Which case won?

The case for the insurance company
  • Before we ceased payments to the worker, we requested that he attend a medical appointment with one of our specialist doctors to enable us to determine whether he would be entitled to weekly payments after the 260-week period expired. Our doctor assessed the worker’s degree of permanent impairment resulting from the injury at 5%. This is well below the 20% threshold that would have entitled the worker to ongoing payments.
  • After the weekly payments stopped, the worker applied to the Workers Compensation Commission for referral for assessment by an approved medical specialist. When that specialist issued a medical assessment certificate on 16 July 2018 certifying satisfaction of the 20% threshold, we immediately resumed weekly payments from that date.
  • This is all we were required to do, as there is no entitlement to back pay under section 39. Rather, after an aggregate period of 260 weeks, a worker loses the entitlement to weekly compensation payments, and has no entitlement to payments until, and from, the day they regain entitlement by demonstrating via an assessment that they meet the 20% threshold. Here that was on 16 July.
  • The legislation is intended to work this way to align with the government’s objective of reducing the costs of the workers compensation scheme.
  • It also provides greater certainty of operation, in that both the worker and the insurer have a “bright line” identifying when the entitlement to weekly benefits exists and when it does not exist.
  • We are not required to pay the worker for the six month period from 26 December 2017 to 15 July 2018, and the court must reject the worker’s claim for back payment.
The case for the worker
  • A permanent injury is a permanent injury, regardless of when it is officially assessed or certified. My permanent injury didn’t magically go away after 260 weeks and then reappear after being certified on 16 July 2018.
  • Contrary to the insurance company’s assertion that my entitlement to compensation flows from the date of the medical assessment, a proper construction of section 39 dictates that compensation flows from the event of my injury.
  • This interpretation of section 39 is consistent with the government’s objective of preserving benefits, until retirement age, for seriously injured workers.
  • Therefore, the court must order the insurance company to pay me for the period from 26 December 2017 to 15 July 2018.

So, which case won?

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Expert commentary on the court's decision

Digby Dunn
Digby DunnDirector
“The Court of Appeal determined that the 260-week limit never applies to a worker whose degree of permanent impairment resulting from the relevant injury exceeds 20%, regardless of when that threshold is crossed, and regardless of whether or when it is formally assessed as having been crossed.”
Court rules in favour of worker

In Hochbaum v RSM Building Services Pty Ltd; Whitton v Technical and Further Education Commission t/as TAFE NSW [2020] NSWCA 113, the NSW Court of Appeal, Supreme Court ruled in favour of the worker, Mr Hochbaum.

The court ordered the insurance company of the employer, RSM Building Services, to pay Mr Hochbaum compensation for the period from 26 December 2017 to the date on which weekly payments resumed in July 2018.

Because of the important issues involved in this case and the far-reaching consequences for many aspects of workers compensation claims which arise from conflicting interpretations of the law, the Court of Appeal considered the legal principles in detail.

Liability for permanent impairment dates from injury, so worker cannot lose then regain right to compensation

Section 39(3) says that for the purposes of section 39, the degree of permanent impairment that results from an injury is to be assessed as provided by specifically enumerated legislative provisions.

Injury and impairment are different concepts.

Mr Hochbaum was injured at work in 2000. As a result of that injury, he was left with a significant impairment, which got worse in 2012.

It commonly takes time for the extent of permanent impairment to be known, often delayed by surgery, complications, slow recovery or “not wanting to make a fuss”.

There is a consistent line of case law dating back more than 90 years establishing that the right to compensation arises from the injury, even though it may take some time to work out how much compensation must be paid.

The Court of Appeal confirmed this interpretation of the law, saying, “It is the injury, rather than the impairment, that attracts [the exemption from the five year cut off] … Liability for permanent impairment dates from the injury, regardless of when it is ascertained.”

Therefore, as long as the resulting impairment satisfies the 20% threshold, the timing of the assessment is irrelevant.

Accordingly, the court rejected the insurance company’s argument that under section 39 a worker can lose, but then regain the right to weekly compensation.

Assessment not mandatory for exemption from 260-week limit to apply

The court rejected the insurance company’s argument that section 39(3) requires that a formal assessment culminating in a medical assessment certificate must occur before a worker is exempted from the 260-week limit in section 39(1).

Rather, an official assessment and certification under section 39(3) is not mandatory. Nor is it a precondition to the exemption under section 39(2).

Official assessment is merely a methodology and process for measuring impairment if there is a dispute about whether a worker is within the exempt class under section 39(2).

On this construction, the 260-week limit in section 39(1) never applies to a worker whose degree of permanent impairment resulting from the relevant injury exceeds 20%, and the worker is protected against having their weekly compensation payments cut off after five years.

No windfall if worker belatedly determined to have impairment in excess of 20%

The Court of Appeal also noted that “there is no ‘windfall’ for a worker” who is belatedly determined to have an impairment in excess of 20%.

This is because entitlement to weekly payments under workers compensation, including after the 260-week limit, are always subject to the work capacity test.

In other words, the worker still needs to show that the injury reduces their capacity to earn a living.

Incentive removed for insurance companies to delay assessments

In an article I wrote in 2019, I noted that the President of the Worker’s Compensation Commission’s decision in this case gave priority to protecting insurance companies against the potential uncertainty of when they might be required to make substantial back payments.

The President’s ruling gave a strong incentive to insurers to delay the assessment process, since they would not be required to make back payments in relation to the delay.

The result was to ignore the much more significant impact upon injured workers of being forced to wait months for payment, without any prospect of ever being paid for the period of the delay.

The Court of Appeal’s decision fixes this problem. Insurance companies once again have a real incentive not to allow unknown back payments to accumulate.

They will instead be motivated to take the initiative to reach agreement with workers about the extent of permanent impairments, particularly where the injuries are serious.

NOTICE: This article is accurate as at the time of publication and does not constitute legal advice. Please see our legal notices page for more information. Information related to coronavirus can be outdated very quickly.

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