Work capacity decisions

A work capacity assessment and all information obtained in the process may be used by the insurer to make a work capacity decision, which is a decision by the insurer regarding:

• the current work capacity of a worker
• what constitutes suitable employment for a worker
• the amount a worker is able to earn in suitable employment
• a worker’s PIAWE or current weekly earnings
• a worker’s ability to engage in employment without risk of further injury
• any other decision that affects a worker’s entitlement to weekly payments based on any of the matters noted above.

A decision to dispute liability for payment of weekly compensation, or a decision which may be the subject of a medical dispute (as defined), is not considered to be a work capacity decision. Such decisions are communicated by notices pursuant to section 54 of the 1987 Act or section 74 of the 1998 Act.

Work capacity decisions are covered in the SIRA Guidelines for claiming compensation (Part B1.3).

A work capacity decision need not be based on a work capacity assessment. For example, if an injured worker returns to work, a decision can be made to cease or reduce payments without the requirement for an assessment.

A work capacity decision may be made on receipt of new information such as:

• a change in the worker’s personal circumstances
• confirmation of a return to work or cessation of work
• a medical report
• a rehabilitation report
• an investigation report.

A work capacity decision will be final and binding on the worker, subject to the avenues of review discussed below.

Fair notice to worker

Before making a work capacity decision that may result in the reduction or discontinuance of weekly payments, an insurer must provide at least 2 weeks’ notice to the worker (by telephone or in person, and confirmed in writing):

• that their work capacity is being reviewed and a work capacity decision is going to be made
• that this may involve consultation with the employer, nominated treating doctor and other treatment providers
• informing the worker of the potential outcome of the review and the material upon which the insurer is relying
• that the worker may supply further information for consideration by the insurer, and the date by which this must be done; and
• advising the worker of the date when it is expected a decision will be made.

Once the notice period has expired and the insurer has made its work capacity decision, the insurer must telephone and speak to the worker to inform the worker of the decision and the basis upon which it was made, and explain the review process.

Notice of decision

Confirmation of the decision must be given to the worker by telephone and in writing and, if the decision involves the reduction or discontinuance of weekly payments, must provide 3 months’ notice of when the decision is to take effect. The 3-month notice only applies to workers who have received weekly payments for a continuous period of at least 12 weeks. In other cases, the required notice period is 2 weeks: section 54 of the 1987 Act.

If the notice is to be sent by post, you must allow an extra 7 days from when the notice is posted until the notice period is due to commence, to allow for possible delay in delivery.

Notice is not required if the change to the rate of payment results from indexation of benefits or step-downs when moving from one entitlement period to another.

The specific requirements for what is to be included in a work capacity decision notice are set out in Part B1.3 of the SIRA Guidelines for claiming workers compensation. The notice of the work capacity decision must:

• state what decision has been made and clearly explain the reasons
• provide an outline of all the information considered in making the decision
• explain how the decision affects the worker’s entitlement to weekly payments, treatment expenses and return to work obligations
• specify when the decision will take effect
• let the worker know that if he or she requires copies of relevant documents not already provided, they will be supplied on request
• provide information regarding the review process
• advise the date by which a review application is to be lodged for a stay of the decision to take effect
• provide information about where the worker can seek assistance, including the SIRA Customer Service Centre, Workers Compensation Independent Review Office (WIRO), or their trade union.

Effect of work capacity decision on jurisdiction of Commission

The Workers Compensation Commission cannot make a decision in relation to a dispute that is inconsistent with an insurer’s work capacity decision.

The Commission cannot determine a dispute regarding weekly compensation payable to a worker while a review of a work capacity decision of an insurer is pending.

The above limitations on the Commission’s powers apply to proceedings pending in the Commission when a work capacity decision is made. That is, if an insurer makes a work capacity decision after a worker has lodged an application to resolve a dispute with the Commission, the insurer’s decision would then prevent the Commission from determining any dispute regarding weekly compensation payable to the applicant worker.

The Commission would not be prevented from determining other aspects of a dispute (e.g. payment of treatment expenses).

Review of Work Capacity Decisions

Section 44 of the Workers Compensation Act 1987 sets out the worker’s rights to a review of a work capacity decision.

Further information is contained in the SIRA Guidelines for claiming workers compensation (Part B1.4).

Internal review by insurer

The worker may firstly request that the insurer conduct an internal review of its decision. The request for review should be made within 30 days of the worker receiving notice of the work capacity decision. The review will be conducted by a senior case manager, team leader or other experienced employee of the insurer who was not involved in making the original decision. The reviewer may confirm the original decision or substitute a new decision, and will inform the worker of this

in writing. Notification of the review decision must be sent within 30 days of the insurer receiving the application for review.

Merits review by the Authority

If the worker is dissatisfied with the result of the insurer’s internal review, the worker may apply (within 30 days after receipt of the internal review decision) for a review on the merits review by the Authority. The Authority will provide a copy of the application to the insurer, which will prepare a reply, with all relevant documents, and submit that to the Authority electronically. A copy of the reply must also be served on the worker with a list of relevant documents (copies are not required). The Authority must make its decision within 30 days of receiving the application for merits review, and will notify the insurer and worker of the decision in writing. The insurer must comply with, and cannot challenge, any recommendation made by the Authority.

Procedural review by WIRO

If the outcome of the merits review is not acceptable to the worker, a review of the procedural aspects of the insurer’s work capacity decision may be referred (within 30 days after receipt of the Authority’s review decision) to WIRO. The review will only consider the procedures followed by the insurer in making its work capacity decision – e.g. whether the insurer properly served its decision on the worker, provided all relevant documents to the worker, and provided the information required by the SIRA Guidelines. The WIRO decision will be binding on the insurer and the Authority.

Stay of decision during review process

The review process stays (suspends) the decision – that is, the insurer is prevented from implementing its work capacity decision while the review application is being considered by the insurer, the Authority or WIRO provided the worker has applied within 30 days of receiving the original decision by the insurer, or the merit review decision by SIRA or the procedural review decision by WIRO.

Application to Supreme Court

If a worker is still not satisfied with the decision after going through all stages of the review process, the final opportunity to challenge the decision is by way of an application to the Supreme Court of NSW Administrative Law Division pursuant to section 69 of the Supreme Court Act 1970.

INSERT DIAGRAM OR FLOWCHART FOR REVIEW PROCESS

Termination of Weekly Payments

Notice before terminating weekly payments – section 54

If a worker has been receiving weekly benefits continuously for at least 12 weeks, notice is required to be given of an intention to discontinue or reduce benefits.

• A worker who has been receiving benefits for less than one year is entitled to 2 weeks’ notice.
• A worker who has been receiving benefits for a continuous period of one year or more is entitled to 6 weeks’ notice.

If the discontinuation or reduction in weekly payments is as a result of an insurer’s work capacity decision, a period of

3 months’ notice is required. The notice must comply with the requirements for a work capacity decision (see pages ##)

Notice is not required to be given where a reduction in weekly payments is occurring only as a result of the application of different rates of compensation after the expiration of an earlier period of incapacity for which higher rates were payable.

An insurer is required to conduct an internal review of the decision to reduce or discontinue payments before giving notice under section 54 of the 1987 Act.

A section 54 notice of termination is in the same form as a dispute notice pursuant to section 74 of the 1998 Act (see pages ##).

Non-compliance with return to work obligations – Section 48A

Section 48 of the 1998 Act imposes an obligation on a worker with a capacity to work to make reasonable efforts to return to work in suitable employment, and to cooperate with the insurer and employer in these efforts. The suitable employment may be with the pre-injury employer or with a new employer.

If a worker unreasonably fails to comply with any of his or her obligations under section 48, an insurer may use section 48A of the 1998 Act to suspend payments of weekly compensation (subject to the insurer giving notice to the worker of an intention to stop making payments and advising the worker that payments will not resume until the worker’s failure to comply has been remedied). A subsequent resumption of weekly payments does not entitle the worker to recover weekly payments for the period during which he or she was in breach.

Section 48A also allows the insurer the options of terminating payment of weekly compensation, or to ‘cease and determine the entitlement of the worker’ to weekly payments, in accordance with the section.

Retirement age – section 52

If a worker receives an injury before reaching retiring age, weekly compensation may be made for up to one year after the worker’s retiring age.

If a worker receives an injury after the retiring age, he or she is only entitled to weekly payments for up to one year after the first occasion of incapacity for work resulting from the injury. Payments are subject to any work capacity decision made by the insurer within that period.

The retiring age is defined as the age at which a person qualifies for an age pension.

The retiring age depends on the worker’s date of birth. A table setting out the retirement ages for men and women is contained in Part 6 of this Guide.

Worker ceases to reside in Australia – section 53

A worker who ceases to reside in Australia is not entitled to continue receiving weekly compensation payable pursuant to an award of the Commission, unless an approved medical specialist certifies, or the Commission determines, that the incapacity for work is likely to be of a permanent nature: section 53 of the 1987 Act. If the worker is not being paid pursuant to an award of the Commission, the worker must provide evidence of incapacity certified by a medical practitioner registered in Australia

The worker must apply to the Commission for a declaration that his or her incapacity for work (whether total or partial) is likely to be permanent. This declaration is usually not difficult to obtain if the worker has received or is entitled to receive permanent impairment compensation.

Adjusting Overpayments

If there has been an overpayment of weekly benefits to a worker, an insurer is not entitled to obtain a refund from any future weekly benefits, except with an order from the Commission: section 58 of the 1987 Act.

Section 58(1) gives the Commission power to order a refund of any amount which the worker was not entitled to receive because of his or her return to work or a change in employment, but only in respect of payments made during a period not exceeding two years from the date of the last payment (or such other period as the Commission considers to be appropriate).

The Commission can order that the refund is to be deducted from future weekly payments or recovered as a debt in a Court of competent jurisdiction (usually, a Local Court).

A broader power is found in section 58(4) which provides that the Commission may make such orders as it thinks appropriate for the adjustment of weekly compensation to take account of any overpayments made to the worker – whether or not the overpayment occurred in the circumstances referred to in section 58(1).

The Authority has powers to order a worker to refund an overpayment of compensation, but its power can only be exercised if the overpayment has resulted from fraud on the scheme or from false or misleading statements: section 235D of the 1998 Act. The order is enforceable as a civil debt and can be recovered in any court of competent jurisdiction.