Work Injury Damages Claims

If a worker is injured in circumstances where the employer was negligent, the worker (or his/her dependants) may have a right to claim work injury damages, subject to Part 5 of the 1987 Act – Modified Common Law Damages.

Permanent impairment threshold

The claimant must satisfy a permanent impairment threshold of at least 15% whole person impairment (or the worker has died) as result of the injury: section 151H of the 1987 Act.

The degree of permanent impairment is to be assessed in accordance with Part 7 of Chapter 7 of the 1998 Act and the NSW workers compensation guidelines for the evaluation of permanent impairment.

Physical impairment is to be assessed separately to any psychological impairment to determine whether or not a worker exceeds the 15% WPI threshold.

A physical impairment and a psychological impairment cannot be added together to meet the threshold requirement.

Section 280A of the 1998 Act provides that permanent impairment compensation pursuant to section 66 of the 1987 Act must be claimed before or at the time of making a claim for work injury damages.

Section 280B stipulates that the lump sum compensation for section 66 must be paid to the worker before a claim for work injury damages can be finalised.

Section 314(3) provides that acceptance ‘by the person on whom a claim for work injury damages is made’ (that is, the employer/insurer) of a degree of permanent impairment for a section 66 claim, also constitutes acceptance of the degree of permanent impairment for the purposes of a work injury damages claim.

This means that if an insurer accepts a section 66 claim for 15% WPI or more, the insurer cannot raise a threshold dispute (under section 151H of the 1987 Act) should the worker later claim work injury damages.

However, section 314(3) provides that the acceptance of the degree of impairment is binding only on the ‘person on whom a claim for work injury damages is made’ (i.e. the employer/insurer).

Therefore, a situation could arise where a worker and insurer may agree to a certain percentage of whole person impairment for a section 66 claim, but the worker later applies for a medical assessment certificate for the purposes of determining the work injury damages section 151H threshold (e.g. because of subsequent surgery). This would not offend either section 314(3) or section 322A (i.e. only one medical assessment certificate) but would only arise where no medical assessment certificate was obtained for the initial section 66 claim.

Economic loss only

Pursuant to section 151G, claims for work injury damages are limited to damages for:

  • past economic loss due to loss of earnings, and
  • future economic loss due to the deprivation or impairment of earning capacity.

Claimants do not have any entitlement to general damages for pain and suffering, domestic assistance, treatment expenses and other traditional components of common law damages. Despite this, a successful work injury damages claim will extinguish all entitlements to workers compensation including future treatment expenses, and so workers in need of significant ongoing care (e.g. paraplegic or brain-damaged workers) would not usually bring a work injury damages claim.

The calculation of economic loss is to be at a rate of net earnings no greater than the section 34 maximum rate

(as at 1 October 2016 the rate was $2,058.10 per week) and will be calculated only up to the pension age: sections 151I and 151IA of the 1987 Act.

Economic loss due to past loss of earnings and future impairment of earning capacity can include loss of superannuation entitlements.

For injured workers unable to manage a significant sum of damages, the cost of professional fund management can be claimed as part of the loss due to the deprivation or impairment of earning capacity.

Death claims

The restrictions regarding damages under Part 5 of the 1987 Act do not apply to a claim for damages brought pursuant to the Compensation to Relatives Act 1897 by surviving family members of a deceased worker.

Nervous shock claims

A ‘nervous shock’ claim is a claim for damages brought by a person who has suffered a psychiatric injury as a consequence of witnessing a worker’s injury or death. Such claims can only be brought by co-workers of the injured or deceased worker: section 151AD of the 1987 Act.

A relative of an injured or deceased worker cannot bring a claim for nervous shock unless the relative is also a co-worker.

Notice of work injury damages claim and insurer’s response

Apart from the usual particulars of a claim that must be given to an employer or an insurer, for work injury damages the claimant must also specify:

  • details of the economic loss claimed, and
  • details of the alleged negligence or other tort of the employer.

An insurer cannot delay determining a claim because of a lack of particulars, unless within 14 days of being provided with the particulars of the claim, the insurer has requested further relevant particulars: section 282. The request for particulars (which could be in a standard form) may relate to, for example:

  • the precise mechanism of injury
  • the allegations of negligence
  • other medical conditions affecting the worker’s earning capacity or life expectancy, and
  • prior or subsequent injuries.

If an insurer within 14 days of receiving the notice of claim advises the worker that a medical assessment is required, then the claimant is not considered to have provided all relevant particulars.

Section 281 of the 1998 Act provides that within one month of the degree of permanent impairment becoming fully ascertainable, or within 2 months after all relevant particulars of the claim for work injury damages have been provided to the insurer (whichever date is the later), the insurer is required to either:

  • accept liability and make a reasonable offer of settlement; or
  • dispute liability.

In either case, the insurer must also indicate whether or not the degree of permanent impairment of the worker is sufficient to qualify for work injury damages.

Section 281 does not apply to death claims, except to the extent that the Workers Compensation Guidelines may otherwise provide.

The time period stipulated in section 281 for an insurer to respond to a claim for work injury damages will not commence to run until the further and better particulars have been supplied and/or the worker has attended the medical assessment.

This extra time would also allow an insurer to arrange, if it has not already done so, a factual investigation (including the obtaining of witnesses’ statements). The earning capacity of an injured worker is the critical issue in assessing damages, and therefore the injured worker should be medically assessed to determine his or her potential earning capacity. It would be worthwhile combining medical and psychological assessment as part of a comprehensive vocational capacity assessment, so that the insurer may have the best evidence in respect of the injured worker’s ability to earn.

The records of an injured worker’s treating doctors should also be obtained, so that the insurer may have a complete medical history for the worker. This will identify, for example, prior similar injuries or other medical conditions that could affect a worker’s earning capacity or life expectancy.

If the insurer denies liability for the claim, a dispute notice pursuant to section 74 must be issued. The Guidelines for claiming workers compensation specify that the notice must include statements that the claimant:

  • must serve a pre-filing statement on the defendant and its insurer before starting court proceedings: section 315 of the 1998 Act, and
  • cannot raise matters in court proceedings that are materially different from those contained in the pre-filing statement except with leave of the court: section 318 of the 1998 Act

If an insurer responds to a claim for work injury damages by making an offer that is on the basis of accepting only partial liability, the offer is to include details sufficient to ascertain the extent to which liability is accepted. (We can’t give an example of where only partial liability would be accepted – either an employer has been negligent or it has not. Alleging that some other party contributed to the injury, or that the injured worker was guilty of contributory negligence, is not the same as admitting ‘partial’ liability.)

Pre-filing statement and defence

The requirement for a pre-filing statement only applies where:

  • the insurer wholly disputes the claim; or
  • one month has elapsed since an offer has been made by an insurer pursuant to section 281 without a response, or the claimant has rejected the offer; or
  • the insurer has failed to determine the claim as and when required by section 281.

A claimant cannot serve a pre-filing statement unless the degree of permanent impairment has been assessed by an approved medical specialist to be, or the defendant has accepted that it is, at least 15%: section 313 (and see also Workers Compensation Commission Rules 2011 Rule 17.4).

The claimant must serve on the proposed defendant and its insurer a pre-filing statement setting out particulars of the claim and all information and documents the claimant will rely on in support of the claim as the Commission Rules may require: section 315 and Rules 17.3 and 17.4.

Rule 17.3 provides that the pre-filing statement is to include a copy of the statement of claim which is to be subsequently filed in a court of relevant jurisdiction (usually the District Court).

If an insurer believes that the pre-filing statement is in some respect defective, the insurer has only 7 days within which to notify the claimant of the defect: section 317 and Rule 17.7.

If the parties are not able to resolve a dispute regarding the defect in the pre-filing statement, the dispute may be referred to the Registrar of the Commission to determine: section 317 and Rule 17.7.

Subject to that qualification, the defendant must respond to the pre-filing statement within 28 days, by:

  • accepting or denying liability (in whole or in part); and
  • to the extent that the defendant does not accept liability, serving a pre-filing defence which sets out the particulars of the defence and all information and documents that the defendant will rely on to defend the claim as the Rules may require: section 316, Rules 17.5 and 17.6.

If the defendant has not served a pre-filing defence within 42 days of the pre-filing statement being served, the claimant can commence court proceedings, and the defendant is not entitled to file a defence which disputes liability: sections 316 and 318. The defence will be limited to disputing the amount of damages claimed, the worker’s contributory negligence, and (if relevant) whether or not leave should be granted for late commencement of court action (i.e. more than 3 years after the date of injury).

The parties cannot rely on any evidence which has not been disclosed in the pre-filing statement or defence, except with leave of the Court and only then if ‘the material concerned was not reasonably available to the party’ at the time of serving the pre-filing statement or defence, and the failure to grant leave would substantially prejudice the party’s case: section 318.

Compulsory mediation

If the defendant has responded to the pre-filing statement within 42 days, the claimant must refer the matter to mediation: section 318A. A defendant can only decline to participate in mediation if liability is wholly disputed.

Mediators are appointed by the Workers Compensation Commission.

An application for mediation is to be lodged with the Registrar of the Commission: Rule 17.9.

The defendant must lodge its reply to the application within 21 days of the application for mediation being registered with the Commission: Rule 17.10.

If the mediation is not successful, the mediator must issue a certificate stating the amounts of the final offers of settlement made by each of the parties, but this information is not to be disclosed to the Court until after a final determination of the claim: section 318E and Rule 17.12.

Interestingly, section 318C provides that an injured worker may be represented at the mediation by a person (whether or not an agent or legal adviser) to act as the injured person’s advocate and to assist in presentation of the case, but there is no such express right extended to a defendant or its insurer. In practice, all parties involved in the mediation process are legally represented.

If the mediation is not successful then the claimant is entitled to commence proceedings in a court (usually, the District Court). The usual court procedures apply thereafter.

Costs

A party cannot recover, and a court cannot award, costs other than in accordance with the Workers Compensation Regulation 2016: section 346 of the 1998 Act.

When the matter is eventually resolved by order or judgment, if the claimant recovers:

  • more than his or her final offer made at the mediation, the claimant is entitled to recover his or her costs on a party/party basis: clause 94 of the Regulation;
  • less than the insurer’s final offer at the mediation, or there is a finding that the insurer is not liable, the claimant will then be required to pay the insurer’s costs on a party/party basis: clause 95 of the Regulation.

In any other case, each party is to bear its own costs of the proceedings: clause 96 of the Regulation.

Clause 97 of the Regulation provides that if the insurer had denied liability and the matter was not mediated, and the claimant eventually obtains an order for judgment for payment of damages, costs are to be awarded on the basis that:

  • the insurer had made a final offer of nil, and
  • the claimant had made a final offer of the amount of damages specified in the pre-filing statement.

Clause 99 of the Regulation states that if the proceedings involve 2 or more defendants, any offer made by the plaintiff to must be to settle the claim against all defendants. Any offer by the defendants to the plaintiff must be to settle the claim against all defendants.

Costs in work injury damages claims are calculated in accordance with Schedule 7 of the Workers Compensation Regulation 2016.

A note about WHS prosecutions and civil liability

Section 267 of the Work Health and Safety Act 2011 states that a breach of the Act does not give rise to a cause of action in civil proceedings. (Prior to 1 January 2012, section 32 of the Occupational Health and Safety Act 2000 was the relevant provision.)

Section 245A(1) of the 1998 Act states that an admission of liability by an employer in a claim for work injury damages cannot be relied upon in any work health and safety prosecution against the employer.

Section 245A(2), in contrast, provides that an admission of guilt by an employer in relation to a work health and safety prosecution may be relied upon in common law work injury damages proceedings brought by an injured worker.

We presume that section 245(2) will not apply if there is a conviction recorded after a hearing, without an admission of guilt by the employer.

Work injury damages flowchart TABLE TO BE REDRAWN

SERVICE OF PFS

Usual court procedure thereafter

Recovery Actions

Recovery Actions

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