EBM Insights podcast series is a deep dive into current issues surrounding insurance and risk management in today’s ever-changing world.
Introduction:
HWL Ebsworth Lawyers
In this podcast we talk with Matthew Thickett, Partner at HWL Ebsworth lawyers (HWLE), a full-service commercial law firm with offices in each Australian State and Territory.
For more information on HWLE please visit www.hwlebsworth.com.au.
A transcript of this podcast is below. The complete EBM Insights podcast series is available here.
00:00:00 Speaker 1 – Disclaimer
In this podcast, we have provided general advice only and not personal advice. In giving this advice, we have not considered your personal circumstances.
00:00:15 Speaker 2 – Sandy Cattley (Senior Marketing Specialist, EBM Insurance & Risk)
Welcome everyone. I’m your host, Sandy Cattley from EBM Insurance & Risk. On 1 July this year, the new Workers Compensation and Injury Management Act 2023 came into effect in Western Australia.
EBM has previously released information on these updates. We also held a podcast with our Injury Management team, who gave an overview of what was to be expected from these changes.
A few months have now passed since the new legislation was implemented and we thought this is a good time to check in with you all and revisit some of the changes.
Joining me again is Luke Westell and Julian Lane from EBM’s Injury Management team. We are also joined by Matthew Thickett, who is a partner at HWL Ebsworth Lawyers.
Thank you for joining me today.
So, to set the scene, I think we could recap on some of the more significant changes we discussed in the last podcast.
Now this included higher caps on medical expenses, an expansion of exclusions for psychological claims, and prohibition on employers asking workers about previous workers compensation claims in pre-employment screening, and from attending medical appointments.
Julian, since you were part of that first podcast, can you give a refresher on these changes?
00:01:34 Speaker 3 – Julian Lane (National Manager – Injury Management, EBM Insurance & Risk)
Prior to an injury even occurring, the new legislation bans employers from asking about an individual’s previous workers comp claims. I think for the most part, the industry has adapted pretty swiftly on that.
I guess one of the big concerns we had was around employers not being able to attend medical appointments, which on the face of it was quite restrictive. However, it’s not quite as it initially seemed in that employees can still attend a medical appointment after that clinical examination has taken place to discuss things like suitable duties.
I think there was some concern also around return-to-work case conferences, as it was termed, where what was able to be discussed during those was quite restrictive as well.
However, there are other avenues to have those discussions around alternate treatment, alternate diagnosis, and things like that. And as you mentioned, the medical entitlement has been doubled, with Royal Flying Doctors Services and other medical transport now considered a miscellaneous expense, that’s going to really help those workers that have been injured while working remotely, particularly those really serious injuries that require hospitalisation.
Where under the old Act you could see workers basically stepping foot outside the hospital, pretty much having exhausted their entitlement.
The other point was around the exclusions for site claims and the change in WA being to include formal administrative action inclusive of performance management. Now obviously nationally, we’ve seen the trend of psychological claims costing more than physical claims and their frequency increasing.
While we’re focusing on WA today, Victoria’s made an interesting change earlier this year in that work needs to be the predominant cause of the psychological injury. Whereas WA still only needs to be a significant contributing factor, but we are seeing that extension being applied. Which as I say is a positive step from our perspective.
00:03:25 Speaker 2 – Sandy Cattley
Alright, thanks for that recap, Julian.
So, what about provisional payments for deferred liability claims?
Matt, can you talk us through what we were expecting and what you are seeing post the 1 July implementation?
00:03:40 Speaker 4 – Matthew Thickett (Partner – HWL Ebsworth Lawyers)
Sure, this was probably one of the more contentious pieces of the new legislation as it was filed. It was a big change to our system and the industry thought it would come at some cost, at least to the kind of process, but certainly to claims.
So, whilst we were expecting the industry would push itself more towards making quicker and more strategic liability decisions to avoid exposure to provisional payments, we’ve seen different clients actually go in different directions. Some clients have gone down that anticipated route of really quickly and efficiently getting as much information as possible, with a view to getting a decision out before those provisional payments trigger.
Others, and surprisingly, have kind of embraced the original payment scheme to the extent it’s what the legislator wanted, and it allows them time to fully investigate liability issues without being pulled into early WorkCover WA applications. So, in the context of those big claims that really need careful medical and factual investigation, we’re avoiding unnecessary and unhelpful early disputes and realistically, significantly injured workers are mitigating their losses by being paid during that time. So, to a large extent, some systems are working. Those claims to be disputed with obvious issues at early stages are disputed quickly. Everyone has certainty as to where the goal posts are. Proceedings are then commenced quickly if they are and issues are resolved quickly rather than, let’s call it the old approach, where a decline may have taken three months and then there were more proceedings, and everyone got entrenched in a dispute mindset, and there was a breakdown in the relationship between the employer and the worker and all of a sudden you had a mess six months down the track as opposed to two weeks down the track as it might be now. And those claims that need a good look get it without there being a flurry of early litigation or an injured worker where there’s no prejudice to an injured worker because they’re getting the true income.
So, the settlement process has been the other really surprising thing and probably not surprising in a good way.
What we’re seeing is under the new WorkCover WA settlement process where obviously we’re no longer following 92F Deeds and we are filing a prescribed form settlement agreement. Settlements colloquially are taking two weeks to two months. We’ve had in our office alone, settlements that are taking over two months to be processed, much to the frustration of workers and to the frustration of our clients and employers. It seems that everything’s being closely examined by WorkCover WA, and processes are being set down as we go.
Errors in documents are being sent back. Perhaps they’re not being explained amazingly well and we’re in a bit of a cycle of documents going backwards and forwards, not being approved, and unfortunately, given what we’ve come to expect from the old settlement process which was a non-disapproval and a payment to a worker within a couple of weeks. Now those timeframes are significantly blowing out, and in those cases where there are settlement terms, say including that usual term where payments continue for four weeks or until approval, those four weeks are long since gone to workers without income and paid their settlement. Perhaps less than desirable. I’d expect it to sort itself out pretty quickly, but right now it’s a fairly big issue for workers and employers.
00:06:59 Speaker 2 – Sandy Cattley
All right. Thanks very much for that, Matt. So, one of the other major changes we should discuss is around informed written consent.
This is very important for businesses to understand because insurers now require a signed consent authority from the injured worker before they will share any personal and sensitive information, and that includes financial details, with your insurance broker.
If no consent is provided, the information disclosed to your broker will be restricted which will change how they assist your business with the workers compensation claim.
I’ll open this one up to all of you to get your thoughts.
00:07:35 Speaker 5 – Luke Westell (Team Leader – Injury Management, EBM Insurance & Risk)
Thanks Sandy. I think I’ll jump in with my thoughts on this because it’s been a change which has impacted a large number of clients already, and to varying degrees, admittedly. We’ve looked to adopt a shift in the way that we provide support and some of the support for our clients, it’s probably important to note just quickly that the insurers require consent to give information to the insurance broker, which is different than, say, the communication lines between an employer and a broker – the broker and their client.
But what we’re seeing in particular is things such as claims reviews, there’s a notable change. I think most insurers are now more solution focused on how these can proceed in a way that enables our Injury Management team to remain practically involved and despite some of the challenges that arise from asking an injured worker to sign a three-page consent form, we are seeing injured workers providing that consent because it allows us to assist with the return-to-work process. It allows us to aid in settlement discussions. It allows us to ensure their claims are being appropriately managed and financially reserved by the insurers.
00:08:57 Speaker 2 – Sandy Cattley
So, another area that we could touch on is the progress of disputes through WorkCover WA’s Conciliation and Arbitration Services under the new legislation.
00:09:06 Speaker 4 – Matthew Thickett
So, we had expected probably to see a trend towards more disputes looking at the new legislation and the provisional payments scheme. I think everyone expected there’d be a heap of early disputed claims and that would result in the Conciliation Service being fairly overwhelmed. Now again, depending on which day you’re down at WorkCover WA it can be overwhelming, or it could be fairly quiet.
I can’t say colloquially that at our office we’re seeing more disputes. What I can say is we’re seeing more quickly. That’s on the basis that those liability disputes are crystallising pretty early in the claim and within two or three weeks of that dispute going out, which is generally about a month after the claim, we’re seeing a dispute being brought to WorkCover WA if they’re going to.
Now through our office, there are a couple of concerns about the way the new system might be working and how that’s translated into the Conciliation Arbitration Service.
The first is kind of procedural and there seems to be a real growing trend in multiple conciliation conferences being listed on worker applications because some evidence is required. So not only are we attending on a first date, but we’re being also told that further evidence is required, and we need to attend on the 2nd and sometimes 3rd, and it might be by phone, or it might not be. And what it causes is a real difficulty, I think for an employer and insurer perspective because realistically, when an application is filed, the evidence that’s required should be there. And whether the same extent of leniency would be extended towards an employer in a situation where they require more evidence is fairly arguable. So, what we are seeing is a trend towards more conciliation conferences, because a conciliation officer forms the view that the matter is not able to be fully conciliated because something’s outstanding.
Realistically, that evidence should have been obtained before proceedings were filed, and we are unfortunately seeing employers and insurers put in a real position of prejudice in these cases where further evidence is forthcoming in a process which they’re unable to respond to. A further conciliation might be listed, and an interim payment order might be sought based on further evidence obtained in a proceeding that the employer and insurer are unable to respond to.
It’s a difficulty and I do think it needs to be addressed because it is a real growing trend and concern.
The second concern or issue that has really become prevalent in the new system is the issue of claim costs and claims not necessarily being resolved at conciliation. So, where this comes from is in the old system or to any workers compensation claim in WorkCover WA there is a scale of cost that applies.
In the, let’s call it the old system or the old cost scale, what it did was incentivise a front loading of a claim, of everyone getting their evidence and a conciliation being ready to discuss settlement of a claim.
When that happened, the claim was quickly and easily disposed of. That was where the tipping point for kind of risk and reward for costs went for solicitors.
There is now a new cost scale, which people may or may not be aware of which has almost doubled the costs allowable. So, under the 2024 scale, once the matter proceeds to the arbitration service, there is a scale item that used to be worth 7 hours, which is now worth 30 hours.
So, the cost of resolving an application, the arbitration service that maybe used to be $12,000 and now 50 hours at say $500.00 an hour at $25,000.
Whether the industry can wear that, where the cost of resolving every claim is increased and not only the costs of paying the workers solicitors, if we’re involved in that process, there’s going to be a cost for defense as well. Whether the industry can wear that cost and whether that’s sustainable in the long run remains to be seen. I mean it, it does seem a real concern, that the cost of running these cases has probably doubled.
00:13:04 Speaker 3 – Julian Lane
And I guess there’s that flow on effect as well that the claim remains in the system for longer that sort of creates a drain on resources across all of the stakeholders.
00:13:13 Speaker 4 – Matthew Thickett
Certainly, there’s no incentive, I think now to resolve quickly the concil (conciliation).
00:13:19 Speaker 2 – Sandy Cattley
OK, so we’re coming to the end of our podcast. Do any of you have anything more to add to the discussion?
00:13:24 Speaker 5 – Luke Westell
I’ve got a question actually. Matt, you were talking about settlements before and about the changes in the timeliness of getting the settlements registered.
In terms of settlements in the old scheme, we would do it by way of a deed. It wouldn’t be uncommon for us to include a principal or some other third party and perhaps have other clauses in there such as confidentiality agreements. Can you talk us through the change from then and now with those sorts of things?
00:13:58 Speaker 4 – Matthew Thickett
As best I can, I think the intention of the new legislation was to make this much simpler, the settlement agreement is a prescribed form. It can’t be amended to add terms around confidentiality. It can’t be amended to add terms around even a resignation or a discharge against a principal. So, all that exists is that vanilla settlement agreement that is the only way to settle a workers compensation claim in Western Australia now.
So, there’s a lot to be resolved because there may be these peripheral issues, especially around getting claims resolved against principles that require some strategic thinking, side agreements, concurrent agreements, written agreements through exchange of letters that just weren’t so much an issue when it came to the old 92F Deed. What’s better? What’s worse, is quite difficult to comment on. Say for the fact the settlement agreement, as it is fairly rigid and perhaps doesn’t necessarily work even for some of WorkCover WA’s own processes it is something that does need to be resolved that we’ve run across, and one of those issues that was just going to pop up was how you actually resolve an application for extension of the prescribed weekly payments. Actually, you can’t do that under the new settlement agreement because what you are settling for is over the maximum of the prescribed amount will get rejected, but obviously there’s the old Section 217 application. It’s actually no way to legitimately resolve that through the current settlement agreement.
00:15:29 Speaker 5 – Luke Westell
And I’ll also just jump in with another question. One that we probably haven’t touched on too much, but I think is relevant to effectively every claim is the new Section 3 Section 64 Notices, in particular return-to-work notices.
So, there’s a requirement to serve a worker with a return-to-work notice. In the old scheme the worker made a return-to-work, their entitlement ceased because they’ve made a return to work. New scheme. It’s just that we need to serve that worker with a notice to say that you have made a return to work, and we are going to discontinue your income compensation.
Or in the circumstances where the worker has returned to alternate employment and may not be earning the same amount each week, as what they were when they injured themselves, and what they were when they suffered their injury. And then the notice advises that there will be a reduction in their income compensation.
Some insurers are having conversations with injured workers upfront and talking about the fact that as the claim progresses, as it gets towards the end, they’ll be receiving a notice. This is what it means and not to be too concerned.
On those ones, for the vast majority of them we haven’t been seeing any disputes arise. It seems to be a relatively smooth process and in fact, I think it almost draws a line in the sand and says, ‘right there was a claim, now there isn’t’ and it adds that finality for all the different parties. We are seeing a little bit of tension arising where there’s casual employees and the hours are a little bit up and down and we’re sort of averaging it out and saying that, hey look you’ve been able to work on average what you were beforehand. And naturally, there might not be the same work available to those causal employees so we’re starting to see a little bit of tension and potentially some disputes arising from those, but I think overall it’s a relatively smooth, smooth process.
00:17:38 Speaker 2 – Sandy Cattley
So, before we close out this podcast, I’d like to mention that Matt and HWLE are part of EBM’s Risk Solutions Network. The Network has been set up to help our clients gain access to an extensive network of resources and support to assist them to identify, understand and manage risks.
If you’re interested in learning more about this Network, please visit our website ebm.com.au or chat to your EBM Account Manager.
I’d like to thank Julian and Luke once again for their expertise in this area.
Also, a big thank you to Matt Thickett for joining us today to provide some insight on these changes.
If you’d like more information on HWLE, please visit their website which is hwlebsworth.com.au.
Once again, thanks to everyone for sharing your expertise today.
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