WorkCoverSA Injury and Case Management Manual Chapter 9: Payment entitlements November 2009
Contents Chapter 9: Payments entitlements...5 Centrelink, other Commonwealth benefits and private garnishees 5 Garnishee orders...5 Federal Government...5 State Government...5 Private and individual companies...5 Payment of settlement monies and Tribunal costs 7 Payment of settlement monies to solicitor s trust account...7 IRREVOCABLE AUTHORISATION AND INDEMNITY...7 INDEMNITY...7 Payment of Tribunal costs and disbursements...8 Lump sums 8 Lump sum compensation for non-economic loss (sections 43, 43A and 43B) 9 Prior requirements for a payment...10 Assessments for permanent impairment...10 5% threshold...11 Psychiatric disabilities...11 Disfigurement...11 Aggravation, acceleration, exacerbation, deterioration or recurrence of a prior compensable disability.11 Impairments from unrelated disabilities or causes...12 Impairments are to be assessed in chronological order...12 Schedule 3A Total loss, no disadvantage-compensation table...13 Process for section 43 lump sum determinations...13 Disputes process...16 Deductions to Centrelink, Department of Education, Employment and Workplace Relations and Medicare Australia 17 Centrelink...17 Department of Education, Employment and Workplace Relations (DEEWR)...17 Medicare Australia (formerly Health Insurance Commission) and section 43 payments...17 Payments to Medicare Australia...18 Redemption of weekly payments and medical expenses (section 42) 22 General principles...22 Redemption criteria...22 Section 42(2)(e)(iii)...22 Approval of redemption...23 Limitations to claims agent s redemption delegations...23 Redemption negotiations...23 WorkCover Corporation of South Australia, 2009 Page 2 of 63
Prerequisites to a redemption in section 42 of the Act...23 Competent professional advice...23 Competent financial advice...25 Consultation with the employer...27 Certification of incapacity...27 Conditions to making a redemption...27 Agreement to redemption...28 Redemption payments...28 Cessation of weekly payments and/or medical expenses...28 Notification to Medicare Australia...29 Dispute resolution...30 Section 58C obligations...31 Effect of redemption on weekly payments...31 Effect of redemption on employer s claims experience...32 Processing a redemption...32 Loss of earning capacity assessment (LOEC) 34 Compensation for property damage 34 Discharge voucher Property damage...35 Weekly payment entitlements 36 Payments prior to claim determination interim payments...36 Guideline for payment of interim payments...36 Exemption from employer's liability...37 Time limit for payment...38 Employer defaults on weekly payments...38 Self-employed worker...38 Interest for delay in payment of weekly payments...38 Worker delays...38 Mutuality...39 Two or more disabilities...39 Tax payable on interest...40 Incapacity for work...40 Deeming provision partial deemed total (for date of injury prior to 1 July 2008)...40 Weekly payments over designated periods 41 Definitions relevant for weekly payments over designated periods...41 Designated weekly earnings...42 Section 35A(4)(b) Claims agent does not have the delegation under this section...42 Entitlement periods 43 First entitlement period...43 Second entitlement period...43 Third entitlement period...43 Aggregate periods...44 WorkCover Corporation of South Australia, 2009 Page 3 of 63
Notice period advising of end of entitlement period...44 Entitled to the payment of compensation...44 Work capacity review section 35B 45 Assessment of work capacity...45 Determining no work capacity...46 Can the worker return to suitable employment?...46 Process for review...47 Application for continuation of payments after expiry of the third entitlement period section 35C 48 35C Application Worker not in employment...49 Leave entitlements and effect of an allowance or benefit on weekly payments 49 Period of incapacity counted as period of service...49 Total incapacity greater than 52 weeks...49 Examples of annual leave entitlements...50 Leave entitlements under other legislation...51 Public holidays, rostered days off...51 Taxation on direct weekly payments (including top-up payments) 52 Tax file declaration...52 Effective tax file number (TFN) declaration...52 14 day rule for worker to provide completed TFN declaration...53 28 day rule for worker to provide completed TFN declaration...53 What if a worker does not provide a completed TFN declaration...54 TFN declarations forms to the ATO...54 Top-up payments...54 IDEAS flag...55 Calculation of tax deduction...55 Taxation on backpay and interest...55 Tax application principle for backpay and interest...56 Amounts accrued in the current financial year...56 Amounts accrued in previous financial years...59 IDEAS, backpay and interest payment processing...61 Deduction authorities applied to income maintenance in IDEAS 61 General...61 Child Support Agency (CSA) and Centrelink payments...62 ATO garnishees...62 Payment summaries (previously called group certificates)...63 Reasonable costs reasonably incurred 63 WorkCover Corporation of South Australia, 2009 Page 4 of 63
Chapter 9: Payments entitlements This section deals with an injured worker s entitlements to payments for a compensable disability: weekly payments of income maintenance lump sums compensation for property damage. Centrelink, other Commonwealth benefits and private garnishees Garnishee orders A garnishee order (or order for attachment) can be simply described as an action taken in consequence of a right of claim by one party on the money of another who owes that money. For example, the Child Support Agency may serve notice on a claims agent that money needs to be deducted from a worker who is about to receive a lump sum payment for non-economic loss, as that worker owes the Child Support Agency money. The claims agent is required to deduct the amount for the Child Support Agency and pay the balance to the worker. Generally speaking, garnishee orders will be received from government departments or agencies, though private companies and individuals may also take this action. In each case the rules vary. They are set out below. Federal Government Federal Government departments must be given the power to garnishee by legislation. Therefore, where a particular Act gives the relevant Government department the power to garnishee, the claims agent is bound to comply with any request received. State Government State Government departments must be given the power to garnishee by legislation. Therefore, where a particular Act gives the relevant Government department the power to garnishee, the claims agent is bound to comply with any request received with the following exceptions: Weekly payments and section 42 (redemption) payments are characterised as salary or wages and therefore cannot be garnished without the consent of the worker. If however, the relevant Act under which the request is made authorises the garnishee of wages and salary, a deduction can be made. Future entitlements to a lump sum payment can only be garnished if the relevant Act provides specific authority to do so. Private and individual companies Where a garnishee order is received from a private individual or company, the order must be approved by the Governor. If not, it should be returned to the creditor advising that the order is unenforceable until it has been issued in accordance with section 10(1) of the Crown Proceedings Act 1992. WorkCover Corporation of South Australia, 2009 Page 5 of 63
Where an order has been obtained in accordance with the above Act, the claims agent may make the necessary deductions with the following exceptions: Weekly payments and section 42 (redemption) payments are characterised as salary or wages and therefore cannot be garnished without the consent of the worker. If however, the relevant Act under which the request is made authorises the garnishee of wages and salary, a deduction can be made. If a lump sum payment has not been determined by the claims agent a garnishee order is not valid as the money due to the worker must be established prior to the issuing of the garnishee order. WorkCover Corporation of South Australia, 2009 Page 6 of 63
Payment of settlement monies and Tribunal costs Payment of settlement monies to solicitor s trust account If a worker s solicitor has provided a copy of an Irrevocable authorisation and indemnity in the precise terms set out below which is current and signed by the worker, then the case manager must pay the compensation to which it relates to the solicitor s trust account. IRREVOCABLE AUTHORISATION AND INDEMNITY IN CONSIDERATION of my solicitors (name of firm) of (address) acting for me with respect to my claim (specify nature) and agreeing to forebear recovery of any legal fees billed to me for work undertaken in relation to my said claim until settlement (specify payment), I, (name of worker), HEREBY IRREVOCABLY AUTHORISE AND DIRECT Employers Mutual Limited, as agent for the WorkCover Corporation, to make payment of settlement funds (specify the nature of the particular payment as may be relevant) to the trust account of my said solicitors. I HEREBY ACKNOWLEDGE that such payment wholly discharges the liability of the WorkCover Corporation to me for the said entitlement (specify as above) and I IRREVOCABLY INDEMNIFY the WorkCover Corporation from any further claim, demand or action with respect to such specified payment at any subsequent time. If the worker s solicitor does not provide such a document, the compensation is to be paid to the worker direct unless the worker s solicitor has provided a current general authority signed by the worker (see below for minimum criteria) and the solicitor provides an Indemnity in the terms set out below. INDEMNITY WHEREAS Employers Mutual Limited, as agent for the WorkCover Corporation, will pay compensation payable to (name of worker the worker ) to (name of firm or solicitor) trust account in accordance with the worker s current authority (name of firm or solicitor) INDEMNIFIES the WorkCover Corporation if the worker seeks payment direct from the WorkCover Corporation at a later time to the extent of the moneys which (name of firm or solicitor) retained for solicitor / client costs (including disbursements) in the event that the WorkCover Corporation is found liable by a court to pay those moneys to the worker. WorkCover Corporation of South Australia, 2009 Page 7 of 63
The following is an example of a worker authority: I (name of worker) hereby authorise Employers Mutual Limited to pay compensation payments due to me to my solicitor s.. (name of firm or solicitor) trust account. DATED THE DAY OF 200.... Worker's signature... Signature of witness... Print full name of witness (BLOCK LETTERS)...... Address of witness Payment of Tribunal costs and disbursements Generally, the Tribunal orders will also award costs and disbursements. On receipt of the Tribunal orders, a recommendation on the claim for costs should be provided by WorkCover s legal representative acting in the matter. The claims agent is to pay costs to parties without the need for separate invoice. There is no requirement for the worker s solicitors to submit a formal invoice or provide a breakdown of their fees unless they are excessive. As the payment made is in settlement of a claim, WorkCover is not entitled to claim any GST on the solicitor s fees. Therefore, no GST component should be entered into IDEAS for the solicitor s fees. NOTE: An invoice is not required to pay the disbursements, however disbursements should not be paid without copies of the service providers accounts where they are available. Lump sums Lump sums payable under the Act and included in this section are: lump sum compensation for non-economic loss section 43 redemption section 42 Loss of earning capacity assessment (LOEC) section 42A. From 1 July 2008 no further new LOEC assessments can be made. WorkCover Corporation of South Australia, 2009 Page 8 of 63
Lump sum compensation for non-economic loss (sections 43, 43A and 43B) Overview applicable to all determinations of lump sum compensation payments that are made on or after 1 April 2009 Section 43 of the Act entitles a worker to a lump sum payment for non-economic loss, which is defined in section 3 as: pain and suffering loss of amenities of life loss of expectation of life any other loss or detriment of a non-economic nature. There is no obligation under the Act to make a specific application for a section 43 payment entitlement flows from the original claim, so the claims agent will not require a claimant to make a separate claim for a lump sum. There is no time limit for paying lump sums under section 43 of the Act. Compensation paid to the worker is based on the extent of the worker s impairment and is expressed as a percentage of whole person impairment (%WPI). This payment is in addition to any other compensation payable under the Act, and has no effect on other entitlements such as weekly payments, medical expenses and the like. Because compensation under section 43 is an entitlement, the claims agent should commence an assessment as soon as circumstances permit. The claims agent will not delay payment of compensation under section 43 in the redemption negotiation process. The claims agent must ensure that lump sum entitlements under section 43 are paid when appropriate, because acknowledgement and settlement of entitlements occurring at the earliest appropriate opportunity should lead to workers being able to move forward with return to work processes. This should also result in lower levels of disputes. Furthermore, interest is not payable on the lump sum even if the section 43 determination is delayed without good reason. It is essential that payment of compensation following a determination is made in a timely manner as lump sum compensation is not payable after the death of a worker. In order to ensure all current claims are assessed appropriately for the existence of a section 43 entitlement, the claims agent will receive a report at the start of each month, summarising active claims which are in receipt of income maintenance with a duration of nine months (from date of incapacity) and where no section 43 payment has been processed during that time. The nine month point has been selected because by that time, in a large proportion of claims, it should be possible to either make a decision about lump sum entitlement, or at least estimate when it is likely that a decision could be made. Case managers are not, however, obliged to wait until receipt of this report to begin to process a worker s section 43 entitlement. Some injuries may stabilise before or after this point. It is expected that good case management practices will apply to identify potential section 43 entitlements at the earliest opportunity. WorkCover Corporation of South Australia, 2009 Page 9 of 63
Prior requirements for a payment Before a worker can be paid lump sum compensation under section 43 the claims agent must establish that the disability is: permanent - means for a long and indeterminate time but not necessarily forever and more likely than not to persist in the foreseeable future stable - has reached maximum medical improvement (MMI). MMI is generally considered to occur when the worker s condition has been medically stable for the previous three months and is likely to remain stable for the foreseeable future, with or without further medical treatment (ie, further recovery or deterioration is not anticipated, but it can include temporary fluctuations). If the condition is not stable, the assessor cannot make an accurate assessment of the whole person impairment and should defer the section 43 assessment until the worker s condition is stable compensable - only where a compensable disability leads to a permanent impairment will the worker be entitled to a section 43 payment residual - the worker must be worse off than they would have been but for the injury ie, what is left is less than the whole. Assessments for permanent impairment Section 43A of the Act requires assessments for a section 43 entitlement to be: made in accordance with the WorkCover Guidelines for the evaluation of permanent impairment. A copy of the WorkCover Guidelines is available at www.workcover.com The WorkCover Guidelines are based on the Guides to the evaluation of permanent impairment, Fifth edition published by the American Medical Association (AMA5) and the WorkCover Guide for the evaluation of permanent impairment, 3 rd edition published by WorkCover NSW. The WorkCover Guidelines adopt AMA5 in most cases, however there are some differences defined in the WorkCover Guidelines. For example, the WorkCover Guidelines specify that AMA4 should be used to assess the visual system (see chapter 10 of the Guidelines for reasons). undertaken by a medical practitioner who is accredited with WorkCover. Only medical practitioners accredited with WorkCover are able to assess a worker s level of impairment for the purpose of section 43, and they may or may not be the worker s treating practitioner. Assessors are accredited according to the various body systems, after they have undertaken the required training and successfully completed a competency assessment for each body system. A current list of accredited permanent impairment assessors and which body system they can assess is available on www.workcover.com. Before the claims agent can make a determination with respect to a section 43 entitlement, the worker will have been examined by an accredited permanent impairment assessor. The assessor will provide a report to the worker s case manager that explains: their clinical findings the method used when applying the WorkCover Guidelines to calculate the worker s %WPI. WorkCover Corporation of South Australia, 2009 Page 10 of 63
5% threshold There is no entitlement to lump sum compensation if the degree of permanent impairment is less than 5%WPI. Each impairment has to be assessed separately. However, injuries that result from the same traumatic event or in the same calendar year are combined by the accredited assessor and the worker s entitlement is determined on the final %WPI calculated by the accredited assessor. Example A worker has a shoulder injury in 2010 and is assessed as having 3%WPI and then has an ankle injury in 2011 which is assessed at 4%WPI. The worker has no entitlement to compensation because each impairment falls below the 5% threshold. Example A worker has a shoulder injury and ankle injury as a result of the same event, or in the same calendar year. The %WPI for the shoulder is 3% and for the ankle is 4%. The %WPI is combined by the assessor using the Combined Values Chart in AMA5 and the worker is entitled to a lump sum payment because the combined %WPI is 7%WPI, which is over the 5% threshold. Psychiatric disabilities Compensable psychiatric disabilities entitle a worker to weekly payments, medical expenses and the like but there is no entitlement to lump sum compensation under section 43 for psychiatric impairments. However, where a compensable psychiatric injury results in a loss of function of a body part contained in the WorkCover Guidelines and the loss of function is permanent, the worker is entitled to compensation under section 43 for that loss of function. Example A worker has acute anxiety as a result of which she suffers a partial loss of vision. Although the worker is not eligible for section 43 compensation for the acute anxiety, she is entitled to compensation under section 43 for the loss of vision if the loss is permanent. Disfigurement Lump sum compensation for disfigurement is not assessed separately. Scarring is assessed by the accredited assessor when undertaking the assessment for the relevant body system and included in the final %WPI. Aggravation, acceleration, exacerbation, deterioration or recurrence of a prior compensable disability Section 43(7) of the Act requires payments made for a previous compensable disability to be deducted if a worker suffers a further impairment as a result of an aggravation, acceleration, exacerbation, deterioration or recurrence of that previous compensable disability. This means that a worker who has had a previous payment for an injury will have the previous amount paid deducted from any entitlement to compensation for the impairment caused by the aggravation. WorkCover Corporation of South Australia, 2009 Page 11 of 63
Example A worker with a previous back injury received lump sum compensation of $10,000 under section 43 for that injury in 2006. The worker suffers an aggravation in January 2010, which results in a further impairment. The accredited assessor rates the worker s impairment as 15%WPI in Sept 2010. 15%WPI under the prescribed sum for 2010 is $35,000. The case manager will deduct the previous payment of $10,000 before determining the worker s entitlement for the aggravation. As a result, the case manager determines the worker s entitlement to lump sum compensation for the aggravation under section 43(7) to be $25,000 ($35,000 $10,000). Impairments from unrelated disabilities or causes Section 43A(9)(b) of the Act requires accredited assessors to disregard impairments resulting from unrelated disabilities or causes. This means the accredited assessor must exclude impairments that are not related to the disability being assessed. However, a disability that is the result of an aggravation, acceleration, exacerbation, deterioration or recurrence of a prior compensable disability for which a worker has been paid compensation does not constitute an unrelated disability or cause. Example A worker has an unrelated disability (a previous knee injury from playing sport, which resulted in removal of some cartilage).the worker then injures their knee at work. The case manager will advise the assessor of the worker s previous injury when requesting the assessment. The assessor will establish the %WPI for the sports injury and exclude it from the final %WPI. The sporting injury is assessed as 2%WPI and the whole knee injury is assessed at 10%WPI. The assessor deducts the 2% from the total %WPI. The worker is entitled to lump sum compensation for 8%WPI for the compensable disability. Impairments are to be assessed in chronological order Section 43A(9)(a) requires impairments resulting from disabilities that occur on different dates to be assessed in chronological order. This means the: 1. accredited assessor must assess and rate the %WPI for each of the compensable disabilities separately 2. case managers will determine the workers entitlement to lump sum compensation under section 43 for each disability separately using the prescribed sum for the relevant injury year. Example A worker has two compensable disabilities a knee injury in Jan 2008 and shoulder in June 2009. A permanent impairment assessment is requested for both compensable disabilities in Jan 2010. The accredited assessor: 1. assesses the knee and rates the impairment to be 4%WPI 2. then assess the shoulder and rates the impairment to be 7%WPI 3. then provides a report to the case manager outlining the %WPI for each compensable disability. The case manager determines the worker s entitlement to lump sum compensation under section 43 for each disability using the prescribed sum for the relevant year. The case manager determines the worker is: WorkCover Corporation of South Australia, 2009 Page 12 of 63
1. entitled to lump sum compensation for the shoulder injury and uses the prescribed sum for 2009 to determine the amount of compensation to be paid 2. not entitled to lump sum compensation for the knee because the impairment rating is below the 5% threshold. Schedule 3A Total loss, no disadvantage-compensation table Section 43B of the Act provides an entitlement to workers who have suffered a total loss (ie, amputation of a limb) or total loss of function under schedule 3A of the Act, the No disadvantage non-economic loss compensation. Schedule 3A sets out minimum amounts of compensation a worker is entitled to for the total loss of a body part. For example, the table specifies minimum amounts of compensation for a total loss of speech, a total loss of a foot etc. However, there is no entitlement under schedule 3A if the permanent impairment is assessed to be less than 5%WPI. A worker who suffers a total loss listed in schedule 3A and that loss is assessed to be 5%WPI or above is entitled to receive the compensation provided in schedule 3A if it is higher than the amount of compensation that would be paid under sections 43 and 43A. This means that, when a compensable disability involves a total loss, the case manager must compare the compensation that a worker is entitled to receive for the %WPI under sections 43 and 43A to the entitlement they would receive under schedule 3A in order to determine the worker s entitlement to compensation. The worker is entitled to receive the higher amount. Example In 2008 a worker has an amputation of an arm at the shoulder. This is assessed as 60%WPI, for which they would receive $297,260 applying section 43 and 43A. Under schedule 3A they would receive $215,160. The worker is therefore entitled to $297,260 compensation, which represents the higher amount. Example 2 In 2008 a worker has an amputation of the ring finger. This is assessed as 5%WPI, for which they would receive $10,000 applying section 43 and 43A. However, under schedule 3A the worker is entitled to $30,340. The worker is therefore entitled to $30,340 compensation, which represents the higher amount. Process for section 43 lump sum determinations All determinations made from and after 1 April 2009 will occur as follows: 1. Make the referral As soon as it becomes apparent that a permanent impairment may result from a compensable disability and the disability appears to be stable, the claims agent should request that a permanent impairment assessment be undertaken by an accredited assessor (unless a worker or their representative has already initiated an assessment). The accredited assessor can be the worker s treating doctor. Referrals will be made to an assessor, who has been accredited with WorkCover in the body system(s) relevant to the worker s impairment. WorkCover Corporation of South Australia, 2009 Page 13 of 63
The case manager must: provide the assessor with all relevant medical and allied health information, including results of all clinical investigations related to the impairment that needs to be assessed provide the assessor with information on whether the impairment is the result of an aggravation, acceleration, exacerbation, deterioration or recurrence of a previous disability clearly state the type of report they are requesting ie, a standard, moderately complex or complex report. If the case manager is arranging the assessment, they will make the appointment with the assessor, notify the worker of the appointment date and time and provide a copy of the worker information sheet on permanent impairment. If the case manager would like the permanent impairment assessor to answer questions not directly related to the permanent impairment assessment (ie, questions regarding a worker s capacity, treatment etc), they must request this separately. However, the worker should not have to attend a separate consultation for the different requests. Where multiple body systems need to be assessed and more than one accredited assessor is required to undertake the assessments, the case manager will appoint a lead assessor to coordinate the final report, which will include the results for all assessments undertaken. Ideally, the lead assessor should be the assessor who can undertake the majority of the assessments. The case manager will provide: the lead assessor with the names of the other assessors and body systems involved the other assessors with the name and contact details of the lead assessor so they can provide their reports to the lead assessor. The consolidated report provided by the lead assessor must have the other assessors reports attached. 2. Assessment conducted At the assessment, the assessor will use the WorkCover Guidelines to determine: whether the worker s compensable disability has resulted in impairment whether the compensable disability has reached maximum medical improvement (MMI) whether the resultant impairment is permanent the degree of impairment that results from the compensable disability the proportion of permanent impairment due to any previous disability (compensable or otherwise). Where only one body part has been affected, it is possible to make only one assessment. For example, if a worker suffers injuries above and below the knee in the same trauma, the assessment would be made of the entire leg at or above the knee. It cannot be assessed as one leg above knee injury and one leg below knee injury. WorkCover Corporation of South Australia, 2009 Page 14 of 63
3. Assessor s report written WorkCover has developed a standard report format for permanent impairment assessments. Assessors are required to provide reports to the referrer using this standard format within 10 working days of the assessment being completed (or as agreed between the referrer and the assessor). The assessor must determine the degree of permanent impairment using the tables, graphs and methodology outlined in the WorkCover Guidelines. The report must include the assessor s reasons and the final %WPI. 4. Review the report When the report is received by the claims agent it must be reviewed in order to ensure it is in accordance with the WorkCover Guidelines. Any reports not in accordance with the WorkCover Guidelines will be returned to the provider for amendment. The claims agent cannot make a determination until the report is amended, unless another report in accordance with the WorkCover Guidelines is received in the meantime. A copy of the report should be sent to the worker within seven days (unless they were the referrer and received the report directly). 4. Make the lump sum determination The case manager will determine a worker s entitlement to lump sum compensation under section 43 of the Act based on the report(s) they received from the accredited assessor(s). Reports that do not comply with the WorkCover Guidelines will not be used. If the report complies with the WorkCover Guidelines and the case manager is satisfied that the %WPI is reasonable, no other report should be requested - regardless of whether the report was requested by the case manager or the worker s representative. The case manager calculates the amount of compensation the worker is entitled to using the prescribed sum for the relevant injury year. If more than one report is received and there is conflict between opinions, the case manager will use the report(s) they receive from the accredited assessor and any other relevant and recent documentation as the basis for determining a worker s entitlement to compensation under section 43. The case manager must document clearly the strengths and weaknesses of each piece of evidence and the degree to which it has been relied upon in arriving at the decision. 5. Notify the worker of the lump sum determination The claims agent will notify the worker and the employer of: the determination made under section 43 how and when payment will be made the consequences of having to pay funds to other parties eg, Centrelink, Child Support Agency, Medicare Australia. The case manager must also: 1. inform the worker of their review rights and how to exercise those rights WorkCover Corporation of South Australia, 2009 Page 15 of 63
2. save a copy of the determination letters on the worker s file and on IDEAS, including a detailed breakdown of how the final %WPI was calculated and a note when the %WPI fell below the 5% threshold. Disputes process If a worker disagrees with the case manager s determination and the claims agent cannot settle the dispute with the worker, the worker is entitled to lodge a Notice of Dispute with the Workers Compensation Tribunal (Tribunal), where normal dispute processes apply. If the matter cannot be settled by agreement at conciliation, section 98H(4) of the Act allows the Tribunal to refer the matter to the Medical Panels SA for an opinion,. The medical panel will issue a certificate, which sets out the reason(s) for the medical panel s opinion. The opinion of a medical panel is final and binding, irrespective of who referred the matter to Medical Panels SA. The amount of lump sum compensation paid to the worker under section 43 will be calculated on the basis of the medical panel s opinion. Important note: A worker s entitlement, where a dispute is lodged with the Tribunal in respect of a determination made before 1 April 2009 but finalised after 1 April 2009, will be made under the previous section 43. WorkCover Corporation of South Australia, 2009 Page 16 of 63
Deductions to Centrelink, Department of Education, Employment and Workplace Relations and Medicare Australia Centrelink Under the Social Security (Administration) Act 1999 Centrelink may request details of payments. When providing information on a section 43 payment, the claims agent must stress that the payment is purely for non-economic loss. Department of Education, Employment and Workplace Relations (DEEWR) Under section 23 (7) of the Disability Services Act 1986 (the DSA), DEEWR may recover the costs of a rehabilitation program provided by DEEWR on behalf of the Commonwealth. For the purpose of section 23 of the DSA, the costs may be recovered out of the worker s lump sum compensation payments (ie, under section 42 and 43) but not out of their ongoing weekly benefits payments. If a Notice of Charge has been received from DEEWR, the case manager must ensure that, before the lump sum payment is made to the worker, DEEWR is paid first and the DEEWR payment is deducted from the lump sum amount. Medicare Australia (formerly Health Insurance Commission) and section 43 payments The Commonwealth Health and Other Services (Compensation) Act 1995, as amended, (the HOSC Act) allows Medicare Australia to ascertain whether Medicare has paid for any of the costs relating to the compensable disability, and if so, to recover those costs. Any section 43 payment above $5,000 is subject to the HOSC Act. Section 4(1)(d) of the Health and Other Services (Compensation) Act 1995 (the HOSC Act) defines compensation as, among other things: any other compensation or damages payment, other than a payment under a scheme to which the person has contributed that is made in respect to an injury to a person (whether or not the payment is made to that person). The definition of compensation is also deemed by Medicare Australia to cover legal fees received by the worker as part of a settlement or judgement. Legal costs covered in a judgement should therefore be included in the amount used to calculate the 10% paid to Medicare Australia. Confusion will arise where the legal costs have not been agreed to at the time of the settlement or judgement. Medicare Australia has accepted that if it is possible to agree, the total of these costs to date at the time of the judgement, those costs should be included in the amount. Their aim is not to create unnecessary delay and confusion, but to recover moneys in a timely and cost-effective manner. The claims agent will have to act in good faith, and with proper regard to the provisions of the HOSC Act. Our obligation is, as far as possible, to ascertain the total of legal fees and decide the total compensation paid. This may cause prolonged and serious difficulties for the worker, the claims agent and the legal practitioner involved. In these circumstances, Medicare Australia has accepted that underpayments to them could arise where the claims agent makes a decision without the final total legal costs figure being available. WorkCover Corporation of South Australia, 2009 Page 17 of 63
Payments to Medicare Australia Once a determination of a section 43 payment of over $5,000 is made under the Act, the obligation to advise Medicare Australia arises. There are two ways in which the matter can then be finalised, the advance payment option or the Notice of charge option. Advance payment option (Refer to section 43 flowchart and to advanced payment options flowchart). This involves paying 90% of the settlement sum (provided the settlement sum is greater than $5,000) to the worker and 10% to Medicare Australia. The 10% is of the gross settlement amount, with any statutory payment, such as to Centrelink or DEEWR, being deducted from the 90% paid to the worker. The Health and Other Services (Compensation) Act 1995 (the HOSC Act) requires that the worker must be advised in writing that the advance payment option is to be made. When the advanced payment has been forwarded to Medicare Australia, they will contact the worker and make the necessary enquiries leading to the notice of charge. If the amount owing to Medicare Australia is less than the 10% paid, Medicare Australia will reimburse the worker the difference. If the amount is greater than 10% Medicare Australia will pursue the worker for the difference. For reasons of confidentiality the notice of charge is released only to the worker. It is likely that some workers will present their notice of charge to the claims agent seeking reimbursement for items which they claim are related to the compensable disability. In these situations, if the worker can show (eg, by documented evidence from the provider) that an item on the notice of charge would or should have been paid by the claims agent, the worker should be reimbursed that amount. Notice of charge option (Refer to section 43 flowchart and to advanced payment options flowchart). There is no need for Medicare Australia to be notified prior to judgement or settlement. However, a request for notice of past benefits may be made prior to judgement or settlement, a course of action recommended by Medicare Australia. It is not necessary to notify Medicare Australia where the judgement/settlement amount is less than $5,000. Where the amount exceeds $5,000, Medicare Australia must be notified within 28 days of judgement or settlement. If there is a current notice of charge held by the claims agent, the advance payment option cannot be used. Where the worker has sought and obtained a notice of charge from Medicare Australia the amount owing to Medicare Australia must be paid before the settlement or judgement is released to the worker. A notice of charge is current for six months. Medicare Australia has advised that for its purposes a determination, settlement or judgement (DSJ) does not occur until the relevant appeal period has lapsed. From that date, Health and Other Services (Compensation) Act 1995 (the HOSC Act) allows a maximum of 28 days within which to make the payment to Medicare Australia. However, payment(s) and notification to Medicare Australia should be made immediately all appeal periods plus four days for postage etc, have passed, providing that there is no appeal WorkCover Corporation of South Australia, 2009 Page 18 of 63
lodged against the determination. An appeal lodged at any point delays payment to Medicare Australia until the finalisation of that appeal. Medicare Australia has first charge on the section 43 payment through the notice of charge/past benefits. Therefore, if the amount in the notice exceeds the entitlement, all of the entitlement must be paid to Medicare Australia. If the amount in the notice is less than the entitlement, the worker is entitled to the difference. Once WorkCover, or its claims agent, have made the payment to Medicare Australia there is no liability to make further payments to Medicare Australia. Gradually developing disabilities The Health and Other Services (Compensation) Act 1995 (the HOSC Act) deems a different date to that deemed under section 113 of the Act. This may have an impact in section 43 cases where a payment must be made to Medicare Australia. For disabilities that have a gradual onset, the HOSC Act deems the date of an injury (which is a disease), is the first day on which professional service was rendered in respect of the disease. Professional service is defined in the HOSC Act (Commonwealth). Essentially, it means any scheduled service provided by a medical, dental, optometrical, pathology or diagnostic practitioner. Section 113, of the Act deals with gradually developing disabilities. Subsection (1) deems that gradually developing disabilities and diseases (not being noise induced hearing loss) occur when the worker first becomes totally or partially incapacitated for work by the disability. When working out details of payment to be made to Medicare Australia, if the question of date of disability arises, it will be necessary to set a date that complies with the requirements of the HOSC Act, as the Commonwealth legislation takes precedence over State legislation. The date shall be determined by reference to the date on which the worker first sought treatment from a legally qualified medical practitioner, a dental practitioner or an optician/optometrist. For the purposes of Health and Other Services (Compensation) Act 1995 (the HOSC Act), a payment to Medicare Australia is a payment to the worker. There are penalties for non-compliance with the HOSC Act. WorkCover will not accept responsibility for actions taken by the claims agent that are clearly inconsistent with the HOSC Act. Forms: Request for Notice of Past Benefits. Notice of Reimbursement Arrangements. Notice of Judgement or Settlement. WorkCover Corporation of South Australia, 2009 Page 19 of 63
WorkCover Corporation of South Australia, 2009 Page 20 of 63
Section 42/43 entitlements greater than or equal to $5,000 ADVANCE PAYMENT OPTION (APO) Claim made by worker No claim by worker - WorkCover to make determination Notify worker that claim received/ determination pending and check file to ascertain if there is a Notice of Charge/Notice of Past Benefits Is there a current Notice of Past Benefits/ Notice of Charge? No Worker can take Notice of Charge option if desired. YES Advise worker in writing that APO will be made to Medicare Australia Make determination, settlement or judgement (DSJ) Wait 4/52 NO APPEAL APPEAL Consent Judgement Heard and finalised Wait 2/52 NO FURTHER APPEAL MAKE PAYMENT TO MEDICARE AUSTRALIA: 1. IF NO NOTICE PAY 10% OF DSJ TO MEDICARE AUSTRALIA 2. IF THERE IS A NOTICE, PAY AMOUNT STATED PAY THE BALANCE OF THE ENTITLEMENT TO THE WORKER WorkCover Corporation of South Australia, 2009 Page 21 of 63
Redemption of weekly payments and medical expenses (section 42) General principles Redemption of both weekly payments and future medical expenses is authorised by section 42(1) of the Act. A redemption payment is a lump sum payment made to a worker in lieu of future payments of weekly income maintenance and/or medical expenses that removes WorkCover s future liability to make those payments. Although a primary objective of the Act is to return injured workers to employment, it is recognised that this objective is sometimes best achieved by releasing the worker from rehabilitation obligations and redeeming WorkCover s liability for ongoing workers compensation entitlements. Section 42 sets out the basis for an agreement between a worker and WorkCover to redeem a liability through a capital payment to the worker. Notwithstanding the savings in future income maintenance that each redemption might represent, an excessive reliance on redemptions has in the past impacted negatively on scheme performance. Redemption criteria The 2008 amendments to the Act include amendments to section 42. Redemption criteria are now included in section 42(2)(e) of the Act, which states that one or more of the following criteria must be met: the rate of weekly payments to be redeemed does not exceed $30 (indexed) the worker is 55 years old and has been determined to have no current work capacity (refer to section 3(1) for the definition of current work capacity ) the worker and the claims agent have jointly applied to the Workers Compensation Tribunal (constituted of a Presidential member) and the Tribunal has determined that continuation of weekly payments to the worker is not in their best interests, from a psychological and social perspective. These provisions will not apply to all claims until 1 July 2010. However, they will apply as a matter of policy from 1 July 2008 to all claims with a date of injury on or after 1 July 2006. In circumstances where the claims agent has notified a worker, in writing before 1 July 2008, of its intention to enter into redemption negotiations, the above criteria is not required to be met. Claims that are greater than two years old as at 1 July 2008 may, in appropriate circumstances, continue to be redeemed without taking into account the above criteria. From 29 June 2009 the new criteria will apply to all claims less than three years old as a result of the operation of the transitional provisions in the 2008 legislative amendments. From 1 July 2010 all redemptions will be managed in accordance with section 42(2)(e) of the Act. Section 42(2)(e)(iii) Before agreeing to make any application to the Tribunal, pursuant to section 42(2)(e)(iii) of the Act, the claims agent will consult WorkCover. WorkCover Corporation of South Australia, 2009 Page 22 of 63
Approval of redemption From 1 July 2006 the claims agent has full authority to negotiate, agree and pay redemptions within the delegation limits advised from time to time by WorkCover s general manager, Scheme Regulation and Compliance (or equivalent authorised officer). WorkCover s role will be limited to monitoring, evaluating and reporting against agreed targeting and expenditure criteria. This does not apply to cost neutral redemptions made possible through section 54 recoveries, which are subject to a unique approval process by WorkCover. Cost neutral redemptions are available to the extent that an amount recovered pursuant to section 54 exceeds the amount of compensation paid. Limitations to claims agent s redemption delegations The claims agent has a financial limitation to negotiate, agree and pay redemptions up to $300,000. For redemptions above this amount approval must be obtained from WorkCover before negotiations can commence. All approval applications must be forwarded to the Manager, Legal & Technical Services. Operational limitations as a result of the amended Act are yet to be determined. Redemption negotiations Either the claims agent or the worker may initiate negotiations in respect of a redemption of weekly payments and/or medical expenses. Where the request is made by the worker, this should be in writing. Prerequisites to a redemption in section 42 of the Act Before a redemption can be made, the criteria set out in section 42(2) of the Act, as set below, must be met. Competent professional advice A worker must have received competent professional advice about the consequences of the redemption. This advice may be provided by a solicitor or union advocate practising in workers compensation or who represents workers at the Tribunal. Regulation 12 of the 1999 WRC (General) Regulations provides that WorkCover will indemnify a worker for the cost of obtaining professional advice. The amount is indexed annually. (Refer to the Schedule of Sums). This will only be paid where the claims agent has advised the worker in writing that it is prepared to enter into negotiations for redemption. The worker is required to provide written evidence of receiving the advice. Following is a suitable form for this purpose: WorkCover Corporation of South Australia, 2009 Page 23 of 63
Professional advice for redemption Redemption under section 42 of the Workers Rehabilitation and Compensation Act 1986 I (worker s name) have received competent professional advice about the consequences of a redemption payment from (adviser's name). Although not limited to, I have received advice on the following: That on receipt of this redemption payment I have no further entitlement to (weekly payments and/or medical expenses) in relation to my compensable disability suffered on (date of injury). That on receipt of a redemption payment of weekly payments I am aware of the implications of sections 35(4) and 35(5) of the Workers Rehabilitation and Compensation Act 1986. Taxation implications of the redemption payment. Centrelink and Department of Education, Employment and Workplace Relations (DEEWR) implications in relation to the redemption payment. That on receipt of a redemption payment of medical expenses I will have no entitlement to claim for future expenses, incurred as a result of this compensable disability, from Medicare or my health fund.... Worker s name... Address... Signature... Date... Adviser's name... Address... Signature... Name of employer or company...... Address... Date WorkCover Corporation of South Australia, 2009 Page 24 of 63
Competent financial advice A worker must have received competent financial advice on the best use or investment of the amount of the redemption payment. Such advice may be provided by a financial planner, counsellor or broker, a practising accountant or a financial institution. Regulation 12 of the 1999 WRC (General) Regulations provides that WorkCover will indemnify a worker for the cost of obtaining financial advice. This amount is indexed annually. (Refer to the Schedule of Sums). This will only be paid where the claims agent has advised the worker in writing that it is prepared to enter into negotiations for redemption. The worker is required to provide written evidence of receiving the advice. Following is a suitable form for this purpose. WorkCover Corporation of South Australia, 2009 Page 25 of 63
Financial advice for redemption Redemption under section 42 of the Workers Rehabilitation and Compensation Act 1986. I, (worker s name) have received competent financial advice about the investment or use of the redemption payment from (adviser's name). Although not limited to, I have received advice on the following: A financial management plan that is tailored to my personal circumstances A plan that provides me with a secure investment and a reasonable and regular return that ensures the protection of my money Taxation implications of the redemption payment.... Worker s name... Address... Signature... Date... Adviser's name... Address... Signature... Name of employer or company...... Address... Date WorkCover Corporation of South Australia, 2009 Page 26 of 63