Workers compensation claims for psychological injury - dual HR and injury investigation - why both?

An employer who investigates an employee for any matter – performance, code of conduct issues, grievance complaints or anything else – can sometimes find themselves then dealing with a subsequent workers compensation claim for psychological injury.

The timing of the compensation claim can vary. It can emerge at the beginning of the HR investigation. Sometimes, the claim can be made following the investigation or, often, when leave entitlements run out.

Whether or not the workers compensation claim is justified is one matter. The other matter – and the one addressed in this article – is how to properly deal with such a claim.

The first point to note is that a psychological injury claim will inevitably prompt separate and additional investigation instigated by the insurer or Council self-insurance unit covering at least some, if not many, of the matters already dealt with by the employer or HR investigation.

Given that, why have two investigations at all? Surely a single investigation is stressful enough on all parties, including witnesses, without adding another to the mix. Can the workers compensation claim be addressed by the HR investigation? The short answer is no!

The focus of the employer or HR investigation is usually on conduct or performance of the worker and other employees. This investigation is designed to establish whether the misconduct or poor performance occurred and, if it did, the employer action which should follow such as a warning, performance improvement plan, further training or other disciplinary measures such as demotion or even dismissal.

Where there is also a work-related psychological injury, the entitlement compensation usually depends on the employer action that caused the injury. If the injury was wholly or predominantly caused by reasonable employer action on defined matters such as performance appraisal, discipline or dismissal, there is no entitlement.

The focus of the workers compensation investigation is, therefore, the action taken by the employer to deal with the performance or conduct issue, whether it falls into one of the categories where workers compensation benefits are excluded and whether the employer action was objectively reasonable. Whilst the conduct or performance of the worker is relevant, of more relevance to workers compensation is what the employer did about that.

The focus of this investigation is, therefore, quite different and the material assembled in the HR investigation will not be enough to properly deal with workers compensation.

Moreover, HR investigations often do not produce signed witness statements in admissible form, which is a requirement in the Workers Compensation Commission.

What’s more, material that may be important in an investigation – such as interview notes, HR investigation and disciplinary correspondence, internal emails and an investigation report – carry some weight but will just not be enough to deal with the workers compensation claim. The material usually won’t address the main employer defence to psychological injury claims under section 11A(1) of the Workers Compensation Act:

No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers

The workers compensation dispute resolution system is designed to do just what the name says – resolve disputes. It is not an adversarial court process, hearing times are kept to a minimum, there is limited opportunity for cross examination and witnesses are rarely called to give oral evidence.

The system is paper driven and ‘front end loaded’. This means the witness statements must be prepared in admissible form, signed served with the dispute notice prior to litigation. The evidence must be assembled early and promptly when the claim is made. If the witness statements are not obtained, the insurer generally won’t be able to dispute the claim and it will have to be paid.

Preparing for a psychological injury claim defence

How, then, do you deal with a claim for psychological injury?

The first principle is to act promptly and identify claims where the section 11A(1) defence may apply to disentitle or exclude payment of workers compensation. You should also identify questionable or suspect claims at the beginning. These claims should be targeted for detailed insurer driven factual investigation.

If you do decide to dispute the claim:

• It is critical to begin by assembling all relevant information before the insurer factual investigation begins. This includes things like the injury notice, claim form, medical certificate(s), HR investigation and records, business unit material such as email and notes, and historical sick leave records.

• Identify any non-work events or pre-existing medical conditions that could be relevant to the alleged injury, and who has that information; but remember unsubstantiated hearsay or speculation does not help and won’t be useful.

• Then develop a chronology of potentially relevant causal events; not the worker’s life story but the things you think caused the injury.

• Focus on what the worker is alleging in the claim form and medical certificate. Do not be distracted by anything else.

• Create a list of relevant witnesses and their contact details.

• Organise a go-to person for the investigator at the Council to help with lining up witnesses and obtaining any further material.

Limit material only to what is relevant and order it in a way that helps the insurer and/or investigator make sense of it. A jumble of disordered documents does not enhance your case.

Your insurer or solicitor will brief an investigator to research and check relevant evidence. The brief will include establishing a balanced history of relevant events, what the worker alleges, and formulating a cohesive employer response.

Witnesses are not obliged to give statements, and some will refuse to do so on legal advice. Employers cannot oblige employees to sign statements. Those who do sign, should be given the opportunity to review and, if necessary, amend them before doing so and then be given a copy of their signed statement only – do not give them copies of any other documentation.

During a claim investigation, information may come to light that has some bearing on the initial – or even a subsequent – employment issue. That information, however, may only be used to deal with the compensation claim. To use it otherwise can breach workers compensation regulatory requirements and lay the employer open to legitimate complaints from witnesses that their evidence is being used for a purpose not disclosed to them. An employee may have agreed to give a statement for the compensation claim; without permission to use the statement to support disciplinary action against the worker.

Finally, be aware the injury story and related evidence can change over time, including after the claim is disputed. Depending on the nature of those changes further investigation may be warranted.

Should a claim arise get in communication with your insurer or self-insurance unit early and stay in touch with them and the investigator until the matter is settled. In addition, ensure you are doing everything needed to deal with the claim and doing it in a timely fashion.

Author: Mick Franco