Historically, some Compensating Authorities and Self-Insured Employers have often approached settlement negotiations during a workers’ compensation dispute on a global and commercial basis – meaning, that they will agree to resolve a worker’s claim, dispute and sometimes the employment relationship by way of a global settlement sum. The intention is to resolve all heads of compensation and finalise all past and future liability. This has sometimes involved the parties’ agreeing without an assessment, but by way of negotiations and based on the medical evidence available, the extent of the worker’s whole person impairment and the consequential lump sum compensation for non economic loss pursuant to section 58 of the Return to Work Act 2014 (the Act) and economic loss pursuant to section 56 of the Act.
On 23 October 2017, the then President Judge McCusker issued Practice Direction No 28 – Consent Orders, which was issued “because an issue has arisen in connection with the recording of consent orders in connection with s58 assessments” under the Act. The Practice Direction can be found at this link.
Whilst it is still early days, and different Presidential Members of the SAET appear to have different interpretations of the Practice Direction, it seems most likely that parties’ to a dispute will not be able to resolve matters on a global basis unless:
- There has been an assessment of whole person impairment pursuant to section 22 of the Act for any and all injuries that will be subject of an Order pertaining to lump sum compensation under sections 56 and/or 58. This means that the section 22 process must be followed and the worker must have reached maximum medical improvement and be assessed by an accredited assessor; or
- In some cases, the worker agrees that an injury has resolved and, as such, agrees that there will be no impairment and to a NIL WPI and entitlement in the Consent Orders. This approach is still being explored on a case by case basis and seems likely to be applicable to very few matters. It may, for example, apply to matters whereby the worker has suffered a minor injury or an aggravation only and the aggravation has been spent.
It should be noted that the implication of this Practice Direction may cause some difficulty for disputes that involve rejected claims and where, at the time of the settlement negotiations, the injury in question has not reached maximum medical improvement (and therefore the worker cannot undergo a section 22 assessment). The parties’ may wish to negotiate a resolution on a global basis. The Compensating Authority / Self Insured Employer may only wish to resolve the matter from a commercial perspective and on a global basis (to resolve all liability) but may be unable to do so due to the Practice Direction resulting in an inability to resolve any section 56 and 58 entitlements without a section 22 assessment. There will be some instances where the matters can be resolved via different means, with different breakdowns and structures of settlement – but that will be largely dependent on the individual circumstances of the matter. Legal advice should be sought in that regard.
The scope and application of Practice Direction is continuing to evolve, and the Presidential Members of the SAET are providing assistance at short notice to parties to help them work through in-principle settlements to find a solution to record the agreement without being in breach of the Practice Direction. We envisage that there will be further developments and further guidance / direction from the SAET in the early 2018.
Finally, parties’ need to take great care and caution when submitting consent orders that include the provision for the payment of lump sum compensation pursuant to section 56 or 58 of the Act as the Practice Direction provides that in doing so the parties are taken as given an undertaking to the SAET that there has been a section 22 assessment.
This article was written by Shane Thurnwald, Partner and Samara Harley, Senior Associate.