NSW CTP and Workers’ Compensation Reform: responsibility shifting or good policy?
The drastic cuts made to the NSW workers’ compensation scheme in 2012 resulted in a turnaround from a projected debt to an estimated $3 billion in surplus. But at what cost? asks Matthew Forshaw.
The impact will be felt in full this December as payments cease after the five-year grace period expires, with many unprepared for the consequences.
As a personal injury lawyer, on the plaintiff side, I advocate to protect the injured after an accident at work or on our roads. I am genuinely concerned that with the earlier changes to the workers’ compensation scheme and upcoming changes to motor vehicle accident compensation, we face a real risk of systemic responsibility shifting with little gain for the community.
Many workers who have until now been declared unfit to work will face a loss of weekly payments from 2017, resulting from existing changes to the NSW workers’ compensation system. This will force them to seek assistance from other avenues. Significantly, injured people are in danger of becoming political pinballs to reduce running costs and balance the budget.
How injured are you?
Much of the legislative changes in workers’ compensation is reflected in the changes to the motor accidents legislation coming into effect in December 2017. They revolve around the introduction of arbitrary thresholds to determine how long and how much compensation an injured person may be entitled to, based on an assessment of an injured person’s “whole person impairment”.
The problem is the complex assessment process does not necessarily reflect the seriousness of an injured person’s condition, nor their ability to work. In the workers’ compensation system, a number of the thresholds for ongoing weekly compensation and medical expenses require that an injured worker be assessed at over 20 per cent whole person impairment, which is a very high assessment.
For example, in the case of workers who suffer injury at work to their back, it may depend on whether they elect to have potentially risky surgery to determine whether or not they receive weekly compensation or payment of medical expenses for as long as they foreseeably may need it.
The surgery dilemma
Under the WorkCover and the American Medical Association (“AMA”) guidelines, effectively the only way for a worker with an injured back to reach or exceed 20 per cent whole person impairment is to have spinal fusion or disc replacement surgery.
Each of these surgeries are not without risk and a number of surgeons recommend against patients undergoing them, or at least delaying surgery for as long as possible.
This creates a disconnect between an injured person’s financial and health needs. If they undergo the surgery, then they may be risking their long-term health but will be more than likely covered by workers’ compensation insurance for the financial needs in the short to medium term.
However, if they choose to prioritise their health, then they are likely to do so to their financial detriment if they are unable to work, as any workers’ compensation coverage will be limited.
A flawed view of impairment
Indeed, it can be argued that the legislation’s use of whole person impairment to determine an injured worker’s needs is flawed and unfair to the worker.
The AMA guides are used by both the workers’ compensation and motor vehicle accident schemes, both specifically state that whole person impairment assessments are meant to assess the severity of medical conditions and the degree to which it decreases the ability to perform activities of daily living, excluding work. Yet they are still used despite the guidelines.
Like the workers’ compensation provisions, the new motor accident legislation limits the amount of compensation payable to injured persons on the basis of a whole person impairment assessment. If their whole person impairment does exceed 10 per cent, then they will be limited to 156 weeks of weekly compensation. Even if an injured motorist is assessed as having a whole person impairment of greater than 10 per cent, they will be limited to 260 weeks of payments.
Shifting from state to welfare
A shift to the federal welfare system is only likely to increase with the recent changes to the motor accidents scheme. Those unable to work will be shifted off the state-based workers’ compensation scheme and onto the federal welfare system.
Their income now comes from Centrelink, rather than their workers’ compensation insurer. Similarly, medical expenses are more likely to now be met by Medicare, as injured persons’ entitlements to medical expenses also cease some time after their right to weekly payments is extinguished, depending on their level of whole person impairment.
Unfortunately for them, Centrelink benefits are generally less generous than their previous entitlements to weekly compensation, while Medicare and the PBS only cover certain types of treatment.
Asking the hard questions
As the CTP changes are yet to come into effect, it is difficult to gauge its immediate effect. The government has stated that the objectives of the reform is to reduce the time it takes to resolve a claim, increase the proportion of benefits provided to the most seriously injured road users, reduce the cost of green slip premiums and reduce the opportunities for claims fraud and exaggeration.
Similar goals were given as the reasoning behind the workers’ compensation amendments; however, there has been more of a stagnation of increases in insurance premiums rather than a reduction.
We must question whether the reduction or stagnation of premiums for both employers and motorists can fully justify the significant reduction in compensation for workers and road users alike.
Matthew Forshaw is a solicitor with Carroll & O’Dea Lawyers, specialising in personal injury.