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    august 2008P Hks QC

    aCCIDENtCOMPENsatIONaCt REVIEWfinal rePort

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    CONTENTS

    Abbreviations 4

    Introduction and acknowledgements 7

    Recommendations for change 21

    Benefit improvements 35

    Chapter 1 Improving understanding and clarity of the legislation 37

    Legislation and the scheme 38

    Amendments 38

    A new Act 40

    Chapter 2 Workers entitlement to compensation 43

    Who is a worker? 45

    Contribution of employment to injuries 60

    Stress-related and psychiatric injuries 69

    Chapter 3 Ensuring timely access to benefits and support 89

    Delays in injury notification and determination of claims 92

    Introduce provisional liability and streamline injury notification 93

    Reduce formalities 111

    Introduce electronic lodgement 113

    Improve access to medical information 115

    Clarify employer obligations 116

    Providing greater protection against discrimination 118

    Chapter 4 Supporting workers to get back to work after injury 127

    The importance of early and durable return to work 128

    How should the AC Act support return to work? 131

    A new approach to the legislative framework 132Planning return to work 137

    Providing pre-injury or suitable employment 140

    Exemption from the obligation to provide pre-injury or suitable employment 144

    Risk management and occupational rehabilitation programs 146

    Return to work coordinators 148

    Labour hire 152

    Compliance and enforcement 155

    Workers right of action 162

    Roles of other workplace parties involved in return to work 164

    Issue resolution 172

    Return to work incentives 173

    Chapter 5 Better income replacement 185

    Pre-injury average weekly earnings 190Step-downs and entitlement periods 193

    Weekly benefits after 130 weeks for partially incapacitated workers 199

    Weekly benefits for workers who undergo medical procedures after 130 weeks 201

    Payments pending receipt of funds from common law settlements 202

    The relationship between annual and long service leave and weekly benefits 203

    Accrual of leave while in receipt of weekly benefits 204

    Notional earnings 205

    Superannuation 209

    Section 96 212

    The method of calculating entitlement periods 215

    Redemption of weekly benefits 217

    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    CONTENTS continued

    Chapter 6 Treatment expenses 219

    Timeframes for determining liability 223

    Notice of termination of claims 224

    Reasonable costs 225

    Prior approval of expenses 227

    Fee setting 229

    Gap payments 231

    Duration of benefits 232

    Coordinated care programs 234

    Ordinary daily living costs 237

    Regulation of medical and like providers 238

    Chapter 7 Lump sum benefits for significantly injured workers 243

    The adequacy of current impairment benefits 249

    Hearing loss injuries 260

    Gradual process injuries 264

    Multiple injuries 264

    Two separate systems 268

    Delays in lodging claims 270

    Delays in processing claims 272

    Impairment benefit assessment process 274

    Chapter 8 Access to justice for seriously injured workers: common law 277

    Assessing proposals for change 285

    The deeming test 287

    The narrative test for economic loss damages 291

    Review of the method of assessing permanent impairment 295

    Psychiatric/psychological consequences of physical injuries 296

    The impact of ongoing weekly payments on statutory offers 299

    Terminally ill workers 302

    Access to medical information 303

    One application 306

    Reduction in scale costs 308

    Appeals 310

    Chapter 9 Benefits for dependants following work-related deaths 313

    Adequacy of current death benefits 318

    Eligibility for compensation 322

    Accessing death benefits 328

    Chapter 10 Transparency in decision-making and the efficient resolution of disputes 333

    Performance of the current dispute resolution process 345

    A modified approach to dispute resolution 349Lodging a dispute 350

    Internal review of statutory benefit decisions 351

    A modified role for the ACCS 355

    Arbitration 365

    Medical questions 367

    Medical Panel referrals by courts 372

    Reasons 374

    Accountability 375

    Composition of Medical Panels 377

    The Magistrates Court 378

    Review of agent decisions by employers 380

    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    CONTENTS continued

    Chapter 11 Employer premiums 385

    Premium calculation 386

    Principals and contractors 396

    Employer excess 401

    Remuneration 404

    Premium disputes and appeals 408

    Enforcing premium-related obligations 412

    Independent review of premium-setting 413

    Trustees 418

    Uninsured Employers and Indemnity Scheme 419

    Chapter 12 Recovery from third parties 423

    The recovery formula 425

    Application of the recovery provision 427

    Labour hire 429

    Hold harmless clauses 433

    Reimbursement to employers following recoveries 436

    Impact of recoveries on premium 436

    Chapter 13 Self-insurance 439

    The role of self-insurance 440

    How should self-insurance be managed 441

    Eligibility and approval 442

    Ongoing requirements 447

    Contributions 448

    Audit program 458

    Claims management 459

    The need for greater flexibility 462

    Appendices 1. Amendments to inoperative, irrelevant or superfluous provisions 467

    2. Taylor Fry Report 473

    3. Access Economics Report 487

    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    ABBREVIATIONS

    AC Act Accident Compensation Act 1985

    AC Regulations Accident Compensation Regulations 2001

    ACCS Accident Compensation Conciliation Service

    AMCA Air Conditioning and Mechanical Contractors Association

    ACWI Act Accident Compensation (WorkCover Insurance) Act 1993

    AEU Australian Education Union

    AHEIA Australian Higher Education Industrial Association

    Ai Group Australian Industry Group

    ALA Australian Lawyers Alliance

    AMA Australian Medical Association

    AMA-2 American Medical Association Guides to the Evaluation of Permanent Impairment

    2nd edition

    AMA-4 American Medical Association Guides to the Evaluation of Permanent Impairment

    4th edition

    AMA-5 American Medical Association Guides to the Evaluation of Permanent Impairment

    5th edition

    AMIEU Australasian Meat Industry Employees Union

    ANF Australian Nursing Federation

    APA Australian Physiotherapy Association

    ARPA Australian Rehabilitation Providers Association

    AWU Australian Workers Union

    CCP Coordinated Care Program

    CFA Country Fire Authority

    CIP Community Integration Program

    COCA Chiropractic and Osteopathic College of Australia

    CPSU Community and Public Sector Union

    DEECD Department of Education and Early Childhood Development

    ESC Essential Services Commission

    GEPIC Guide to the Evaluation of Psychiatric Impairment for Clinicians

    HSG Health Services Group

    HWCA Heads of Workers Compensation Authorities

    IDSA Industrial Deaths Support and Advocacy Inc

    INSG Injured Nurses Support Group

    LIV Law Institute of Victoria

    MAV Municipal Association of Victoria

    MBS Medical Benefits Schedule

    MDT Multi-Disciplinary Team

    MGA Master Grocers Australia

    MUA Maritime Union of Australia

    NAB National Australia Bank

    NAL National Acoustic Laboratory

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    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

    ABBREVIATIONS

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    NUW National Union of Workers

    NZACC New Zealand Accident Compensation Commission

    OHS Act Occupational Health and Safety Act 2004

    OHS Occupational Health and Safety

    OM Originating Motion

    Panel Medical Panel

    PETP Priority Education and Training Program

    PIAWE Pre-injury average weekly earnings

    PTSD Post traumatic stress disorder

    PWC PricewaterhouseCoopers

    RCSA Recruitment and Consulting Services Association

    SCE Statistical case estimate

    SDA Shop, Distributive & Allied Employers Association

    SI Serious injury

    SIAV Self Insurers Association of Victoria

    SRC Act Safety, Rehabilitation and Compensation Act 1998

    TA Act Transport Accident Act 1986

    TAC Transport Accident Commission

    TCFUA Textile Clothing and Footwear Union of Australia (Victoria Branch)

    VACC Victorian Automobile Chamber of Commerce

    VBIRA Victorian Brain Injury Recovery Association

    VCAT Victorian Civil and Administrative Tribunal

    VCEAVictorian Congress of Employer Associations

    VECCI Victorian Employees Chamber of Commerce and Industry

    VFF Victorian Farmers Federation

    VIEU Victorian Independent Education Union

    VTHC Victorian Trades Hall Council

    VWA Victorian WorkCover Authority

    WC Act Workers Compensation Act 1958

    WIC Workplace Industry Classification

    WOHC Workers Occupational Health Centre

    WPI Whole person impairment

    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

    ABBREVIATIONS

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    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    INTRODUCTIONAreas for reform

    A consultative review

    Overview of the VictorianWorkCover scheme

    The way forward

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    1. On 10 December 2007, I was commissioned by the Minister for Finance, WorkCover and the

    Transport Accident Commission, the Hon Tim Holding, to conduct an independent review of theAccident Compensation Act 1985 (the AC Act) and associated legislation. My terms of reference

    were to provide advice and recommendations in relation to:

    the need to provide fair and effective benefit and premium regimes, having regard to workers

    compensation schemes in other jurisdictions and the need to secure long-term positive

    outcomes for injured workers;

    the fundamental need to protect the operational and financial viability of the scheme;

    identifying and resolving anomalies in the AC Act and in the operation of the scheme;

    improving employer and employee understanding of the AC Act;

    reducing the regulatory and administrative burden on employers, including through improved

    alignment, where appropriate, with related administrative arrangements both within the State

    of Victoria and with other jurisdictions; and

    improving the usability of the legislation through the removal of inoperative, irrelevant or

    superfluous provisions.

    How to read this report

    2. My report is arranged in chapters that address the various components of the legislation and

    the scheme. In particular, the chapters cover

    clarity of the legislation;

    workers entitlement to compensation;

    workers access to benefits and support;

    workers rehabilitation and return to work following injury;

    income replacement benefits for injured workers;

    treatment expenses for injured workers;

    lump sum benefits for significantly injured workers;

    access to common law for significantly injured workers;

    benefits for dependants following work-related deaths; decision-making and the efficient resolution of disputes;

    employer premiums;

    recovery from third parties of benefits paid to workers; and

    self-insurance.

    3. Immediately following this Introduction are two tables. The first table provides a summary of

    each recommendation in the report, with a cross-reference to the location of that

    recommendation in the report. The second table lists only those recommendations that involve

    the improvement of benefits.

    4. I appreciate that reading over 500 pages is a daunting task for even the most committed reader

    and I have therefore developed a separate guide to the report. The guide provides a summary

    of the reports more significant recommendations plus an overview of all the benefit

    improvements. The guide also includes a full list of the reports recommendations and the list ofprioritised benefit improvements.

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    AREAS FOR REFORM

    5. My proposed package of recommendations seeks to address four areas of reform, namely:

    better rehabilitation and return to work outcomes;

    fair and accessible benefits;

    greater accountability and transparency; and

    improved understanding and usability of the legislation.

    Improving return to work is the central objective

    6. All stakeholders were united in supporting the importance of improving return to work for

    injured workers; and this was a central consideration for me in assessing proposals for reform.

    7. An injured workers return to work after workplace injury is much influenced by their

    relationship with their employer and workplace, as well as by the workers recovery from injury.

    Although that relationship is a workplace matter, it can be enhanced by the rights and

    responsibilities established by the legislation, and can be compromised by the compensation

    system.

    8. My recommendations for recasting the return to work provisions in the AC Act aim to support

    return to work outcomes by setting clear expectations for all parties involved in the return to

    work process, without prescribing a one-size-fits-all approach, and supporting the development

    of comprehensive guidance material tailored to the needs of participants in different industries

    and sectors of the economy.

    9. My recommendation for the introduction of provisional liability aims to ensure that workers

    receive short-term income support and work with their employer on return to work, without the

    divisive issue of establishing liability being the initial focus of a compensation claim, potentially

    damaging an employers relationship with a worker.

    Priorities for benefit reform

    10. The Reviews terms of reference indicated that the Review would provide some scope to

    examine the benefits available to injured workers having regard to the need to protect the

    long-term financial viability of the scheme.

    11. I have balanced the competing considerations of providing benefits to injured workers and

    maintaining the financial viability of the scheme by recommending a package of benefit

    improvements that I believe could be funded within existing premium rates.

    12. In December 2007, the valuation of the WorkCover scheme indicated that the margin between

    the average premium rate and the annual cost of funding the schemes liabilities was around

    $93 million an amount commonly referred to as the implied margin.

    13. I have used the implied margin as a guide to the amount that the scheme may be able to affordin additional benefits without putting upward pressure on premiums, or requiring that the

    Victorian Workcover Authority (VWA) use investment returns to fund compensation for injuries.

    14. The implied margin can only be used as a guide because, by the time the Minister receives my

    report, the next valuation of the scheme will be underway and that valuation may significantly

    affect the implied margin. The implied margin will also be affected by any initiatives that the

    Government decides to fund outside the Review.

    15. The actuaries advising me have estimated that, not including administrative costs, the net cost

    of my package of recommendations will be in the range of $88.9-$137.1 million a year. It may

    be that all the benefit improvements recommended in my report cannot be implemented in one

    financial term; nevertheless, I believe that all the benefit improvements should be implemented

    by Government even if implementation occurs over more than one financial term.

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    25. Overall, my review has found that the accident compensation legislation is generally working

    well. However, the Review has identified many reform opportunities that will cut red tape foremployers and improve compensation for the most disadvantaged the families of deceased

    workers, workers with a permanent impairment and long-term injured workers. There is a

    considerable consensus among stakeholders in support of many of these reforms although

    some remain contentious. I encourage the Government having taken the brave step of

    commissioning the first independent review of the AC Act in 20 years to seize this opportunity

    to improve outcomes for injured workers and employers.

    A CONSULTATIVE REVIEW

    26. My proposed package of reforms is very much the outcome of stakeholder feedback. In my

    view, the quality and success of the final recommendations largely belongs to all those who

    have taken the time to engage and be involved with the Review.

    27. I did not approach this Review with a back to the drawing board approach. Rather, I wasguided by the terms of reference which expressed the Victorian Governments view that the

    underlying principles of the accident compensation laws remain sound, and then sought the

    views of stakeholders and practitioners as to how the legislation and the scheme could be

    improved, based on their vast experience.

    28. To assist me, the Minister appointed a Stakeholder Reference Group (the SRG), chaired by

    Ms Elana Rubin, Chairperson of the VWA. The SRGs members were:

    Brian Boyd Secretary, Victorian Trades Hall Council;

    Graham Bird Federal and Victorian Secretary, Australasian Meat Industry Employees Union;

    Cesar Melham Victorian Branch Secretary, Australian Workers Union;

    Wayne Kayler-Thomson CEO, Victorian Employers Chamber of Commerce and Industry;

    Tim Piper Victorian Branch Director, Australian Industry Group;

    Steve Irving Chairperson, Self Insurers Association of Victoria;

    Jane Stephens CEO, Australian Medical Association, Victorian Branch;

    Michael Brett Young CEO, Law Institute of Victoria; and

    Marcus Fogarty Representative, Australian Lawyers Alliance.

    29. The SRG proved invaluable in assisting me to define the issues for the Review, and in acting as

    a sounding board for all of the draft chapters of the report, and commenting on the package of

    final recommendations.

    30. I am very grateful for the time and commitment given by the SRG members throughout the

    Review and for the quality of their contributions to the Review.

    31. In December 2007, I wrote to over 130 organisations asking them for their initial views on

    opportunities for reforming the accident compensation legislation. Their responses helped me

    to develop a Discussion Paper, released in March 2008. In that Paper, I called for detailed

    submissions on a series of issues and questions. In total, 100 organisations and individualsmade submissions in response to my initial letter and discussion paper. I also held over 100

    hours of face-to-face consultation with stakeholders to discuss the issues raised in the Review.

    32. I engaged independent expert advisers on a number of technical issues, namely:

    Taylor Fry, who were engaged to provide independent actuarial costings of all

    recommendations (Appendix 2); and

    Access Economics, who were engaged to advise on pricing of self-insurance contributions

    (Appendix 3).1

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    1 Appendix 1 is a table of recommended amendments to inoperative, irrelevant or superfluousprovisions in the legislation.

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    Acknowledgements

    33. I was greatly assisted in this Review by Counsel Assisting, Michael Fleming, and a Review

    Secretariat, formed from the Department of Treasury and Finance and the VWA. Indeed,

    the preparation of this report would have been impossible without the stimulation and

    support provided by Michael and by the Secretariat.

    34. I wish to record my sincere thanks to Michael and all members of the Review team for their

    assistance to me. Michael brought to the Review a great deal of experience with legal issues

    arising under the AC Act, and a good understanding of the social and economic implications

    of workers compensation. The members of the Secretariat brought to the Review many years

    of practical and policy-oriented experience in the public sector. The commitment, insight and

    diligence of both Michael and the members of Secretariat have made it possible for my task

    to be completed in the short time available, and for the task to be completed so thoroughly

    and accurately.

    35. I am particularly grateful for the assistance given me by Dave McQueen, the outstanding leader

    of the Review Secretariat, Megan OHalloran, communications and stakeholder manager for the

    Review and Linda Timothy, manager of legal and policy for the Review. I do not underestimate

    the hard work, support and clear thinking provided by other members of the Secretariat; but

    I must express my appreciation for the daily support and clear advice provided by those

    three over the past eight months. I should also record the extraordinary level of support,

    encouragement and constructive criticism provided throughout my work on the Review by

    my personal assistant, Lou Coffey.

    36. I would also like to record my sincere appreciation to Elana Rubin, VWA Chairperson, and

    Greg Tweedly, Chief Executive, VWA, and all employees of the VWA.

    37. Since the beginning of the Review, the VWA has provided full cooperation in answering limitless

    requests for information and queries.

    38. I hope the recommendations in this report will assist the VWA achieve its mission of working

    with the community to deliver outstanding workplace health and safety, together with quality

    care and insurance protection to workers and employers.

    OVERVIEW OF THE VICTORIAN WORKCOVER SCHEME

    39. Workers compensation schemes are designed to mitigate and, as far as possible, remove the

    serious disadvantage that is so frequently caused by work-related injury or illness.

    40. The Victorian WorkCover scheme provides employers with compulsory insurance against the

    impact of loss suffered by injured workers. The scheme provides a range of benefits to injured

    workers, for life if required, regardless of fault, including weekly compensation, medical and

    paramedical treatment, attendant care and lump sum payments.

    41. Where death occurs as a result of a work-related injury or illness, support is also provided for

    dependants in the form of lump sum compensation and periodic pension payments, counselling

    for immediate family members and funeral expenses.

    42. The VWA acts as the regulator of Victorias workplace occupational health and safety (OHS)

    and return to work requirements and as the underwriter of the workers compensation scheme.

    It administers the scheme through private insurance agents, who manage claims and collect

    premiums on behalf of the VWA. Agents are authorised by the VWA to provide services to

    employers and injured workers in accordance with the legislation and the standards and

    procedures set by the VWA.

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    43. The VWAs statutory obligations are spelt out in several Acts of Parliament including:

    health and safety at work under the OHS Act; workers compensation and the rehabilitation of injured workers under the AC Act;

    employer insurance premiums under the ACWI Act;

    explosives and other dangerous goods under theDangerous Goods Act 1995;

    the transport of dangerous goods by road underRoad Transport Reform (Dangerous Goods)

    Act 1995; and

    high-risk equipment used in non-work-related situations under theEquipment (Public Safety)

    Act 1994.

    44. Broadly, the responsibilities of the VWA are to:

    help prevent workplace injuries;

    enforce Victorias OHS laws (including selected Commonwealth laws);

    provide reasonably priced insurance against liability for workplace injuries and disease for

    employers;

    help injured workers back into the workforce; and manage the workers compensation scheme by ensuring the prompt delivery of appropriate

    services and adopting prudent financial practices.

    45. In the VWAs 2006/2007 Annual Report, the following safety, business and financial performance

    was recorded:

    less than 30,000 workplace injury claims for only the second time in its history;

    the lowest workplace injury rate on record (it has reduced by 19% in the past five years);

    fourth successive 10% cut to average premium rates;

    performance from insurance operations of $729 million;

    sixth successive year of full-year actuarial release of $394 million; and

    commencement of a return to work inspectorate.

    46. The VWA is governed by a board which is accountable to the Government, stakeholders and the

    Victorian community.

    A brief history of Victorias accident compensation legislation

    47. Workers compensation legislation in Victoria started in 1914, with benefits payable to workers

    for injuries arising out of and in the course of employment. The Workers Compensation Act

    1946 changed the scope to injuries arising out of or in the course of employment.

    48. In June 1983, the Victorian Government established a Committee of Enquiry into the Victorian

    Workers Compensation Scheme chaired by Mr BC Cooney. The Cooney Report2 led to the

    introduction of the AC Act, with the establishment of WorkCare, a single government insurance

    scheme to underwrite workers compensation, replacing the previous scheme underwritten by

    52 private insurers, and the creation of the Accident Compensation Commission to administer

    the scheme.

    49. The AC Act made sweeping changes to the workers compensation system, including public

    underwriting, vocational rehabilitation, OHS reforms, and a new dispute resolution system.

    50. The AC Act has been amended 80 times since 1985, including, in 1987, changes aimed at

    tightening up the system, and focusing particularly on the poor return to work performance.

    A new remuneration system for claims agents was introduced and the ability of employers to

    change insurance agents was enhanced.

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    2 B C Cooney,Report of the Committee of Enquiry into the Victorian Workers Compensation System1983-84, Victorian Government Printer, 1984.

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    62. Since the 2003/2004 financial year, there have also been four consecutive annual 10% cuts

    to the average premium rate payable by Victorian employers. The average premium rate hasreduced from 2.22% of wages in 2003/2004 to 1.46% of wages in 2007/2008.

    The Australian context

    63. Victorias workers compensation scheme is one of 10 schemes within Australia. Each State

    and Territory in Australia has its own workers compensation scheme, which is governed by

    respective legislation. There are also two national schemes: Comcare, which primarily covers

    Commonwealth Government employees, and Seacare, which covers maritime workers.

    64. The State, Territory and national schemes vary markedly in design, coverage, benefit

    entitlements, compliance and premiums. Each scheme has developed since the introduction of

    workers compensation legislation in the early 1900s, in the context of its own political, social

    and economic environment, and it is not surprising that the schemes are significantly different

    in nature, application and content.

    65. The differences between the various schemes have driven a variety of reform initiatives aimed

    at national uniformity, which gained momentum during the 1970s.3

    66. The more recent reform initiatives can be traced back to the Industry Commission reports of

    1995 into workers compensation in Australia.4 In 1989, the Federal Government requested

    that the Industry Commission examine whether existing workers compensation arrangements

    ensured appropriate safety and accident prevention incentives for both employers and

    employees in the context of a federal system and sought advice on any changes that should

    be implemented. The Industry Commission recommended several changes to workers

    compensation schemes and strongly recommended the establishment of a national framework

    for workers compensation.

    67. As part of the agenda for national consistency, the Australian Safety and Compensation Councilwas established to develop policy advice on workers compensation and engage State and

    Territory governments in progressing nationally consistent workers compensation

    arrangements. Currently the arrangements vary in the following main areas.

    Scheme model

    68. Workers compensation schemes can be broadly categorised as no-fault or common law, or

    a hybrid of both.

    69. No-fault schemes pay compensation to injured workers without any inquiry into the question

    of who was at fault for the injury. Schemes which adopt this model are the South Australian,

    Northern Territory and Commonwealth (Comcare) schemes.5

    70. In some Australian jurisdictions, compensation is available for more serious injuries at commonlaw on the basis of fault. In these schemes, access to common law is sometimes limited by

    an impairment threshold or an irrevocable election between accepting no-fault benefits and

    exercising common law rights. Queensland is an example of a model with both these limitations.

    71. Schemes with a hybrid of both models provide long term statutory benefits on a no-fault basis

    and allow access to common law damages on a fault basis. Schemes that operate under this

    model include the Victorian, New South Wales, Western Australian and Australian Capital

    Territory schemes.

    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    3 Guthrie, R, Purse, K & Meredith, F, Workers Compensation and Self-Insurance in Australia National

    Priority or Trojan Horse?, (2006) 17Insurance Law Journal, 256 at 256.4 Industry Commission Workers Compensation in Australia, Report No. 36, February 1994;Industry

    Commission Work, health and safety: An inquiry into occupational health and safety, September 1995.

    5 Northern Territory for injuries after 1987; and Victoria between November 1997 and October 1999.

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    Scheme funding

    72. Workers compensation schemes are funded in three ways: centrally funded, privately

    underwritten or a combination of the two.

    73. In centrally funded schemes, a single public insurer (the Government) both underwrites and

    administers the scheme. Centrally funded schemes include the Commonwealth (Comcare) and

    Queensland schemes.

    74. In privately underwritten schemes, approved insurance companies underwrite and primarily

    administer the scheme. Privately underwritten schemes include the Seacare, Western

    Australian, Tasmanian, the Northern Territory6 and the Australian Capital Territory schemes.

    75. In combination schemes, public insurers underwrite the scheme and are responsible for funds

    management and premiums, but other administrative functions are primarily carried out by

    private bodies (including private insurers). The Victorian and New South Wales schemes are

    hybrid schemes.

    Premium

    76. The majority of employers in Australia pay workers compensation insurance premiums.

    However, some smaller employers are exempt by reason of their structure or size and some

    larger employers, who meet various prudential requirements, self-insure their liability in respect

    of workplace injury. Although self-insurers contribute an amount to help administer the scheme

    in the jurisdiction where they operate, they do not pay premiums.

    77. Premiums fund each of the schemes liabilities. However, cross-jurisdictional comparison is

    complex, due to a number of factors. Premiums are set based on actuarial forecasts of claims

    liabilities. Generally they are set according to the risk profile of a particular industry, but there is

    a multitude of risk profiles. Premium rates are typically fixed as a percentage of an employers

    remuneration and the definition of remuneration varies. Some States have higher levels ofself-insurance (for example, South Australia) and others have lower levels (for example, the

    Australian Capital Territory); and excesses apply in certain jurisdictions (for example, in Victoria

    the excess is the first 10 days of incapacity with the first $564 of medical costs, with a buy-out

    option). Claims liabilities also vary across the States and Territories due to a number of complex

    factors considered in further detail below.

    78. As a comparison, the Commonwealth scheme, Comcare, had the highest average premium

    level for 2006/2007 at 3.03% of aggregate remuneration, closely followed by South Australia at

    3.00%.7 Queensland had the lowest level at 1.20%, and Victorias premium rate of 1.62% was

    the second lowest of the schemes.

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    6 In the Northern Territory scheme, a public insurer also competes in the private market.

    7 No comparable figure was available for the Australian Capital Territory, but was 3.32% for 2004/2005.

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    Coverage

    79. Whether or not a worker is entitled to compensation for an injury at work is dependent on

    a number of factors:

    whether the person is a worker as defined in the legislation (including where a person

    would otherwise not be a worker but is a deemed worker);

    whether the person has suffered an injury (as defined by the legislation);

    whether there was a sufficient nexus between the workers injury and employment, that

    is whether the injury arose out of or in the course of employment;

    to what extent the employment has contributed to the injury (for example, employment

    in Victoria has to be a significant contributing factor for certain types of injuries, and in

    New South Wales it has to be a substantial contributing factor);

    what constitutes work (for example, recess and journey claims are treated differently across

    the States and Territories: the New South Wales, Queensland, the Australian Capital Territory

    and Seacare cover journey claims with some restrictions, Victoria and South Australia do not);

    whether the worker is entitled to coverage having regard to age (many jurisdictions haveretirement provisions which restrict access to compensation, particularly weekly benefits);

    whether there are any exclusionary provisions which may apply (for example, self-inflicted

    injury); there are specific exclusions in each jurisdiction for psychiatric or psychological

    injuries (for example, most jurisdictions exclude psychiatric or psychological injury caused by

    reasonable administrative or management action).

    80. As illustrated above, there are vast differences in the schemes, which determine whether

    employers will be responsible for injuries sustained by workers.

    Benefits

    81. Schemes vary widely in the benefits that workers are entitled to receive. The benefits fall

    primarily into four categories:

    weekly benefits (income replacement); lump sum benefits (permanent impairment);

    medical treatment; and

    benefits for the death of a worker.

    Weekly benefits

    82. Weekly benefits are periodic payments intended to replace income and are common to all

    schemes. However, the amount, levels and duration of weekly benefits vary markedly between

    the schemes. Broadly speaking, most of the schemes decrease the weekly benefits over time

    with one or more step-down periods.

    83. Some schemes have a cap, being the maximum amount of weekly benefit allowed. Some

    schemes also have a maximum period for which weekly benefits are payable (such as

    Queensland, where the maximum period is five years).

    84. All of the schemes use various step-down provisions in which a workers weekly benefits

    are decreased over time. Some schemes compensate workers 100% of their weekly earnings

    (subject to different rules about how those earnings are calculated). In the initial period of

    incapacity for work,8 the Commonwealth (Comcare), New South Wales, South Australia,

    Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory pay 100%

    of weekly earnings to injured workers (subject to maximum levels imposed in some

    jurisdictions). Victoria pays 95% of a workers pre-injury average weekly earnings initially, and

    Queensland pays 85%. Some schemes with higher initial compensation levels significantly

    reduce benefits after the initial period, either by imposing low long-term weekly compensation,

    or by means of a capping provision.

    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

    INTRODUCTION

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    8 The initial period varies from one scheme to another: see Chapter 5, Better income replacement,Table 5.2.

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    85. Weekly payments are calculated differently in each jurisdiction. Some are based on award rates

    (where they still exist) or other industrial instruments; some include overtime bonuses or otherallowances or both.

    86. Each jurisdiction has different circumstances and methods for terminating or suspending

    weekly payments and provides for cessation of weekly benefits in different circumstances.

    Victoria and New South Wales have similar provisions relating to the cessation of payments

    after 130 or 104 weeks of incapacity, where the worker has a capacity for suitable employment.

    Most jurisdictions have suspension or termination provisions to deal with a worker who does

    not comply with rehabilitation and return to work obligations or does not attend medical

    examinations.

    87. In all States and Territories, so-called redemption of weekly benefits is permitted. That is,

    injured workers may redeem their entitlements to weekly benefits (and all statutory benefits)

    in one lump sum amount instead of continuing to receive entitlements in the form of weekly

    payments. However Victoria, New South Wales and the Commonwealth (Comcare) only doso on a very limited basis and subject to restrictions.

    Lump sum benefits

    88. Where a worker suffers a permanent impairment, lump sum payments are available in all

    jurisdictions. Lump sum payments compensate a worker for permanent impairment to a body

    part or function. This payment is made in addition to any entitlement to weekly benefits.

    89. Some jurisdictions operate with thresholds to the entitlement (for example, Victoria has a

    10% whole person impairment (WPI) threshold for physical and 30% WPI threshold for

    psychiatric or psychological injury, New South Wales has 1% WPI threshold for physical and

    15% WPI threshold for psychological or psychiatric injury), and other jurisdictions have no

    thresholds (Western Australia and Queensland). Each jurisdiction has a statutory maximum

    (a cap) for lump sum payments.

    90. The lump sum amount in each jurisdiction is primarily calculated by reference to the AMA

    Guides for the Evaluation of Permanent Impairment, although some jurisdictions use different

    editions of the Guides. Western Australia uses its own guides as does Comcare, although

    those guides are based on the AMA Guides 5th edition.

    Medical treatment

    91. Fundamentally, all jurisdictions cover all reasonable costs associated with treatment,

    rehabilitation and hospitalisation. However, the services which are covered and limits

    on any amounts payable vary between jurisdictions.

    Compensation following the death of a worker

    92. If a worker dies because of a workplace injury, all jurisdictions provide access to death benefits

    so that the workers surviving domestic partner or dependant is entitled to a lump sum, ongoing

    living expenses by way of periodic payments and payment of funeral expenses. Coverage varies

    between the schemes based on the definition of dependant, as do the amounts payable.

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    Common law

    93. Access to common law varies between the jurisdictions and has been a continuing area ofcontention in the schemes.

    94. Before the introduction of no-fault statutory schemes, workers had to begin common law

    proceedings for negligence or breach of statutory duty to receive any benefits (in the form of

    damages). Initially, the damages available at common law were open-ended, but currently

    common law entitlements (where available) are restricted. Negligence (or breach of a statutory

    duty) has to be established; and, in some jurisdictions, there are threshold tests (Victoria has a

    threshold of 30% WPI or a complicated narrative test for serious injury ultimately determined

    by a court, and New South Wales has a threshold of 15% WPI). The types of damages that can

    be awarded have been restricted (Victoria requires a worker to establish a 40% economic loss

    before the worker can sue for economic loss) and caps or upper limits have been placed on

    awards in some jurisdictions.

    95. In some jurisdictions a worker must make an irrevocable election between statutory benefitsand common law damages. South Australia and the Northern Territory have removed access to

    common law damages entirely. Victoria removed access to common law damages in November

    1997, but reinstated that access from October 1999.

    96. One of the biggest differences between the schemes is their relative reliance on common law

    or no-fault statutory benefits for compensating injured workers. That relative reliance

    determines the scheme model. Generally, those schemes that provide access to common law

    have less generous no-fault benefits. The primary example is Queensland. The other schemes

    with access to common law are Victoria, New South Wales (with low limits for weekly benefits)

    and the Australian Capital Territory.

    Regard for other jurisdictions

    97. Several jurisdictions have conducted reviews into various aspects of their workerscompensation schemes. Although the objectives and recommendations made following the

    reviews have varied in content, all appear to have considered harmonisation between schemes

    as a key outcome.

    98. The Reviews terms of reference required the Review to consider workers compensation

    arrangements in other jurisdictions, as well as complementary statutory schemes, in order

    to identify opportunities for alignment, with a view to providing fair and effective benefit and

    premium regimes, and easing the administrative burden for employers.

    99. In the course of developing recommendations, the Review considered the design and delivery

    of the various State, Territory and national workers compensation schemes that operate in

    Australia.

    100. The Review also considered complementary schemes, such as that administered by theVictorian TAC, noting that those schemes have similarities in design, purpose and processes to

    those in the WorkCover scheme. Statutory schemes that interact with the WorkCover scheme,

    such as Federal income taxation and social security, were also considered to identify

    opportunities for administrative alignment and efficiency,

    101. To ensure a best practice workers compensation scheme, international experiences were also

    considered throughout the course of the Review. Comparisons with the United States and

    Canada were drawn because they have State-based (or Province-based) workers compensation

    schemes9 similar to the Australian schemes.

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    9 K Purse, The Evolution of Workers Compensation Policy in Australia, Health Sociological Review (2005)14, 8 at 8.

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    102. Further, Victorias Charter of Human Rights10 became fully operational on 1 January 2008.

    Amongst other requirements, the Charter requires all statutory provisions to be interpreted,and imposes an obligation on the VWA to act in a way that is compatible with human rights.

    Accordingly, the Review has considered the impact of the Charter on the current provisions

    of the WorkCover scheme and any new provisions which may be recommended.

    THE WAY FORWARD

    103. Workers compensation has long aimed to provide fundamental protection for workers and their

    dependants against the risk of injury in the workplace. As workers compensation schemes

    have developed, they have also provided protection for the interests of employers, by providing

    a degree of predictability in the costs of compensating injured workers, by giving financial

    recognition to those employers who develop and maintain safe workplaces, and by facilitating

    a relatively stable workforce through enhanced rehabilitation and return to work policies.

    104. The recommendations made in this report are aimed at strengthening those fundamentalaspects of workers compensation. Because my report is made to the Victorian Government,

    through the Minister for Finance, WorkCover and the Transport Accident Commission, it will be

    the Government that will decide which recommendations will be implemented and how the

    program for implementation should be developed.

    105. I have no doubt that the Government, in identifying and implementing its priorities, will continue

    to emphasise the fundamental scheme objectives of delivering fair and effective benefit and

    premium regimes while maintaining the schemes operational and financial viability. I believe

    that my recommendations can provide a basis for strengthening those objectives and ensuring

    that the Victorian workers compensation scheme continues its strong performance in delivering

    security to workers and employers.

    PETER HANKS QC

    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    10 Charter of Human Rights and Responsibilities Act 2006 (Vic).

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    RECOMMENDATIONSUMMARY

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    Recommendations for change Reference

    Chapter 1 Improving clarity and understanding of the Act paragraph

    1 Recast Victorias accident compensation legislation into a comprehensive Act, arranged

    logically and expressed in plain language.

    1.24

    Chapter 2 Workers entitlements to compensation

    2 Streamline and consolidate the provisions in the AC Act that determine when persons are

    regarded as workers and employers, in order to make the provisions easier to understand.

    2.17

    3 Simplify the deeming provisions in the AC Act relating to contractors in order to improve

    clarity and promote compliance.

    2.46

    4 Clarify the operation of the provisions in the AC Act relating to outworkers, together with the

    deeming provisions, by deeming all outworkers to be workers.

    In addition, the VWA should provide better information about the situations where

    outworker arrangements will be deemed to create employment relationships, and the

    responsibilities of employers in those situations.

    2.99-

    2.107

    2.108

    5 Extend scheme coverage under the AC Act to municipal councillors. 2.130

    6 Reduce weekly benefits paid to workers injured as a result of driving a motor vehicle

    where they are found to have a blood alcohol concentration above 0.05 and below 0.24,

    aligning the AC Act with the relevant provisions in the TA Act.

    2.203

    7 Amend section 82(2A) of the AC Act to exclude from compensation psychiatric injuries that

    arise from an employers reasonable management actions.

    Management actions should be defined to include performance appraisals, disciplinary

    action, demotions and counselling of employees.

    2.311-2.313

    8 Introduce mediation or workplace counselling at the request of any party before the

    determination of liability for stress-related and psychiatric claims.

    2.322-2.331

    Chapter 3 Ensuring timely access to benefits and support

    9 Introduce a more flexible approach to injury notification and making a claim, whether by theworker, the employer, a person on the workers behalf or a doctor, including allowing

    notification and lodgement to the employer, or directly to the VWA or its agents.

    3.183

    10 Introduce systems to enable electronic and telephone notification of injury and lodgement

    of a claim.

    3.184

    11 Ensure that claim forms are regarded as valid unless the VWA or employer is unable to identify

    adequate information to enable a decision about payment or liability. In addition remove the

    distinction between a claim for weekly benefits and a claim for medical and like expenses.

    3.163-3.166

    12 Implement a system of provisional liability in Victoria, in conjunction with a streamlinedinjury notification process.

    Provisional liability should cover both weekly payments, medical and like expenses. A ceiling on the duration and amount of provisional payments should be imposed. Provisional payments should not continue beyond the time when the agent decides whether

    to accept the claim (assuming that the payments have not already ceased because theceiling has been reached).

    Guidelines should set out the application (and any limitations on the application) ofprovisional liability.

    Agents should be able to refuse provisional liability payments in certain circumstances. Eligibility for provisional liability for stress claims and other psychiatric injuries should be

    guided by the schemes experience after the introduction of provisional liability. Agents should be authorised to deny provisional payments where there is an increased risk

    of fraud or likelihood of a claim being denied. Where a claim is denied and fraud is established, any provisional payments should be

    recoverable from the worker (either as a debt or from accrued leave). Where a claim is ultimately denied, the employer should be able to deduct the amount of

    weekly benefits paid from the workers accrued sick leave entitlements. The cost of provisional liability payments on accepted claims should be treated in the same

    way as any other cost on a claim: the cost should count toward the employers premium.

    The cost of provisional payments on claims that are subsequently rejected or closed beforeliability is determined should count towards the employers premium but should not betaken into account in assigning estimates of the future costs of claims.

    The period for determining liability should be extended to promote better initial decision-making.

    3.128-3.150

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    Chapter 3 Ensuring timely access to benefits and support continued

    13 Allow VWA and self-insurers to access the necessary medical information relating to a

    claimed injury, without requiring the consent of the worker.

    3.196

    14 Amend the additional liability provision (section 108(4) of the AC Act) for late lodgement

    of claims by employers so as to calculate the penalty by reference to the period between

    the date when the claim was forwarded to the employer and the date when the claim was

    received by the VWA or the agent.

    3.211

    15 Remove the current offence of refusal to receive a claim for compensation in section

    242(3)(a) of the AC Act.

    Include an express requirement for service of the claim on an employer (either personally or

    by post or electronically).

    3.204

    16 Provide greater protection for workers who experience discrimination for making or

    pursuing compensation claims by amending section 242(3) of the AC Act to ensure that: a wider range of detrimental conduct, falling short of dismissal (such as demotion,

    transfer or reduction in hours) is punishable consistent with OHS, Equal Opportunity and

    Long Service Leave Acts;

    prospective employees are protected in addition to current employees and other deemed

    workers;

    an offence is committed by an employer where the proscribed reason was the

    dominantreason for the discriminatory conduct, aligning the test for liability with the

    test under the OHS Act;

    where the prosecution has proved all the facts constituting an offence under section

    242(3), other than the reason for the alleged discriminatory conduct, the onus of proof

    should shift to the defendant to prove that the dominant reason for the conduct was not

    a proscribed reason, further aligning the test for liability with the test under the OHS Act;

    the maximum financial penalty for an offence under section 242(3) is equivalent to the

    financial penalty for the comparable offence under the OHS Act, but should not bepunishable by imprisonment; and

    orders for reinstatement and compensation and, in the case of prospective employees,

    orders requiring employment should be available to the Court when sentencing for a

    discrimination offence.

    3.241-

    3.248

    17 Include a provision in the AC Act, along the lines of section 131 of the OHS Act, allowing a

    worker to request that the VWA bring a prosecution for an alleged offence in relation to

    dismissal or discrimination for pursuing a compensation claim.

    3.250

    18 Amend the EO Act to ensure that workers who suffer discrimination arising from making or

    pursuing a workers compensation claim can make complaints to the Equal Opportunity and

    Human Rights Commission as the first step in seeking redress.

    3.252

    Chapter 4 Supporting workers to get back to work after injury

    19 The AC Act should include a set of principles that apply to return to work. The principleswould help guide employers, injured workers and other stakeholders in interpreting the

    legislative requirements, and foster the type of relationship between the various parties that

    is essential to a successful return to work process.

    4.71-4.72

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    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    Recommendations for change Reference

    Chapter 4 Supporting workers to get back to work after injury continued

    27 The sanction for workers who fail to make reasonable efforts to participate in the return

    to work process should initially involve suspension of weekly benefits, with termination

    to follow if the failure is not remedied within 28 days.

    4.260-4.261

    28 The powers of the return to work inspectorate should be expanded and the inspectorate

    should be provided with appropriate tools to monitor and encourage compliance with the

    AC Act. In particular, inspectors should be authorised to direct employers to remedy

    contraventions on the spot, rather than having to rely on voluntary compliance or the

    threat of prosecution.

    4.288

    29 The return to work inspectorate should be substantially expanded to a level where the

    inspectorate can conduct a credible workplace intervention program.

    4.310

    30 Consideration should be given to whether the two inspectorates (OHS and return to work)

    should continue to operate as separate entities.

    4.313

    31 The processes for review of decisions made by the OHS and return to work inspectorates

    should be the same, to ensure consistency and improve transparency and accountability.

    The AC Act should identify which decisions are reviewable and which parties are entitled to

    request a review of each decision.

    4.308-4.309

    32 The VWA should retain the exclusive right to prosecute parties for breaches of the AC Act.

    However, the AC Act should be amended to allow any person to seek a review of the VWAs

    decision not to prosecute an offence, consistent with section 131 of the OHS Act.

    4.327

    33 The AC Act and the OHS Act should be amended to extend the role of Health and Safety

    Representatives, so that they can also represent workers in the return to work process.

    A Health and Safety Representative should be permitted to act as a workers representative

    only where the worker consents to that representation.

    4.339-4.353

    34 A similar framework to the OHS Act should be adopted for resolving issues arising in the

    workplace about return to work. The framework should allow for issues to be resolved

    using an agreed workplace procedure or, if no such procedure has been agreed, a

    prescribed procedure set out in the AC regulations.

    4.409

    35 The time within which a worker must choose an occupational rehabilitation provider from a

    list provided by the employer or agent should be reduced from 14 to seven days.

    4.365

    36 Additional guidance material should be developed so as to assist and support healthcare

    professionals in their treatment of injured workers.

    4.386

    37 The VWA should pay treating practitioners for their time in facilitating return to work, incuding

    by telephone consultations between a healthcare professional and the agent or employer.

    4.389

    38 Repeal section 113 of the AC Act which allows employers to direct workers to a

    health professional selected by the employer to provide a certificate where capacity for

    work is in dispute.

    4.397

    39 The VWA should promote the advantages of the JSA and WISE programs to

    employers and workers and proactively identify eligible workers to promote access to these

    programs.

    4.440-4.445

    Chapter 5 Better income replacement

    40 The Government should commission a further review of the method of calculating

    pre-injury average weekly earnings (PIAWE) with a view to incorporating changes and

    trends in current remuneration arrangements.

    5.46-

    5.52

    41 Increase weekly benefits from 75% of PIAWE to 80%, after the first 13 weeks. 5.81

    42 Require the VWA to pay superannuation contributions for injured workers receiving weekly

    benefits after 52 weeks, for as long as the worker is eligible to receive weekly benefits with

    the contributions being made directly to the workers chosen fund rather than reimbursing

    the employer for making superannuation payments. Payments should be based on the

    superannuation guarantee percentage (currently 9%) of the workers weekly benefit.

    5.181-5.193

    43 Clarify that annual leave and long service leave can be taken in addition to weekly benefits. 5.130

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    Chapter 5 Better income replacement continued

    44 Remove the notional earnings provisions of the AC Act which give agents a broad

    discretion to reduce or cease weekly benefits.

    5.151-5.154

    45 Consistent with the approach taken in NSW and Queensland, agents should be able to

    adopt a staged approach to motivating a worker to comply with the workers return to

    work obligations:

    A worker should be given notice of the intention to cease or reduce payments unless the

    worker complies within a specified period with her or his return to work and rehabilitation

    obligations.

    If the worker continues to fail to comply with her or his obligations, payments should be

    able to be suspended or reduced for a further period (of up to 28 days), during which time

    payments will be reinstated if the worker complies with her or his obligations.

    If the worker continues to fail to comply with her or his obligations following the

    suspension period, the agent or self-insurer should be able to cease payments with a

    discretion to reinstate payments where the worker subsequently complies.

    Under the proposal, payments during the suspended period will be forfeited and will count

    towards the calculation of entitlement periods.

    Workers should have the right to seek a review of any suspension or termination decision or

    any refusal to reinstate payments.

    Repeal the provisions, making it a criminal offence for a worker to fail to attend an interview

    to discuss employment opportunities or to fail to notify the VWA or a self-insurer that they

    have returned to work whilst in receipt of benefits.

    5.159-5.165

    46 Subject to appropriate limits, provide weekly benefits to workers who have returned to

    work, but who must take time off work for surgical treatment for a work-related injury, after

    the expiry of the 130 week entitlement period.

    5.114-5.115

    47 Allow for payment of weekly benefits between the date of settlement of a common law

    claim and receipt of the settlement payment by the worker.

    5.119

    48 In relation to the payment of weekly benefits after 130 weeks for workers who have a partial

    capacity to work, and who have returned to work (section 93CD), amend the AC Act to:

    clarify that benefits can be accessed at any time when the worker returns to work;

    ensure that, where a worker is receiving the benefit and the workers employment is

    withdrawn, the worker is given 13 weeks notice of termination of the benefit;

    clarify that temporary fluctuations in capacity or the availability of work do not affect the

    workers entitlement; and

    reduce the time within which the VWA must decide whether to accept or reject such a

    claim from 90 days to 28 days.

    5.103-5.105

    49 Section 96 (which provides that a worker is not entitled to receive weekly benefits in

    conjunction with certain other income benefits) should be amended to ensure that:

    workers may access additional insured benefits for loss of earnings or disability up to

    100% of their pre-injury actual earnings;

    if workers access additional insured benefits for loss of earnings or disability beyond

    100% of their pre-injury actual earnings, the VWA may offset the excess against the

    workers weekly benefits;

    the scope of section 96 should be broadened to include all disability pensions, including

    pensions paid out of income protection insurance, irrespective of whether they are related

    to the injury employment;

    offsets are not to apply where a worker accesses superannuation savings in the form of a

    pension or a lump sum payment; and

    offsets are not to apply where a worker receives a redundancy, severance or termination

    package.

    5.216

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    ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT

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    Recommendations for change Reference

    Chapter 6 Treatment expenses

    50 The timeframe for determining liability on claims for medical and like expenses should be

    fixed in line with the time for determining weekly benefits claims (28 days).

    6.37

    51 Prescribe that 28 days notice be provided to a worker when terminating a medical and like

    expenses claim.

    6.44

    52 Provide consistent information (in the form of guidelines) on the determination of

    reasonable costs and make the information easily available to all parties.

    6.54-

    6.55

    53 Introduce a discretionary power permitting the VWA to require prior approval for some

    medical and like expenses.

    6.67-

    6.74

    54 An independent review of medical and non-medical fees payable by the VWA should be

    conducted as soon as possible.

    The review should include consideration of the provision of appropriate financial incentivesfor service providers to treat injured workers and support return to work.

    6.93-

    6.94

    55 The provisions in the AC Act relating to co-ordinated care plans (section 99AAA) are

    redundant and should be repealed.

    6.144

    56 In line with the TA Act, the AC Act should be amended to authorise the Governor in Council

    to fix limits on the contributions payable by the worker for the cost of supported

    accommodation.

    6.155

    57 The provisions in the AC Act for referring health care providers to their professional bodies

    where there are concerns about their behaviour should be maintained. However, the

    sanctions available to the VWA should be strengthened. In particular, the VWA should have

    the power to suspend future payments to service providers who are found to have engaged

    in unprofessional conduct.

    6.185-6.187

    Chapter 7 Lump sum benefits for significantly injured workers

    58 Increase the maximum benefit awarded for a permanent injury under the impairment

    benefit regime to the equivalent of the maximum common law damages payable for pain

    and suffering that is, from $396,690 to $484,830, to be indexed annually.

    7.59

    59 Workers assessed at 81% WPI or greater should be awarded an impairment benefit equal

    to the maximum amount of common law damages paid for pain and suffering that is

    $484,830. The amount paid to workers assessed between 71% WPI and 80% WPI should

    be increased proportionately.

    7.59

    60 The 2003 amendments relating to WPI of the spine, upper extremity, lower extremity and

    the pelvis should remain as a permanent adjustment to the method of assessing

    musculoskeletal injuries for the purpose of calculating impairment benefits.

    7.70

    61 Increase by 10%, the impairment benefit awarded to an injured worker with a spinal injury. 7.82-7.85

    62 Increase the impairment benefit awarded for a 30% psychiatric impairment to the level

    of impairment benefit awarded for a 30% physical impairment. Similar adjustmentsshould be made to the payments for psychiatric impairments assessed between

    31% and 70% WPI.

    7.103

    63 The VWA should initiate a review of the method of assessing permanent impairment,

    with all relevant stakeholders across the Victorian compensation schemes participating

    in the review.

    7.124

    64 Impairment benefits should be calculated at the date of the determination of a claim rather

    than at the date of injury, bringing the calculation into line with the current practice of the TAC.

    7.132

    65 Introduce consistent terminology for hearing loss claims and injuries, simplify and

    rationalise the provisions relating to hearing loss injuries.

    7.142

    66 Define the date of injury for gradual process injuries as:

    the last day of the workers employment out of which, or in the course of which, the

    injury arose, or the date of the claim (if the worker is still employed in that employment at the date of the

    claim).

    7.168

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    Recommendations for change Reference

    Chapter 7 Lump sum benefits for significantly injured workers continued

    67 The VWA should use the provision in the AC Act that allows it to initiate impairment

    benefit claims on behalf of injured workers.

    7.238

    68 The VWA should consider the feasibility of introducing a one-stop shop for the

    management of impairment benefits. The one-stop shop could be structured in a manner

    similar to the Medical Panels, so that there would be a central location where all impairment

    benefit claims could be processed and where all independent medical assessments could

    occur.

    7.270-7.273

    Chapter 8 Access to justice for seriously injured workers: common law

    69 Lower the common law deeming test to 20% whole person impairment ( WPI) for physical

    injuries only.

    8.93

    70 Once the assessment of permanent impairment has been reviewed (see recommendation

    62), with the percentages of impairment produced by that assessment reflecting more

    accurately the level of impairment suffered by injured workers, a further analysis of the

    relevant deeming threshold for all injuries should be undertaken. If that analysis shows that

    the new impairment assessment tool can fairly and accurately identify the seriously injured,

    it might be possible to abandon the narrative test and rely on a measure of impairment as

    the sole gateway to common law damages (after further consultation and consideration of

    the effectiveness of the new assessment tool). Even if the narrative test is not abandoned, a

    more accurate impairment assessment tool should enable the majority of seriously injured

    workers to access common law through the deeming test, rather than the narrative test, as

    was intended when the two tests were introduced.

    8.134-8.135

    71 Amending section 134AB(28) of the AC Act so that all weekly payments received after

    the workers statutory counter-offer during the section 134AB(12) process are disregarded

    when comparing the judgment, settlement or compromise with the workers statutory

    counter-offer.

    8.184

    72 Allow a serious injury application to continue where a worker dies before the application is

    heard by providing that, where the claimant dies before the determination of significant

    injury from a cause unrelated to the injury to which the claim relates, the Court may make

    a determination of serious injury.

    8.192

    73 Where a worker lodges a serious injury application, the worker should be taken to have

    given authority for the VWA to request and obtain relevant medical information.

    The AC Act should include a framework that:

    sets clear parameters for the type of information that can be requested and the extent

    of the authority;

    provides a mechanism for dealing with disputes that may arise about the provision of

    information in an efficient and effective manner, bearing in mind the relevant timeframes; enables the serious injury decision-making timeframe to be extended by a further (say)

    30 days in the event that vital information has not yet been provided; and

    ensures appropriate and proportionate methods of dealing with non-compliance with the

    authority by healthcare providers.

    The current legal costs order will also need to be amended as all workers would be required

    to provide a medical information authority and thus no financial incentive or sanction need

    be included in the costs order.

    8.214-8.215

    74 Amend the AC Act to clarify section 134AB(21). The sub-section should make it clear that,

    where an application for serious injury has been denied or accepted, or has resulted in a

    determination of serious injury (including a deemed determination), or has otherwise been

    resolved, a worker may not make a further application for the same cause of action.

    8.232

    75 A review of legal costs in work-related injury litigation is recommended in order to

    determine the impact of the 20% scale cost reduction on injured workers and whether theabolition of the scale cost reduction supported by legal groups is justifiable.

    8.252-8.253

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    Chapter 10 Transparency in decision-making and the efficient resolution of disputes continued

    The review unit (or self-insurer) will not have the power to substitute a new decision but, atthe conclusion of the review, the review unit (or self-insurer) will report the outcome to theACCS, with a brief statement of reasons, as one of the following alternatives: the original decision is confirmed because, on the material before the original

    decision-maker and having regard to the legislation and the VWAs (or self-insurers)policies, the decision was the correct or preferable decision;

    the original decision is not confirmed because the material before the originaldecision-maker is insufficient to enable any decision to be made, having regard to thelegislation and the VWAs (or self-insurers) policies;

    the original decision is not confirmed because, on the material before the originaldecision-maker and having regard to the legislation and the VWAs policies, the decisionwas not the correct or preferable decision.

    Where the review unit (or self-insurer) finds that the material before the original decision-makeris insufficient to enable any decision to be made (the second alternative), the review unit(or self-insurer) will be required as part of its reasons, to specify any additional informationconsidered necessary to resolve the dispute, including the opinion of a Medical Panel.

    86 The review units conclusion and the statement of its reasons should be provided to the

    injured worker, the employer, the VWA and its agent. The self-insurers conclusion and the

    statement of its reasons should be provided to the injured worker.

    10.166

    87 Ministerial guidelines should be developed, which set out the procedures to be followed on

    internal review, and those guidelines will assist self-insurers to perform their equivalent

    review function.

    10.167

    88 The AC Act internal review unit should be operationally separate from the VWA and report

    directly to the CEO.

    10.171

    89 Require the ACCS to notify the parties of the outcome of internal review within seven days,

    together with information setting out the next steps for the injured worker.

    10.179-

    10.180

    90 Require workers to request continuation of the conciliation process within 14 days

    of that notification (although an extension of time should be possible in

    exceptional circumstances).

    10.181

    91 Require the conciliation officer to request within seven days that the parties produce

    specified information necessary for conciliation to proceed.

    10.182

    92 Remove the prohibition on a party, who refuses or fails to produce any document or

    provide any information requested by the conciliation officer, from tendering the document

    or information as evidence in any proceedings that relate to the dispute before the ACCS

    section 56 (9A) of the AC Act.

    10.186

    93 Require an outcome certificate be provided by ACCS within seven days of conclusion of

    the conciliation conference, with the certificate setting out any terms on which the dispute

    was resolved and certifying that the parties acknowledge their intention to be bound by theresult. The AC Act should provide that the certificate be treated as conclusive.

    10.188

    and

    10.209

    94 Where matters remain unresolved, require the outcome certificate to set out any bases for

    agreement and identify the issues that remain in dispute and that require determination.

    10.210

    95 Remove the powers of conciliation officers to make directions. 10.205

    96 Clarify that parties may not be represented at conciliation by a person who

    is a legal practitioner; or

    holds a tertiary degree in law or legal studies; or

    is otherwise eligible to be admitted to practice;

    unless the conciliation officer and each party to the dispute agree.

    10.230

    97 Provide for reimbursement of reasonable costs incurred by workers for attending

    conciliation, limited to reasonable travel expenses and related time lost from work.

    10.242

    98 Require the VWA and self-insurers to pay the reasonable costs of medical reports

    obtained and used for the purposes of conciliation where the medical reports have been

    obtained both with the consent of the worker and at the request of the conciliation officer.

    10.248-

    10.249

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    Chapter 10 Transparency in decision-making and the efficient resolution of disputes continued

    99 Revise the ACCSs governance structure, including the establishment of a Board to give

    general directions to the ACCS and monitor its performance.

    10.257

    100 Confer increased powers on the Senior Conciliation Officer to ensure that:

    conciliations are conducted expeditiously and consistently;

    conciliation officers comply with appropriate protocols; and

    transparency and accountability measures are introduced.

    10.260

    101 Clarify the power of a Medical Panel to return a medical question to the referring body

    where the referral is unclear or otherwise inadequate. That power should be in addition to

    the Panels power to return questions that relate to non-medical matters.

    10.302

    102 Amend the definition of medical question to address anomalies identified by stakeholdersso as to provide greater clarity and certainty about the matters which may properly be the

    subject of a referral to a Medical Panel.

    10.303

    103 Provide rights of assistance to persons with a disability (including minors) when attending a

    Medical Panel, similar to those contained in sections 26LZD(2) and (3) of the Wrongs Act 1958.

    10.305

    104 Provide the Courts with discretion to refuse to refer medical questions to Medical Panels

    where the proposed question involves non-medical matters, and where the referral would

    not be in the interests of the proper administration of justice.

    10.316

    105 Place a time limit on referral by the Courts of medical questions to Medical Panels, with a

    power to refer after that time limit where exceptional circumstances exist.

    10.318

    106 Require Medical Panels to provide written reasons together with their opinions on a medical

    question.

    10.323

    107 Ensure that the Ombudsman has effective oversight of the Medical Panels Convenors

    administrative functions.

    10.335

    108 Repeal the current restriction in section 63(4) of the AC Act on the permitted number of

    Medical Panel members.

    10.344

    109 Remove the restrictions on the jurisdiction of the Magistrates Court with respect to

    disputes over statutory benefits.

    10.348

    110 Establish an exception to the mandatory requirement for conciliation before proceedings

    are issued. Subject to the views of the Court, and an appropriate Court order, parties to the

    dispute should be permitted to amend their pleadings to ensure that all outstanding issues

    between the parties are brought before the Court in a timely manner.

    10.355

    111 Employers should have limited rights to seek internal review of decisions. In particular, they

    should have the opportunity to seek review of initial decisions to accept liability for a claim.The form of internal review for employers should be more extensive than the internal review

    contemplated for worker disputes, given the limited impact of any decision made on

    internal review and the fact that the employer would not be able to take the matter to the

    ACCS or to the Magistrates Court.

    10.367-

    10.368

    112 The review unit should report its conclusion to the employer and to the VWA, which in

    turn would be required to apply a conclusion that the agent decision was not confirmed

    in the calculation of the employers premium.

    10.371

    113 The outcome of employer applications for review must be limited to premium impacts, and

    not affect benefits already granted to a worker.

    10.372

    114 Given that the outcome of employer applications for review would be limited to premium

    impacts where the agents decision is not confirmed, an employers and workers return

    to work obligations should continue to apply.

    10.373

    115 Employers should be given the right to request, from their agents, written reasons for

    decisions, particularly in relation to initial liability, as well as at appropriate points throughout

    the life of a claim.

    10.374

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    Chapter 11 Employer premiums

    116 The VWA should improve its information and advice to employers regarding Statistical Case

    Estimates (SCEs) by:

    ensuring that claim statements disclose the timing of information used in determining the

    SCEs for individual claims; and

    including all estimates of future costs against individual claims, rather than grouping the

    estimates in one combined amount at the end of the statement (unless the grouped

    amounts are small).

    Improved information should be supported by:

    including information with the premium statement that explains the key drivers of SCEs

    (safety, speedy return to work, and staying at work) and tells employers what they can

    do to reduce their premiums and where they can get more information;

    providing more detailed and up-to-date information on the VWA website about how

    premiums are set, what drives SCEs and how employers can reduce their premiums; and making the premium simulator available to employers on the VWA website

    whenever possible.

    11.53-11.54

    117 Only new claims received to the end of December should be included in the calculation

    of premium for the following financial year.

    11.59

    118 Employers should have the right to seek a review of their SCEs. However, that right should

    be limited to data errors that lead to erroneous estimates.

    11.60-11.66

    119 Amend the contractor provisions so that only the deemed employer would declare rateable

    remuneration for the deemed worker. The deemed worker would be entitled to make an

    injury claim only against the deemed employers WorkCover insurance policy.

    11.126

    120 The scheme should provide employers with the option of a higher excess of $1,000 for

    medical expenses and $15,000 for weekly payments, equivalent to around 16 weeks of

    salary.

    11.135-

    11.139

    121 Alignment of the definitions of remuneration for workers compensation and for payroll tax

    within Victoria should commence. Alignment of the definitions of remuneration for the

    workers compensation schemes in Victoria and NSW should also commence, with a long

    term objective of aligning the definition across all Australian jurisdictions.

    11.174

    122 There should be transparent and robust mechanisms for review of premium decisions made

    by the VWA with:

    a formal internal VWA premium review process, which aims to provide a non-adversarial

    system for the prompt and low-cost resolution of premium disputes; and

    a codified premium dispute resolution system which allows employers recourse to

    independent review (for example, VCAT, the Magistrates Court or the Supreme Court),

    based on the model for Victorian State taxes.

    The dispute resolution system should include:

    the right of an employer to object to a premium notice (including an adjusted premium)within a prescribed time period;

    the requirement for the VWA to determine an employers objection within a prescribed

    time period (for example 60 or 90 days);

    the requirement for the VWA to provide written reasons for its decision so as to ensure

    transparency; the reasons would be provided through a formal premium review process

    by a VWA internal review unit with parameters codified in legislation; and

    the right of an employer, aggrieved by a decision made by the VWA (or the failure to make

    a decision), to seek an independent review within a prescribed time (for example, 60 or 90

    days).

    11.201-

    11.204

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    Chapter 11 Employer premiums continued

    123 The VWA should be obliged to pay interest where a review finds that a lower amount of

    premium is payable.

    11.214

    124 To encourage voluntary disclosure of non-compliance and help reduce the VWAs

    administrative burden, include provisions allowing the remission of penalties in cases of

    voluntary disclosure in the ACWI Act.

    11.223

    125 Introduce penalties for employers who enter into premium avoidance schemes and for the

    promoters of such schemes.

    11.224

    126 Introduce a statutory requirement for review of the VWAs premium-setting by an

    independent expert body, such as the Essential Services Commissioner.

    11.257

    127 Amend the ACWI Act to overcome the situation where a trustee would be in breach of the

    legislation by holding multiple WorkCover ins