurer decisions, the evidence which is relevant to the decision, communicating with the worker and decision notice requirements. Guidance is also provided in relation to requesting a review of the insurer decision, the stay of a work capacity decision and worker representation.

Insurer decisions

An insurer may decide to dispute liability for all or part of a claim or make a work capacity decision. The impact of that decision might mean, for example, that the insurer will not:

pay weekly payments, or reduces or stops weekly payments after they have started
pay for a service or treatment
agree that a worker is entitled to lump sum compensation.

Evidence relevant to the decision

Before making a decision, the insurer should carefully consider all related evidence in the claim file. This may include reviewing reports and documents submitted by the worker and the employer. The evidence an insurer may consider includes, but is not limited to:

claim form
certificates of capacity
medical reports
treatment plans
return to work plans
rehabilitation reports
factual investigation reports
independent medical reports
independent consultant reports.

Claims Management Principles

When making decisions, an insurer is to have regard to the overarching claims management principles in SIRA’s Standards of practice. Principle 1 of the overarching claims principles require insurers to undertake the management of claims in an empathetic manner intended to maximise fairness for workers by:

ensuring that workers understand their rights, entitlements and responsibilities, and making clear what workers and employers can expect from insurers and other scheme participants, and
ensuring workers are afforded procedural fairness, and that decisions are made on the best available evidence, focused on advancing the worker’s recovery and return to work.

Quality Assurance

Before notifying the worker of a decision that will impact their entitlements, it is good practice for the insurer to have a quality assurance process in place. This may include, for example, having an appropriately qualified person (other than the original decision-maker) review the reasons for the decision, the information considered and/or available on the claim file and the decision notice.

Note: The Commission has raised the adequacy of dispute notices in a number of matters, highlighting the importance of providing a full and proper explanation of the issues in dispute, in plain language.

See for example: Gibson v Royal Lifesaving Society of Australia [2009] NSWWCCPD 137; Hobden v South East Illawarra Area Health Service [2010] NSWWCCPD 13

Communicating with the worker

It is important that decisions made by the insurer are communicated in plain language and can be easily understood by the worker.

The insurer should also consider:

discussing the effect of the decision with the worker, including the impact it will have on their entitlements, before confirming the same in the decision notice
the worker’s individual circumstances and what support is required before communicating the decision (support might be provided, for example, by a support person, health or legal representative).

Procedural fairness

When making a decision that will affect a worker’s rights or interests, insurers should consider the principles of procedural fairness, including fair notice. This needs to occur on a case-by-case basis, having regard to the nature and potential consequences of each decision that may be made (see Insurer guidance GN 1.5 Procedural fairness for further detail).

Considerations

In summary, insurers should have in place current policies, procedures and protocols which ensure and maintain that:

all decisions are soundly based and supported by evidence
all decisions have been peer-reviewed and/or authorised by staff with the relevant skills and experience before the decision is communicated with the worker
all decision notices are easy to understand and compliant with legislative and regulatory requirements
the worker continues to be supported during and after the decision notice has been issued
the principles of procedural fairness have been considered
potential disputes are prevented and minimised, where possible.

Disputing liability

Sometimes when a worker makes a claim for compensation, the insurer will dispute its liability for that compensation. A dispute happens when the insurer decides, based on available information, that a person does not meet the legal requirements to be entitled to workers compensation benefits. An insurer may dispute liability for many reasons, including, but not limited to:

Reason to dispute liability	Reference
The worker has not sustained an injury	Section 4 of the 1998 Act
The person is not a worker	Sections 4 and 5, and Schedule 1, of the 1998 Act
Employment was not a substantial contributing factor to the injury	Section 9A of the 1987 Act
The psychological injury was wholly or predominantly caused by the employer’s reasonable actions	Section 11A of the 1987 Act
Claimed medical, hospital and rehabilitation expenses are not reasonably necessary because of the injury	Section 60 of the 1987 Act
The claim for property damage covers items the Act does not	Sections 74 and 75 of the 1987 Act
There is no total or partial incapacity for work	Section 33 of the 1987 Act
The degree of permanent impairment does not reach the required thresholds for a lump sum payment	Sections 65A and 66 of the 1987 Act
The worker was injured on a journey with no real and substantial connection between their employment and the accident that caused the injury	Section 10 of the 1987 Act

Work capacity decisions

Insurers make work capacity decisions regularly throughout the life of a claim.

Work capacity decisions should not be confused with other claim decisions, such as decisions to dispute liability in respect of all or part of a claim.

In accordance with section 43 of the Workers Compensation Act 1987 (1987 Act), an insurer may make a work capacity decision about:

the worker’s current work capacity
what is suitable employment for the worker
how much the worker can earn in suitable employment
the worker’s pre-injury average weekly earnings (PIAWE) or current weekly earnings
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
any other matters, where the decision of the insurer 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 the above points.

Refer to Insurer guidance GN 3.9 Work capacity assessments and decisions for further information .

Decision notices

A quality decision notice should:

contain all information as required by section 79 of the Workplace Injury Management and Workers Compensation Act 1998 (1998 Act) and clause 38 of the Workers Compensation Regulation 2016 (2016 Regulation) (see ‘decision notice requirements’ outlined below)
be specific to the claim
raise all issues relevant to the dispute (this includes not raising irrelevant issues)
be in plain language and readily understood
include the date when the decision comes into effect, allowing for any postal processing where required

The date specified in the decision notice is to be the date the insurer makes the decision.

Note: If a defect is identified in the notice of dispute, the insurer should correct the defect and reissue the notice.

Insurer to give notice of decision

An insurer must give notice of any decision to dispute liability in respect of a claim or any aspect of a claim or discontinue or reduce the amount of weekly payments of compensation to the worker (section 78 of the 1998 Act).

There is no need to issue a notice when a worker’s entitlements change due to:

weekly payments being reduced because of a change in entitlement periods
shift and overtime allowances being removed from the calculation of PIAWE after 52 weeks (note: workers who sustain an injury on or after 26 October 2018 will not have shift and overtime allowances removed after 52 weeks)

How notice of decision is given

The insurer must give notice to the claimant or worker concerned (section 79 of the 1998 Act). If the notice relates to a decision to discontinue weekly payments of compensation, the insurer is to provide a copy of the decision notice summary to any employer liable to pay the compensation, except where the insurer pays the compensation directly (clause 38(2) of the 2016 Regulation).

Decision notice requirements

The requirements for decision notices which insurers must adhere to are summarised in the table below:

Summary of the decision	The insurer is to provide a decision notice summary in the approved form. It must include the: effect of the decision the worker’s rights of review the procedure for requesting a review, and the legal and other services that may be available to the worker to provide advice or assistance in relation to the dispute. See clause 38(1)(h) of the 2016 Regulation. The summary is to be positioned on the front page of a decision notice.
Reasons and issues for disputing liability or discontinuing or reducing compensation	A concise, easy-to-understand statement of: the reasons for the insurer’s decision the issues relevant to the decision the relevant sections of the legislation on which the insurer relies. See section 79 of the 1998 Act.
Required period of notice	For workers who have received weekly payments for a continuous period of at least 12 weeks, the notice should include an easy-to-understand statement of the required period of notice: 2 weeks’ notice is required if a worker has been receiving weekly payments of compensation for a continuous period of less than one year or 6 weeks’ notice is required if a worker has been receiving weekly payments of compensation for a continuous period of one year or more. See section 80 of the 1998 Act.
Service by post rule	Where appropriate, workers should be informed of the service by post rule, which provides that (unless there is evidence to the contrary) the notice is taken to have been effected on the seventh working day after the notice was posted. See section 76 of the Interpretation Act 1987.
Documents the worker and employer have submitted	A statement identifying all the reports and documents the worker and employer have submitted and relied on in making the claim. See clause 38(1)(a) of the 2016 Regulation.
Documents the insurer has considered	A statement identifying the reports of the type referred to in clause 41 that are relevant to the decision, whether or not they support the reasons for the decision. A statement that a copy of a report required to be provided by the insurer under clause 41 (3) (except as provided by clause 41 (5) or (6)) accompanies the notice. See clause 38(1)(b) and (c) of the 2016 Regulation.
Copies of reports to be attached to notice	A copy of the reports considered are to be provided, regardless of whether or not the report supports the reasons for the decision. See clause 41(4) of the 2016 Regulation. This applies unless the insurer believes that giving the worker a report would pose a serious threat to anyone’s life or health. In such instances, the insurer can instead: give the medical report to the medical practitioner the worker has nominated for that purpose give any other report to the worker’s legal practitioner. Seek SIRA’s direction on another approach when these options are not appropriate. See clause 41(5) and (6) of the 2016 Regulation.
How to request a review	The notice is to include the details of the procedure for requesting a review of the decision. See clause 38(1)(d) of the 2016 Regulation. This will include: that the worker can request a review by the insurer (optional review) that the worker can lodge a dispute with the Personal Injury Commission.
Where to seek assistance	The notice is to include a statement that the worker can seek advice or assistance from a union, a lawyer or the Independent Review Office (IRO) on 13 94 76. Note: The contact details for IRO must be included. See clause 38(1)(e) and (f) of the 2016 Regulation.
Where to refer an application for determination of a dispute	The insurer decision notice must include that the worker can contact the President of the Personal Injury Commission by: email: [email protected] or mail: Level 20, 1 Oxford Street Darlinghurst NSW 2010. Further information is available at: www.pi.nsw.gov.au. See clause 38(1)(g) of the 2016 Regulation.

Issuing a notice on duplicate, concurrent and shared claims

Where the worker has two or more claims, the lead insurer retains overall responsibility, with the secondary insurer(s) responsible for making proportional payments, as agreed between the insurers.

The lead insurer must make sure that any contact with the worker is managed concurrently with the other insurer(s) on risk, when issuing a decision notice.

Duplicate claims

Same claim, same date of injury.

Concurrent claims

Worker with two or more claims (separate date of injury), same or different employer, same or different insurer.

Shared claims

Worker with a nature and conditions claim (ie industrial deafness), two or more employers, two or more insurers.

Insurer agreement on apportionment and management of the claim (percentage apportionment/lead insurer) may be determined by:

the last employer on risk
percentage of time the worker spent with an employer
percentage of impairment and/or percentage split confirmed by an independent medical examination.

Requesting a review of the insurer’s decision

A worker can request an insurer to review:

a work capacity decision made by the insurer that is disputed by the worker, or
a claim, or any aspect of a claim, that is disputed by the insurer.

The request can be made by the worker at any time before the dispute is referred for determination by the Personal Injury Commission (the Commission).

When the insurer receives a request, it must review the claim and respond to the worker within 14 days. However, the request for a review does not delay the timeframe for the dispute to take effect (see section 287A of the 1998 Act.)

The insurer should ensure that the person undertaking the review is appropriately qualified and was not involved in making the original decision.

The notice under section 287A of the insurer’s decision on a review is to:

be in writing
contain the information referred to in clause 38(1) of the Regulation
contain a concise and readily understandable statement of the reason for the insurer’s decision and of the issues relevant to the decision, and
identify any provision of the workers compensation legislation on which the insurer relies in making the decision.

(See clause 42B of the 2016 Regulation).

Stay of a work capacity decision

If a dispute about a work capacity decision is lodged with the Commission before the notice period expires, a stay will operate to maintain the current amount paid in weekly payments, while the review is being undertaken.

However, if the Commission considers that someone involved in the dispute is unreasonably delaying proceedings to resolve the matter, the Commission may order that the stay ceases to have any effect, should the required period of notice expire before a decision is determined by the Commission.