Psychiatric permanent impairment – adjustment for the effects of treatment – Zoric decision

The recent judicial review decision of Justice Chen in Zoric v Secretary, Department of Education & Ors [2024] NSWSC 131 has clarified the approach required to be taken when applying clause 1.32 of the SIRA Guidelines,[1] and making an adjustment to the permanent impairment assessment for the effects of treatment.

Brief facts

On 18 October 2021, the worker – a special education teacher alleging psychological injury sustained on 14 September 2020 - made a claim for lump sum compensation in respect of 17% WPI under section 66 of the Workers Compensation Act 1987 (“1987 Act”). Her claim was declined by the insurer, and shortly thereafter she filed an Application to Resolve a Dispute in the Personal Injury Commission.

The matter was then remitted to the President for referral to a Medical Assessor, Dr Graham Blom (psychiatrist), for an assessment of whole person impairment resulting from injury.

In the Medical Assessment Certificate (“MAC”) dated 10 January 2023, Dr Blom assessed the worker at 15% WPI under the PIRS criteria. However, the final assessment fell below 15% WPI after a deduction of one-quarter under section 323 of the Workplace Injury Management and Workers Compensation Act 1998 (“1998 Act). Dr Blom did not address clause 1.32 of the SIRA Guidelines in the MAC – the allowance for treatment effect.

In February 2023, the worker filed an appeal against the MAC. Two grounds of appeal were raised under sections 327(3)(c) and (d) of the 1998 Act; asserting Dr Blom erred in the application of clause 1.32 of the SIRA Guidelines, and in making the deduction under section 323 of the 1998 Act. The employer opposed the appeal.

In the decision dated 24 May 2023, the Appeal Panel agreed the Medical Assessor “did not consider whether the [worker’s] impairment would increase were her treatment withdrawn, as required by the Guidelines” (at [25]). However, the Appeal Panel did not accept the Medical Assessor erred in failing to make an allowance for the effects of treatment, because, on the history taken by the Medical Assessor, there was not apparent substantial elimination of the worker’s permanent impairment by the treatment.

The Appeal Panel agreed Dr Blom erred in the application of section 323 and ruled a one-tenth deduction was appropriate for permanent impairment due to previous injury or pre-existing abnormality or condition.

The Appeal Panel revoked the MAC and issued a fresh MAC with an assessment of 14% WPI resulting from psychological injury on 14 September 2020, and the worker again failed to qualify for permanent impairment lump sum compensation.

Application for judicial review in the Supreme Court

In mid-February 2024, the worker commenced judicial review proceedings in the Supreme Court on the grounds:

• The Appeal Panel constructively failed to exercise its jurisdiction when determining the extent to which the plaintiff’s permanent impairment had been improved by treatment in accordance with, and as required by, clause 1.32 of the SIRA Guidelines.

• The Appeal Panel failed to give legally sufficient reasons when dealing with clause 1.32 of the SIRA Guidelines.

When considering the first ground, Justice Chen said clause 1.32 could be “understood to involve, and require findings about, the following “steps”:[2]

1. “First, whether there has been effective long-term treatment of an illness or injury.

2. Secondly, whether that treatment results in apparent substantial or total elimination of the claimant’s impairment.

3. Thirdly, whether the claimant is likely to revert to the original degree of impairment if treatment is withdrawn.”

Then, “upon satisfaction of each step, the medical assessor may increase the percentage of WPI”.[3]

Applying this analysis to the worker’s circumstances, Justice Chen concluded the Appeal Panel failed to undertake the first and second steps required by clause 1.32.

Justice Chen observed it was necessary for the Appeal Panel to make a finding about whether there had been effective long-term treatment of an “illness or injury”, and, to explain that finding. He said, “findings of this kind are not mere formalities, but critical to the proper application of the clause”.[4] The judge concluded the Appeal Panel did not explain and make the necessary findings, and the reasons provided were legally insufficient.

In respect of the second step, Justice Chen considered the reasons of the Appeal Panel disclosed a “clear failure to engage with the comparative exercise required”, and exposed an error of law.[5] Specifically, and with reference to the decision in Peachey [2020] NSWSC 781 at [52] Justice Chen said (at [80]):

“…what is required by cl 1.32… is a comparative exercise between the plaintiff’s original degree of impairment before the “effective” treatment and the plaintiff’s degree of impairment following that treatment: it is only by undertaking that comparison at those times can a medical assessor (or in the present case, the Appeal Panel) determine whether the treatment “results in apparent substantial…elimination” of the plaintiff’s permanent impairment. The Appeal Panel failed to undertake that task.”

On concluding the Appeal Panel had failed to undertake the first and second steps adequately (or at all), Justice Chen was not required to consider whether the third step had been addressed. He observed the third step would “likely be informed, perhaps significantly, by the findings in relation to the first and second steps”.[6]

On 21 February 2024, the Supreme Court issued its decision upholding the worker’s judicial review application on the grounds asserted and the decision of the Appeal Panel dated 24 May 2023 was quashed.

Learnings

This decision provides guidance on the required analysis for medical assessors of permanent impairment when considering an ‘adjustment for the effects of treatment’ under clause 1.32 of the SIRA Guidelines in the assessment of permanent impairment.

The commentary of Justice Chen provides a clear and practical guide for parties to review assessments of psychiatric permanent impairment, and the decision emphasises the importance of explanation by the assessor when an adjustment for treatment effect under clause 1.32 is made or not made.

This decision has since been followed by Appeal Panels on several occasions throughout 2024. The continued adoption of the approach in Zoric will contribute to more accurate assessments of psychiatric injury permanent impairment.

Authors: Maddi Chaplin

Contributing partner: Mick Franco