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august 2008P Hks QC

aCCIDENtCOMPENsatIONaCt REVIEWfinal rePort


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CONTENTS

Abbreviations 4

Introduction and acknowledgements 7

Recommendations for change 21

Benefit improvements 35

Chapter 1 Improving understanding and clarity of the legislation 37

Legislation and the scheme 38

Amendments 38

A new Act 40

Chapter 2 Workers entitlement to compensation 43

Who is a worker? 45

Contribution of employment to injuries 60

Stress-related and psychiatric injuries 69

Chapter 3 Ensuring timely access to benefits and support 89

Delays in injury notification and determination of claims 92

Introduce provisional liability and streamline injury notification 93

Reduce formalities 111

Introduce electronic lodgement 113

Improve access to medical information 115

Clarify employer obligations 116

Providing greater protection against discrimination 118

Chapter 4 Supporting workers to get back to work after injury 127

The importance of early and durable return to work 128

How should the AC Act support return to work? 131

A new approach to the legislative framework 132Planning return to work 137

Providing pre-injury or suitable employment 140

Exemption from the obligation to provide pre-injury or suitable employment 144

Risk management and occupational rehabilitation programs 146

Return to work coordinators 148

Labour hire 152

Compliance and enforcement 155

Workers right of action 162

Roles of other workplace parties involved in return to work 164

Issue resolution 172

Return to work incentives 173

Chapter 5 Better income replacement 185

Pre-injury average weekly earnings 190Step-downs and entitlement periods 193

Weekly benefits after 130 weeks for partially incapacitated workers 199

Weekly benefits for workers who undergo medical procedures after 130 weeks 201

Payments pending receipt of funds from common law settlements 202

The relationship between annual and long service leave and weekly benefits 203

Accrual of leave while in receipt of weekly benefits 204

Notional earnings 205

Superannuation 209

Section 96 212

The method of calculating entitlement periods 215

Redemption of weekly benefits 217

ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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CONTENTS continued

Chapter 6 Treatment expenses 219

Timeframes for determining liability 223

Notice of termination of claims 224

Reasonable costs 225

Prior approval of expenses 227

Fee setting 229

Gap payments 231

Duration of benefits 232

Coordinated care programs 234

Ordinary daily living costs 237

Regulation of medical and like providers 238

Chapter 7 Lump sum benefits for significantly injured workers 243

The adequacy of current impairment benefits 249

Hearing loss injuries 260

Gradual process injuries 264

Multiple injuries 264

Two separate systems 268

Delays in lodging claims 270

Delays in processing claims 272

Impairment benefit assessment process 274

Chapter 8 Access to justice for seriously injured workers: common law 277

Assessing proposals for change 285

The deeming test 287

The narrative test for economic loss damages 291

Review of the method of assessing permanent impairment 295

Psychiatric/psychological consequences of physical injuries 296

The impact of ongoing weekly payments on statutory offers 299

Terminally ill workers 302

Access to medical information 303

One application 306

Reduction in scale costs 308

Appeals 310

Chapter 9 Benefits for dependants following work-related deaths 313

Adequacy of current death benefits 318

Eligibility for compensation 322

Accessing death benefits 328

Chapter 10 Transparency in decision-making and the efficient resolution of disputes 333

Performance of the current dispute resolution process 345

A modified approach to dispute resolution 349Lodging a dispute 350

Internal review of statutory benefit decisions 351

A modified role for the ACCS 355

Arbitration 365

Medical questions 367

Medical Panel referrals by courts 372

Reasons 374

Accountability 375

Composition of Medical Panels 377

The Magistrates Court 378

Review of agent decisions by employers 380


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CONTENTS continued

Chapter 11 Employer premiums 385

Premium calculation 386

Principals and contractors 396

Employer excess 401

Remuneration 404

Premium disputes and appeals 408

Enforcing premium-related obligations 412

Independent review of premium-setting 413

Trustees 418

Uninsured Employers and Indemnity Scheme 419

Chapter 12 Recovery from third parties 423

The recovery formula 425

Application of the recovery provision 427

Labour hire 429

Hold harmless clauses 433

Reimbursement to employers following recoveries 436

Impact of recoveries on premium 436

Chapter 13 Self-insurance 439

The role of self-insurance 440

How should self-insurance be managed 441

Eligibility and approval 442

Ongoing requirements 447

Contributions 448

Audit program 458

Claims management 459

The need for greater flexibility 462

Appendices 1. Amendments to inoperative, irrelevant or superfluous provisions 467

2. Taylor Fry Report 473

3. Access Economics Report 487


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ABBREVIATIONS

AC Act Accident Compensation Act 1985

AC Regulations Accident Compensation Regulations 2001

ACCS Accident Compensation Conciliation Service

AMCA Air Conditioning and Mechanical Contractors Association

ACWI Act Accident Compensation (WorkCover Insurance) Act 1993

AEU Australian Education Union

AHEIA Australian Higher Education Industrial Association

Ai Group Australian Industry Group

ALA Australian Lawyers Alliance

AMA Australian Medical Association

AMA-2 American Medical Association Guides to the Evaluation of Permanent Impairment

2nd edition


4th edition


5th edition

AMIEU Australasian Meat Industry Employees Union

ANF Australian Nursing Federation

APA Australian Physiotherapy Association

ARPA Australian Rehabilitation Providers Association

AWU Australian Workers Union

CCP Coordinated Care Program

CFA Country Fire Authority

CIP Community Integration Program

COCA Chiropractic and Osteopathic College of Australia

CPSU Community and Public Sector Union

DEECD Department of Education and Early Childhood Development

ESC Essential Services Commission

GEPIC Guide to the Evaluation of Psychiatric Impairment for Clinicians

HSG Health Services Group

HWCA Heads of Workers Compensation Authorities

IDSA Industrial Deaths Support and Advocacy Inc

INSG Injured Nurses Support Group

LIV Law Institute of Victoria

MAV Municipal Association of Victoria

MBS Medical Benefits Schedule

MDT Multi-Disciplinary Team

MGA Master Grocers Australia

MUA Maritime Union of Australia

NAB National Australia Bank

NAL National Acoustic Laboratory

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ABBREVIATIONS


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NUW National Union of Workers

NZACC New Zealand Accident Compensation Commission

OHS Act Occupational Health and Safety Act 2004

OHS Occupational Health and Safety

OM Originating Motion

Panel Medical Panel

PETP Priority Education and Training Program

PIAWE Pre-injury average weekly earnings

PTSD Post traumatic stress disorder

PWC PricewaterhouseCoopers

RCSA Recruitment and Consulting Services Association

SCE Statistical case estimate

SDA Shop, Distributive & Allied Employers Association

SI Serious injury

SIAV Self Insurers Association of Victoria

SRC Act Safety, Rehabilitation and Compensation Act 1998

TA Act Transport Accident Act 1986

TAC Transport Accident Commission

TCFUA Textile Clothing and Footwear Union of Australia (Victoria Branch)

VACC Victorian Automobile Chamber of Commerce

VBIRA Victorian Brain Injury Recovery Association

VCAT Victorian Civil and Administrative Tribunal

VCEAVictorian Congress of Employer Associations

VECCI Victorian Employees Chamber of Commerce and Industry

VFF Victorian Farmers Federation

VIEU Victorian Independent Education Union

VTHC Victorian Trades Hall Council

VWA Victorian WorkCover Authority

WC Act Workers Compensation Act 1958

WIC Workplace Industry Classification

WOHC Workers Occupational Health Centre

WPI Whole person impairment


ABBREVIATIONS

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INTRODUCTIONAreas for reform

A consultative review

Overview of the VictorianWorkCover scheme

The way forward


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1. On 10 December 2007, I was commissioned by the Minister for Finance, WorkCover and the

Transport Accident Commission, the Hon Tim Holding, to conduct an independent review of theAccident Compensation Act 1985 (the AC Act) and associated legislation. My terms of reference

were to provide advice and recommendations in relation to:

the need to provide fair and effective benefit and premium regimes, having regard to workers

compensation schemes in other jurisdictions and the need to secure long-term positive

outcomes for injured workers;

the fundamental need to protect the operational and financial viability of the scheme;

identifying and resolving anomalies in the AC Act and in the operation of the scheme;

improving employer and employee understanding of the AC Act;

reducing the regulatory and administrative burden on employers, including through improved

alignment, where appropriate, with related administrative arrangements both within the State

of Victoria and with other jurisdictions; and

improving the usability of the legislation through the removal of inoperative, irrelevant or

superfluous provisions.

How to read this report

2. My report is arranged in chapters that address the various components of the legislation and

the scheme. In particular, the chapters cover

clarity of the legislation;

workers entitlement to compensation;

workers access to benefits and support;

workers rehabilitation and return to work following injury;

income replacement benefits for injured workers;

treatment expenses for injured workers;

lump sum benefits for significantly injured workers;

access to common law for significantly injured workers;

benefits for dependants following work-related deaths; decision-making and the efficient resolution of disputes;

employer premiums;

recovery from third parties of benefits paid to workers; and

self-insurance.

3. Immediately following this Introduction are two tables. The first table provides a summary of

each recommendation in the report, with a cross-reference to the location of that

recommendation in the report. The second table lists only those recommendations that involve

the improvement of benefits.

4. I appreciate that reading over 500 pages is a daunting task for even the most committed reader

and I have therefore developed a separate guide to the report. The guide provides a summary

of the reports more significant recommendations plus an overview of all the benefit

improvements. The guide also includes a full list of the reports recommendations and the list ofprioritised benefit improvements.


INTRODUCTION

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AREAS FOR REFORM

5. My proposed package of recommendations seeks to address four areas of reform, namely:

better rehabilitation and return to work outcomes;

fair and accessible benefits;

greater accountability and transparency; and

improved understanding and usability of the legislation.

Improving return to work is the central objective

6. All stakeholders were united in supporting the importance of improving return to work for

injured workers; and this was a central consideration for me in assessing proposals for reform.

7. An injured workers return to work after workplace injury is much influenced by their

relationship with their employer and workplace, as well as by the workers recovery from injury.

Although that relationship is a workplace matter, it can be enhanced by the rights and

responsibilities established by the legislation, and can be compromised by the compensation

system.

8. My recommendations for recasting the return to work provisions in the AC Act aim to support

return to work outcomes by setting clear expectations for all parties involved in the return to

work process, without prescribing a one-size-fits-all approach, and supporting the development

of comprehensive guidance material tailored to the needs of participants in different industries

and sectors of the economy.

9. My recommendation for the introduction of provisional liability aims to ensure that workers

receive short-term income support and work with their employer on return to work, without the

divisive issue of establishing liability being the initial focus of a compensation claim, potentially

damaging an employers relationship with a worker.

Priorities for benefit reform

10. The Reviews terms of reference indicated that the Review would provide some scope to

examine the benefits available to injured workers having regard to the need to protect the

long-term financial viability of the scheme.

11. I have balanced the competing considerations of providing benefits to injured workers and

maintaining the financial viability of the scheme by recommending a package of benefit

improvements that I believe could be funded within existing premium rates.

12. In December 2007, the valuation of the WorkCover scheme indicated that the margin between

the average premium rate and the annual cost of funding the schemes liabilities was around

$93 million an amount commonly referred to as the implied margin.

13. I have used the implied margin as a guide to the amount that the scheme may be able to affordin additional benefits without putting upward pressure on premiums, or requiring that the

Victorian Workcover Authority (VWA) use investment returns to fund compensation for injuries.

14. The implied margin can only be used as a guide because, by the time the Minister receives my

report, the next valuation of the scheme will be underway and that valuation may significantly

affect the implied margin. The implied margin will also be affected by any initiatives that the

Government decides to fund outside the Review.

15. The actuaries advising me have estimated that, not including administrative costs, the net cost

of my package of recommendations will be in the range of $88.9-$137.1 million a year. It may

be that all the benefit improvements recommended in my report cannot be implemented in one

financial term; nevertheless, I believe that all the benefit improvements should be implemented

by Government even if implementation occurs over more than one financial term.


INTRODUCTION

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25. Overall, my review has found that the accident compensation legislation is generally working

well. However, the Review has identified many reform opportunities that will cut red tape foremployers and improve compensation for the most disadvantaged the families of deceased

workers, workers with a permanent impairment and long-term injured workers. There is a

considerable consensus among stakeholders in support of many of these reforms although

some remain contentious. I encourage the Government having taken the brave step of

commissioning the first independent review of the AC Act in 20 years to seize this opportunity

to improve outcomes for injured workers and employers.

A CONSULTATIVE REVIEW

26. My proposed package of reforms is very much the outcome of stakeholder feedback. In my

view, the quality and success of the final recommendations largely belongs to all those who

have taken the time to engage and be involved with the Review.

27. I did not approach this Review with a back to the drawing board approach. Rather, I wasguided by the terms of reference which expressed the Victorian Governments view that the

underlying principles of the accident compensation laws remain sound, and then sought the

views of stakeholders and practitioners as to how the legislation and the scheme could be

improved, based on their vast experience.

28. To assist me, the Minister appointed a Stakeholder Reference Group (the SRG), chaired by

Ms Elana Rubin, Chairperson of the VWA. The SRGs members were:

Brian Boyd Secretary, Victorian Trades Hall Council;

Graham Bird Federal and Victorian Secretary, Australasian Meat Industry Employees Union;

Cesar Melham Victorian Branch Secretary, Australian Workers Union;

Wayne Kayler-Thomson CEO, Victorian Employers Chamber of Commerce and Industry;

Tim Piper Victorian Branch Director, Australian Industry Group;

Steve Irving Chairperson, Self Insurers Association of Victoria;

Jane Stephens CEO, Australian Medical Association, Victorian Branch;

Michael Brett Young CEO, Law Institute of Victoria; and

Marcus Fogarty Representative, Australian Lawyers Alliance.

29. The SRG proved invaluable in assisting me to define the issues for the Review, and in acting as

a sounding board for all of the draft chapters of the report, and commenting on the package of

final recommendations.

30. I am very grateful for the time and commitment given by the SRG members throughout the

Review and for the quality of their contributions to the Review.

31. In December 2007, I wrote to over 130 organisations asking them for their initial views on

opportunities for reforming the accident compensation legislation. Their responses helped me

to develop a Discussion Paper, released in March 2008. In that Paper, I called for detailed

submissions on a series of issues and questions. In total, 100 organisations and individualsmade submissions in response to my initial letter and discussion paper. I also held over 100

hours of face-to-face consultation with stakeholders to discuss the issues raised in the Review.

32. I engaged independent expert advisers on a number of technical issues, namely:

Taylor Fry, who were engaged to provide independent actuarial costings of all

recommendations (Appendix 2); and

Access Economics, who were engaged to advise on pricing of self-insurance contributions

(Appendix 3).1


INTRODUCTION

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1 Appendix 1 is a table of recommended amendments to inoperative, irrelevant or superfluousprovisions in the legislation.


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Acknowledgements

33. I was greatly assisted in this Review by Counsel Assisting, Michael Fleming, and a Review

Secretariat, formed from the Department of Treasury and Finance and the VWA. Indeed,

the preparation of this report would have been impossible without the stimulation and

support provided by Michael and by the Secretariat.

34. I wish to record my sincere thanks to Michael and all members of the Review team for their

assistance to me. Michael brought to the Review a great deal of experience with legal issues

arising under the AC Act, and a good understanding of the social and economic implications

of workers compensation. The members of the Secretariat brought to the Review many years

of practical and policy-oriented experience in the public sector. The commitment, insight and

diligence of both Michael and the members of Secretariat have made it possible for my task

to be completed in the short time available, and for the task to be completed so thoroughly

and accurately.

35. I am particularly grateful for the assistance given me by Dave McQueen, the outstanding leader

of the Review Secretariat, Megan OHalloran, communications and stakeholder manager for the

Review and Linda Timothy, manager of legal and policy for the Review. I do not underestimate

the hard work, support and clear thinking provided by other members of the Secretariat; but

I must express my appreciation for the daily support and clear advice provided by those

three over the past eight months. I should also record the extraordinary level of support,

encouragement and constructive criticism provided throughout my work on the Review by

my personal assistant, Lou Coffey.

36. I would also like to record my sincere appreciation to Elana Rubin, VWA Chairperson, and

Greg Tweedly, Chief Executive, VWA, and all employees of the VWA.

37. Since the beginning of the Review, the VWA has provided full cooperation in answering limitless

requests for information and queries.

38. I hope the recommendations in this report will assist the VWA achieve its mission of working

with the community to deliver outstanding workplace health and safety, together with quality

care and insurance protection to workers and employers.

OVERVIEW OF THE VICTORIAN WORKCOVER SCHEME

39. Workers compensation schemes are designed to mitigate and, as far as possible, remove the

serious disadvantage that is so frequently caused by work-related injury or illness.

40. The Victorian WorkCover scheme provides employers with compulsory insurance against the

impact of loss suffered by injured workers. The scheme provides a range of benefits to injured

workers, for life if required, regardless of fault, including weekly compensation, medical and

paramedical treatment, attendant care and lump sum payments.

41. Where death occurs as a result of a work-related injury or illness, support is also provided for

dependants in the form of lump sum compensation and periodic pension payments, counselling

for immediate family members and funeral expenses.

42. The VWA acts as the regulator of Victorias workplace occupational health and safety (OHS)

and return to work requirements and as the underwriter of the workers compensation scheme.

It administers the scheme through private insurance agents, who manage claims and collect

premiums on behalf of the VWA. Agents are authorised by the VWA to provide services to

employers and injured workers in accordance with the legislation and the standards and

procedures set by the VWA.


INTRODUCTION

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43. The VWAs statutory obligations are spelt out in several Acts of Parliament including:

health and safety at work under the OHS Act; workers compensation and the rehabilitation of injured workers under the AC Act;

employer insurance premiums under the ACWI Act;

explosives and other dangerous goods under theDangerous Goods Act 1995;

the transport of dangerous goods by road underRoad Transport Reform (Dangerous Goods)

Act 1995; and

high-risk equipment used in non-work-related situations under theEquipment (Public Safety)

Act 1994.

44. Broadly, the responsibilities of the VWA are to:

help prevent workplace injuries;

enforce Victorias OHS laws (including selected Commonwealth laws);

provide reasonably priced insurance against liability for workplace injuries and disease for

employers;

help injured workers back into the workforce; and manage the workers compensation scheme by ensuring the prompt delivery of appropriate

services and adopting prudent financial practices.

45. In the VWAs 2006/2007 Annual Report, the following safety, business and financial performance

was recorded:

less than 30,000 workplace injury claims for only the second time in its history;

the lowest workplace injury rate on record (it has reduced by 19% in the past five years);

fourth successive 10% cut to average premium rates;

performance from insurance operations of $729 million;

sixth successive year of full-year actuarial release of $394 million; and

commencement of a return to work inspectorate.

46. The VWA is governed by a board which is accountable to the Government, stakeholders and the

Victorian community.

A brief history of Victorias accident compensation legislation

47. Workers compensation legislation in Victoria started in 1914, with benefits payable to workers

for injuries arising out of and in the course of employment. The Workers Compensation Act

1946 changed the scope to injuries arising out of or in the course of employment.

48. In June 1983, the Victorian Government established a Committee of Enquiry into the Victorian

Workers Compensation Scheme chaired by Mr BC Cooney. The Cooney Report2 led to the

introduction of the AC Act, with the establishment of WorkCare, a single government insurance

scheme to underwrite workers compensation, replacing the previous scheme underwritten by

52 private insurers, and the creation of the Accident Compensation Commission to administer

the scheme.

49. The AC Act made sweeping changes to the workers compensation system, including public

underwriting, vocational rehabilitation, OHS reforms, and a new dispute resolution system.

50. The AC Act has been amended 80 times since 1985, including, in 1987, changes aimed at

tightening up the system, and focusing particularly on the poor return to work performance.

A new remuneration system for claims agents was introduced and the ability of employers to

change insurance agents was enhanced.


INTRODUCTION

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2 B C Cooney,Report of the Committee of Enquiry into the Victorian Workers Compensation System1983-84, Victorian Government Printer, 1984.


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62. Since the 2003/2004 financial year, there have also been four consecutive annual 10% cuts

to the average premium rate payable by Victorian employers. The average premium rate hasreduced from 2.22% of wages in 2003/2004 to 1.46% of wages in 2007/2008.

The Australian context

63. Victorias workers compensation scheme is one of 10 schemes within Australia. Each State

and Territory in Australia has its own workers compensation scheme, which is governed by

respective legislation. There are also two national schemes: Comcare, which primarily covers

Commonwealth Government employees, and Seacare, which covers maritime workers.

64. The State, Territory and national schemes vary markedly in design, coverage, benefit

entitlements, compliance and premiums. Each scheme has developed since the introduction of

workers compensation legislation in the early 1900s, in the context of its own political, social

and economic environment, and it is not surprising that the schemes are significantly different

in nature, application and content.

65. The differences between the various schemes have driven a variety of reform initiatives aimed

at national uniformity, which gained momentum during the 1970s.3

66. The more recent reform initiatives can be traced back to the Industry Commission reports of

1995 into workers compensation in Australia.4 In 1989, the Federal Government requested

that the Industry Commission examine whether existing workers compensation arrangements

ensured appropriate safety and accident prevention incentives for both employers and

employees in the context of a federal system and sought advice on any changes that should

be implemented. The Industry Commission recommended several changes to workers

compensation schemes and strongly recommended the establishment of a national framework

for workers compensation.

67. As part of the agenda for national consistency, the Australian Safety and Compensation Councilwas established to develop policy advice on workers compensation and engage State and

Territory governments in progressing nationally consistent workers compensation

arrangements. Currently the arrangements vary in the following main areas.

Scheme model

68. Workers compensation schemes can be broadly categorised as no-fault or common law, or

a hybrid of both.

69. No-fault schemes pay compensation to injured workers without any inquiry into the question

of who was at fault for the injury. Schemes which adopt this model are the South Australian,

Northern Territory and Commonwealth (Comcare) schemes.5

70. In some Australian jurisdictions, compensation is available for more serious injuries at commonlaw on the basis of fault. In these schemes, access to common law is sometimes limited by

an impairment threshold or an irrevocable election between accepting no-fault benefits and

exercising common law rights. Queensland is an example of a model with both these limitations.

71. Schemes with a hybrid of both models provide long term statutory benefits on a no-fault basis

and allow access to common law damages on a fault basis. Schemes that operate under this

model include the Victorian, New South Wales, Western Australian and Australian Capital

Territory schemes.


INTRODUCTION

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3 Guthrie, R, Purse, K & Meredith, F, Workers Compensation and Self-Insurance in Australia National

Priority or Trojan Horse?, (2006) 17Insurance Law Journal, 256 at 256.4 Industry Commission Workers Compensation in Australia, Report No. 36, February 1994;Industry

Commission Work, health and safety: An inquiry into occupational health and safety, September 1995.

5 Northern Territory for injuries after 1987; and Victoria between November 1997 and October 1999.


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Scheme funding

72. Workers compensation schemes are funded in three ways: centrally funded, privately

underwritten or a combination of the two.

73. In centrally funded schemes, a single public insurer (the Government) both underwrites and

administers the scheme. Centrally funded schemes include the Commonwealth (Comcare) and

Queensland schemes.

74. In privately underwritten schemes, approved insurance companies underwrite and primarily

administer the scheme. Privately underwritten schemes include the Seacare, Western

Australian, Tasmanian, the Northern Territory6 and the Australian Capital Territory schemes.

75. In combination schemes, public insurers underwrite the scheme and are responsible for funds

management and premiums, but other administrative functions are primarily carried out by

private bodies (including private insurers). The Victorian and New South Wales schemes are

hybrid schemes.

Premium

76. The majority of employers in Australia pay workers compensation insurance premiums.

However, some smaller employers are exempt by reason of their structure or size and some

larger employers, who meet various prudential requirements, self-insure their liability in respect

of workplace injury. Although self-insurers contribute an amount to help administer the scheme

in the jurisdiction where they operate, they do not pay premiums.

77. Premiums fund each of the schemes liabilities. However, cross-jurisdictional comparison is

complex, due to a number of factors. Premiums are set based on actuarial forecasts of claims

liabilities. Generally they are set according to the risk profile of a particular industry, but there is

a multitude of risk profiles. Premium rates are typically fixed as a percentage of an employers

remuneration and the definition of remuneration varies. Some States have higher levels ofself-insurance (for example, South Australia) and others have lower levels (for example, the

Australian Capital Territory); and excesses apply in certain jurisdictions (for example, in Victoria

the excess is the first 10 days of incapacity with the first $564 of medical costs, with a buy-out

option). Claims liabilities also vary across the States and Territories due to a number of complex

factors considered in further detail below.

78. As a comparison, the Commonwealth scheme, Comcare, had the highest average premium

level for 2006/2007 at 3.03% of aggregate remuneration, closely followed by South Australia at

3.00%.7 Queensland had the lowest level at 1.20%, and Victorias premium rate of 1.62% was

the second lowest of the schemes.


INTRODUCTION

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6 In the Northern Territory scheme, a public insurer also competes in the private market.

7 No comparable figure was available for the Australian Capital Territory, but was 3.32% for 2004/2005.


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Coverage

79. Whether or not a worker is entitled to compensation for an injury at work is dependent on

a number of factors:

whether the person is a worker as defined in the legislation (including where a person

would otherwise not be a worker but is a deemed worker);

whether the person has suffered an injury (as defined by the legislation);

whether there was a sufficient nexus between the workers injury and employment, that

is whether the injury arose out of or in the course of employment;

to what extent the employment has contributed to the injury (for example, employment

in Victoria has to be a significant contributing factor for certain types of injuries, and in

New South Wales it has to be a substantial contributing factor);

what constitutes work (for example, recess and journey claims are treated differently across

the States and Territories: the New South Wales, Queensland, the Australian Capital Territory

and Seacare cover journey claims with some restrictions, Victoria and South Australia do not);

whether the worker is entitled to coverage having regard to age (many jurisdictions haveretirement provisions which restrict access to compensation, particularly weekly benefits);

whether there are any exclusionary provisions which may apply (for example, self-inflicted

injury); there are specific exclusions in each jurisdiction for psychiatric or psychological

injuries (for example, most jurisdictions exclude psychiatric or psychological injury caused by

reasonable administrative or management action).

80. As illustrated above, there are vast differences in the schemes, which determine whether

employers will be responsible for injuries sustained by workers.

Benefits

81. Schemes vary widely in the benefits that workers are entitled to receive. The benefits fall

primarily into four categories:

weekly benefits (income replacement); lump sum benefits (permanent impairment);

medical treatment; and

benefits for the death of a worker.

Weekly benefits

82. Weekly benefits are periodic payments intended to replace income and are common to all

schemes. However, the amount, levels and duration of weekly benefits vary markedly between

the schemes. Broadly speaking, most of the schemes decrease the weekly benefits over time

with one or more step-down periods.

83. Some schemes have a cap, being the maximum amount of weekly benefit allowed. Some

schemes also have a maximum period for which weekly benefits are payable (such as

Queensland, where the maximum period is five years).

84. All of the schemes use various step-down provisions in which a workers weekly benefits

are decreased over time. Some schemes compensate workers 100% of their weekly earnings

(subject to different rules about how those earnings are calculated). In the initial period of

incapacity for work,8 the Commonwealth (Comcare), New South Wales, South Australia,

Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory pay 100%

of weekly earnings to injured workers (subject to maximum levels imposed in some

jurisdictions). Victoria pays 95% of a workers pre-injury average weekly earnings initially, and

Queensland pays 85%. Some schemes with higher initial compensation levels significantly

reduce benefits after the initial period, either by imposing low long-term weekly compensation,

or by means of a capping provision.


INTRODUCTION

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8 The initial period varies from one scheme to another: see Chapter 5, Better income replacement,Table 5.2.


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85. Weekly payments are calculated differently in each jurisdiction. Some are based on award rates

(where they still exist) or other industrial instruments; some include overtime bonuses or otherallowances or both.

86. Each jurisdiction has different circumstances and methods for terminating or suspending

weekly payments and provides for cessation of weekly benefits in different circumstances.

Victoria and New South Wales have similar provisions relating to the cessation of payments

after 130 or 104 weeks of incapacity, where the worker has a capacity for suitable employment.

Most jurisdictions have suspension or termination provisions to deal with a worker who does

not comply with rehabilitation and return to work obligations or does not attend medical

examinations.

87. In all States and Territories, so-called redemption of weekly benefits is permitted. That is,

injured workers may redeem their entitlements to weekly benefits (and all statutory benefits)

in one lump sum amount instead of continuing to receive entitlements in the form of weekly

payments. However Victoria, New South Wales and the Commonwealth (Comcare) only doso on a very limited basis and subject to restrictions.

Lump sum benefits

88. Where a worker suffers a permanent impairment, lump sum payments are available in all

jurisdictions. Lump sum payments compensate a worker for permanent impairment to a body

part or function. This payment is made in addition to any entitlement to weekly benefits.

89. Some jurisdictions operate with thresholds to the entitlement (for example, Victoria has a

10% whole person impairment (WPI) threshold for physical and 30% WPI threshold for

psychiatric or psychological injury, New South Wales has 1% WPI threshold for physical and

15% WPI threshold for psychological or psychiatric injury), and other jurisdictions have no

thresholds (Western Australia and Queensland). Each jurisdiction has a statutory maximum

(a cap) for lump sum payments.

90. The lump sum amount in each jurisdiction is primarily calculated by reference to the AMA

Guides for the Evaluation of Permanent Impairment, although some jurisdictions use different

editions of the Guides. Western Australia uses its own guides as does Comcare, although

those guides are based on the AMA Guides 5th edition.

Medical treatment

91. Fundamentally, all jurisdictions cover all reasonable costs associated with treatment,

rehabilitation and hospitalisation. However, the services which are covered and limits

on any amounts payable vary between jurisdictions.

Compensation following the death of a worker

92. If a worker dies because of a workplace injury, all jurisdictions provide access to death benefits

so that the workers surviving domestic partner or dependant is entitled to a lump sum, ongoing

living expenses by way of periodic payments and payment of funeral expenses. Coverage varies

between the schemes based on the definition of dependant, as do the amounts payable.


INTRODUCTION

PAGE 18


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Common law

93. Access to common law varies between the jurisdictions and has been a continuing area ofcontention in the schemes.

94. Before the introduction of no-fault statutory schemes, workers had to begin common law

proceedings for negligence or breach of statutory duty to receive any benefits (in the form of

damages). Initially, the damages available at common law were open-ended, but currently

common law entitlements (where available) are restricted. Negligence (or breach of a statutory

duty) has to be established; and, in some jurisdictions, there are threshold tests (Victoria has a

threshold of 30% WPI or a complicated narrative test for serious injury ultimately determined

by a court, and New South Wales has a threshold of 15% WPI). The types of damages that can

be awarded have been restricted (Victoria requires a worker to establish a 40% economic loss

before the worker can sue for economic loss) and caps or upper limits have been placed on

awards in some jurisdictions.

95. In some jurisdictions a worker must make an irrevocable election between statutory benefitsand common law damages. South Australia and the Northern Territory have removed access to

common law damages entirely. Victoria removed access to common law damages in November

1997, but reinstated that access from October 1999.

96. One of the biggest differences between the schemes is their relative reliance on common law

or no-fault statutory benefits for compensating injured workers. That relative reliance

determines the scheme model. Generally, those schemes that provide access to common law

have less generous no-fault benefits. The primary example is Queensland. The other schemes

with access to common law are Victoria, New South Wales (with low limits for weekly benefits)

and the Australian Capital Territory.

Regard for other jurisdictions

97. Several jurisdictions have conducted reviews into various aspects of their workerscompensation schemes. Although the objectives and recommendations made following the

reviews have varied in content, all appear to have considered harmonisation between schemes

as a key outcome.

98. The Reviews terms of reference required the Review to consider workers compensation

arrangements in other jurisdictions, as well as complementary statutory schemes, in order

to identify opportunities for alignment, with a view to providing fair and effective benefit and

premium regimes, and easing the administrative burden for employers.

99. In the course of developing recommendations, the Review considered the design and delivery

of the various State, Territory and national workers compensation schemes that operate in

Australia.

100. The Review also considered complementary schemes, such as that administered by theVictorian TAC, noting that those schemes have similarities in design, purpose and processes to

those in the WorkCover scheme. Statutory schemes that interact with the WorkCover scheme,

such as Federal income taxation and social security, were also considered to identify

opportunities for administrative alignment and efficiency,

101. To ensure a best practice workers compensation scheme, international experiences were also

considered throughout the course of the Review. Comparisons with the United States and

Canada were drawn because they have State-based (or Province-based) workers compensation

schemes9 similar to the Australian schemes.


INTRODUCTION

PAGE 19

9 K Purse, The Evolution of Workers Compensation Policy in Australia, Health Sociological Review (2005)14, 8 at 8.


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102. Further, Victorias Charter of Human Rights10 became fully operational on 1 January 2008.

Amongst other requirements, the Charter requires all statutory provisions to be interpreted,and imposes an obligation on the VWA to act in a way that is compatible with human rights.

Accordingly, the Review has considered the impact of the Charter on the current provisions

of the WorkCover scheme and any new provisions which may be recommended.

THE WAY FORWARD

103. Workers compensation has long aimed to provide fundamental protection for workers and their

dependants against the risk of injury in the workplace. As workers compensation schemes

have developed, they have also provided protection for the interests of employers, by providing

a degree of predictability in the costs of compensating injured workers, by giving financial

recognition to those employers who develop and maintain safe workplaces, and by facilitating

a relatively stable workforce through enhanced rehabilitation and return to work policies.

104. The recommendations made in this report are aimed at strengthening those fundamentalaspects of workers compensation. Because my report is made to the Victorian Government,

through the Minister for Finance, WorkCover and the Transport Accident Commission, it will be

the Government that will decide which recommendations will be implemented and how the

program for implementation should be developed.

105. I have no doubt that the Government, in identifying and implementing its priorities, will continue

to emphasise the fundamental scheme objectives of delivering fair and effective benefit and

premium regimes while maintaining the schemes operational and financial viability. I believe

that my recommendations can provide a basis for strengthening those objectives and ensuring

that the Victorian workers compensation scheme continues its strong performance in delivering

security to workers and employers.

PETER HANKS QC


INTRODUCTION

PAGE 20

10 Charter of Human Rights and Responsibilities Act 2006 (Vic).


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RECOMMENDATIONSUMMARY


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Recommendations for change Reference

Chapter 1 Improving clarity and understanding of the Act paragraph

1 Recast Victorias accident compensation legislation into a comprehensive Act, arranged

logically and expressed in plain language.

1.24

Chapter 2 Workers entitlements to compensation

2 Streamline and consolidate the provisions in the AC Act that determine when persons are

regarded as workers and employers, in order to make the provisions easier to understand.

2.17

3 Simplify the deeming provisions in the AC Act relating to contractors in order to improve

clarity and promote compliance.

2.46

4 Clarify the operation of the provisions in the AC Act relating to outworkers, together with the

deeming provisions, by deeming all outworkers to be workers.

In addition, the VWA should provide better information about the situations where

outworker arrangements will be deemed to create employment relationships, and the

responsibilities of employers in those situations.

2.99-

2.107

2.108

5 Extend scheme coverage under the AC Act to municipal councillors. 2.130

6 Reduce weekly benefits paid to workers injured as a result of driving a motor vehicle

where they are found to have a blood alcohol concentration above 0.05 and below 0.24,

aligning the AC Act with the relevant provisions in the TA Act.

2.203

7 Amend section 82(2A) of the AC Act to exclude from compensation psychiatric injuries that

arise from an employers reasonable management actions.

Management actions should be defined to include performance appraisals, disciplinary

action, demotions and counselling of employees.

2.311-2.313

8 Introduce mediation or workplace counselling at the request of any party before the

determination of liability for stress-related and psychiatric claims.

2.322-2.331

Chapter 3 Ensuring timely access to benefits and support

9 Introduce a more flexible approach to injury notification and making a claim, whether by theworker, the employer, a person on the workers behalf or a doctor, including allowing

notification and lodgement to the employer, or directly to the VWA or its agents.

3.183

10 Introduce systems to enable electronic and telephone notification of injury and lodgement

of a claim.

3.184

11 Ensure that claim forms are regarded as valid unless the VWA or employer is unable to identify

adequate information to enable a decision about payment or liability. In addition remove the

distinction between a claim for weekly benefits and a claim for medical and like expenses.

3.163-3.166

12 Implement a system of provisional liability in Victoria, in conjunction with a streamlinedinjury notification process.

Provisional liability should cover both weekly payments, medical and like expenses. A ceiling on the duration and amount of provisional payments should be imposed. Provisional payments should not continue beyond the time when the agent decides whether

to accept the claim (assuming that the payments have not already ceased because theceiling has been reached).

Guidelines should set out the application (and any limitations on the application) ofprovisional liability.

Agents should be able to refuse provisional liability payments in certain circumstances. Eligibility for provisional liability for stress claims and other psychiatric injuries should be

guided by the schemes experience after the introduction of provisional liability. Agents should be authorised to deny provisional payments where there is an increased risk

of fraud or likelihood of a claim being denied. Where a claim is denied and fraud is established, any provisional payments should be

recoverable from the worker (either as a debt or from accrued leave). Where a claim is ultimately denied, the employer should be able to deduct the amount of

weekly benefits paid from the workers accrued sick leave entitlements. The cost of provisional liability payments on accepted claims should be treated in the same

way as any other cost on a claim: the cost should count toward the employers premium.

The cost of provisional payments on claims that are subsequently rejected or closed beforeliability is determined should count towards the employers premium but should not betaken into account in assigning estimates of the future costs of claims.

The period for determining liability should be extended to promote better initial decision-making.

3.128-3.150


RECOMMENDATION SUMMARY

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Chapter 3 Ensuring timely access to benefits and support continued

13 Allow VWA and self-insurers to access the necessary medical information relating to a

claimed injury, without requiring the consent of the worker.

3.196

14 Amend the additional liability provision (section 108(4) of the AC Act) for late lodgement

of claims by employers so as to calculate the penalty by reference to the period between

the date when the claim was forwarded to the employer and the date when the claim was

received by the VWA or the agent.

3.211

15 Remove the current offence of refusal to receive a claim for compensation in section

242(3)(a) of the AC Act.

Include an express requirement for service of the claim on an employer (either personally or

by post or electronically).

3.204

16 Provide greater protection for workers who experience discrimination for making or

pursuing compensation claims by amending section 242(3) of the AC Act to ensure that: a wider range of detrimental conduct, falling short of dismissal (such as demotion,

transfer or reduction in hours) is punishable consistent with OHS, Equal Opportunity and

Long Service Leave Acts;

prospective employees are protected in addition to current employees and other deemed

workers;

an offence is committed by an employer where the proscribed reason was the

dominantreason for the discriminatory conduct, aligning the test for liability with the

test under the OHS Act;

where the prosecution has proved all the facts constituting an offence under section

242(3), other than the reason for the alleged discriminatory conduct, the onus of proof

should shift to the defendant to prove that the dominant reason for the conduct was not

a proscribed reason, further aligning the test for liability with the test under the OHS Act;

the maximum financial penalty for an offence under section 242(3) is equivalent to the

financial penalty for the comparable offence under the OHS Act, but should not bepunishable by imprisonment; and

orders for reinstatement and compensation and, in the case of prospective employees,

orders requiring employment should be available to the Court when sentencing for a

discrimination offence.

3.241-

3.248

17 Include a provision in the AC Act, along the lines of section 131 of the OHS Act, allowing a

worker to request that the VWA bring a prosecution for an alleged offence in relation to

dismissal or discrimination for pursuing a compensation claim.

3.250

18 Amend the EO Act to ensure that workers who suffer discrimination arising from making or

pursuing a workers compensation claim can make complaints to the Equal Opportunity and

Human Rights Commission as the first step in seeking redress.

3.252

Chapter 4 Supporting workers to get back to work after injury

19 The AC Act should include a set of principles that apply to return to work. The principleswould help guide employers, injured workers and other stakeholders in interpreting the

legislative requirements, and foster the type of relationship between the various parties that

is essential to a successful return to work process.

4.71-4.72



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Chapter 4 Supporting workers to get back to work after injury continued

27 The sanction for workers who fail to make reasonable efforts to participate in the return

to work process should initially involve suspension of weekly benefits, with termination

to follow if the failure is not remedied within 28 days.

4.260-4.261

28 The powers of the return to work inspectorate should be expanded and the inspectorate

should be provided with appropriate tools to monitor and encourage compliance with the

AC Act. In particular, inspectors should be authorised to direct employers to remedy

contraventions on the spot, rather than having to rely on voluntary compliance or the

threat of prosecution.

4.288

29 The return to work inspectorate should be substantially expanded to a level where the

inspectorate can conduct a credible workplace intervention program.

4.310

30 Consideration should be given to whether the two inspectorates (OHS and return to work)

should continue to operate as separate entities.

4.313

31 The processes for review of decisions made by the OHS and return to work inspectorates

should be the same, to ensure consistency and improve transparency and accountability.

The AC Act should identify which decisions are reviewable and which parties are entitled to

request a review of each decision.

4.308-4.309

32 The VWA should retain the exclusive right to prosecute parties for breaches of the AC Act.

However, the AC Act should be amended to allow any person to seek a review of the VWAs

decision not to prosecute an offence, consistent with section 131 of the OHS Act.

4.327

33 The AC Act and the OHS Act should be amended to extend the role of Health and Safety

Representatives, so that they can also represent workers in the return to work process.

A Health and Safety Representative should be permitted to act as a workers representative

only where the worker consents to that representation.

4.339-4.353

34 A similar framework to the OHS Act should be adopted for resolving issues arising in the

workplace about return to work. The framework should allow for issues to be resolved

using an agreed workplace procedure or, if no such procedure has been agreed, a

prescribed procedure set out in the AC regulations.

4.409

35 The time within which a worker must choose an occupational rehabilitation provider from a

list provided by the employer or agent should be reduced from 14 to seven days.

4.365

36 Additional guidance material should be developed so as to assist and support healthcare

professionals in their treatment of injured workers.

4.386

37 The VWA should pay treating practitioners for their time in facilitating return to work, incuding

by telephone consultations between a healthcare professional and the agent or employer.

4.389

38 Repeal section 113 of the AC Act which allows employers to direct workers to a

health professional selected by the employer to provide a certificate where capacity for

work is in dispute.

4.397

39 The VWA should promote the advantages of the JSA and WISE programs to

employers and workers and proactively identify eligible workers to promote access to these

programs.

4.440-4.445

Chapter 5 Better income replacement

40 The Government should commission a further review of the method of calculating

pre-injury average weekly earnings (PIAWE) with a view to incorporating changes and

trends in current remuneration arrangements.

5.46-

5.52

41 Increase weekly benefits from 75% of PIAWE to 80%, after the first 13 weeks. 5.81

42 Require the VWA to pay superannuation contributions for injured workers receiving weekly

benefits after 52 weeks, for as long as the worker is eligible to receive weekly benefits with

the contributions being made directly to the workers chosen fund rather than reimbursing

the employer for making superannuation payments. Payments should be based on the

superannuation guarantee percentage (currently 9%) of the workers weekly benefit.

5.181-5.193

43 Clarify that annual leave and long service leave can be taken in addition to weekly benefits. 5.130


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Chapter 5 Better income replacement continued

44 Remove the notional earnings provisions of the AC Act which give agents a broad

discretion to reduce or cease weekly benefits.

5.151-5.154

45 Consistent with the approach taken in NSW and Queensland, agents should be able to

adopt a staged approach to motivating a worker to comply with the workers return to

work obligations:

A worker should be given notice of the intention to cease or reduce payments unless the

worker complies within a specified period with her or his return to work and rehabilitation

obligations.

If the worker continues to fail to comply with her or his obligations, payments should be

able to be suspended or reduced for a further period (of up to 28 days), during which time

payments will be reinstated if the worker complies with her or his obligations.

If the worker continues to fail to comply with her or his obligations following the

suspension period, the agent or self-insurer should be able to cease payments with a

discretion to reinstate payments where the worker subsequently complies.

Under the proposal, payments during the suspended period will be forfeited and will count

towards the calculation of entitlement periods.

Workers should have the right to seek a review of any suspension or termination decision or

any refusal to reinstate payments.

Repeal the provisions, making it a criminal offence for a worker to fail to attend an interview

to discuss employment opportunities or to fail to notify the VWA or a self-insurer that they

have returned to work whilst in receipt of benefits.

5.159-5.165

46 Subject to appropriate limits, provide weekly benefits to workers who have returned to

work, but who must take time off work for surgical treatment for a work-related injury, after

the expiry of the 130 week entitlement period.

5.114-5.115

47 Allow for payment of weekly benefits between the date of settlement of a common law

claim and receipt of the settlement payment by the worker.

5.119

48 In relation to the payment of weekly benefits after 130 weeks for workers who have a partial

capacity to work, and who have returned to work (section 93CD), amend the AC Act to:

clarify that benefits can be accessed at any time when the worker returns to work;

ensure that, where a worker is receiving the benefit and the workers employment is

withdrawn, the worker is given 13 weeks notice of termination of the benefit;

clarify that temporary fluctuations in capacity or the availability of work do not affect the

workers entitlement; and

reduce the time within which the VWA must decide whether to accept or reject such a

claim from 90 days to 28 days.

5.103-5.105

49 Section 96 (which provides that a worker is not entitled to receive weekly benefits in

conjunction with certain other income benefits) should be amended to ensure that:

workers may access additional insured benefits for loss of earnings or disability up to

100% of their pre-injury actual earnings;

if workers access additional insured benefits for loss of earnings or disability beyond

100% of their pre-injury actual earnings, the VWA may offset the excess against the

workers weekly benefits;

the scope of section 96 should be broadened to include all disability pensions, including

pensions paid out of income protection insurance, irrespective of whether they are related

to the injury employment;

offsets are not to apply where a worker accesses superannuation savings in the form of a

pension or a lump sum payment; and

offsets are not to apply where a worker receives a redundancy, severance or termination

package.

5.216


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Chapter 6 Treatment expenses

50 The timeframe for determining liability on claims for medical and like expenses should be

fixed in line with the time for determining weekly benefits claims (28 days).

6.37

51 Prescribe that 28 days notice be provided to a worker when terminating a medical and like

expenses claim.

6.44

52 Provide consistent information (in the form of guidelines) on the determination of

reasonable costs and make the information easily available to all parties.

6.54-

6.55

53 Introduce a discretionary power permitting the VWA to require prior approval for some

medical and like expenses.

6.67-

6.74

54 An independent review of medical and non-medical fees payable by the VWA should be

conducted as soon as possible.

The review should include consideration of the provision of appropriate financial incentivesfor service providers to treat injured workers and support return to work.

6.93-

6.94

55 The provisions in the AC Act relating to co-ordinated care plans (section 99AAA) are

redundant and should be repealed.

6.144

56 In line with the TA Act, the AC Act should be amended to authorise the Governor in Council

to fix limits on the contributions payable by the worker for the cost of supported

accommodation.

6.155

57 The provisions in the AC Act for referring health care providers to their professional bodies

where there are concerns about their behaviour should be maintained. However, the

sanctions available to the VWA should be strengthened. In particular, the VWA should have

the power to suspend future payments to service providers who are found to have engaged

in unprofessional conduct.

6.185-6.187

Chapter 7 Lump sum benefits for significantly injured workers

58 Increase the maximum benefit awarded for a permanent injury under the impairment

benefit regime to the equivalent of the maximum common law damages payable for pain

and suffering that is, from $396,690 to $484,830, to be indexed annually.

7.59

59 Workers assessed at 81% WPI or greater should be awarded an impairment benefit equal

to the maximum amount of common law damages paid for pain and suffering that is

$484,830. The amount paid to workers assessed between 71% WPI and 80% WPI should

be increased proportionately.

7.59

60 The 2003 amendments relating to WPI of the spine, upper extremity, lower extremity and

the pelvis should remain as a permanent adjustment to the method of assessing

musculoskeletal injuries for the purpose of calculating impairment benefits.

7.70

61 Increase by 10%, the impairment benefit awarded to an injured worker with a spinal injury. 7.82-7.85

62 Increase the impairment benefit awarded for a 30% psychiatric impairment to the level

of impairment benefit awarded for a 30% physical impairment. Similar adjustmentsshould be made to the payments for psychiatric impairments assessed between

31% and 70% WPI.

7.103

63 The VWA should initiate a review of the method of assessing permanent impairment,

with all relevant stakeholders across the Victorian compensation schemes participating

in the review.

7.124

64 Impairment benefits should be calculated at the date of the determination of a claim rather

than at the date of injury, bringing the calculation into line with the current practice of the TAC.

7.132

65 Introduce consistent terminology for hearing loss claims and injuries, simplify and

rationalise the provisions relating to hearing loss injuries.

7.142

66 Define the date of injury for gradual process injuries as:

the last day of the workers employment out of which, or in the course of which, the

injury arose, or the date of the claim (if the worker is still employed in that employment at the date of the

claim).

7.168


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Chapter 7 Lump sum benefits for significantly injured workers continued

67 The VWA should use the provision in the AC Act that allows it to initiate impairment

benefit claims on behalf of injured workers.

7.238

68 The VWA should consider the feasibility of introducing a one-stop shop for the

management of impairment benefits. The one-stop shop could be structured in a manner

similar to the Medical Panels, so that there would be a central location where all impairment

benefit claims could be processed and where all independent medical assessments could

occur.

7.270-7.273

Chapter 8 Access to justice for seriously injured workers: common law

69 Lower the common law deeming test to 20% whole person impairment ( WPI) for physical

injuries only.

8.93

70 Once the assessment of permanent impairment has been reviewed (see recommendation

62), with the percentages of impairment produced by that assessment reflecting more

accurately the level of impairment suffered by injured workers, a further analysis of the

relevant deeming threshold for all injuries should be undertaken. If that analysis shows that

the new impairment assessment tool can fairly and accurately identify the seriously injured,

it might be possible to abandon the narrative test and rely on a measure of impairment as

the sole gateway to common law damages (after further consultation and consideration of

the effectiveness of the new assessment tool). Even if the narrative test is not abandoned, a

more accurate impairment assessment tool should enable the majority of seriously injured

workers to access common law through the deeming test, rather than the narrative test, as

was intended when the two tests were introduced.

8.134-8.135

71 Amending section 134AB(28) of the AC Act so that all weekly payments received after

the workers statutory counter-offer during the section 134AB(12) process are disregarded

when comparing the judgment, settlement or compromise with the workers statutory

counter-offer.

8.184

72 Allow a serious injury application to continue where a worker dies before the application is

heard by providing that, where the claimant dies before the determination of significant

injury from a cause unrelated to the injury to which the claim relates, the Court may make

a determination of serious injury.

8.192

73 Where a worker lodges a serious injury application, the worker should be taken to have

given authority for the VWA to request and obtain relevant medical information.

The AC Act should include a framework that:

sets clear parameters for the type of information that can be requested and the extent

of the authority;

provides a mechanism for dealing with disputes that may arise about the provision of

information in an efficient and effective manner, bearing in mind the relevant timeframes; enables the serious injury decision-making timeframe to be extended by a further (say)

30 days in the event that vital information has not yet been provided; and

ensures appropriate and proportionate methods of dealing with non-compliance with the

authority by healthcare providers.

The current legal costs order will also need to be amended as all workers would be required

to provide a medical information authority and thus no financial incentive or sanction need

be included in the costs order.

8.214-8.215

74 Amend the AC Act to clarify section 134AB(21). The sub-section should make it clear that,

where an application for serious injury has been denied or accepted, or has resulted in a

determination of serious injury (including a deemed determination), or has otherwise been

resolved, a worker may not make a further application for the same cause of action.

8.232

75 A review of legal costs in work-related injury litigation is recommended in order to

determine the impact of the 20% scale cost reduction on injured workers and whether theabolition of the scale cost reduction supported by legal groups is justifiable.

8.252-8.253


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Chapter 10 Transparency in decision-making and the efficient resolution of disputes continued

The review unit (or self-insurer) will not have the power to substitute a new decision but, atthe conclusion of the review, the review unit (or self-insurer) will report the outcome to theACCS, with a brief statement of reasons, as one of the following alternatives: the original decision is confirmed because, on the material before the original

decision-maker and having regard to the legislation and the VWAs (or self-insurers)policies, the decision was the correct or preferable decision;

the original decision is not confirmed because the material before the originaldecision-maker is insufficient to enable any decision to be made, having regard to thelegislation and the VWAs (or self-insurers) policies;

the original decision is not confirmed because, on the material before the originaldecision-maker and having regard to the legislation and the VWAs policies, the decisionwas not the correct or preferable decision.

Where the review unit (or self-insurer) finds that the material before the original decision-makeris insufficient to enable any decision to be made (the second alternative), the review unit(or self-insurer) will be required as part of its reasons, to specify any additional informationconsidered necessary to resolve the dispute, including the opinion of a Medical Panel.

86 The review units conclusion and the statement of its reasons should be provided to the

injured worker, the employer, the VWA and its agent. The self-insurers conclusion and the

statement of its reasons should be provided to the injured worker.

10.166

87 Ministerial guidelines should be developed, which set out the procedures to be followed on

internal review, and those guidelines will assist self-insurers to perform their equivalent

review function.

10.167

88 The AC Act internal review unit should be operationally separate from the VWA and report

directly to the CEO.

10.171

89 Require the ACCS to notify the parties of the outcome of internal review within seven days,

together with information setting out the next steps for the injured worker.

10.179-

10.180

90 Require workers to request continuation of the conciliation process within 14 days

of that notification (although an extension of time should be possible in

exceptional circumstances).

10.181

91 Require the conciliation officer to request within seven days that the parties produce

specified information necessary for conciliation to proceed.

10.182

92 Remove the prohibition on a party, who refuses or fails to produce any document or

provide any information requested by the conciliation officer, from tendering the document

or information as evidence in any proceedings that relate to the dispute before the ACCS

section 56 (9A) of the AC Act.

10.186

93 Require an outcome certificate be provided by ACCS within seven days of conclusion of

the conciliation conference, with the certificate setting out any terms on which the dispute

was resolved and certifying that the parties acknowledge their intention to be bound by theresult. The AC Act should provide that the certificate be treated as conclusive.

10.188

and

10.209

94 Where matters remain unresolved, require the outcome certificate to set out any bases for

agreement and identify the issues that remain in dispute and that require determination.

10.210

95 Remove the powers of conciliation officers to make directions. 10.205

96 Clarify that parties may not be represented at conciliation by a person who

is a legal practitioner; or

holds a tertiary degree in law or legal studies; or

is otherwise eligible to be admitted to practice;

unless the conciliation officer and each party to the dispute agree.

10.230

97 Provide for reimbursement of reasonable costs incurred by workers for attending

conciliation, limited to reasonable travel expenses and related time lost from work.

10.242

98 Require the VWA and self-insurers to pay the reasonable costs of medical reports

obtained and used for the purposes of conciliation where the medical reports have been

obtained both with the consent of the worker and at the request of the conciliation officer.

10.248-

10.249


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Chapter 10 Transparency in decision-making and the efficient resolution of disputes continued

99 Revise the ACCSs governance structure, including the establishment of a Board to give

general directions to the ACCS and monitor its performance.

10.257

100 Confer increased powers on the Senior Conciliation Officer to ensure that:

conciliations are conducted expeditiously and consistently;

conciliation officers comply with appropriate protocols; and

transparency and accountability measures are introduced.

10.260

101 Clarify the power of a Medical Panel to return a medical question to the referring body

where the referral is unclear or otherwise inadequate. That power should be in addition to

the Panels power to return questions that relate to non-medical matters.

10.302

102 Amend the definition of medical question to address anomalies identified by stakeholdersso as to provide greater clarity and certainty about the matters which may properly be the

subject of a referral to a Medical Panel.

10.303

103 Provide rights of assistance to persons with a disability (including minors) when attending a

Medical Panel, similar to those contained in sections 26LZD(2) and (3) of the Wrongs Act 1958.

10.305

104 Provide the Courts with discretion to refuse to refer medical questions to Medical Panels

where the proposed question involves non-medical matters, and where the referral would

not be in the interests of the proper administration of justice.

10.316

105 Place a time limit on referral by the Courts of medical questions to Medical Panels, with a

power to refer after that time limit where exceptional circumstances exist.

10.318

106 Require Medical Panels to provide written reasons together with their opinions on a medical

question.

10.323

107 Ensure that the Ombudsman has effective oversight of the Medical Panels Convenors

administrative functions.

10.335

108 Repeal the current restriction in section 63(4) of the AC Act on the permitted number of

Medical Panel members.

10.344

109 Remove the restrictions on the jurisdiction of the Magistrates Court with respect to

disputes over statutory benefits.

10.348

110 Establish an exception to the mandatory requirement for conciliation before proceedings

are issued. Subject to the views of the Court, and an appropriate Court order, parties to the

dispute should be permitted to amend their pleadings to ensure that all outstanding issues

between the parties are brought before the Court in a timely manner.

10.355

111 Employers should have limited rights to seek internal review of decisions. In particular, they

should have the opportunity to seek review of initial decisions to accept liability for a claim.The form of internal review for employers should be more extensive than the internal review

contemplated for worker disputes, given the limited impact of any decision made on

internal review and the fact that the employer would not be able to take the matter to the

ACCS or to the Magistrates Court.

10.367-

10.368

112 The review unit should report its conclusion to the employer and to the VWA, which in

turn would be required to apply a conclusion that the agent decision was not confirmed

in the calculation of the employers premium.

10.371

113 The outcome of employer applications for review must be limited to premium impacts, and

not affect benefits already granted to a worker.

10.372

114 Given that the outcome of employer applications for review would be limited to premium

impacts where the agents decision is not confirmed, an employers and workers return

to work obligations should continue to apply.

10.373

115 Employers should be given the right to request, from their agents, written reasons for

decisions, particularly in relation to initial liability, as well as at appropriate points throughout

the life of a claim.

10.374


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116 The VWA should improve its information and advice to employers regarding Statistical Case

Estimates (SCEs) by:

ensuring that claim statements disclose the timing of information used in determining the

SCEs for individual claims; and

including all estimates of future costs against individual claims, rather than grouping the

estimates in one combined amount at the end of the statement (unless the grouped

amounts are small).

Improved information should be supported by:

including information with the premium statement that explains the key drivers of SCEs

(safety, speedy return to work, and staying at work) and tells employers what they can

do to reduce their premiums and where they can get more information;

providing more detailed and up-to-date information on the VWA website about how

premiums are set, what drives SCEs and how employers can reduce their premiums; and making the premium simulator available to employers on the VWA website

whenever possible.

11.53-11.54

117 Only new claims received to the end of December should be included in the calculation

of premium for the following financial year.

11.59

118 Employers should have the right to seek a review of their SCEs. However, that right should

be limited to data errors that lead to erroneous estimates.

11.60-11.66

119 Amend the contractor provisions so that only the deemed employer would declare rateable

remuneration for the deemed worker. The deemed worker would be entitled to make an

injury claim only against the deemed employers WorkCover insurance policy.

11.126

120 The scheme should provide employers with the option of a higher excess of $1,000 for

medical expenses and $15,000 for weekly payments, equivalent to around 16 weeks of

salary.

11.135-

11.139

121 Alignment of the definitions of remuneration for workers compensation and for payroll tax

within Victoria should commence. Alignment of the definitions of remuneration for the

workers compensation schemes in Victoria and NSW should also commence, with a long

term objective of aligning the definition across all Australian jurisdictions.

11.174

122 There should be transparent and robust mechanisms for review of premium decisions made

by the VWA with:

a formal internal VWA premium review process, which aims to provide a non-adversarial

system for the prompt and low-cost resolution of premium disputes; and

a codified premium dispute resolution system which allows employers recourse to

independent review (for example, VCAT, the Magistrates Court or the Supreme Court),

based on the model for Victorian State taxes.

The dispute resolution system should include:

the right of an employer to object to a premium notice (including an adjusted premium)within a prescribed time period;

the requirement for the VWA to determine an employers objection within a prescribed

time period (for example 60 or 90 days);

the requirement for the VWA to provide written reasons for its decision so as to ensure

transparency; the reasons would be provided through a formal premium review process

by a VWA internal review unit with parameters codified in legislation; and

the right of an employer, aggrieved by a decision made by the VWA (or the failure to make

a decision), to seek an independent review within a prescribed time (for example, 60 or 90

days).

11.201-

11.204


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123 The VWA should be obliged to pay interest where a review finds that a lower amount of

premium is payable.

11.214

124 To encourage voluntary disclosure of non-compliance and help reduce the VWAs

administrative burden, include provisions allowing the remission of penalties in cases of

voluntary disclosure in the ACWI Act.

11.223

125 Introduce penalties for employers who enter into premium avoidance schemes and for the

promoters of such schemes.

11.224

126 Introduce a statutory requirement for review of the VWAs premium-setting by an

independent expert body, such as the Essential Services Commissioner.

11.257

127 Amend the ACWI Act to overcome the situation where a trustee would be in breach of the

legislation by holding multiple WorkCover ins

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