An Insurer Makes a Worker’s Permanent Impairment Compensation Claim?

In Eaton v Kerry Ingredients Australia Pty Limited t/as Kerry Ingredients [2015] NSWWCC 21 Arbitrator Edwards considered whether a proactive offer for s.66 compensation by an insurer (i.e. one based on an assessment obtained by the insurer without the worker having yet made any formal claim) constituted a “claim” for permanent impairment compensation (PIC).

The facts were that the insurer made an offer in respect of a 3% WPI resulting from injury to the right shoulder as assessed by it’s IME on 17 October 2011. On 11 April 2014, being after the expiry of the time for which the insurer’s offer was stated to be open, the worker made a claim for a 14% WPI resulting from injury to the right shoulder, the cervical spine and in respect of scarring.

At issue was whether a claim for PIC had been made prior to 19 June 2012, thereby exempting the worker from the effects of the 2012 amendments applying the decision in Caulfield v Whelan Kartaway Pty Limited [2014] NSWWCC PD 34.

The arbitrator found that the insurer’s proactive offer did constitute a “claim”, primarily on the basis that at the time of making the offer the insurer had “all relevant particulars about the claim” within the meaning of s.282 of the 1998 Act and had made a determination as required by s.281 of that Act. Reference was also made to the 2009 WorkCover Guidelines for Claiming Compensation Benefits (as in force as at October 2011) made pursuant to and for the purposes of s.260 of the 1998 Act, in which insurers were directed not to require a Permanent Impairment Claim Form if a claim for compensation generally was already in progress and to “initiate an assessment of permanent impairment to determine the lump sum payable” if satisfied that maximum medical improvement had been reached.

The arbitrator further found that by making a proactive offer the insurer had “determined” the claim so as to invest the Commission with jurisdiction under s.289(3) of the 1998 Act.

While the arbitrator’s decision proved beneficial to the worker in the case under consideration, as she avoided the 2012 amendments, it at first blush has the potential to complicate matters for workers whose claims are subject to the amendments and are therefore limited to making “only one claim” by operation of s.66(1A). This is because the “claim” as effectively made by the insurer’s proactive offer may not, for example, include body parts which a worker may subsequently wish to claim.

Further, s.281 of the 1998 Act provides for what must be done by “the person on whom a claim for lump sum compensation … is made” and s.4 of that Act defines a “claimant” as a person who has made or is entitled to make a claim for compensation. Thus, as a matter of both law and logic it does not appear possible for an insurer to be both a person who makes a claim and a person on whom a claim is made.

A better view may have been that when an insurer made a proactive offer, a worker could either accept it or make a claim for a greater degree of permanent impairment which would have then constituted that worker’s “one claim”.

In any event, it is unlikely that this decision will be of any relevance or effect in claims to which the 2012 amendments do apply because, in addition to the legal and logical difficulties referred to above, the WorkCover Guidelines in force from 11 October 2013 have deleted any reference to insurers initiating assessments of permanent impairment and making proactive offers and instead make it plain that only a worker can “initiate” a claim for PIC and must provide a Permanent Impairment Claim Form in order to do so (see Clause 6.1). Further, Clause 6.4 of the current WorkCover Guidelines set out the action required to be taken by an insurer pursuant to s.281 of the 1998 Act “when an insurer receives a claim for permanent impairment”. In short, under the current WorkCover Guidelines it is no longer open to an insurer to make a proactive offer in respect of PIC and an offer can only be made in response to a claim received from a worker.