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  Issue No 95 Official Organ of LaborNet 11 May 2001  




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View from the Bench

Compensation Court judge and former Attorney-General, Frank Walker, argues the Della Bosca workers comp reforms are a threat to judicial independence.


Judicial Officers are fond of disclaimers when addressing public forums. Given the public controversy currently raging about the Carr Government's proposal to reform both the workers compensation legislation and common law claims for industrial accidents, prudence demands that I should make my position very clear about the opinions I am about to express.

Firstly I want to emphasise that, except where questions of the independence of the judiciary are concerned, it is not the business of judges to be expressing opinions about the merits of Government policy. It is the function of Government to develop and enact laws that control our workers compensation schemes and modify the common law regarding actions against negligent employers. It would, in my view, be inappropriate for a member of the judiciary to enter the political arena in a partisan manner to debate the policy issues underlying the present debate.

The role of the judiciary is to interpret and apply the laws Parliament enacts, as well as to develop the common law.

I propose, therefore, to restrict my comments to an expression of views upon the nature and effect of the Bill before Parliament, aspects of it that touch upon judicial independence, and the effect the proposed scheme might have on compensation litigation as we now know it.

My second disclaimer concerns the views I am about to express that might go to the interpretation of the Bill.

Since becoming a judge I have had the privilege, along with fellow judges, of reading and writing learned papers interpreting new amendments to workers compensation law. I refer in particular to papers on ss9A, 11A and 52A I believe it is true to say that while all the papers were learned and full of insight few of them gave precisely the same interpretation eventually arrived at by the Court of Appeal and the High Court. Indeed, it is not uncommon for the judges who had authored such papers, upon listening to argument and further researching the law, to themselves arrive at a different interpretation of the section when they eventually came to determining a test case.

Nevertheless, it is always necessary to make a start in coming to grips with new laws, and it is useful to test one's opinions against those expressed by fellow legal practitioners.

1 Introduction

On 27 March 2001 the Minister for Industrial Relations, John Della Bosca, introduced into the Legislative Council the Workers Compensation Legislation Amendment Bill. That bill had its second reading on 29 March 2001.

Debate was consequently suspended after the Premier agreed with the NSW Labor Council to delay its passage to 29 May, while negotiations were held.

It is fair to observe that the Bill has created uproar in the trade union movement and the medical and legal professions. Widespread industrial action is currently underway and worse threatened. It has been very well received by most Chambers of Commerce and Employers Association. The Opposition continues to keep its powder dry.

2. The Policy

The Evidence Act permits our courts, in interpreting statutes, to take a purposive approach, and refer to Parliamentary Debates and other material - such as White Papers - to assist them understand the intention of the legislature.

Mr Della Bosca in his speeches to the Parliament, and in his white paper entitled "Simpler Fairer Faster - a better approach to Workers Compensation in NSW", explained that the amendments were necessary because the WorkCover Scheme had "blown out" by some $2.2 billion over the past six months.

He identified three major causes of the "blow out", viz

1. Lodgement of common law claims had increased by 30 per cent, adding $360 million;

2. The current economic downturn had reduced WorkCover's investments returns by a further $120 million;

3. Employers failure to pay their premiums had caused the fund to haemorrhage by another $20 million.

None of these financial problems appear to have much to do with workers compensation, but Mr Della Bosca explained that the reforms were also necessary for the following reasons:

1. NSW has a much higher rate of defended workers compensation claims than the rest of Australia.

2. Workers compensation claims in NSW are being managed badly by the insurers employed by WorkCover. In addition to the high incidence of defended claims, there is poor co-ordination between claims managers and rehabilitation services leading to workers staying off work longer, so adding to the cost of benefits;

3. There is an increased trend in the incidence of serious work injuries, which is having a serious financial impact on the viability of the scheme because such injuries constitute 80 per cent of the total costs of the scheme.

4. The legislation administered by WorkCover is far too complex and is part of the problem contributing to unnecessary disputation;

5. Legal costs are far too high. Mr Della Bosca's opinion is that they constitute 17 per cent of the total costs of the scheme.

3. The Proposed Scheme

This paper will deal only with the broad structure of the scheme. Time does not permit, nor - given the fluidity of the political process - is there much point at this stage, getting involved with the devils in the detail. I will therefore adopt a broad-brush approach to the operational features of the scheme and its potential impact upon my audience and their client.

I also propose to make some remarks about judicial independence.

4. The Big Picture

4.1 The Process of Determination

In a nutshell, the major institutional change is to eliminate judges, to the greatest extent possible, from the process of determination of workers compensation cases and, to a lesser but still significant extent, from common law suits for negligence against employers.

The judges will be replaced by a body called the Claims Assessment Service. That will be comprised of public servants whose functions will be mainly administrative, but also quasi judicial in nature.

Appeals on questions of fact and law are prohibited. Parties denied natural justice will have access to the Supreme or District Courts. The Claims Assessment Service, if it is minded, will have access to judges of the Compensation Court to give advisory opinions on complex questions of law.

For centuries, the British legal system, with its adherence to the rule of law and the doctrine of separation of powers, has protected our citizen's rights by entrusting the process of their determination to an independent judiciary. That independence is protected by our Constitution and the doctrine of separation of powers from abuse by the executive arm of Government. It is not as if the rights I am discussing today can be said to be trivial or naturally susceptible to bureaucratic administrative processes. As Mr Della Bosca pointed out to the Parliament, 80 per cent of the cost of the scheme the Claims Assessment Service will be dealing with involves very serious injury to workers. We are talking here about brain damage, quadriplegia and paraplegia, mental illness and loss of limbs, eyesight, hearing and sexual function. In the past, many of those claims have been serious enough for legislatures to entrust their common law determination to Supreme Court judges, and the determination of their workers compensation rights to judges of the Compensation Court.

The proposal now is to remove the determination of such rights from the judicial arm of Government and give them to a Director of the Claims Assessment Service, appointed by the Minister for Industrial Relations, pursuant to the provisions of the Public Sector Management Act 1988.

The Director, in turn, will have powers to appoint more public servants to fulfil roles required by the Act. The Director will also have power, if so inclined, to appoint a class of Commissioner who s368 of the Bill asserts "is not a public servant", in that Part 2 of the Public Sector Management Act does not apply. However, the Commissioner will hold office for a three-year term, and his or her salary and conditions are determined by the Minister. I should comment here that the Principal Commissioner and other Commissioners are to be appointed by the Director, and will be public servants.

The Government's primary objective is to control the costs of the scheme. Giving public servants - who are subject to the Executive's direction and control - power over the determination process is obviously going to provide a mechanism whereby the quantum of compensation claims and common law verdicts can be easily contained according to political necessity. Unfortunately, such a process will have little to do with the rule of law.

One only has to look at the recent motor vehicle legislation to see the potential for control. My understanding is that the 10 per cent threshold and cost penalties alone in that legislation have virtually eliminated hearings of cases.

Obviously, the new structure will greatly assist to achieve the Government's purpose. The question I pose is whether it is constitutionally appropriate. For example, there is no doubt that a Government concerned about rising crime rates could achieve close to 100 per cent conviction rate if the DPP were to be stripped of his independence, judges, juries and magistrates removed from administering the Crimes Act and the police left to determine the guilt or innocence of suspects. Some countries have such a system. We, however, pride ourselves in a democratic tradition with checks and balances on unrestrained executive power. The citizens of NSW are entitled to wonder whether the curtailment of the rights of workers injured in industrial accidents will be just the first step in a series of cut-cutting measures that will see a range of other legal rights similarly curtailed and left for determination by public servants.

4.2 The New Boys on the Block

The proposed scheme sees three groups of bureaucrats dealing with the administration of claims:

A. claims conciliators and assessors;

B. medical assessors;

C. commissioners

A. Conciliators and Assessors

The tactical approach in the new Bill (like the motor vehicle scheme) is to avoid hearings. In this respect, the Director and his team of conciliators will have enhanced powers, designed to bring about settlements of claims prior to hearing. I propose to speak about the details of those powers later but they go to restricting the scope of the case that the parties can present to prove or disprove the claim, and imposing a system which, for lack of a better term, I will describe as pre-trial assessment. They subject the parties to the threat of draconian cost penalties if the settlement is refused and a much larger verdict is not secured than that originally assessed.

B. Medical Assessors

A wide range of the functions currently undertaken by judges will be given to medical assessors appointed by the Director.

Section 314 lists the matters that medical assessors will determine as:

� Reasonable necessity for medical treatment (i.e. s60 cases).

� Whether incapacity is the result of the injury. In other words, causation.

� Whether an injury is stable and permanent.

� The percentage loss or impairment.

� Whether a worker is totally or partially incapacitated for work and the degree of any partial incapacity.

� The suitability of the worker for other work.

� Section 68A cases, or the contribution made to any loss or impairment by a pre-existing condition or abnormality.

� Assessments of thresholds.

� The percentage loss of hearing.

� Section 9A: whether employment is a significant contributing factor.

� Any medical question referred by the Director.

The certificates of medical assessors are to provide reasons and are conclusive, subject only to review by the Principal Medical Assessor.

The medical assessors are to be constrained in carrying out these tasks in the following manner:

� They must apply the American AMA Guidelines Fourth Edition (I will comment later on these guidelines.

� In assessing losses and impairments they cannot take into consideration psychological injuries.

� All losses and impairments resulting from the same injury must be assessed as a whole.

� No assessments to be made until the injury has stabilised.

C. Commissioners

Commissioners will be appointed by the Director to determine disputed workers compensation and common law claims.

They will sit informally and the rules of evidence will not apply. They will be restricted in their determination as follows:

� They will be bound by the medical assessors' certificates determining crucial issues such as causation, continuing injuries, the quantums of impairments and loses, pre-existing conditions, thresholds, capacity for work and ability to work.

� They will be restricted in the evidence they are allowed to take into consideration by the amending Bill that Robert Taylor will be discussing later.

� They will be restricted by amendments to s65, 66 and 67 in Sch 3 to the Act, which:

� excludes psychological injuries;

� imposes formulae for entitlements weighted by seriousness of the injury.

Taking a leg injury as an example:

1. If the medical assessor finds a 10 per cent loss then the assessment will be 10 x $750 or $7,500.

2. If the loss is between 10 and 20 per cent, the formulae is $7,500 = [(D - 10) x

$1,500], which would produce, for a 20 per cent loss, $7,500 = [10 x 1,500] or $22,500.

3. If the loss is between 20 and 30 per cent, the formula is $22,500 + [(D - 20) x $2,500] which for 30 per cent loss would produce $47,500.

4. If the loss is between 30 per cent and 66 per cent, the formula is $47,500 + {(D - 30) x $3,500], which for a 60 per cent loss would produce $66,000.

5. Thereafter the maximum of $173,500 applies.

The 10% threshold on s67 claims continues but it is now to be 10 per cent of the whole body, which is a vastly higher threshold.

If the motor vehicle claims record is any indicator, s67 awards will be a rare event.

In common law damages claims, Commissioners will be prohibited from awarding damages for either economic loss or non-economic loss unless the worker's impairment has reached 25 per cent of the whole body (after first reducing any whole of the body losses by pre-existing conditions or abnormalities).

The Commissioner will be bound by the medical assessor's certificate on the issues. Again it is hard to imagine workers obtaining damages unless their injury was of the most serious kind. It is unlikely that there will be any litigated cases for common law damages if the Bill passes because, for the few who manage to attain the threshold, the costs penalties are likely to be too horrific to risk running the case.

4.3 Special Features of Note

There are some aspects of the Bill that are guaranteed to raise the hackles, upon which I should comment.

4.3.1 Discrimination

Psychological injury plays a major role in our present workers compensation and common law schemes. There is a wide range of illnesses where somatized pain has an impact upon lump sum compensation claims, eg:

(a) Post Traumatic Stress Disorder, which is common amongst Police Officers, Ambulance Officers, Bank Tellers, Nurses and Doctors, faced with life threatening situations.

(b) Schizophrenia can be triggered by work trauma. More often it is aggravated by such trauma.

(c ) Organic brain damage syndrome affects motor functions and cognitive functions of workers suffering serious head injuries.

(d) Stress related anxiety and depression affects a wide range of workers.

(e) Pain syndromes are another form of psychological injury that affect workers involved in highly repetitive or heavy work.

Losses and impairments caused by psychological injury will no longer be compensable.

4.3.2 Use of the American AMA Guidelines 4th Edition

I appreciate that the Bill contemplates that WorkCover will eventually develop its own Guidelines, and that Mr Della Bosca has recently stated he intends to "customise" the American Guidelines in any event.

However, the comments I wish to make are still pertinent.

In the first place the American Guidelines were not developed for workers compensation cases, and actually disclaim the validity of their application in that context.

The guidelines developed by American doctors and are a subjective statistical construct that have but passing relevance to assessments under Australian common law, or workers compensation law.

Australian courts have always been reluctant to apply such models, preferring to assess compensation on a case-by-case basis. One of the obvious reasons for this is that they do not take pain into consideration in assessing the impairment. Pain, or fear of pain, can play a major role in the loss of efficiency of a limb or impairment of the spine. Failure to take pain into consideration could well result in greatly reduced assessments.

Mind you, the current workers compensation laws, that require comparison with a most extreme case, present plenty of contentious problems in themselves. For example, some neurosurgeons imagine a most extreme case of brain damages is a baby born without a brain who lives but momentarily. Others believe a most extreme case is a coma victim. Some orthopaedic specialists will not give a 50 per cent loss of efficient use of leg, although all that is left is a small stub, arguing that a prosthesis can be fitted. Some workers are declared legally blind but claim they can see well enough to watch television or drive.

There is no doubt that a home grown set of guidelines is long overdue. It will need to be a lot better than the American version if it is to receive widespread support in Australia, however.

4.3.3 The Thresholds

The new thresholds have caused a great deal of acrimonious debate, particularly in the light of claims that the legislation is fairer and no workers will be worse off. That statement is in the genre of "no child will live in poverty". I say that because the thresholds, which are now to be based on whole of the body assessments, as opposed to the assessment of the particular parts of the body, have lifted the bar much higher.

The requirement that previous injuries and pre-existing conditions are also to be deducted may mean that some very serious injuries might not reach the threshold. For example, a paraplegic with a pre-existing degenerate spinal condition may require a very large deduction to be made under s319 of the new Bill.

5 Costs in Common Law Cases

Section 282 requires that employers against whom a claim for compensation is made must, within one month of the injury stabilising, make a reasonable offer of settlement or dispute liability. Similar provisions apply to common law damages cases, except the offer must remain on the table for two months.

Commissioners will then assess the damages claim but the assessment is not binding. If the assessment is not accepted, the worker has the right to proceed to have the claim heard by a court.

Commissioners are given wide powers to determine costs.

In common law cases where the workers has refused the Commissioner's assessment, costs will only be awarded against the employer if the ultimate verdict exceeds the amount by 20 per cent, or $200,000.

6. Costs in Workers Compensation

If a Commissioner is satisfied that any costs were unreasonably incurred, no order will be made.

Failure to accept a reasonable settlement offer means the costs were not reasonably incurred. Similarly, failure to provide particulars can incur cost penalties.

7. Review of Decisions

No appeals from Commissioners as to fact, or upon questions of law, are to lie to any court.

The only access to courts will be:

(a) In very serious common law injuries, where a Commissioner can refer the case directly to a court for hearing;

(b) In common law cases after the Commissioner's assessment has been made;

(c) To either the Supreme or District Court where a breach of natural justice has occurred.

There is no appeal from medical assessments, but if the Principal Medical Officer is so disposed, a "peer group review" of the assessment can be ordered.

8. Commutations

Commutations will no longer be subjected to judicial approval and will now proceed by a system of registration of agreements. The Director can refuse to register an agreement if he believes the worker did not receive proper legal advice. However, if the Director is concerned about an agreement, he can have it reviewed by a Commissioner.

9. What does all this mean for the Legal Profession?

One of the purposes of the Bill is to reduce legal costs. I have not gone into the Commissioner's powers to control costs at any length, sweeping though they may be. The principal problem for the profession with the Bill is, of course, the limited work it will generate. A greatly reduced number of litigated cases means greatly reduced costs.

So far as common law is concerned, given the 25 per cent whole of the body threshold, it is reasonable to predict that litigated common law industrial accident cases will be rarer than litigated motor vehicle cases - perhaps rarer than hens' teeth.

Even the gung-ho litigation lawyer will think three times about questioning a Commissioner's assessment, given the horrendous cost penalties. Obviously, the administrative work for solicitors in putting a case together for assessment will still produce an income and Mr Della Bosca talks in his speech about a legal aid scheme.

The role of barristers would appear to be close to extinct, being limited to cases deemed by Commissioners to be very serious, or those run by intrepid lawyers prepared to lose all.

So far as workers compensation is concerned, it is hard to find many issues that will need to be heard by a Commissioner.

My experience is that most cases for lump sum compensation are litigated about:

� quantum of s66 assessments, including applications under s22 and s68A;

� causation;

� injury

All those questions will be decided by medical assessors and will not be open to litigation.

Occasionally the Compensation Court litigates "worker", "employment", or "journey", and those determinations will fall to the Commissioner.

Similarly, the occasional familial dispute about apportionment of death claims will need to be determined by a Commissioner.

When it comes to weekly benefits, the key issues of continuing injury, capacity to work, and ability to earn are now to be decided by medical assessors.

The Commissioner's role will be confined to determining disputes about comparable employees, availability of overtime, and the exercise of discretion to reduce make-up pay.

Again there will be plenty of office work for solicitors, but the role of barristers will be greatly reduced.

Having said all that, it also needs to be said that the indicators are that the Bill is unlikely to proceed through the Parliament in its current form. We will await the outcome with interest.

This speech was presented at a Continuing Legal education Conference in Sydney this week


*   View entire issue - print all of the articles!

*   Issue 95 contents

In this issue
*  Interview: Geek Guys
Two of the union movement�s pioneers in new technology, Peter Ross and Mark McGrath, chew the fat about wired unionism and virtual politics.
*  Compo: Costa�s Angels
Behind the spotlight of the workers comp campaign four women trade union officials have been burning the midnight oil to protect injured workers.
*  Legal: View from the Bench
Compensation Court judge and former Attorney-General, Frank Walker, argues the Della Bosca workers comp reforms are a threat to judicial independence.
*  International: Timor: Time for the Truth
HT Lee was in Dili when the militas ran rampage. Now he wants the truth to come out.
*  History: True Believers
Frank Bongiorno looks at the origins of the Australian Labor Party, which celebrated its centenary of Caucus this week.
*  Corporate: Trust Me, I�m a Multi-National!
BHP unions have united across the factions to urge �No� vote on the planned Billiton merger.
*  Unions: AWAs � A Doomed Future?
ACTU Assistant Secretary Richard Marles plays clairvoyant and predicts a dismal future for AWAs.
*  Satire: Bush Defends One China Policy - Then Another China Policy, Then Another ....
President Bush today announced a major change to the United States� policy of �strategic ambiguity� towards the status of Taiwan and its One China policy.
*  Review: Surviving Survivor
Workers Online's Reality TV correspondent Mark Morey rakes over the coals of the Survivor II result.

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