Lump Sums for Permanent Impairment
Permanent impairment – section 66 of the 1987 Act
The NSW workers compensation guidelines for the evaluation of permanent impairment provide approved medical specialists with directions regarding the methods for assessment of permanent impairment. The guidelines adopt the American Medical Associations Guides to the Evaluation of Permanent Impairment 5th edition (AMA5) subject to any variations noted in the NSW workers compensation guidelines.
Lump sum compensation is only payable if the injury results in more than 10% whole person impairment (WPI) or at least 15% WPI for a psychological injury.
Only one claim can be made for permanent impairment that results from an injury.
The restriction of only one claim does not apply to workers who made a claim for lump sum compensation before 19 June 2012. Those workers are able to make one further claim for lump sum compensation ‘in respect of an existing impairment’; and the degree of impairment for the further claim does not have to meet the usual threshold of more than 10% WPI: Workers Compensation Regulation 2016 Schedule 8 Part 1 clause 11.
If the worker receives more than one injury arising out of the same incident, those injuries must be treated as one injury for the purposes of assessing the whole person impairment: section 65(2). That is, the impairment for each body part that has been injured can be added together (aggregated) to produce a single assessment of whole person impairment.
If an injury results in permanent impairment of the back, the amount of lump sum compensation for that back impairment is increased by 5%: section 66(2A). This only applies to injuries sustained on or after 1 January 2006. ‘Back’ includes the thoracic and lumbar spines, but not the cervical spine.
If there is a dispute about the degree of the permanent impairment, the worker must be assessed by an approved medical specialist. The injured worker can refer a disputed section 66 lump sum claim to the Commission, and the Commission will refer the assessment of the degree of permanent impairment to an approved medical specialist: section 65 of the 1987 Act.
Deductions for previous injuries or pre-existing conditions
When calculating the degree of permanent impairment resulting from an injury, section 323(1) of the 1998 Act allows
a deduction to be made for any proportion of the impairment that is due to any previous injury or pre-existing condition or abnormality.
If the parties cannot agree on the deductible proportion, this is a medical dispute which can be referred for medical assessment. The resulting medical assessment certificate would be conclusively presumed to be correct in relation to the amount of the deductible proportion: section 326 of the 1998 Act.
If the extent of the deductible proportion will be difficult or costly to determine (e.g. because of insufficient medical evidence) it is to be assumed that the deduction will be one-tenth, unless this assumption is at odds with the available evidence: section 323.
A deduction pursuant to section 323 will not necessarily be made just because there is evidence of a pre-existing condition or previous injury. In the Supreme Court of NSW case of Cole v Wenaline [2010] NSWSC 78 it was said:
“The section is directed to a situation where there is a pre-existing injury, pre-existing condition or abnormality. For a deduction to be made from what has been assessed to have been the level of impairment which resulted from the later injury in question, a conclusion is required, on the evidence, that the pre-existing injury, pre-existing condition or abnormality caused or contributed to that impairment. Section 323 does not permit that assessment to be made on the basis of an assumption or hypothesis, that once a particular injury has occurred, it will always, ‘irrespective of outcome’, contribute to the impairment flowing from any subsequent injury. The assessment must have regard to the evidence as to the actual consequences of the earlier injury, pre-existing condition or abnormality. The extent that the later impairment was due to the earlier injury, pre-existing condition or abnormality must be determined. The only exception is that provided for in s 323(2), where the required deduction ‘will be difficult or costly to determine (because, for example, of the absence of medical evidence)’. In that case, an assumption is provided for, namely that the deduction ‘is 10% of the impairment'. Even then, that assumption is displaced, if it is at odds with the available evidence.”
Section 22 apportionment for more than one injury
Section 68B(1) of the 1987 Act provides that when dealing with a claim where liability must be apportioned under section 22 (because the permanent impairment results from two or more compensable work injuries), there is to be no deduction under section 323 of the 1998 Act for any proportion of the impairment that is due to an injury in respect of which liability is to be apportioned. (A deduction can still be made, however, for any proportion of the impairment that is due to any other injury or pre-existing condition which is not being apportioned.)
Sections 15 and 16 single impairment
Section 68B(2) and (3) cover situations involving claims affected by sections 15 and 16 of the 1987 Act – diseases of gradual process, or aggravation of a disease. Section 68B provides that if a worker’s disease, or aggravation of a disease, was caused or contributed to by employment with a number of employers, the impairment resulting from employment with all of those employers is treated as a single impairment for the purpose of calculating WPI, and deductions can only be made for:
- any proportion of the impairment for which lump sum compensation, either under section 66 of the 1987 Act or section 16 of the 1926 Act, has been paid or is payable;
- in the case of permanent impairment of the back, neck or pelvis, any permanent impairment caused by work prior to 30 June 1987;
- permanent impairment attributable to a prior non-work related injury or to a pre-existing condition.
Pre-2002 non-compensable loss or impairment
Schedule 6 Part 18C clause 3 of the 1987 Act provides that there is to be a reduction in the compensation payable under section 66 for any proportion of the impairment due to a previously non-compensable impairment (i.e. any proportion of the permanent impairment caused by something that occurred before 1 January 2002, if that impairment was not a loss or impairment contained in the former Table of Disabilities, see page 74.)
Special provisions for psychological injuries
Permanent impairment compensation is payable for a primary psychological injury, provided the permanent impairment is assessed to be at least 15% WPI: section 65A(3).
A primary psychological injury is a psychological injury that is not a secondary psychological injury. A secondary psychological injury is one which arises as a consequence of, or secondary to, a physical injury, and is not compensable under section 66.
Permanent impairment for primary psychological injuries is assessed in accordance with a psychiatric impairment rating scale – see Part 11 of the NSW workers compensation guidelines for evaluation of permanent impairment. The assessment must be conducted by a qualified psychiatrist trained in the use of the guidelines.
A worker who receives both a primary psychological injury and a physical injury arising out of the same incident is only entitled to receive lump sum compensation for impairment resulting from one of those injuries. The impairments for the psychological and physical injuries must be assessed separately and the worker is entitled to receive compensation for whichever injury results in the greater amount of compensation: section 65A(4).
Injuries before 1 January 2002 – Table of Disabilities
There are still some claims being made for lump sum compensation in respect of injuries received prior to 1 January 2002, and the former versions of sections 66, 67, 68A and 68B in force prior to that date apply to those claims: Schedule 6 Part 18C clause 3(1).
The lump sums are calculated by reference to a Table of Disabilities, rather than whole person impairment.
However, claims procedures are the same for all injuries, regardless of the date of injury – the loss or impairment must be assessed by an approved medical specialist under Part 7 of Chapter 7 of the 1998 Act, and the assessment certified in the medical assessment certificate will be conclusively presumed to be correct: Schedule 6 Part 18C clause 4(2).
Injuries before 19 June 2012
The 2012 amendments to claims for lump sum compensation do not apply to a claim for lump sum compensation made before 19 June 2012. Workers who have the benefit of this exemption can claim s67 benefits for pain and suffering, and are not subject to the 11% WPI threshold.
Workers whose initial claim for permanent impairment compensation was made before 19 June 2012 are entitled to make one further claim for lump sum compensation, if the further claim relates to ‘the existing impairment’: Regulation 2016 Schedule 8 Part 1 clause 11.
‘Existing impairment’ is defined as ‘permanent impairment resulting from an injury in respect of which a lump sum compensation claim was made before 19 June 2012.
Section 66A – Complying Agreements
An agreement between an injured worker and an insurer in relation to payment of section 66 permanent impairment compensation must be in writing and contain the information stipulated in the NSW guidelines for claiming workers compensation.
The agreement will not be valid unless the worker has received independent legal advice about the agreement before the worker entered into the agreement.
Once the agreement is made, the worker is not entitled to receive additional compensation in respect of the impairment. However, the Commission may award additional compensation if the agreement was obtained by fraud or undue influence, or if the agreed amount of compensation was ‘manifestly inadequate’.