No way for NSW employers to recover payments made when workers comp denied

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No way for NSW employers to recover payments made when workers comp denied

Employers in NSW may just have to carry the loss when they make compulsory payments to workers compensation claimants when the claims are later denied by the insurer. The issue was originally brought to the attention of WorkplaceInfo by a member company of Australian Business Limited that had been directly affected by such an event.

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Employers in NSW may just have to carry the loss when they make compulsory payments to workers compensation claimants when the claims are later denied by the insurer. The issue was originally brought to the attention of WorkplaceInfo by a member company of Australian Business Limited that had been directly affected by such an event.

The legislation requires insurers to make a decision within seven days as to whether they agree to pay any particular workers compensation claim. If the insurer does not make a decision within this time then the employer is required to pay what are referred to as 'provisional payments' for up to 12 weeks. 

The outcome is that these provisional payments become additional payments borne by the employer if the insurer decides not to accept the claim. Moreover, the payments are not recoverable from the employee who made the claim (unless there was fraud involved). These payments cannot be set-off against other entitlements that the employee may have - like sick leave or annual leave.

Inquiries made of WorkCover NSW have confirmed this interpretation. The motive behind the recent change in the law seemed to be to avoid having employees wait for unreasonable periods of time while decisions were made about their claims. However, in some cases (like stress claims) it takes more than one week to properly assess the claim. In such instances, insurers would argue that it is reasonable to expect that a decision would take longer than one week.

The problem is that the sanction seems to be carried by the employers if the insurer later rejects the claim. In addition to this non-recoverable payment from employers, it would follow that the employers' premiums are also adversely affected by the employers having made the payments.

WorkCover NSW has advised that the best tactic for employers to use if they think an insurer is unreasonably delaying making a decision is to contact the claims supervisor to discuss the case. If an employer is having difficulty contacting the correct person at the insurance company then they are advised to contact WorkCover on 13 10 50.

 

 
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