WCC gives short shrift to WorkCover guideline on reactivated industrial deafness claims

On 27 January 2005, WorkCover NSW issued a guideline on reactivated industrial deafness claims to licensed, self and specialised insurers. It contains WorkCover’s policy on the management of claims for further hearing loss, replacement and maintenance of hearing aids, and supply of batteries to "provide guidance for all parties: insurers, injured workers, solicitors, doctors and hearing aid suppliers".

The guideline outlines a process for the investigation and determination of these claims with no lawyer involvement:

"If a request is received from a solicitor, insurers are to advise solicitors by letter that the insurer will now contact the worker directly to determine their needs. The insurer will then notify the worker by letter of the information received from the solicitor and that the worker’s nominated treating doctor must verify the request for the supply of hearing aids in a declaration form to be signed by both worker and worker’s nominated treating doctor."

The guideline stipulates maximum costs for monaural replacement hearing aids and batteries ($1,200.00), monaural digital replacement hearing aids and batteries ($2,000.00) and ongoing annual maintenance and batteries ($150.00). Legal costs can only be recovered for "a duly made new claim, or a claim for further hearing loss made under section 66 of the 1987 Act".

In ruling out legal costs for reactivated industrial deafness claims, the guideline states:

"Solicitors cannot recover costs for reactivation of industrial deafness claims for maintenance of hearing aids, supply of batteries or hearing aid replacement."

The Guideline in Practice 

The Workers Compensation Commission (WCC) recently considered this guideline in the case of Neville Smith v Newcastle City Council (WCC 8486-07) decided on 4 February 2008.

Mr Smith, a former employee of the Council, was paid impairment compensation for hearing loss under section 66 in 1996 (under the old Table of Disabilities) and in 2005 (under the current WPI regime). When those entitlements were paid, there was no claim for hearing aids because Mr Smith utilised government supplied hearing aids.

On 2 January 2007, his solicitors claimed compensation for replacement hearing aids and legal costs as follows:

• Bilateral Oitcon Delta 8000 hearing aids - $8,000.00.
• Cost of trial of several hearing aids - $600.00.

No medical evidence was submitted. Mr Smith simply relied on a quotation to support the claim.

The self insured Council sought to comply with the WorkCover guideline. It communicated with Mr Smith’s lawyers, indicating it would deal with Mr Smith direct. This, however, did not accord with Mr Smith’s wishes. He chose to retain his lawyers. After obtaining medical evidence, the Council offered $4,000.00 in respect of bilateral digital replacement hearing aids. The Council indicated the guideline prevented payment of a higher amount and legal costs. The offer was rejected by Mr Smith.

Mr Smith bolstered his claim by providing further evidence including several medical opinions and a detailed statement outlining his hearing problems, his need for hearing aids and his experiences on trialling several hearing aid models including a model advocated by the Council. This evidence supported his assertion the claimed hearing aids amounted to reasonably necessary medical treatment as a result of injury.

WCC proceedings came on for conciliation/arbitration on 22 January 2008 and were determined on 4 February 2008. The issues for determination were:

• Whether the hearing aids claimed (Oitcon Delta 8000) were reasonably necessary medical treatment as a result of injury.
• Whether WorkCover NSW Self insurer Guideline: 05-03 prevents Newcastle City Council paying more than $4,000.00 in respect of hearing aids.
• Whether the guideline prohibits the Council paying legal costs to the applicant’s solicitors.

Based on the evidence submitted by Mr Smith, the WCC found the claimed hearing aids were reasonably necessary medical treatment within the meaning of section 60.

The WCC then held the WorkCover guideline is not mandatory and can be displaced by other evidence. Following the decision of the New South Wales Court of Appeal in Fletcher International Exports Pty Limited v Barrow (2007) NSWCA 244, the WCC held the WorkCover guideline does not "displace the Commission’s jurisdictional powers or in any way limit an Arbitrator in considering what is reasonably necessary in respect of the provision of hearing aids."On the question of legal costs, the WCC examined section 376 of the 1998 Act (which is WorkCover’s guideline making power) and observed WorkCover has the power to make guidelines in respect of certain prescribed matters, but not costs. The Commission held:

"There are no provisions in the various Workers Compensation Acts which enable WorkCover to issue Guidelines in respect of legal costs. Accordingly paragraph 7 of the Guideline is ultra vires of WorkCover’s power to issue Guidelines and void and of no effect".

The WCC decision renders part 5 of the Guideline (cost limitation on hearing aids and batteries) largely ineffective and part 7 (prohibition on recovery of legal costs) invalid. There are likely to be more cases testing the validity of WorkCover Guidelines.

Author: Mick Franco