Key lessons for insurers - investigating workers compensation claims before payments

In a recent Personal Injury Commission decision an uninsured employer has successfully established it had no liability in respect of weekly payments commenced by the insurer for an injury claim submitted by a worker.

The decision in 2 Shores Pty Ltd v Workers Compensation Nominal Insurer [2024] NSWPIC 721 brings to light the insurer’s responsibilities to investigate for compensation claims prior to making workers compensation payments.

The worker’s claim

Lisa Arnold (worker) was employed by 2 Shores Pty Ltd (2 Shores) as the manager of 2 Shores Holiday Village.

The worker raised concerns about a resident of one of the cabins in the village. She was provided with instructions from the directors of 2 Shores to not do anything to relocate the resident until they received advice from the Caravan Camping Industry Association. Despite those instructions, the worker showed the resident to another caravan, which was not fit for habitation and called the police to evict the resident.

2 Shores terminated the worker’s employment on Friday 21 October 2022 and the directors informed her they were on their way to the Holiday Village to retrieve the company keys and phone. Upon learning this, she left with the keys and the phone. It took 4-5 days to return the belongings.

After this, the worker made a claim for workers compensation claiming she had sustained a psychological injury due to bullying and intimidation while she was employed by 2 Shores.

2 Shores Pty Ltd did not have a workers compensation policy and the Workers Compensation Nominal Insurer (Nominal Insurer) commenced payments to the worker in relation to her psychological injury.

The Nominal Insurer sought reimbursement from 2 Shores for the payments made to the worker on their behalf.

2 Shores commenced an application in the Personal Injury Commission for a determination of their liability in respect of those payments under section 145(3) of the Workers Compensation Act (1987 Act).

The issues before the Personal Injury Commission

In the Commission proceedings 2 Shores disputed the worker suffered injury and in the event an injury was found, said section 11A(1) of the 1987 Act would act as a defence to the claim.

Their claim was presented on the basis the Nominal Insurer should have investigated whether section 11A applied before making payment to the worker.

Ultimately after reviewing the evidence, the Member was not satisfied there was a finding of psychological injury arising out of or in the course of the worker’s employment with 2 Shores. The Member gave no weight to the evidence of the history provided to the treating doctors as they were reliant on the worker’s account which was not supported by the factual evidence that was ultimately obtained by 2 Shores.

The Member concluded the worker did not have a diagnosable condition and instead had a normal psychological reaction to the concerns about being paid following her termination.

Further, in the event an “injury” was established, then the Member found that 2 Shores acted reasonably in terminating the worker’s employment and there was no evidence to suggest the worker was bullied by the employees of 2 Shores.

Accordingly, the Member determined 2 Shores did not need to repay the Nominal Insurer for the payments they had made.

The key takeaways for insurers

This case reinforces the importance of investigating claims for compensation and not accepting liability for a claim based on a worker’s version of events.

It also underscores the importance of doctors being provided with the factual investigation so they can provide their opinions in a fair climate.

Authors: Kate Ralph & Kate Nammour