All or nothing: Guarding against section 217 claims

21 June 2016

There has been a notable upward trend in the number of WorkCover Applications being made by workers pursuant to section 217 of the Workers’ Compensation and Injury Management Act 1981 (WA) (the Act).

Section 217 of the Act is relevant to insurers and self-insurers in situations where a worker has suffered a compensable injury and has exhausted their prescribed amount for weekly payments under the Act. The section provides that where a worker’s entitlement to weekly compensation payments has exhausted, WorkCover WA may extend the worker’s prescribed amount for weekly payments by up to 75% of the current prescribed amount. This has the potential to lead to an extension of up to $163,477.50 (a figure which will be subject to a moderate increase as of 1 July 2016).

These Applications represent a significant risk to insurers and self-insurers who may find themselves faced with an Application to extend a worker’s weekly payments well beyond the anticipated maximum quantum amount of $217,970.00. These Applications result in an “all or nothing” paradigm where workers have little to lose by running matters through to hearing where they potentially stand to gain a significant further statutory entitlement.

Section 217 of the Act requires a worker to satisfy three criteria in order to be granted an extension. Namely, the worker must prove that:

  1. Their ongoing incapacity results from a compensable condition;
  2. Their compensable condition produces a “permanent total incapacity“; and
  3. The worker’s social and financial circumstances, and their reasonable financial needs, justify an extension.
Permanent total incapacity

“Permanent total incapacity” means that the worker is incapable of undertaking any employment for the foreseeable future (Re Crosser; ex parte Rutherford [2001] 25 WAR 170).

A worker who is only partially incapacitated (that is, a worker who retains some earning capacity), may also come within the scope of the requirements of “permanent total incapacity”, where:

  1. the worker can provide evidence that they are totally incapacitated for any work except for some “special employment of an unusual kind“: and
  2. there is no evidence from the employer that such special employment is available on the open labour market,

(Dettenmaier v Minister for Works [1979] WAR 203).

“Special employment of an unusual kind” typically refers to an employment opportunity that takes into account the worker’s disabilities and provides them with some sort of unusual employment which would not generally be readily available to them in the open labour market. In that regard, special modifications, special restrictions or other work requirements are required.

Section 217 of the Act poses barrier significant hurdle to workers seeking an extension of the prescribed amount. It is not enough for a worker to show that they are permanently unfit for their pre-injury role. A worker is required to prove that they are permanently unfit for all work that may be reasonably available to them.

To resist such an Application, the onus is on the Employer to prove that:

  1. The worker is fit for some form of employment (for example, sedentary, administrative or clerical work);
  2. The worker has the vocational capacity for the type of work identified as falling within the worker’s restrictions; and
  3. Employment of the kind identified as falling within the scope of the worker’s capacity and vocational skill set is reasonably available to the worker.

Insurers and self-insurers who find themselves at risk of an Application being made for an extension of weekly payments pursuant to section 217 of the Act should consider obtaining vocational and labour market assessments at the early stages, before a dispute arises (or preferably seek to demonstrate capacity for work through vocational rehabilitation).

Evidence of capacity for particular types of work to which the worker is vocationally suited, having regard to the worker’s retained knowledge, qualifications and skills, and which is readily available to them having regard to the current jobs market, is compelling evidence which may discourage the making of an Application pursuant to section 217 of the Act, where the worker has retained capacity for work.

Social and financial circumstances and the reasonable financial need of the worker

This third requirement of section 217 of the Act involves an assessment of whether the social and financial circumstances of the worker, and their reasonable financial needs, justify the making of an order. This is a very wide area of discretionary inquiry.

The case of Lockwood Hall v BHP Billiton Nickel West Pty Ltd [C5-2012] provides guidance as to the extent of the factors which may be considered. This case involved a younger worker who contracted occupational asthma as a result of exposure to industrial gases. The worker had dependant children, and at the relevant time his wife was studying to become a nurse. The worker was awarded an extension of $65,000.00, a sum which was intended to provide for the worker (and his family) during a period of financial hardship while his wife completed her training and the worker was unable to participate in gainful employment.

Broadly, some of the factors which may be considered by the decision maker in making their assessment of the worker’s social and financial circumstances, and reasonable financial need, include:

  1. The worker’s age, and when they might retire;
  2. The worker’s savings and superannuation;
  3. The worker’s assets and liabilities;
  4. The worker’s weekly income and expenses;
  5. The earning capacity of the worker’s spouse or partner; and
  6. The needs of any dependants the worker may have.

Resources available to the worker, such as savings or the earning capacity of the worker’s spouse, may be taken into consideration, whether or not the worker (or the worker’s spouse, as in the case of Lockwood Hall), choose to exploit those resources.

Reducing risk

The successful Application for an extension of weekly compensation payments may expose an insurer or self-insurer to payment of an unexpected significant further amount (currently up to $163,477.50).

There are a number of areas of risk with respect to section 217 Applications that insurers and self-insurers should bear in mind when reviewing a worker’s claim:

  1. A worker who has been off work for a lengthy period of time, and who is of an advanced age, is likely to face significant challenges in obtaining alternative employment. It is for the employer to demonstrate that work to which the worker is vocationally suited, and physically capable of performing, is readily available to that worker;
  2. Workers who have performed manual roles for the majority of their adult working life, and who have suffered an injury that renders them incapacitated for employment to which they are vocationally suited, will pose a greater challenge to employers, insurers and self-insurers alike who seek to demonstrate that an extension of the worker’s weekly payments is not justified; and
  3. The geographical location of a worker is a relevant consideration when it comes to identifying alternative employment opportunities for an injured worker. A worker who lives in an isolated area will have significantly reduced job prospects.

These are issues that should be considered as a worker’s prescribed amount for weekly compensation comes closer to exhausting. If there is a risk that the worker will remain in receipt of weekly payments until the prescribed amount exhausts, consideration should be had to the early resolution of the worker’s claim in preference to simply allowing the claim to run its course (and allowing the prescribed amount for weekly payments to exhaust).

This article was written by Andrew Davidson, PartnerĀ and Annaleise Bryant, Solicitor.

Subscribe to HWL Ebsworth Publications and Events

HWL Ebsworth regularly publishes articles and newsletters to keep our clients up to date on the latest legal developments and what this means for your business.

To receive these updates via email, please complete the subscription form and indicate which areas of law you would like to receive information on.

Contact us