Bill to modernise Victoria's workers compensation scheme released

The Victorian State Government has entered the consultation phase in relation to proposed amendments to the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) that were foreshadowed on 19 May 2023.

The Bill, that has now been released is the Workplace Injury, Rehabilitation Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023.

The enactment of the Bill could occur as early as 1 January 2024, but no later than 31 March 2024.

Changes in relation to eligibility for psychological injuries will apply to claims made for injuries that occur after the commencement, likely to be on or before 1 April 2024.  The transitional provisions do not address circumstances where injuries have occurred over a period of time before and after the commencement date.

Changes in relation to eligibility for weekly payments after the second entitlement period will not apply to workers already in receipt of weekly payments after the second entitlement period before 1 January 2024.  If the second entitlement period expires on or after 1 January 2024 the new provisions apply. 

Eligibility for compensation for mental injuries

The Bill proposes to limit eligibility for entitlement to compensation for mental injuries by requiring those injuries to meet the following criteria:

• The Bill defines a mental injury as an injury that causes significant behavioural, cognitive or psychological dysfunction, and is diagnosed by a medical practitioner in accordance with the latest version of the DSM criteria. That practitioner will not include a psychologist.  “Stress”, for example, will not meet this requirement.
• The Bill provides a new requirement that the mental injury predominantly arose out of or in the course of employment, so that employment must be the predominant cause of the mental injury claimed. “Predominant” is not defined but and is intended to take its ordinary meaning referring to the strongest or largest contributing factor.  The requirement of predominant cause also applies to mental injuries that are a recurrence, aggravation, acceleration exacerbation, or deterioration of any pre-existing injury or disease, replacing the significant contribution test.
• Injuries that are predominantly caused by stress or burnout arising out of events that are usual or typical and reasonably expected to occur in the worker’s employment will be excluded.  Work-related stress and burnout are not defined and will take their ordinary meaning.  “Usual or typical work activities” may include typical job demands, workload pressures and interpersonal interactions according to the explanatory memorandum. Behaviour that constitutes bullying, harassment or discrimination would not be regarded as typical or reasonably expected to occur in the usual course of duties. 
• If the injury is predominantly caused by traumatic events that may be considered usual or typical and reasonably expected to occur in the course of the worker’s duties, the injury will be compensable. ‘Traumatic Events” are not defined but include, according to the explanatory memorandum, events that are typically emotionally shocking and can cause fear and distress. Traumatic events may involve exposure to, or actual, physical abuse, the threat of physical harm or actual physical harm.  According to the explanatory memorandum, roles where workers may be exposed to traumatic events as part of their usual duties would include emergency personnel and other ‘front-line’ workers who suffer traumatic events as part of their usual or typical duties.
• The present defence for mental injuries that are caused wholly or predominantly by reasonable management action will remain.
• The new definition of ‘mental injury’ will not apply to eligibility to receive provisional payments for medical and like expenses for mental injuries.  That means that any claim for a mental injury will still require provisional payments for medical and like expenses.

Proposed changes to eligibility to weekly payments after 130 weeks

• In order to be entitled to receive weekly payments of compensation after 130 weeks, workers must have more than a 20% whole person impairment (WPI) based on the AMA4 guides, and no current work capacity that is likely to be indefinite. (i.e., the current test and more than a 20% WPI).
• For workers in receipt of weekly payments after 130 weeks there will be a requirement to undergo work capacity reviews at least every two years.
• Where a worker’s entitlements have ceased at the expiry of the second entitlement period and they subsequently undergo surgery to treat the compensable injury, they are eligible to reapply for weekly payments where the WPI has increased as a result of surgery and they have an indefinite capacity for work.
• If a self-insurer determines that post surgery a worker has more than a 20% WPI and an indefinite total incapacity, the worker will have an entitlement to weekly payments after the second entitlement period.
• Presently workers who have returned to work for at least 15 hours per week and earn at least $177 per week and are indefinitely incapable of further or additional employment are entitled to top up weekly payments to 80% of their pre-injury average weekly earnings. The Bill introduces a new requirement for workers to also have more than a 20% WPI for entitlement to these payments.  These changes are proposed to apply to claims where 130 weeks will expire on or after commencement.
• Self-insurers will have the discretion not to refer a worker approaching the 130-week mark for an impairment assessment if that worker is obviously below or obviously above the 20% threshold.  A decision and notice will still be required.
• If a worker has previously obtained a WPI assessment under Part 5, Division 4 (that is for permanent impairment), that assessment will be regarded as the final assessment for the purposes of the new greater than 20% WPI requirement. If a worker has made a permanent impairment claim and has a final assessment of WPI, that will also be the WPI assessment for the purposes of the new greater than 20% threshold.
• The applicable impairment assessment will be the greater of the physical or psychological compensable injury. Those assessments cannot be combined.  An impairment determination cannot relate to more than one compensable injury unless those injuries arose out of the same event or circumstance.  As with impairment benefit claims, a self-insurer can adjust or modify and IME assessment where it has not accurately reflected all relevant factors.
• If a worker disagrees with the adjustment, the worker can refer a dispute to a Medical Panel fur a binding determination.
• The Bill provides the power to a self-insurer to request a worker to attend for an impairment assessment and provides that a worker must attend.
• A self-insurer is granted the power to determine that it is not necessary or practicable to assess a worker for the purposes of an impairment assessment and can make a determination if there is no reasonable prospect of the worker having a whole person impairment of more or less than 20% WPI, or the worker resides overseas or it is not reasonable or practicable to attend an assessment.  Any such determination requires consideration of the available medical evidence, whether the degree of impairment is likely to be permanent, any practical barriers to the worker attending the assessment, whether determining without an assessment will disadvantage the worker, and whether there will be an indefinite capacity for work. Written reasons for any determination must be given.
• A self-insurer is granted power to make an interim determination that a worker is or is not eligible for payments after 130 weeks, where an impairment determination cannot be made because the injury has not stabilised, or is a progressive disease under s 51A, the worker is under 18 or the information required to complete the assessment is incomplete. We expect that an example would be when a worker has failed or refused to attend for an impairment assessment.  The interim decisions must take into account whether the worker’s impairment is likely to be permanent if the impairment could be assessed - whether it would likely be above or below 20% WPI and whether the worker has a current work capacity or have an indefinite capacity for work and must have regard to all available medical evidence.
• An interim decision has application until there is a further interim decision or an ongoing eligibility determination. Interim decision can be reviewed at any time by a self-insurer.
• The Bill is silent in relation to a worker’s right to dispute an interim determination. A dispute regarding an interim decision may be amenable to referral to the WIC under the general definition of ‘dispute’.
• Notice must be given of any ongoing eligibility determination and the workers must not commence proceedings regarding a dispute of in that regard without going through conciliation (and the WIC can make Medical Panel referrals for relevant questions such as capacity and permanence) or with leave of the Court if other proceedings are underway.
• If an interim determination has been made that a worker is entitled to weekly payments, 13 weeks’ notice must be given of an ongoing eligibility determination that the worker is not entitled to weekly payments.
• If an interim notice is given that a worker is not entitled to weekly payments and this is affirmed in an ongoing eligibility determination, a self-insurer is deemed to have given 13 weeks’ notice.
• If an interim notice is given that a worker is not entitled to weekly payments and an ongoing notice is later issued that the worker is entitled to weekly payments, the worker is entitled to weekly payments for the period from the date that the interim determination took effect. No interest is payable on arears.
• If a worker advises a self-insurer that they only dispute an impairment assessment for an ongoing eligibility determination, the self-insurer must refer the question as to degree of impairment to a Medical Panel within 14 days, and within 60 days of receipt advise the worker of the Panel opinion and any entitlement to compensation. The worker then has 60 days to advise whether they accept or dispute the entitlement.  Once advised that the assessment is accepted, payments (if any) must commence within 14 days.
• No issue estoppel arises from any ongoing eligibility decision.
• If any other aspect is disputed, the whole dispute must be referred to the WIC.
• For previous claims where liability has been accepted or determined, a self-insurer may request a worker to attend an IME if it has been at least 18 months after the date of injury or the workers’ impairment is being assessed for the purpose of the new 130 eligibility provisions, where a permanent impairment claim has not been made. This request will also have the effect of initiating an impairment benefits claim for the worker.
• A further provision stipulates that a self-insurer may, in writing, suspend an impairment benefits claim if an ongoing eligibility determination is being made, within 14 days of the impairment benefits claim being made and either a request to attend an assessment under the new provisions or a statement of injuries being given to a worker.  This is to ensure that separate eligibility determinations and impairment benefits claims cannot proceed at the same time. Any suspension of the impairment benefits claim must be lifted within 14 days of the ongoing liability determination.
• The Bill provides that a direction for the payment of weekly compensation cannot be issued by the WIC for a matter relating to a determination of the degree of impairment under the new provisions. 

Changes to dispute resolution

Disputes in relation to eligibility or initial liability determinations will no longer be eligible for arbitration after conciliation. Those disputes can only be referred to Court.  Disputes that cannot be referred to arbitration are:

• whether an injury is an injury under the Act
• whether an injury has occurred in circumstances that create a liability for a self-insurer to pay compensation under the Act
• whether the Claimant is a worker
• whether the Claimant has suffered an injury including a mental injury
• whether an injury caused to a Claimant is an injury that arose out of or in the course of or due to the nature of the Claimant’s employment
• whether employment was a significant contributing factor
• whether an injury is a mental injury for which there is no entitlement to compensation
• whether an injury is a disease for which there is no entitlement to compensation
• whether the injury is a proclaimed disease, and
• any other matter that is relevant to determining whether an injury is an injury under the Act and/or whether an injury has occurred in circumstances that create a liability for a self-insurer to pay compensation under the Act.

Information sharing

The Bill provides WorkSafe with the power to use any information collected under the WIRC Act for the purposes of performing its functions and powers under any Act administered by the Authority (including the OHS Act).

According to the 2nd reading speech, this “allows for information obtained in insurance functions to inform WorkSafe Victoria’s prevention activities under the Occupational Health and Safety Act 2004.”

Statutory review

The Bill requires an independent review of the operation of the amendments made during the 2027 calendar year. The review must be conducted by a panel of experts with experience in the law, medicine, finance and occupational health and safety in accordance with terms of reference set by the Minister. This independent review will examine all changes made by the Bill, to measure their effectiveness, identify areas for potential improvement and assess the ongoing impact of these changes on the continued operation of the Scheme.

Commencement date

The Bill has been read a second time and awaits Parliamentary debate.   It may commence as early as 1 January 2024 but no later than 31 March 2024.

Implications

These changes are by and large very welcome to self-insurers.  There are significant opportunities to reduce exposure to psychological injuries and post 130 week liabilities. 

Given that entitlements to damages are not affected, we expect to see an increase in Common Law activity. While there is a limitation imposed by the more than 20% WPI threshold for weekly compensation after 130 weeks, no such limitation applies to damages. With the narrative tests remaining place, the changes incentivise disentitled workers to pursue Common Law rights. 

From a practical perspective, self-insurers should review their portfolios to identify those claims where 130 weeks will expire on and after 1 January 2024 in readiness to begin the process of arranging eligibility determinations. 

The information sharing provisions may permit WorkSafe to access self-insurers’ claims documents for the purposes of its OHS investigation and prosecution functions. We would be pleased to provide advice to self-insurers in relation to implementing processes that address these new powers and in relation to the proposed amendments.

Supporting information

• Click here to view the Victorian Assembly's second reading speech.
• Click here to view the Bill.
• Click here to view the Explanatory Memorandum to the Bill.