Impact of changes to NSW Workers Compensation Act

As part of the 2012 Amendments to the Workers Compensation Act (NSW) 1987, a review of the effects and implications of the changes was included as a requirement within the legislation.

This review is currently underway. The NSW Government has engaged the Centre for International Economics (CIE) to undertake the review as an independent organisation, and they are due to report to the NSW Parliament before the end of the month.

The key terms of reference for the review are seven guiding principles, which formed the key objectives of the 2012 reforms. The principles are:

  1. Enhance NSW workplace safety by preventing and reducing incidents and fatalities
  2. Contribute to economic and jobs growth, including small business, by ensuring that premiums are comparable with other states
  3. Promote recovery and the health benefits of return to work
  4. Guarantee quality long term medical and financial support for seriously injured workers
  5. Support less seriously injured workers to recover and regain their financial independence
  6. Reduce the high regulatory burden and make it simple for injured workers, employers and service providers
  7. Strongly discourage payments, treatments and services that do not contribute to recovery and return to work

The positive impact of the amendments on scheme performance has been well documented by the NSW Government.
Aided by the amendments and improved investment returns, the scheme is now in a much stronger financial position having recorded a surplus, despite passing on a 7.5% reduction in premiums to employers in June 2013 and a further reduction passed on in December.

Despite the obvious benefits, a review of submissions made to the CIE and available for public viewing suggest a number of stakeholders have formed the view that significantly more work is needed if the amendments are to meet objectives of the reforms.

As a provider of workplace rehabilitation services with a strong presence in NSW, Konekt is in the unique position of working closely with key stakeholders in the scheme including the injured worker, employer, insurer or self-insurer.

A lot of the discussion and reviews leading to the 2012 amendments emphasised the importance of timely return to work for injured workers. This continues to be an area of concern for stakeholders in addition to the perceived focus on establishing work capacity to the detriment of focusing proactively on achieving a return to work.

It is Konekt’s view that for principles three, five and seven to be satisfied; a much greater investment is needed in injury triage, and early referral for an accurate diagnosis to enable targeted early rehabilitation.

As well as providing improved return to work outcomes, introducing an effective injury triage model will help insurers decide what services or treatments are appropriate and will contribute toward a better recovery.

Early referral results in positive return to work outcomes and lower average rehabilitation costs contributing directly to the viability of the scheme and premium stability.

Konekt acknowledge and understand the need for a financially sustainable workers compensation scheme in NSW and introduction of work capacity decisions and a new benefits regime aligned with achieving this goal. However, Konekt firmly believe that the primary focus should remain on those activities early in the management of a workplace injury which positively impact work capacity and achieve a reduction in benefits from returning an injured worker to work rather than relying on a work capacity decision to terminate benefits.

Konekt advocates a sustainable and safe return to work aligned with principle three.

Apart from the areas mentioned, there has been a lot of discussion and debate around the dispute resolution process introduced as part of the 2012 amendments, particularly the review process of work capacity decisions made by insurers.

When a work capacity decision is disputed, it is legislated that an injured worker must follow the process as outlined:

    1. Lodge a work capacity application for internal review by the insurer with the insurer.
    2. If the worker disputes the insurer’s decision then an application for merit review by the WorkCover Authority must be lodged within 30 days of receipt of the decision of the insurer or 30 days from the due date if the insurer fails to make a decision.
    3. The worker may make an application to the WorkCover Independent Review Office (ÒWIROÓ) for a review of the insurer’s procedures in making the work capacity decision (not the merits of the case). This application must be made within 30 days after the receipt of the merit review decision.
    4. The final avenue of appeal is to the Supreme Court for judicial review.

The complexity associated with a multi-tiered system of dispute resolution, apparent delays in the processing of disputes, and the impact of the dispute process on return to work suggest that principle six may not yet be achieved.

Like our customers, Konekt look forward to the outcomes of the statutory review and continuing to work with key stakeholders in positively impacting on injured workers in the NSW scheme.