NSW lump sum compo reforms retrospective: High Court

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NSW lump sum compo reforms retrospective: High Court

More than 16,000 injured workers will collectively lose $350 million in compensation benefits following a successful High Court appeal by the NSW government, according to the Greens.

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As a result of a successful High Court appeal by the NSW government last week, the loss in compensation benefits for more than 16,000 injured workers could be as high as $350 million.

In ADCO Constructions Pty Ltd v G [2014] HCA 18, handed down on Friday, the High Court overturned an earlier ruling by the NSW Court of Appeal that an injured labourer could claim lump sum compensation for a permanent impairment, assessed at 6 per cent, under the terms of WorkCover reforms put in place in NSW in 2012.

According to Greens MP and IR Spokesman David Shoebridge, the decision validates a provision of the reforms that retrospectively removes the right of workers who had been injured before the reforms commenced to claim lump sum compensation for either pain and suffering or any increased impairment they had suffered.

Impact of 2012 reforms

Shoebridge said WorkCover was already on track to deliver an “embarrassing” scheme surplus of $5.5 billion by 2019, but the High Court’s decision will mean this surplus is expected to be closer to $6 billion, because 16,000 people will miss out on a total of $350 million in injury benefits, based on figures compiled by WorkCover accountant PricewaterhouseCoopers.
 
“This is $6 billion that should be returned to the injured workers that the scheme is meant to be protecting,” he said.
 
“In the last two years we have seen thousands and thousands of injured workers lose the right to income protection, medical benefits and lump sum compensation despite suffering often serious work injuries.

"After the so-called ‘reforms’ of 2012 even workers who have their whole foot amputated after an injury at work are not classified as “seriously injured” and are being cut off workers compensation.

“This is yet another act of meanness and dishonesty from the NSW Coalition who repeatedly told the public their amendments were not retrospective, while they argued the exact opposite in the High Court.”
 
A NSW Finance Department spokesperson was reported as saying the government had commissioned an independent review of WorkCover to determine whether the 2012 changes were still appropriate.

Background to the case

In April 2010, a labourer sustained crush injuries to his left foot and ankle in a work accident involving a forklift. He applied for workers compensation in April 2010 and on 20 June 2012 sought lump sum compensation according to s66 of the Workers Compensation Act 1987 (NSW) for permanent impairment, assessed at 6 per cent.

However, s66 had been amended by the Workers Compensation Legislation Amendment Act 2012 on 27 June 2012 to limit payments of lump sum compensation to workers with injuries causing more than 10 per cent permanent impairment. The amendments were said to apply to claims made on or after 19 June 2012.

The matter proceeded to Judge Keating, the president of the Workers Compensation Commission, who in October 2012 determined the amendments applied where a worker had made a claim for compensation before 19 June 2012 and had subsequently sought a lump sum. On that basis, the labourer was not entitled to lump sum compensation because his permanent impairment was not severe enough.

The labourer applied for leave to appeal, contending that his claim was not affected by the amendments because the claim for lump sum compensation was not a new claim but a consequence of the initial claim made on 19 April 2012, submitted after it had become clear the injury had also resulted in permanent impairment.

The Court of Appeal of the Supreme Court of NSW determined in April 2013 that a worker’s right to compensation arose at the date of injury. It did not accept that a subsequent claim for lump sum compensation should be regarded as a new claim where no new injury had been sustained.
 
It concluded the labourer was entitled to compensation to be calculated according to the provisions of s66 of the Workers Compensation Act 1987 because his entitlement to compensation was not extinguished by the reforms.

Last Friday, the High Court determined that the labourer’s entitlement to lump sum compensation was extinguished by the reforms.

Note: WorkplaceOHS will publish a detailed case analysis of this High Court decision later this month.
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