Welcome to the January 2016 Edition issue of the Edwards Michael Powell eBulletin.

It’s The Vibe… Confusion on Work Capacity Decisions

On 21 January 2016 Deputy President Kevin O’Grady delivered a Decision in Sabaneyagam v St George Bank Limited [2016] NSW WCC PD 3.

The short facts are that the worker was in receipt of weekly payments following a Work Capacity Decision dated 24 September 2014 that she had no current work capacity, before liability was declined pursuant to a Section 74 Notice dated 20 March 2015 on the basis that:

1. The worker was fit for pre-injury duties.
2. The effects of the injury had resolved.
3. Injury was no longer responsible for incapacity.

The primary question before the Commission on Appeal was whether the Commission had jurisdiction by virtue of Section 43(3) of the 1987 Act which provides:-

“(3) The Commission does not have jurisdiction to determine any dispute about a Work Capacity Decision of an insurer and is not to make a decision in respect of a dispute before the Commission that is inconsistent with a Work Capacity Decision of an insurer”.

Accordingly, if it was determined that a Work Capacity Decision had been made then the Commission would not have any jurisdiction to consider any dispute about the decision and could not make a decision inconsistent with the Work Capacity Decision.

Significantly, the Deputy President accepted an argument that the Section 74 Notice could not be a Work Capacity Decision because:-

1. It disputed liability (Section 43(2)(a), and
2. It determined fitness for employment, a matter which could be the subject of a Medical Dispute (Section 43(2)(b)).
However, the Deputy President then accepted that an inference could be drawn that the insurer had considered the material attached to the Notice before deciding to discontinue weekly payments, and that by virtue of the combined effect of Section 43(1)(a) and (f) a Work Capacity Decision had been made at that time.

Whilst the reasons are not expressed with any clarity, particularly regarding precisely when and how the Work Capacity Decision was made, prima facie the Decision involves a finding that a Work Capacity Decision was made without any direct evidence from the decision-maker and no documentary evidence of the decision.

Further, there appears to be a logical inconsistency between a finding that the Notice itself did not constitute a Work Capacity Decision but that the thought process of the insurer when preparing the same Notice did constitute a Work Capacity Decision.

The Deputy President also considered the question of whether the Commission had jurisdiction to determine the existence or otherwise of a Work Capacity Decision, given the prohibition in Section 43(3) which states that the Commission does not have jurisdiction to determine any dispute about a Work Capacity Decision. He concluded that in any dispute before the Commission in relation to entitlement to weekly benefits following the first two Entitlement Periods, it is necessary that a threshold question be answered as to the existence or otherwise of a Work Capacity Decision. He determined that such a threshold question is not “about” a Work Capacity Decision and therefore may be determined by the Commission. If the question is answered in the affirmative (ie. a Work Capacity Decision has been made), then the Commission may not make a decision inconsistent with the Work Capacity Decision.

Whilst the Deputy President found that a Work Capacity Decision had been made in March 2015 he noted that the insurer had not followed the procedure mandated by the 1987 Act and the WorkCover Guidelines, and that this was a matter about which the worker might seek advice.

Conclusion

1. There is nothing new about the essence of the Decision – the Workers Compensation Commission does not have jurisdiction to determine any dispute about a Work Capacity Decision and cannot make a Decision inconsistent with such a Work Capacity Decision.
2. The Decision establishes that in relation to disputes concerning weekly payments of compensation after the first two Entitlement Periods, the Commission should first ask itself a threshold question as to whether a Work Capacity Decision has been made. If the question is answered in the affirmative, then the Commission has no jurisdiction to make a Decision inconsistent with that Work Capacity Decision.
3. The Decision also provides some clarity in relation to what is not a Work Capacity Decision, being decisions to dispute liability for weekly payments of compensation and decisions that can be the subject of a Medical Dispute (including disputes as to “the worker’s condition” and “the worker’s fitness for employment”).
4. The balance of the Decision concerns a factual exercise as to whether in the circumstances of the case a Work Capacity Decision had been made. The Deputy President found that the Section 74 Notice did not constitute a Work Capacity Decision because it concerned a dispute about liability and a dispute about the worker’s fitness for employment. It was nonetheless inferred that because the insurer had obviously decided to discontinue weekly compensation, then Section 43(1)(a) and (f) were engaged to form the basis for a finding that a Work Capacity Decision had been made.
5. The Decision is almost certain to be the subject of an Appeal.
6. There a direct inconsistency between Section 43(1) and Section 43(2) in relation to what constitutes a Work Capacity Decision. For example, Section 43(1)(a) stipulates that a decision about a worker’s “current work capacity” is a Work Capacity Decision, whereas pursuant to Section 43(2)(b) a decision in relation to “fitness for employment” is not a Work Capacity Decision. The Second Reading Speech introducing the Workers’ Compensation Amendment Bill 2012 provides some marginal assistance, indicating that decisions of an insurer “about a worker’s current work capacity” can be the subject of a review process, allowing an argument that other decisions (eg. those saved by the Section 43(2) exclusions) ought be determined by the Workers Compensation Commission – with the clear terms of Section 43(2) allowed to operate when inconsistent with the broader framework of Section 43(1).
7. This Decision will allow insurers to argue that virtually any decision to discontinue payments of weekly compensation after the first two Entitlement Periods constitutes a Work Capacity Decision, and that the Workers Compensation Commission cannot make a Decision inconsistent with that Work Capacity Decision. However, it can be anticipated that Arbitrators of the Commission will attempt to extend the Section 43(2) exclusions wherever possible and to overcome the effect of this Decision on factual grounds.
8. There will be considerable confusion until the Court of Appeal or the Legislature clarifies the position.