Radical changes to workers compensation laws in NSW will see injured workers thinking long and hard before pursuing a claim. Stephanie Quine investigates what the changes mean for workers, taxpayers and personal injuries lawyers.

Workers compensation laws here and around the world have always made provisions for workers to have their costs, or at least some of their costs, paid.

That’s still the case here — except in NSW. 

On 22 June this year, the Nile Amendment overhauled workers compensation laws in the state, in a move that personal injuries lawyers agree was out of left field.

The original bill, introduced three days before, maintained the situation whereby insurers met injured workers costs at rates regulated by WorkCover.

However, in a midnight amendment, after half an hour of debate, the NSW Government supported a change to the costs regime moved by Christian Democrats MP Fred Nile. It provided that injured workers cannot recover the legal costs they incur to run a workers compensation claim, even if they are successful in the NSW Workers Compensation Commission.

President of Australian Lawyers Alliance, Tony Kerin, describes the changes as draconian.

“Costs were usually only denied if your claim was vexatious or frivolous, there are provisions like that around the county, but in terms of NSW now, win, lose or draw you’ve got to fund it yourself,” he says.

 If the claim is worth $20,000, $30,000 or $40,000 workers may still be able to run that claim and pay their legal costs out of any sums they receive, Green MP David Shoebridge explained while campaigning against the changes in Parliament in September. 

However, for more modest claims, where workers seek some medical treatment or a modest increase in wages, the legal costs they will incur to run the case will, in many cases, be significantly more than the benefits they are chasing. 

“Insurance companies know this. They know that workers will not be able to afford to run their cases,” said Shoebridge.

Quick cuts

The Nile Amendment also retrospectively abolished all claims for lump sum impairment payments that are below 11 per cent of whole-person impairment.

Steve Walker, a partner at Shine Lawyers in Sydney, says his clients have reacted with extreme dismay, disgust and disappointment.

A 17-year-old carpenter he is advising lost a finger on his dominant hand, and damaged the finger next to it, in the first few weeks of his job.

“He has no entitlement now because his impairment was five per cent. It’s well under the threshold of 11 per cent,” says Walker.

“The boy’s mother was sitting next to him [in my office] and was crying.”

Payment is abolished for “pain and suffering” caused by significant injuries. Someone who has had a lumbar discectomy and was getting $50,000 tax free, for example, now gets nothing, says Walker.

 “The new legislation specifically removes the ability of the Workers Compensation Commission to challenge any of those decisions, so the people who are making the decisions to cut them off are also making the decision on review,” he adds.

Window to the sun 

The implementation of the Nile Amendment includes the appointment of a WorkCover Independent Review Officer (WIRO) — a role Kim Garling took up on 1 October.

The WIRO is responsible for independently reviewing work-capacity decisions by insurers and complaints made by workers about insurers. Where an insurer will not review a decision there is, in some cases, subject to approval by WIRO, a grant of some legal funding.

“The devil is in the detail and it’s unclear at this stage how it will work,” says Walker. Kerin agrees and says he’s sceptical that the service will be anywhere near as effective as an independent lawyer.

However, Roshana May, Slater & Gordon’s NSW group leader for compensation claims, believes it’s a sufficient avenue for review.

May says she’s had a number of meetings with Garling and has ensured every lawyer practising in workers compensation at Slaters received an ILARS Panel Number, which enables them to apply for assistance for their clients through WIRO.

“What we know, from speaking to [Garling], is that he contemplates a very low threshold merits test for seeking a grant of aid at this point in time … so it’s very encouraging.” 

She explains that there are three tiers of aid that will be offered: preliminary grants to get a medical report to test whether an impairment is more than 11 per cent; grants of aid for disbursement, for medical report fees for example, and for professional fees.

“It makes up for some of the Nile Amendment downfalls, however it can’t assist in a new category of what we call ‘work capacity decision reviews’, where there is a specific provision that says a legal practitioner cannot receive costs for work done to assist a worker through the review of a work capacity decision,” she says.

Lawyers lose out 

The new laws could see personal injuries practices, especially small firms and sole practitioners, close down, as work in this area naturally contracts.

Anthony Scarcella, a Sydney-based personal injuries lawyer and spokesperson for the ALA, says he knows of firms that have already laid off staff.

Until some form of legal assistance is established in NSW — for example through a WorkCover assistance program like in Victoria, where unqualified paralegals assist workers through a review system — May says lawyers will not be doing that work for free. 

Walker is considering applying to the Supreme Court to challenge the laws on administrative grounds.

He says that, in weekly payments claims, people who are fit for suitable duties but not working because they can’t find a job will now have their cases denied based on assessments of ability to work.

“All of the factors have to be taken into account when looking at a person’s work capacity. For example, someone of migrant background who’s elderly, who’s been injured, will find it very difficult to compete in the open labour market. People previously got weekly payments based on those facts but now they will not,” he says.

Instead of implementing such radical changes, Walker says the Government should have looked at incentives for getting people back to work and encouraging employers to keep on injured workers.

 “So often you see their employment terminated not long after their injury. Strictly it isn’t legal within the first six months, but they so often get away with it. You rarely see fines issued, though there’s plenty of scope in the scheme for that,” he says.

Shift to the taxpayer

While the impact of the Nile Amendment hasn’t been felt by all workers yet, May says lives will be hugely impacted when it is, and that’s when we’ll hear outcry. 

 “New work capacity assessments are going to see entitlements cut and many unable to utilise legal assistance through the defined new review process, and they’re going to see themselves on Commonwealth benefits by way of Medicare and Centrelink and that’s going to have a huge social impact over time,” she says, adding that she’s hopeful some of the savings in the scheme will be funnelled back to injured workers eventually.

Payments under Centrelink are substantially less than the weekly workers compensation payments and they’re subject to delays, says Walker.

The Government’s reasoning behind the Nile Amendment was to reign in a $4 billion deficit that it identified had severely blown out, partly due to an “unsustainable” and mismanaged WorkCover scheme.

Critics say it’s a quick fix, rather than principled reform: that it punishes vulnerable injured workers for increases in claim-handling costs and micro-management of the WorkCover scheme.

Scarcella admits the long-tail scheme needed a comprehensive review — it’s been running since 2001 — but argues the Government not only ignored a lengthy proposal by the ALA, but also the fact that claim numbers, medical and death payments, and legal costs were all down.