Section 39 – are wages back paid from the date of cessation or reinstated from the date WPI is determined?

Section 39 of the Workers Compensation Act 1987 provides there is no entitlement to weekly payments of compensation for an injury after an aggregate period of 260 weeks in respect of which a weekly payment has been paid or is payable, unless the worker’s degree of permanent impairment resulting from the injury is more than 20% WPI.

This provision saw many workers in the NSW workers compensation system cease receiving weekly compensation in December 2017, following the 2012 reforms.

Since then, there has been uncertainty as to whether a worker whose WPI is assessed at more than 20% is entitled to have weekly compensation payments re-instated from the date of cessation, or whether payments are restored from the date their WPI is determined to be more than 20% by an AMS. That is, the date of the Medical Assessment Certificate (“MAC”).

President Phillips has recently issued a decision in RSM Building Services Pty Ltd v Hochbaum [2019] NSWWCCPD 15 (“Hochbaum”), dealing with the application of section 39.

The worker was notified he would not be entitled to weekly payments beyond 25 December 2017, on reaching the 260 week maximum under section 39. He had not been assessed as suffering more than 20% WPI.

In April 2018, the worker provided an IME report assessing him as suffering 49% WPI resulting from the injury. The worker made a claim for ongoing weekly payments at that time. The insurer declined the claim on the basis of its own IME expert opinion, who assessed the worker as suffering 5% WPI.

The worker challenged the decision and lodged an Application for Assessment by an AMS. He sought an assessment as to whether he was suffering more than 20% WPI for the purpose of re-instating weekly payments of compensation.

A MAC was subsequently issued, certifying the worker as suffering 21% WPI resulting from the injury. The insurer then notified the worker that weekly payments would recommence from the date of the MAC. The worker challenged this, asserting payments should be re-instated from the date his weekly compensation ceased, that is, from December 2017.

The arbitrator determined that, once an assessment of permanent impairment of more than 20% WPI is issued, the worker is entitled to receive weekly payments of compensation for the period before the assessment was made. In other words, the arbitrator permitted the worker to recover arrears in weekly compensation between the date payments ceased under section 39 and the date of the MAC.

The employer appealed the decision. On appeal, President Phillips overturned the arbitrator’s decision. The President held the effect of section 39(1) is that a worker has no statutory entitlement to weekly compensation for incapacity and wage loss resulting from the injury after an aggregate period of 260 weeks. Section 39(2) operates to restore the entitlement to weekly compensation in circumstances where the degree of permanent impairment resulting from the injury is more than 20% WPI.

The President ruled the proper construction of section 39(2) is to restore a worker’s entitlement to weekly compensation at the point in time an Approved Medical Specialist assesses the degree of permanent impairment resulting from the injury to be more than 20%. In other words, weekly payments can only be re-instated from the date WPI is determined by the AMS. That is, the date of the MAC.

The effect of this decision is that arrears in weekly compensation from the date of cessation under section 39 to the date of the MAC are not payable. Prior to this decision, the position on re-instatement of weekly payments previously terminated under section 39 with a subsequent MAC establishing a permanent impairment resulting from the injury of more than 20% was unclear.

There is still a question as to the date of reinstatement of weekly compensation where permanent impairment resulting from the injury of more than 20% is agreed by the parties without the need for an AMS assessment.

Section 39 stipulates the degree of permanent impairment resulting from an injury must be assessed as provided by section 65, which in turn refers to assessment of permanent impairment as provided by section 65 and Part 7 (Medical assessment) of Chapter 7 of the Workplace Injury Management and Workers Compensation Act 1998; in other words the AMS process.

We query whether the result is different in circumstances where there is no AMS assessment of permanent impairment for section 39 purposes and permanent impairment is resolved by complying agreement?

Authors: Mick Franco and Jessica Maiuolo