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Senate Standing Committee on Education and Employment Legislation Inquiry into the Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015 Submission of the Department of Employment Department of Employment Page 1 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Table of Contents Introduction ...................................................................................................................................................................... 3 Purpose of the submission ................................................................................................................................................ 4 Brief overview of the Comcare Scheme ............................................................................................................................ 4 The case for change .......................................................................................................................................................... 4 Key amendments .............................................................................................................................................................. 6 Early Intervention ......................................................................................................................................................... 6 Eligibility for compensation better focused .................................................................................................................. 6 Suitable employment broadened ................................................................................................................................. 9 Incapacity payments stepped down more frequently ................................................................................................ 10 Permanent impairment lump sum compensation re-focused ................................................................................... 15 Medical treatment based on evidence ....................................................................................................................... 16 Household and attendant care services re-focused ................................................................................................... 17 Enhanced obligations of mutuality ............................................................................................................................. 18 Cap spending on legal costs ........................................................................................................................................ 19 Compensation for detriment caused by defective administration introduced .......................................................... 19 Consultation .................................................................................................................................................................... 20 Appendices ...................................................................................................................................................................... 20 Department of Employment Page 2 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Introduction The Department of Employment (the Department) welcomes the opportunity to make a written submission 1. to the Senate Education and Employment Legislation Committee Inquiry into the Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015 (the Bill).
The Bill was introduced into the House of Representatives on 25 March 2015 and will improve the focus on 2. early intervention to prevent and reduce workplace injuries; improve health outcomes and return-to-work outcomes for injured workers; and improve the operation and sustainability of the system by excluding certain injuries which are not work related, excluding secondary psychological injuries from some compensation and removing payment for treatments which are not evidence based.
This package of reform has benefits for workers, ensures the viability of the 3. scheme and will restore public confidence in one of Australia’s last remaining long- tail workers’ compensation schemes.

The proposed changes ensure that employees will be better off in terms of: 4. access to early rehabilitation and provisional medical expense payments; support to get back to work quickly; and ensuring quality and proven medical treatment and attendant care services.
There will be greater support for seriously injured employees: those with catastrophic injuries will have access to unlimited household and attendant care services, and those with serious permanent impairment will receive weighted lump sum payments.

Claims for liability and disputes will be processed faster and some claimants will receive higher payments than they currently receive.
The key provisions of the Bill that amend the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) 5. will:  ensure a stronger focus on rehabilitation and return-to-work through stronger rehabilitation obligations for employers and employees; and more financial incentive to work.
target support for injured employees through  earlier medical and rehabilitation support, and faster claims reporting and determination; larger permanent impairment lump sum payments for the more severely injured and smaller for those with less severe injuries, with no lump sum payments for permanent impairment which is a secondary psychological or psychiatric injury; modernised income calculation methods, and payment until pension age (as it rises); and uncapped services in the home for the catastrophically injured and a three-year cap for others.
 enhance scheme integrity and viability through only compensating work-related injuries and capping medical and legal costs; only compensating treatment that is evidence-based and support services that are provided by qualified professionals; and requiring claimants to follow certain requirements, with appropriate consequences if they do not.
The majority of amendments in this Bill are based on recommendations contained in two reports on the 6. Review into the SRC Act (the 2012 Review) undertaken by Mr Peter Hanks QC and Dr Allan Hawke AC.

The 2012 Review was commissioned by the Hon.

Bill Shorten, then Minister for Employment under the former Labor Government.

The remaining amendments in the Bill reflect current practice in the states and territories as well as international best practice.
The 2012 Review identified a broad range of opportunities to modernise the SRC Act and the operation of 7. the Comcare scheme.

A consistent theme throughout the 2012 Review was the benefit of increased early intervention and improved rehabilitation resulting in earlier return to work.

Department of Employment Page 3 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 The Government developed a two-stage process to reform the SRC Act.
The first stage of reform focussed on 8. expanding eligibility for companies to self-insure under the SRC Act and reducing red tape as part of the application process.

This culminated in the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 which was introduced into Parliament on 19 March 2014, passed the House of Representatives on 26 November 2014 and is currently before the Senate.
The second stage of the reform, the Safety, Rehabilitation and Compensation Amendment (Improving the 9.

Comcare Scheme) Bill 2015, aims to modernise the SRC Act and improve the operation of the Comcare scheme.

These changes will help bolster return-to-work outcomes and improve workers’ compensation services to individuals while ensuring that fair compensation is paid to injured employees.
The Bill follows extensive consultations with experts, and the broader community informed by international best practice.

Purpose of the submission In this submission, the Department addresses only the aspects of the Bill stated in the terms of reference of 10. the Inquiry.
This submission provides a brief overview of the Comcare scheme and the potential impact of the Bill on 11. workers’ compensation rights, entitlements and obligations, and notes efforts to identify any unforeseen consequences arising from the proposed reforms, through consultation with stakeholders.

Due to the size of the Bill, the body of the submission provides detailed information on significant amendments and Appendix 1 outlines the complete package of changes.
Brief overview of the Comcare Scheme The two key pieces of legislation which form the Comcare scheme are the SRC Act and the Work Health and 12.

Safety Act 2011 (WHS Act).

The SRC Act provides rehabilitation and workers’ compensation for injured Australian Government and 13.
Australian Capital Territory (ACT) Government workers (collectively known as premium payers) and for the employees of 33 licensees, comprising current and former Commonwealth authorities and private corporations, who self-insure under the Comcare scheme.

The SRC Act also applies to members of the Australian Defence Force (ADF) injured during defence service 14. before 1 July 2004.
Coverage for injuries attributable to defence service on or after this date is provided by the Military Rehabilitation and Compensation Act 2004 (MRC Act).

The Department of Veterans’ Affairs administers defence-related claims under the SRC Act and MRC Act on behalf of the Military Rehabilitation and Compensation Commission.

Due to the unique nature of military service, the Government has decided that ADF members and veterans who are covered by the SRC Act will not be affected by the reforms in the Bill.
The exception to this relates to claims for permanent impairment.

The WHS Act places obligations to ensure the health and safety of workers (and others) on persons 15. conducting a business or undertaking in the Commonwealth jurisdiction.

This includes the Commonwealth public sector, the Australian Defence Force and most self-insurers.

The case for change There has been little change to the Comcare scheme since its inception in 1988 and there is a broad 16. consensus that the scheme needs reform.
The previous Government commissioned the 2012 Review to ‘modernise the federal workers’ compensation scheme to ensure injured workers are given every opportunity to return to health, independence and work as quickly as possible’.

A number of submissions to the 2012 Review were received from a cross-section of stakeholders that were also in support of changes to the SRC Act.
Department of Employment Page 4 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 There has been widespread criticism of the scheme in the community and in the media, mostly focussed on 17. the types of claims that can be compensated.
More recently in February 2015, Mr Mick Gentlemen MLA, the ACT Minister for Workplace Safety and Industrial Relations, has said: ‘The Comcare system is quite burdensome, not only for claimants but for their employers as well.

The focus we want to see is recovery and rehabilitation for our staff and getting them back to the workplace.

The studies show that if you get people back to work earlier, their lives are better in the long run.’1 18.

The ACT has signalled its planned exit from the Comcare scheme.
While the SRC Act has not changed much since it commenced nearly 27 years ago, the international 19. evidence and best practice, workplaces and working conditions, health care and rehabilitation practices, technology and social behaviour and expectations have all changed significantly in that time.

The Comcare scheme was established to compensate people who suffer a work related illness or injury and 20. had no focus on return to work.
This was one of the reasons for providing salary replacement until pension age, as there were low expectations of recovery and return-to-work.

The amendments will keep the scheme as long-tail while also raising expectations of, and support for, recovery and return to work.

These reforms are in line with most state and territory schemes and supported by international evidence.

Administrative Appeals Tribunal (AAT) and court decisions have affected the way the SRC Act is applied in 21. practice.
The Comcare scheme has been extended through tribunal and court decisions to compensate employees for non-work related injuries and can entrench low expectations for recovery and return to work.

This is contrary to the common understanding that workers’ compensation relates to work-related injuries (reflected in the original second reading speech to the SRC Act).
In 1998, the case of Australian Postal Corporation v Burch2 established that a stroke was an injury (and not a disease) under the SRC Act, therefore it was sufficient that it happened in the course of employment for compensation to be payable.

Prior to this decision strokes had been treated as the culmination of a disease and therefore were not compensable unless they were significantly contributed to by employment.

The Comcare scheme is coming under significant financial and administrative 22. pressure.
Return-to-work rates have fallen from a high of 89% in 2008-09 to around 80% in recent years3.

This is bad for injured workers and very costly.

This is despite the ever- growing body of evidence that work is good for the social health, mental health and physical health of not just the individual but their entire family.

The scheme creates barriers and disincentives for injured employees to recover at work, for example, by not specifically endorsing the early rehabilitation of injured employees.
This is out of step with prevailing community expectations that those who can work (even if part-time) should be encourage to do so to their capacity.

It has been found that women who accessed the Australian Government Paid Parental Leave scheme were more likely to feel an attachment to their jobs and their employer and were encouraged to return to work.
This was aided by ‘keeping in touch’ provisions within the PPL scheme which encouraged employers to maintain a connection with employees while they were on leave4.

Similarly, an opportunity exists within the workers’ compensation field to foster positive relationships with injured employees by maintaining connections during their absence as well as encouraging and supporting them to return to work.
Studies show that, if an injured worker is off work for 20 days, then the chance of ever getting back to work is 70 per cent but this drops off to just 35 1 Towell, N 2015, ‘ACT dumps Comcare’, The Canberra Times, 25 February.

2 Australian Postal Corporation v Burch [1988] 85 FCR 264, 269.

3 Comcare Annual Report 2013-14, p. 73.

4 ‘PPL Evaluation: Final Report’, The University of Queensland, November 2014, p. 190.
Department of Employment Page 5 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 per cent if an injured worker is off work for 70 days5.

Extended time off work is not conducive to rehabilitation.

Under the SRC Act, Comcare has limited ability to determine the reasonableness or the appropriateness of 23. medical treatment and rehabilitation doctors prescribe.
In practice this has resulted in the Comcare scheme paying for questionable treatments including music lessons, homeopathy and art therapy.

Medical and rehabilitation costs have been increasing at a consistent rate over the past five years.

Total Payment for claims under the Comcare scheme from 2009-10 to 2013-14 This has contributed to claim costs rising every 24. year.
The cost of all claims under the SRC Act during 2012-13 was $540 million, which is an increase of 11 per cent from 2011-12,6 and in the five years to 2012-13 claim costs rose by 37 per cent7.

Premiums charged to Commonwealth agencies have increased by more than 50 per cent over the four years to 2013-148.
Without reform, injured workers will be left 25. with less effective rehabilitation options, agencies will continue to see lower return-to-work rates and poorly targeted support and treatment that is not based on evidence.
The package of changes in the Bill aim to improve return-to-work outcomes for injured employees, give 26. employers the tools to help injured employees receive the best quality evidence-based medical treatment, provide extra support to catastrophically injured employees and improve the integrity and affordability of the Comcare scheme.
Key amendments The Bill introduces provisional medical expense payments which provide injured employees with access to Early Intervention 27. up to $5000 in medical costs before a claim is made or determined.

Additionally, injured employees will have access to rehabilitation from the date of notification of an injury, that is, before a claim is lodged.
This means that injured employees can afford medical treatment and receive support through rehabilitation in the critical early stages following an injury to give them the best possible chance of full recovery and returning to work.

These changes will protect employees from further harm to their health, safety and welfare and assist them 28. to recover and to return to work sooner.
Commonwealth workers’ compensation schemes were originally designed to compensate people who suffer Eligibility for compensation better focused 29. work-related injuries or disease.

Since 1971, the Commonwealth workers’ compensation scheme has covered any injury (other than a disease) that occurs in the course of employment regardless of whether there is a causal connection to the workplace.
The Bill contains a range of amendments that will more clearly distinguish between 5 Johnson, D., Fry T. Factors Affecting Return to Work after Injury: A study for the Victorian WorkCover Authority.

Melbourne: Melbourne Institute of Applied Economic and Social Research; 2002.

Referenced by the Australasian Faculty of Occupational & Environmental Medicine Realising the Health Benefits of Work: A Position Statement.

2011: Royal Australian College of Physicians, p. 12.
6 Comcare Annual Report 2012-13, p. 65.

7 ‘Compendium of WHS and Workers’ Compensation Statistics, 5th Edition’, December 2013, Safety, Rehabilitation and Compensation Commission and Comcare, p. 52.

8 ‘Compendium of WHS and Workers’ Compensation Statistics, 6th Edition’, March 2015, Safety, Rehabilitation and Compensation Commission and Comcare, p. 49.
Department of Employment Page 6 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 work and non-work related injuries, thereby strengthening the eligibility requirements for compensation.

Similar provisions exist under state and territory workers’ compensation legislation.
Under the amendments, to determine whether work was a significant cause of a disease, the relevant 30. authority may take into account:   the state of the employee’s physical and psychological health before the ailment or aggravation; the probability that the employee would have suffered the same condition at or about the same time in (or at the same stage of) the employee’s life; or  any other matters affecting the employee’s physical or psychological health.
The Bill also establishes a new category of injuries, called ‘designated injuries’, which includes heart attacks, 31. strokes and spinal injuries where the injury consists of, is caused by, results from, or is associated with, a pre-existing ailment.

For these conditions to be compensable, they must be contributed to, to a significant degree, by the employee’s employment or by a compensable disease.
There is little justification for workers’ compensation to be paid where an injury or disease is not caused by 32. work but occurred at work.

Similarly, workers’ compensation should only be available where either an underlying condition, or the culmination of that condition (such as a heart attack or stroke), is contributed to, to a significant degree, by the employee’s employment.
In 2002, the Federal Court found that an employee’s perception that an incident at work caused their illness 33. or injury was adequate to enable them to claim and receive workers’ compensation9.

This was regardless of whether the perception was reasonable or real.
In 2013 a CSIRO employee received workers’ compensation under the Comcare scheme for migraines that he claimed were caused by the electromagnetic frequency (EMF) emitted from his work computer even though there was no medical evidence to support his claim.

For recreation, this employee flew a light aircraft from his rural property.

Experts considered that in-flight EMF would be considerably higher than in an office environment.
Based on the Federal Court judgement in Wiegand v Comcare [2002] the Administrative Appeals Tribunal found that the employee’s perception that the disorder from which he suffered was caused by exposure to EMF was sufficient to accept his claim, even though the perception was not reasonable or based in fact.
To rectify this, the Bill expands the matters that a relevant authority may take into account when 34. determining whether an injury was contributed to, to a significant degree, by an employee’s employment.

In particular, where an injury is attributable to the employee’s belief/perception of or interpretation of an incident or state of affairs, the injury may not be compensable unless the employee had reasonable grounds for the belief or perception, as the case may be.
During the period 2009-10 to 2013-14, the incidence of mental stress claims across the Comcare scheme 35. increased by 61 per cent.

Over the same period the average total cost of mental stress claims for premium payers (total claim costs are not available for licensees) was approximately $342,000.

This is significantly higher than the average cost of other claims (refer to Figure 1.1 and Figure 1.2 below) 10.
9 Wiegand v Comcare [2002] FCA 1464 10 ‘Compendium of WHS and Workers’ Compensation Statistics’ March 2015, Safety, Rehabilitation and Compensation Commission and Comcare, p. 21.
Department of Employment Page 7 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Figure 1.1 Incidence of mental stress claims Figure 1.2 Average total cost of mental stress claims (premium payers) Under the SRC Act, an injury or illness suffered as a result of ‘reasonable administrative action taken in a 36. reasonable manner in respect of the employee’s employment’, is excluded from compensation.
In practice this means that if a manager has behaved reasonably with an employee, the employee might be injured or ill, and may be able to take sick leave, but is not able to receive workers’ compensation.

Over the years, there has been much debate over the definition of ‘reasonable administrative action’ when 37. employees have put in mental stress claims under the Comcare scheme.
Employers have argued that if they and their managers behaved appropriately when an employee claims to have suffered a mental stress injury, they should not be liable for workers’ compensation.

The AAT and courts have ruled that the only areas that are exempt from employee mental stress claims are those where managers are undertaking formal performance appraisals, counselling action, suspension action or disciplinary action.
In practice, this means that a stress claim can be successful in every other circumstance, even where a manager was behaving appropriately.

For example, stress claims can be successful where the workplace undertook a reasonable and appropriate restructure and the employee did not like it; or where a manager has asked an employee to work in another location that is reasonable; or where a manager is working one on one with an employee to improve their performance.
An Australian Government employee was anxious about her future, with co-location of offices following a Machinery of Government change, which she believed would make her position redundant.

The restructure affected all staff at the employee’s level.

The claim for workers’ compensation as a result of this restructure was accepted as it did not fit within the exclusionary provision of reasonable administrative action.
Department of Employment Page 8 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Most Commonwealth agencies have reported they are concerned that if they encourage assertive and 38. accountable management practices they risk mental stress claims being lodged.

Managers are understandably concerned about the impact of this on their professional reputations, and on the morale of the rest of their staff.
The Bill removes this impediment to effective workplace management.

It broadens the definition to include 39. any reasonable management action, thus balancing the rights of employees to access compensation for workplace injuries and the rights of employers to effectively manage their employees in the workplace.

There has also been a loophole where employees can make a claim in anticipation of reasonable 40. management action being taken.
Because the action has not yet been taken, this type of situation is not excluded from compensation.

The Bill closes this loophole.

These amendments clarify the scope of compensable claims to ensure that employers and taxpayers are not 41. held financially responsible for certain injuries and illnesses (including stress) that have no causal connection to the workplace or to a manager’s behaviour.
Suitable employment broadened The Bill amends the rehabilitation and return-to-work requirements in the SRC Act to 42. emphasise the vocational (rather than medical) nature of rehabilitation services and improve return-to-work outcomes under the scheme, similar to the current practice in Victoria.
Suitable employment means any employment (including self-employment) for which 43. the employee is suited, having regard to their age, experience, training language and other skills; their suitability for rehabilitation or vocational retraining; location of the employment; and any other matters.
The Bill expands the definition of what is considered suitable employment so that an employee can look 44. beyond their current employer while they are returning to work without losing the right to employment with their employer.

This enables relevant authorities to utilise the return-to-work hierarchy11, a widely accepted rehabilitation tool used to minimise disruption in the injured employee’s life, and ensure the most cost-effective, efficient and permanent re-employment for that employee.
The return-to-work hierarchy states that the goals of vocational rehabilitation are to return the injured worker to: a.

Same job/Same employer: The first goal is to return the injured employee to the original employer in the original job.

b.

Modified job/Same employer: To encourage the employer to modify the original job or to provide employment in a different job at that employer.
c. New job/Same employer: To enable continuity of employer when the employee is no longer able to undertake their original job.

d. Same job/New employer: To assist the injured worker in finding employment with a different employer in a related industry.

e. Modified job/New employer: To assist the injured employee in finding employment in a modified role with a different employer in a related industry.

f. New Job/New employer: To assist the injured worker in finding a job in another industry.
This is particularly helpful where an individual has sustained a psychological or psychiatric injury and their 45. doctor’s advice is that they not return to work with the same employer or where an injured employee who previously worked in a physically intensive role can no longer perform the same duties.
11 ‘Variation of Operational Standards for workplace rehabilitation providers (Rehabilitation programme providers)’, Comcare, 2012, p. 2. https://www.comcare.gov.au/__data/assets/pdf_file/0007/56797/Operational_standards_for_rehabilitation_program_providers_1_July_201 3_-_30_June_2016.pdf Department of Employment Page 9 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 If an employee is assessed as having capacity for suitable employment, both the employee and the employer 46. must take all reasonably practicable steps to seek/provide suitable employment.
Example Meghan works at a small Government agency where she was assaulted by a client.

Meghan would like to return to work but due to her negative associations with her agency and the size of the agency her doctor assesses that she is unable to return to her former employer.

Under the proposed amendments Meghan could undertake suitable employment with any other employer.

This will have a positive impact on both her mental and physical wellbeing.
This amendment will have a positive effect on return-to-work rates, which will lead to improved general 47. health and wellbeing and reduced psychological distress for the injured employee.

This is better for the employee, their family, the workplace and the community12.

The Bill introduces four ‘step-downs’ of incapacity payments to Incapacity payments stepped down more frequently 48. strengthen the incentive for injured employees to return to work, even if on part-time hours.
According to the Royal Australasian College of Physicians, long-term work absence, work disability and unemployment have a negative impact on health and wellbeing.

With appropriate support, many of those who have the potential to work, but who are not currently working because of illness or disability, can access the benefits of work13.

Currently, incapacity payments are reduced by 25 per cent after 44 weeks, that is, employees receive 49.
100 per cent of their normal weekly earnings for the first 45 weeks and 75 per cent thereafter.

This can provide insufficient incentive to return to work quickly.

Under the proposed changes employees will receive:  100 per cent of their average weekly remuneration (AWR) for the first 13 weeks of incapacity;  90 per cent of AWR for 14 -26 weeks;  80 per cent of AWR for 27-52 weeks; and  70 per cent of AWR thereafter.
These reductions are structured to create return-to-work incentives for the approximately ten per cent of 50. injured workers who are still on compensation benefits after four weeks and are in line or are more generous than those schemes that operate in all states and territories As part of the claims management process, an employee’s ability to earn in suitable employment (either 51. actual or deemed) is regularly assessed.
An employees’ income replacement at each of these ‘step-downs’ may be reduced if the employee has a deemed ability to earn that they are not utilising.

Employees who return to work after 26 weeks may increase their take-home pay (a combination of income 52. replacement and salary from their employer) to up to 90 per cent of their average weekly remuneration.

Example Jonathan’s foot is crushed in the course of work as a truck driver and he subsequently undergoes surgery to repair his foot.
Jonathan receives incapacity payments while he is recovering at home.

For the first 13 weeks Jonathan receives 100 per cent of his average weekly remuneration, after 13 weeks this decreases to 90 per cent.

After 26 weeks Jonathan’s incapacity payments would drop to 80 per cent however Jonathan decides to commence a partial return to work on modified duties.
As a result 12 Australian and New Zealand Consensus Statement on the Health Benefits of Work, p. 7 13 The Royal Australasian College of Physicians, Australasian Faculty of Occupational and Environmental Medicine Position Statement on Realising the Health Benefits Work, Sydney 2011, p. 7 Department of Employment Page 10 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Jonathan’s take-home pay would be higher than 80 per cent of his average weekly remuneration based on a combination of his incapacity payments and salary (this is capped at 90 per cent until Jonathan actually earns more than 90 per cent of his average weekly remuneration).
There is also a protection for low income earners (as defined with reference to indexed statutory rates) 53. which prevents the last two ‘step-downs’ being applied.

As a result, low income earners will continue to receive 90 per cent of their average weekly remuneration, less their actual or deemed ability to earn, after 26 weeks.

Currently, where an employee is undertaking a partial return-to-work, the period before the ‘step-down’ is 54. calculated is based on the number of hours away from work.
This operates to extend the 45 week period before the ‘step-down’ is applied.

For example, if an injured employee is away from work for 50 per cent of their pre-injury hours, the number of weeks before the ‘step-down’ will be applied is twice as long as for employees who are completely off work (90 weeks instead of 45 weeks).

This further reduces the effectiveness of the ‘step-down’ arrangements.
Under the proposed changes, any week where an employee is incapacitated for work will be counted as a week for the purpose of ‘step-downs’.

Utilising ‘step-downs’ to encourage return to work is consistent with the international evidence.

For 55. example, Meyer, Viscusi and Durbin found that return to work rates decreased when Michigan and Kentucky increased the amount they paid higher income injured workers.

The rate was steady for other workers (whose payments did not change).
The authors found '…substantial labour-supply effects of workers' compensation benefits.

'14 In the Comcare scheme, evidence shows that injured workers who are off work for between 13 to 45 weeks 56. are less likely to return to work and stay in work than other injured workers15.
Less than 1 week 58% 1 week or more 42% 12 weeks or more 45 weeks or more 52 weeks or more 15% 4% 3% Figure 1.3 Period of Absence Percentage of employees receiving compensation Currently, 85 per cent of employees receiving income replacement have returned to work after 13 weeks of 57. incapacity (refer Figure 1.3), therefore the new ‘step-down’ provisions will affect 15 per cent of injured employees based on current estimates.
‘Step-downs’, combined with return to work incentives and expanded employment options, will provide 58. employees with as much assistance as possible to return them to work.

This will be enhanced after 26 weeks when injured employees who return to work, may increase their take-home pay (income replacement and salary from their employer) to up to 90 per cent of their average weekly remuneration.
All states and territories utilise ‘step-downs’ of incapacity payments to encourage injured employees to 59. return to work and to remove disincentives to stay at home and become sicker.

The Comcare scheme is one of the few workers’ compensation schemes in Australia that remains long-tail, that is, it provides income replacement until retirement age or as long as is required, for all levels of incapacity.
Western Australia and Queensland place caps on the amount of compensation payable per claim while New South Wales, Victoria and Tasmania only provide incapacity payments long term if the injured employee has a severe incapacity or has partially returned to work.

A comparison of incapacity payments across Australian jurisdictions is provided at Figure 1.4 and 1.5 below.

14 Meyer, B.D., Viscusi, W.K., & Durbin, D.L.

‘Workers’ Compensation and Injury Duration: Evidence from a Natural Experiment’, Vol.
85, No.

3 of the American Economic Review, June 1995, page.

322.

15 Comcare, SRCC and Comcare Annual Reports 2013-14, p. 75.

Department of Employment Page 11 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Overtime and allowances are paid to employees in recognition of extra hours worked or in recognition of a 60. certain task or particular skill, use of their own tools at work, or work in unpleasant or dangerous conditions.
Once an employee is no longer undertaking tasks that attract the allowance it should no longer be payable.

The Bill allows a transition period of 104 weeks (2 years) to keep receiving overtime and allowances they had prior to the injury, to allow employees sufficient time to adjust their expenditure if they are unable to return to work in the long-term.
Example Gary, an Australian Federal Police officer, suffered an injury in the course of employment which has left him with no capacity for work and an 18 per cent permanent impairment.

Gary has been receiving incapacity payments for over two years therefore under the amended Comcare scheme, allowances and overtime are no longer included in the calculation of his incapacity payments.
Gary will continue to receive incapacity payments for all other aspects of his pre-injury total earnings (salary, commissions, fringe benefits, and reportable employer superannuation contributions) until retirement age or as long as required.

If Gary was covered under the New South Wales workers’ compensation scheme all Gary’s incapacity benefits would cease after five years.
Combined, these amendments will provide financial support and improved return-to-work outcomes for 61. injured employees while ensuring the Comcare scheme can continue to pay incapacity payments until retirement age or as long as is required for injured employers who are unable to work.
Department of Employment Page 12 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 i j s g n n r a e y r u n i - e r p f o e g a t n e c r e P Comparison of step-down in incapacity entitlements - total incapacity Figure 1.4 NSW VIC Qld WA SA Tas NT ACT Comcare (current) Comcare (proposed) 100% 95% 90% 85% 80% 75% 70% 65% 60% 0 13 26 39 52 Weeks 65 78 91 104 Department of Employment Page 13 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Workers’ compensation after 2 years16 Figure 1.5 Northern Territory Incapacity payments cease after 5 years.
For 15% or more impairment, incapacity payments continue until pension age.

Medical support ceases one year later.

Western Australia Incapacity payments are capped at $212,980 over the life of the claim.

Medical expenses are capped at $63,894.

Comcare scheme Incapacity payments continue for as long as required or until retirement age and medical support is provided for life.

South Australia – from 1 July 2015 Incapacity payments cease after 2 years.
For 30% or more impairment, incapacity payments continue as long as they are seriously injured.

Medical support ceases one year later.

Tasmania Incapacity payments cease after 9, 12 or 20 years, or continue until pension age depending on level of impairment.

Medical support ceases one year later.

16 Note that the state and territory schemes allow more access to common law damages than Comcare.

Department of Employment Queensland Incapacity payments cease after 2 years.
For 15% or more impairment incapacity payments cease after 5 years.

A cap of $296,165 applies.

Medical support is capped at $300,000.

New South Wales Incapacity payments cease after 2 ½ years, except where an injured employee has partial work capacity and is working at assessed capacity, at least 15 hours per week, earning $173 or has no capacity for work.

After 5 years these payments will be further limited to employees with 20% or more impairment.
In some circumstances these employees can access incapacity payments until pension age.

Medical support ceases one year later.

Australian Capital Territory Incapacity payments continue for as long as required or until retirement age and medical support is provided for life.

Victoria Incapacity payments cease after 2 ½ years, except where an injured employee has partial work capacity and is working at assessed capacity, at least 15 hours per week, earning $177 or has no capacity for work.
Medical support ceases one year later.

Page 14 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Permanent impairment lump sum compensation re-focused Permanent impairment compensation is paid as a lump sum separate from, and additional to, other 62. compensation.

Under the current Comcare scheme, permanent impairment compensation no longer fairly reflects the level of impairment of an injured employee.
Some seriously injured employees have received little or no compensation, while less seriously injured employees have received excessive levels of compensation.

Injured employees must meet an impairment threshold of 10 per cent before a lump sum payment for 63. permanent impairment is payable.

Consequently, employees with multiple injuries each resulting in less than 10 per cent impairment are unable to access lump sum compensation.
The Bill provides that permanent impairment resulting from multiple injuries attributable to the same 64. incident or state of affairs (including secondary injuries, other than secondary psychological or psychiatric injuries) will be combined to allow more injured employees to meet the 10 per cent threshold before a lump sum payment is payable.

This addresses the anomalous and, in some cases, unfair results flowing from the High Court’s decision in Canute v Comcare17.
The maximum payable for permanent impairment compensation is currently $243,329.42 (as at 1 July 2014) 65. which includes non-economic loss.

The compensation currently payable is a percentage of the maximum amount multiplied by the percentage of permanent impairment plus an amount for non-economic loss.

The Bill removes the concept of non-economic loss given the difficulty of accurately defining this.

However it 66. increases the maximum payable to $350,000.
The amount of compensation payable is calculated using an algorithmic formula for permanent impairment assessed at less than 75 per cent.

This formula targets compensation to those with a more serious permanent impairment.

Injured employees with permanent impairment assessed at 75 per cent or more will be entitled to the maximum compensation payable of $350,000.
For example, an employee with an assessed 15 per cent whole person permanent impairment is entitled to 67. approximately $36,499 under the SRC Act compared to $15,750 under the proposed changes.

Conversely an employee with a 60 per cent permanent impairment is entitled to approximately $145,998 under the current SRC Act but would be entitled to $239,400 under the proposed changes.

In 1995 Ms Black was injured in a car accident in the course of her employment and made a claim for compensation.
Comcare accepted liability for the injuries to Ms Black’s neck and both of her shoulders caused by the car accident.

Twelve years later Ms Black made a claim for compensation for permanent impairment for her neck (8 per cent) and both shoulders (5 per cent to her right shoulder and 5 per cent to her left shoulder).
In light of the High Court’s judgement in Canute v Comcare [2006], Comcare was not able to pay any compensation for permanent impairment as the degree of permanent impairment resulting from each injury did not meet the 10 per cent threshold.

Under the changes proposed in the Bill, Ms Black may combine the separate impairments resulting from her three injuries to result in an assessment of 17 per cent whole person impairment, assuming her assessable impairment has not changed.
Using the new algorithm, Ms Black would be entitled to lump sum compensation of $19,040: = 0.17 [percentage of impairment] x 0.32 [multiplying factor] x $350,000 [maximum rate] =$19,040 Under the proposed changes, relevant authorities must take into account pre-existing impairments (both 68. compensable and non-compensable) when assessing and compensating the level of permanent impairment.
This will prevent employers compensating employees for pre-existing impairments that are not related to compensable conditions.

17 Canute v Comcare [2006] HCA 47.

Department of Employment Page 15 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Additionally the Bill will exclude access to permanent impairment compensation for secondary psychological 69. or psychiatric conditions.
The effect of this amendment is that compensation for permanent impairment will continue to be payable for primary psychological or psychiatric injuries, for example a major depressive disorder that was in part or whole the result of a traumatic incident at work.
However, no lump sum compensation will be payable for permanent impairment resulting from a secondary psychological or psychiatric injury, for example, a major depressive disorder that was the latent result of a spinal injury that arose out of or in the course of employment.

All other forms of compensation, including incapacity payments, and access to rehabilitation, will continue to be available for secondary psychological or psychiatric injuries.
These amendments allow a fairer assessment of permanent impairment, for employees who will be able to 70. combine impairments resulting from a single or multiple injuries; and for employers who will not be required to compensate employees for pre-existing injuries.
Employees with severe injuries will also benefit from targeted compensation to help them achieve a better quality of life while scaling lump sum payments for those with less severe injuries will allow for higher payments for those who need support.

Injured employees should be entitled to quality medical treatment for their Medical treatment based on evidence 71. injuries.
However, medical treatment under the SRC Act is currently broadly defined, not based on objective standards, and not required to be provided by medical practitioners who meet a level of national accreditation.

This puts injured employees at risk, increases costs for employers, and delays recovery and return to work.
Under the SRC Act, employers currently have no involvement in, or control over, an injured employee’s 72. choice of medical practitioner or treatment, but must pay compensation for ‘reasonable’ medical treatment.

There have been many legal cases over the years that have considered ‘reasonable’ medical treatment and compensation has been awarded for what are arguably questionable claims.

These have received media attention and potentially undermined the professional reputation of the public service.
For example:  The AAT approved the continuation of massage therapy payments as part of a broader treatment plan, despite no evidence of any curative effect associated with the massage therapy in this case.

This cost $29,000 over an eight-year period.


 The AAT found it was reasonable for an injured employee living in Alice Springs (who had ‘generalised anxiety disorder and adjustment reaction with brief depressive reaction’) to attend a Buddhist meditation retreat in Queensland as part of their workers’ compensation treatment.
 The AAT found it was reasonable for an employee to be funded through Comcare to be flown from Canberra to Townsville to receive psychoneuroimmunology treatment after the clinical nurse psychotherapist providing the treatment relocated.

This relatively new form of treatment was not offered by anyone else in Canberra.
The Bill contains amendments to ensure that compensable medical treatment is 73. based on evidence and provided by appropriately qualified health practitioners, similar to current practice in Victoria.

This enables injured employees to be compensated for the cost of quality medical treatment to assist them to return to work sooner.
According to the Royal Australasian College of Physicians, health professionals 74. exert a significant influence on work absence and work disability which includes, but is not limited to, recognition of the health benefits of work.

‘Good outcomes are more likely when individuals understand the health benefits of work and are empowered to take responsibility for their own situation’.
18 18 The Royal Australasian College of Physicians, Australasian Faculty of Occupational and Environmental Medicine Position Statement on Realising the Health Benefits Work, Sydney 2011, p. iii Department of Employment Page 16 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 The Comcare scheme has already begun making complementary changes to improve return-to-work rates 75. such as the adoption of a ‘fit note’ for doctors to complete for patients which details whether a person is fit for work in some capacity.
This is based on evidence that appropriate work is generally good for physical and mental health and people do not have to be 100 per cent fit in order to work in most cases19.

These measures will improve the health and return-to-work outcomes of injured employees, ensure better 76. care and service provision, remove the potential for fraud or misuse by certain providers and injured employees, and support the professional reputation of the Commonwealth public service.
The 2012 Review of the SRC Act noted that there is no distinction between Household and attendant care services re-focused 77. household and attendant care services provided to employees with injuries of varying degrees of severity.

In practice this means employees with relatively minor injuries are entitled to the same level of compensation for household and attendant care services as those with the most severe injuries.
The Bill addresses this by establishing a tiered approach to the payment of compensation for these services, depending on whether the employee’s injury was ‘catastrophic’.

The term ‘catastrophic injury’ will be defined by the legislative rules and will be based on the definition on the National Injury Insurance Scheme.

Under the amendments, there will be no time limit or cap on the amount of compensation payable for 78. household and attendant care services for employees with a catastrophic injury.
Employers will be liable to pay such amount of compensation as the compensation payer considers reasonable in the circumstances.

The Bill also limits the period for which compensation for household and attendant care services is payable 79. to employees with a non-catastrophic injury to three years from the date of injury.

However, if the injured employee is hospitalised as a consequence of the non-catastrophic injury, compensation for attendant services will be payable for 6 months after discharge.
Under the amendments, attendant care services must be provided by an accredited, registered or approved 80. attendant care provider to ensure that injured employees are receiving quality care and assistance which is responsive to their needs.

Trained attendant care providers will also have the skills and knowledge to teach employees coping strategies and techniques to improve their independence and manage any residual impairment.
These amendments recognise the on-going needs of employees with severe long-term injuries while 81. providing support to those with less severe injuries or short-term injuries and empowering them to adapt daily living post injury where possible.

Example Robert is catastrophically injured in a car accident.

Under the current Act, he receives up to $442.40 per week to pay for attendant care services, which are provided by his mother, and up to $442.40 per week for household help.
When the amendments commence, Robert receives a call from an occupational therapist who visits his home to assess his requirements.

The occupational therapist makes a number of suggestions that make activities of daily living easier.

Because of his injuries, Robert qualifies for unlimited support for life.

He will receive professional care from a registered carer who teaches him different ways to cope with his injuries.

19 Waddell, G., Burton, A.K.

and Kendall, N.A.S.

(2008).


Vocational Rehabilitation, what works, for whom and when?
TSO https://www.gov.uk/government/publications/vocational-rehabilitation-scientific-evidence-review Department of Employment Page 17 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Enhanced obligations of mutuality The Bill introduces the concept of mutual obligation, similar to the scheme in South Australia, which is based 82. on the concept that a recipient of benefits has responsibilities or duties in return.
The obligations introduced by this Bill are based on expectations of behaviour which already exist within the scheme and the wider community and are intended to assist employees to recover and return to work.

The obligations of mutuality require an injured employee to actively engage in the injury management process.

Employers in turn are required to provide workers’ compensation payments or premiums, create safe workplaces and assist injured employees to return to work.

83.
An employee must: seek and accept offers of suitable employment and actively engage in that employment;   provide any required documentation or information (including medical certificates) within the specified  period; follow reasonable medical advice provided by a qualified medical practitioner or dentist, including undertaking reasonable medical treatment; fulfil their responsibilities under a rehabilitation plan;   undergo a work readiness assessment as required;  undergo a medical examination as required by the relevant authority;  undergo an assessment of need for household and attendant care services as required; and  comply with reasonable requests from Comcare if it pursues a common law claim.
84.

 An employer must: take all reasonably practicable steps to ensure the rehabilitation of the employee including the provision of rehabilitation services; take all reasonably practicable steps to comply with the employee’s workplace rehabilitation plan;   provide the employee with suitable employment or assist them to find suitable employment;  maintain the employee in suitable employment; and  comply with the WHS Act.

85.
85.

A relevant authority, on behalf of an employer, must:  pay workers’ compensation payments including income replacement;  make provisional medical expense payments including before a claim is accepted;  pay an injured workers’ ongoing medical treatment expenses; and  pay for household and attendant care services as required.
Sanctions for non-compliance by an employee will be applied in three stages, escalating from suspension or 86. reduction of benefits at stages one and two, to cancellation of benefits at stage three.

Each determination concerning an employee at each stage of the sanctions regime will be reviewable.

Western Australia, South Australia and the Northern Territory also have mutual obligations supported by a sanctions regime.
The amendments support the Comcare scheme’s objectives of improved health and return-to-work 87. outcomes through active participation in rehabilitation.

They also improve the integrity of the scheme by discouraging misuse of the system.

Example Rebecca is off work due to a knee injury and is ambivalent about returning to her pre-injury work.

She fails to undergo a work readiness assessment.


Her income replacement payments are suspended and it is explained to her that she only has two more chances before she loses her right to compensation and rehabilitation.

She participates in the rescheduled assessment and takes a more active role in her recovery and return to work.
With support from her workplace, returning to work is better than she expected and in time she is glad to have returned full-time, and is able to manage the physical demands of the job.
Department of Employment Page 18 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 The cost of legal services under the SRC Act is determined on a case-by-case Cap spending on legal costs 88. basis, and does not necessarily reflect the standard of service provided, or the outcome.

Determining authorities are liable for their own legal costs in all matters brought before a court or tribunal.
In addition, if the matter is found in favour of the employee, the determining authority is also liable for some of the employee’s legal costs.

In the last year, legal, administrative and regulatory costs paid under the SRC Act 89. increased by 25 per cent20.

The Comcare scheme has the worst resolution rate for disputes resolved within nine months of all Australian workers’ compensation schemes at 47.7 per cent21.

By comparison, New South Wales resolves 89.7 per cent of disputes within nine months22.
The more protracted a matter in the AAT, the greater the legal costs.

Most state and territory workers’ compensation schemes include schedules that establish the relevant costs 90. payable for particular services.

These schedules provide certainty for the service provider and the injured employee in relation to the amount that will be reimbursed and also result in reduced scheme costs.

The Bill contains a range of amendments designed to control, and thereby reduce overall costs under the 91.
Comcare scheme associated with proceedings brought before the AAT.

In particular, the Bill enables Comcare to develop a Schedule of Legal Costs that provides for the maximum amount that may be awarded or reimbursed to a claimant in certain circumstances.

It also gives the AAT discretion to order the claimant to pay the costs of another party to the proceeding, on request of that party, if the claimant’s application is dismissed by the AAT.
Additionally, the Bill seeks to avoid potentially lengthy and expensive merits review proceedings by 92. introducing a mechanism to resolve claims before proceedings are commenced.

The Bill empowers relevant authorities to reimburse costs incurred by a claimant in connection with the reconsideration of a determination, subject to the claimant undertaking not to apply for review to the AAT.

The claimant must repay the amount if he or she subsequently decided to escalate the matter to the AAT.
Over the last five years a claimant under the Comcare scheme has made five unsuccessful applications for merits review to the AAT, and judicial review to the Federal Court.

To date, the claimant has been unsuccessful in all matters that have proceeded to hearing.

Despite this, Comcare’s legal costs of the AAT proceedings alone exceed $176,000, with the total bill exceeding $277,000 (to date).
Under the proposed changes the amount of legal costs that may be reimbursed or awarded to a claimant would be capped, and the AAT would be able to order costs against the claimant for a frivolous and vexatious claim.

This would act as both a penalty and as a disincentive against future unnecessary proceedings.
Compensation for detriment caused by defective administration introduced 93. of defective administration, such as the miscalculation of entitlements resulting in financial loss to an employee in relation to which there are no other legal avenues to seek redress.

The Comcare scheme lacks a mechanism to compensate claimants who have been disadvantaged as a result Non-corporate Commonwealth entities under the Public Governance, Performance and Accountability Act 94.
2013 (PGPA Act) (formerly entities under the Financial Management and Accountability Act 1997) are covered for these administrative errors under the Compensation for Detriment caused by Defective Administration (CDDA) scheme.

The CDDA scheme provides a mechanism for these entities to compensate people who have experienced detriment as a result of defective administration.

However, because Comcare is a corporate Commonwealth entity 20 Comcare Annual Report 2013-14, p. 71.
21 ‘Comparative Performance Monitoring Report’ 2012-13, Safe Work Australia, p. 34.

22 ‘Comparative Performance Monitoring Report’ 2012-13, Safe Work Australia, p. 34.

Department of Employment Page 19 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 under the PGPA Act (formerly authorities under the Commonwealth Authorities and Companies Act 1997), it is not covered by the CDDA scheme.
In 2010, the Commonwealth Ombudsman investigated two separate complaints about errors that had been 95. made by Comcare in the calculation of workers’ compensation payments.

In each case the errors resulted in underpayments that were not discovered by Comcare for 10 years and 13 years.

On detecting its errors, Comcare paid each of the complainants the amounts they should have originally received.
Both complainants requested further compensation in recognition that, due to Comcare’s error, they had been deprived of the benefit of the money for a number of years.

The Commonwealth Ombudsman found that circumstances warranted compensation.

However, Comcare did not have any direct mechanism to award compensation.

In 2011 Senator Nick Xenophon introduced the Public Service Amendment (Payments in Special 96.

Circumstances) Bill 2011 to address this issue but the Bill lapsed at the end of 2013.
Senator Catryna Bilyk has also highlighted the inability of Comcare to compensate claimants for defective administration at a number of Senate Estimates hearings on behalf of a constituent.

The Bill will resolve this issue by empowering Comcare to make discretionary payments to people who have 97. suffered detriment due to defective administration on Comcare’s part.
Decisions to compensate under the new scheme are approved on the basis that there is a moral as distinct from legal obligation to pay compensation to a claimant.

The adoption of a scheme to compensate claimants for detriment caused by defective administration 98. improves the integrity of the Comcare scheme by creating an avenue for reparation for those who have been negatively affected by defective administration.
Consultation Consistent with Australian Government best practice and as part of an evidenced-based policy development 99. process, the Government consulted widely with a cross section of stakeholders on the reforms to the SRC Act.

There have been four stages of consultation commencing in late 2012 and concluding in early 2015.
Consultation was conducted with Australian and ACT Government agencies, Comcare scheme licensees, 100. legal organisations and practitioners, medical bodies, individual health practitioners, industry bodies and unions.

Consultation methods included public submissions, targeted consultation groups, workshops and cross-agency working groups.

The final stages of consultation prior to the introduction of the Bill were used to identify any unforeseen 101. consequences of the proposed amendments.
Appendices Appendix 1 - Explanation of the Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015 Department of Employment Page 20 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Appendix 1 EXPLANATION OF THE SAFETY, REHABILITATION AND COMPENSATION LEGISLATION AMENDMENT (IMPROVING THE COMCARE SCHEME) BILL 2014 INTRODUCTION The Safety, Rehabilitation and Compensation Act 1988 (the Act) establishes a scheme (the Comcare scheme) to provide compensation and rehabilitation support to injured Australian Government and Australian Capital Territory employees.
The Act also applies to deemed employees and certain members of the Australian Defence Force in relation to service rendered prior to 1 July 2004, as well as employees of private corporations who hold a licence under the Act (licensees).

It is important that the rules governing workers’ compensation meet the needs of employees, employers and workplaces.
From time to time, these rules need to be updated to take into account changes in workplaces and working conditions, health care and rehabilitation, technology and individual and social behaviour and expectations.
There have been important changes in each of these areas since 1988 when the Act was designed:  employees have a broader and more diverse range of pay and work benefits that make it increasingly difficult to calculate the correct amount of compensation to be paid;  vocational rehabilitation is now strongly focussed on supporting injured employees to  recover at work; there is a growing body of evidence that work is generally good for health and well- being and long-term work absence and unemployment have a negative impact on health and well-being;  governments have become more accountable to their citizens for ensuring that benefit systems are not open to abuse and fraud; the community expects that those who can work, even if part-time, should work; and technological advances have reshaped service and delivery expectations.
  The Comcare scheme has been unable to keep pace with the rapid modernisation of work and health practices and has not been able to offer the greatest benefits to:  employees – by targeting support to those who need it most, and ensuring medical treatment is specifically aimed at getting people better and improving return to work options;  employers – by making it difficult to distinguish between work and non-work related  conditions and costing them too much; and the community – who see costs spiral and some people taking advantage of the system.
The Government has decided to turn this situation around.

It proposes to amend the Act to: improve return to work outcomes for injured workers;   put the focus on early intervention and better health outcomes for injured workers; and  ensure the loopholes in the current legislation are closed.
Department of Employment Page 1 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 The Safety, Rehabilitation and Compensation Legislation Amendment (Improving the Comcare Scheme) Bill 2014 (the Bill) comprises the first major review of the Comcare scheme since its establishment in 1988.
The Bill:  implements, in part or whole, recommendations of the Safety, Rehabilitation and Compensation Act Review (the 2012 Review) by Mr Peter Hanks QC and Dr Allan Hawke AC commissioned by the former Government in 2012; and  makes other changes to the Act based on further consultations and analysis which will improve the efficiency, cost effectiveness and viability of the Comcare scheme, and align parts of the scheme with State schemes.
Importantly, the Bill will make the Comcare scheme sustainable over time.

A scheme that supports injured employees until retirement age needs to use every dollar wisely – otherwise the scheme becomes unaffordable.

Rather than reduce the timeframe for supporting injured employees, the Government has chosen to target the spending more carefully based on evidence.

The amendments contained in the Bill are organised into 15 Schedules.
Broadly, the Bill:  emphasises the vocational (rather than medical) nature of rehabilitation services and contains measures designed to improve return to work outcomes under the scheme;  promotes fairness and equity in outcomes of injured employees by targeting support to those who need it most; and  strengthens the integrity and viability of the scheme by clearly distinguishing between work and non-work related injuries; improving the quality of compensable medical treatment and support services; and limiting legal and medical costs under the scheme.
VOCATIONAL APPROACH TO WORKERS’ COMPENSATION The Bill amends the rehabilitation and return to work requirements in the Act to emphasise the preferred vocational (rather than medical) nature of rehabilitation services and improve return to work outcomes under the scheme.

Workplace rehabilitation plans ‘Rehabilitation programs’ under Part III of the Act will be replaced with ‘workplace rehabilitation plans’ which emphasise the vocational nature of rehabilitation services.
The new definition will exclude all references to medical and like treatment and will focus exclusively on vocationally directed activities.

This gives effect to recommendation 6.3 of the 2012 Review.

The two stage process for the development of rehabilitation programs under sections 36 and 37 of the Act will be combined into a single process.

This will ensure that workplace rehabilitation is delivered on a service continuum of assessment of need, planning, active implementation, review and evaluation.
This gives effect to recommendation 6.13 of the 2012 Review.

A ‘workplace rehabilitation plan’ may require an employee to carry out specified activities.

The obligation to do so becomes part of the employee’s responsibilities under the plan.
An employee’s refusal or failure, without reasonable excuse, to fulfil his or her responsibilities under the plan is a breach of an obligation of mutuality that attracts sanctions under the Act, Department of Employment Page 2 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 including suspension and cancellation of compensation and rehabilitation rights.

The sanctions framework is discussed below.


A workplace rehabilitation plan may also require a liable employer to carry out specified activities, for example, undertaking workplace modifications.

Suitable employment The 2012 Review observed that accessibility of suitable employment to injured employees is a cornerstone requirement for any framework to ensure employees are engaged to their full capacity, and to achieve an equitable and cost-effective compensation system.
Currently, under section 40 of the Act the relevant employer has a duty to take all reasonable steps to provide suitable employment to employees who are eligible for compensation and who are undertaking, or have completed, a rehabilitation program, or to assist the employee to find such employment.
The term ‘suitable employment’ is defined in subsection 4(1) of the Act and depends on whether or not the employee was a permanent employee of the relevant employer at the date of the injury and continues to be employed by that employer:   for employees who were permanent employees and remain so, suitable employment is employment by that same employer; and for all other employees, suitable employment may be any employment (including self- employment).
In both situations, suitable employment is employment to which the particular employee is suited, having regard to a number of factors, including the personal circumstances of the employee, the employee’s suitability for rehabilitation or vocational retraining, whether it is reasonable to require the employee to change his or her place of residence, and any other relevant matter.
The Bill expands the existing definition of ‘suitable employment’ so that employment with any employer (including self-employment) can be considered as suitable.

This gives effect to recommendation 6.16 of the 2012 Review.

The employer will be required to take all reasonably practicable steps to provide an injured employee with suitable employment or assist the employee to find such employment.
Where an injured employee is in suitable employment the employer will be required to take all reasonably practicable steps to maintain the employee in suitable employment.

In the case of Commonwealth employees, this means that duty will fall on the actual employer of the employee at the time of the injury (rather than the Commonwealth at large).

This amendment addresses an identified barrier to effective return to work under the current Act.
Many injured employees want to return to work, for many reasons, but they are limited by the types of alternative work that their employer is able, or willing, to provide.

An employer will have a clearer responsibility to provide alternate work or reduced hours to injured employees.

Where an employer is unable to do this, an employee will be able to look at work options from other employers, without losing his or her right to employment with the original employer when fully recovered.
The Bill also provides that an injured employee who is in suitable employment is required to produce a medical certificate in respect of an absence from work.
A refusal or failure to do Department of Employment Page 3 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 so, without reasonable excuse, is a breach of an obligation of mutuality which may result in the imposition of sanctions under the Act, including suspension and cancellation of compensation and rehabilitation rights.

The sanctions framework is discussed below.


Work readiness assessments The Bill empowers a relevant authority (that is, Comcare, the licence holder of a single employer licence or a corporation that is designated by a group employer licence as a relevant authority for the licence) to require an injured employee to undergo a work readiness assessment or examination by a nominated medical practitioner or other suitably qualified person (or by a panel comprising both).
A failure or refusal to undergo a work readiness assessment is a breach of an obligation of mutuality that attracts sanctions under the Act, including suspension and cancellation of compensation and rehabilitation rights.

The sanctions framework is discussed below.

New step down provisions Currently under the Act there is only one step down point after 45 weeks of incapacity payments.
After 45 weeks, compensation is paid at an adjusted rate of between 75% and 100% of the injured employee’s normal weekly earnings.

Such a late step-down provides unintended incentives for injured employees to stay at home.

The evidence is clear that the longer employees are away from work, the less likely it is that they will return to work.

This is undesirable and unintended.

Appropriate step-downs will provide an incentive for employees to return to work as quickly as possible.
They also take into account any savings that an injured employee makes by virtue of not attending work, such as not paying for travel costs.
The Bill provides for the following ‘step down’ points:  For the first 13 weeks after the injury an employee will be entitled to receive weekly incapacity benefits worked out by a formula which reduces the employee’s average weekly remuneration by the employee’s average earnings, defined as the greater of either the amount that the employee is actually earning or has been deemed able to earn in suitable employment;  After 13 weeks compensation will be paid at an adjusted rate of 90% of the employee’s average weekly remuneration less the employee’s average earnings;  After 26 weeks compensation will be calculated using the formula of 90% of the employee’s average remuneration less the employee’s average earnings and paid at an adjusted rate of no more than 80% of the employee’s average weekly remuneration; and  After 52 weeks compensation will be calculated using the formula of 90% of the employee’s average remuneration less the employee’s average earnings and paid at an adjusted rate of no more than 70% of the employee’s average weekly remuneration.
The Bill provides that the final two step-down provisions do not apply where 90% of the employee’s average weekly remuneration is less than the minimum earnings of an employee – as defined in subsection 19(7) of the Act.
Department of Employment Page 4 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Instead of being tied to number of hours worked, step down points will be determined on weeks the employee receives an income replacement payment (whatever that amount may be).

A week will be calculated as 7 days starting from the date of injury.

These amendments give effect to recommendation 7.13 of the 2012 Review with some modifications.
The Bill also contains transitional provisions in relation to the application of the new step down provisions to employees entitled to, or receiving, incapacity benefits at commencement.

Absences from Australia The Bill amends the Act to suspend compensation payments when an injured employee is absent from Australia for non-work related purposes for a period of more than 6 weeks.

This amendment is based on recommendation 7.17 of the 2012 Review.
There are strong arguments in favour of restricting payment of compensation while an injured employee is outside Australia.
In particular:  the prospect of effective assessment of an employee’s continuing incapacity for work, of the amount that the employee is able to earn in suitable employment and of the efficacy of medical treatment is very much diminished if the employee is outside Australia; and  there are significant barriers to an employer arranging an effective rehabilitation program while the employee is outside Australia.
TARGETED SUPPORT FOR INJURED EMPLOYEES The Bill contains a range of measures to target support to those who need it most.

Permanent impairment Permanent impairment compensation is paid as a lump sum separate from, and additional to, incapacity benefits payable to an injured employee under the Act.

Under the current Act, lump sum payments for permanent impairment no longer fairly reflect the level of impairment of an injured employee.
Some seriously injured employees have received little or no compensation, while less seriously injured employees have received excessive levels of compensation.
The Bill amends the Act to:  combine the compensation payable for permanent impairment under section 24 of the Act and compensation payable for non-economic loss under section 27 of the Act into a single permanent impairment payment under section 24, and increase the maximum total amount payable for permanent impairment from $243,329.42 (as at 1 July 2014) to $350,000; and  introduce an algorithmic formula based on multiplying factors that must be used to determine the amount of compensation payable for permanent impairment assessed at less than 75% of the whole person.
This gives effect to recommendation 8.5 of the 2012 Review.

Department of Employment Page 5 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 The amount of compensation currently payable for permanent impairment is assessed as a percentage of the maximum amount payable under section 24 of the Act based on the degree of permanent impairment determined by Comcare, also expressed as a percentage.
For example, an employee with a 50% permanent impairment receives 50% of the maximum amount payable.
The Bill substitutes a new method for calculating permanent impairment compensation as follows:  an employee with a permanent impairment resulting from a single injury (or multiple injuries arising out of the same incident or state of affairs) of 75% or more will receive the maximum amount payable under section 24 of the Act; and  an employee with an impairment of 74% or less will receive compensation calculated in accordance with an algorithmic formula based on multiplying factors specified in a table included in the Bill.
As a result of the application of this algorithmic formula:   the amounts payable for permanent impairments greater than 10% will gradually increase until they achieve parity with the current maximum award at around 60% whole person impairment; and the amounts payable for impairments greater than 60% will further increase until 75% whole person impairment, at which point the new maximum payment will be awarded.
The amendments ensure that those employees with the greatest level of impairment will receive the greatest compensation.

These amendments give effect to recommendation 8.5 of the 2012 Review.

The Bill also contains amendments that:  allow separate impairments resulting from a single injury to be combined to achieve a combined impairment value so that, regardless of the number of injuries or impairments, the combined value would not exceed 100% of the whole person..
This amendment gives effect to recommendation 8.2 of the 2012 Review and addresses the anomalous and, in some cases, unfair results flowing from the High Court’s decision in Canute v Comcare [2006] HCA 47; (2006) 226 CLR 535;  treat multiple injuries arising out of the same incident or state of affairs as a single injury for the purposes of calculating permanent impairment compensation.
This provision is intended to deal with sequelae, that is injuries that manifest later as a consequence of or secondary to a compensable injury.

This will enable the impairment resulting from a sequelae to be combined with the impairment resulting from the original injury using the combined values chart.
This amendment gives effect to recommendation 8.2 of the 2012 Review;  enable relevant authorities to take into account pre-existing conditions (both compensable and non-compensable) when assessing and compensating the level of permanent impairment; and Department of Employment Page 6 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22  exclude access to permanent impairment compensation for secondary psychological or psychiatric conditions.
The effect of this amendment is that compensation for permanent impairment will continue to be payable for primary psychological or psychiatric injuries, for example a major depressive disorder that was in part or whole the result of a traumatic incident at work.
However, no compensation will be payable for permanent impairment resulting solely from a secondary psychological or psychiatric injury, for example, a major depressive disorder that was the latent result of a spinal injury that arose out of or in the course of employment.

All other forms of compensation, including incapacity payments, and access to rehabilitation, will continue to be available for secondary psychological or psychiatric injuries.
Method of calculating weekly compensation payments The Bill alters the method of calculating an employee’s weekly incapacity payments to better reflect the employee’s earnings before their injury.

The Bill amends section 8 to change the concept of ‘normal weekly earnings’ (which is used to calculate an employee’s weekly compensation payments) to ‘average weekly remuneration’ to better reflect an employee’s income.
When the Act commenced in 1988, the majority of employees covered by the scheme were Commonwealth public servants whose conditions of employment were governed by the then Public Service Act 1922.

Conditions of employment for most employees covered by the Act were therefore markedly similar – that is, they were generally paid a consistent salary or wage on a fortnightly basis – and the formula used for calculating normal weekly earnings was practicable.
Since that time, the employment conditions and industrial profile of the employees covered by the Act have changed significantly.

Thirty-three private sector corporations are now covered by the Act.

Many employees have terms and conditions that do not fall within the prescribed formula, which makes it difficult to calculate normal weekly earnings in a way that fairly represents the employee’s lost earnings.
The amendments to section 8 adopt a broader view of what can constitute normal weekly earnings by averaging, over the relevant period, all income earned including overtime and specified allowances payable.

The amendments also adopt a more flexible approach to determining the relevant period so that it fairly reflects an employee’s actual remuneration.

The Bill also introduces a new definition of ‘monetary remuneration’ to replace the term ‘salary, wages or pay’ to include a wider range of remuneration.
These amendments give effect to recommendations 7.1 and 7.2 of the 2012 Review with some modifications.

Cap on average weekly remuneration The Bill also amends subsection 8(10) of the Act which provides a cap on the normal weekly earnings (or average weekly remuneration) used for the purposes of calculating compensation by reference to the notional weekly earnings – calculated in accordance with either paragraph 8(10)(a) or 8(10)(b) – that the employee would receive if he or she were not incapacitated.
The Bill: Department of Employment Page 7 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22  clarifies that subsection 8(10) may operate more than once to decrease, and increase, the amount of an employee’s average weekly remuneration.
This amendment gives effect to recommendation 7.10 of the 2012 Review;  provides that subsection 8(10) applies to an employee who continues to be employed but is suspended from that employment and addresses the decision of the Federal Court in Comcare v Burgess [2007] FCA 1663.

This amendment ensures that an employee who would not have earned anything if free from incapacity (because he or she is suspended without pay) is not able to receive an income because of his or her incapacity.
This amendment gives effect to recommendation 7.11 of the 2012 Review; and  clarifies the operation of the cap where an employee ceases to be employed by a Scheme employer.

Linking payment of incapacity payments to pension age Currently, subsection 23(1) provides that compensation is not payable to an employee who has reached 65 – the standard retirement age when the Act commenced in 1988.
The policy rationale for this provision is that once an employee has reached retirement age he or she can move off workers’ compensation payments and on to other means of financial support, such as the age pension or superannuation.

However, the qualifying age for the age pension set out in the Social Security Act 1991 has risen beyond 65 to 67.
One consequence of this is that an injured employee who is aged 65 will not only be unable to receive compensation but will also be unable to access the age pension until he or she turns 67.

The Bill amends subsection 23(1) to provide that compensation payments cease when an injured employee reaches his or her ‘pension age’ as defined in the Social Security Act 1991.

This amendment gives effect to recommendation 7.16(a) of the 2012 Review.
Removal of the 5% deduction on compensation payments to employees who are accessing superannuation benefits The Bill amends the formula in subsection 20(3) of the Act to remove the 5% deduction from weekly incapacity payments to retired employees who are receiving a superannuation pension.

This provision was enacted when it was compulsory for public servants to contribute to their own superannuation accounts.
However, this requirement no longer exists in the APS superannuation scheme; nor does it exist in the superannuation schemes used by employees of licensed corporations.

The 5% deduction serves no useful purpose; in effect, it is a windfall cost saving for the employer, ie the Commonwealth or a licensed corporation.
Tiered approach to the payment of compensation for household services and attendant care services The 2012 Review noted that there is no distinction between household and attendant care services provided to employees with injuries of varying degrees of severity.

The Bill addresses this by establishing a tiered approach to the payment of compensation for these services, depending on whether the employee’s injury was ‘catastrophic’.
The term ‘catastrophic injury’ will be defined by the legislative rules and will be based on the definition on the National Injury Insurance Scheme.

Department of Employment Page 8 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 The Bill limits the period for which compensation for household and attendant care services is payable to employees with a non-catastrophic injury to 3 years from the date of injury.
Notwithstanding the 3 year limit, if the injured employee is hospitalised as a consequence of the non-catastrophic injury, compensation for attendant services will be payable for 6 months after discharge.

Under the amendments, there will be no time limit for these services in the case of a catastrophic injury.
Nor will there be any limit on the amount of compensation payable – the compensation payer will be liable to pay such amount of compensation as the compensation payer considers reasonable in the circumstances.

Decisions about the amount of compensation will be reviewable under Part VI of the Act.

This gives effect to recommendation 7.33 of the 2012 Review.
More timely and responsive services and support for injured employees Notification of injuries The Act currently does not apply in relation to an injury to an employee unless written notice is given to the relevant authority.

The Bill relaxes the current notification requirements by enabling written notification of a workplace injury to be given to either the relevant authority or the liable employer (who is then required to inform the other).
Improved claim processing and time limits The Bill requires an employer who has been notified of a workplace injury to notify the relevant authority within 3 days.

This will avoid unnecessary delays in the determination of claims.

This amendment gives effect to recommendation 9.2 of the 2012 Review.
The Bill specifies the following statutory time limits in relation to the determination of compensation claims and the reconsideration of compensation claims:  any claim for liability and/or compensation that relates to an injury, including a designated injury, that is not a disease must be determined within 30 days;  any claim for liability and/or compensation that relates to an injury that is a disease must be determined within 70 days; and  a reconsideration must be made within 60 days.
These statutory time limits may be extended where information or documents are requested from the employee.

Any claim for liability or compensation (or reconsideration of such claim) that is not determined within these time limits is taken to have been rejected at the end of the specified time limit.
The benefit of a deemed rejection is that it provides certainty and then immediate access to the next decision-making layer being sought, that is, reconsideration or review by the Administrative Appeals Tribunal, as the case may be.

These amendments give effect to recommendations 9.3 and 9.6 of the 2012 Review.
Department of Employment Page 9 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Provisional medical expense payments If employees are to recover and resume their normal lives, they not only need prompt, high quality health care, but access to medical treatment in the critical early stages of an injury.

Currently injured employees have to wait until their claim is approved before the scheme pays for their medical treatment.
The Bill provides for provisional medical expense payments in respect of an alleged injury to allow injured employees to access up to $5000 (indexed annually) in medical costs before their claim for compensation is determined by the relevant authority.

This means that injured employees can afford medical treatment when they most need it and are given the best possible chance of full recovery.
A provisional medical expense will be regarded as a compensation payment, but does not constitute acceptance of a claim.

This amendment gives partial effect to recommendation 6.2 of the 2012 Review.

Redemption of compensation Redemption of compensation involves the payment of a lump sum amount to an employee in lieu of the employee’s ongoing weekly incapacity payments.
The Bill amends section 30 of the Act to increase the compulsory redemption threshold from $110.65 to $208.91 per week to align it with the Military Rehabilitation and Compensation Act 2004.

The current low redemption threshold means that there are very few employees who qualify for redemption.

This amendment gives effect to recommendation 7.19 of the 2012 Review.
Clarifying compensation and rehabilitation responsibilities The Bill introduces the concept of a ‘liable employer’ to replace the concept of ‘rehabilitation authority’ as the entity responsible for providing suitable employment and vocational rehabilitation to injured employees.
Generally, the ‘liable employer’ is the employer at the time the injury occurred or (where the injury is a disease, designated injury or aggravation of a designated injury) the employer at the time the employment contributed to the disease, designated injury, aggravation or the relevant pre-existing ailment to a significant degree.
Where two or more employments contributed to a significant degree, the most recent contributory employment will determine who is to be the ‘liable employer’ These amendments address uncertainty, confusion and duplication of responsibilities under the current scheme, in particular for employees of premium payers.

This gives effect to recommendation 6.5 of the 2012 Review.
The Bill also clarifies compensation responsibilities where there are two or more contributory employments in relation to a gradual onset injury suffered by an employee (or a death resulting from a gradual onset injury) and provides for apportionment of liability between contributing employers.
Department of Employment Page 10 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 These provisions ensure that employees (or their dependants) can lodge their claim with the last employer under the Act without the need to claim against all potentially liable employers.
The Bill allows Comcare to have regard to the proportion of the contribution of a gradual onset injury made by 2 or more premium payers who are responsible for the contributory employment when setting premiums under section 97 of the Act.

SCHEME INTEGRITY AND VIABILITY The Bill contains a range of measures to ensure the integrity and financial viability of the Comcare scheme.
This will ensure that the scheme operates efficiently and effectively, consistent with current medical and related evidence and community expectations.

Distinction between work and non-work related injuries The Bill contains a range of amendments that will more clearly distinguish between work and non-work related injuries, thereby strengthening the eligibility requirements for compensation.
Significant employment contribution to an ailment or aggravation Under the Act, an ailment (or an aggravation of an ailment) falls within the definition of ‘disease’ in subsection 5B(1) – and is therefore compensable – only if it was contributed to, to a significant degree, by the employee’s employment.
It was the original intention of the Act that an employee’s eligibility for compensation payments for a disease should require a close causal connection between the employee’s work and the contraction or aggravation of the disease.

To provide greater transparency in assessing the contribution of employment to an injury, as well as to improve consistency in decision making, the Bill amends subsection 5B(2) of the Act to include an expanded list of matters that must be taken into account.
These include:   the state of the employee’s physical and psychological health before the ailment or aggravation – a similar requirement exists under State and Territory workers’ compensation legislation, for example, paragraph 9A(2)(e) of the Workers Compensation Act 1987 (NSW); the probability that, if the employee had not been employed in the employment, the ailment or aggravation (or a similar ailment or similar aggravation) would have been suffered by the employee at or about the same time in (or at the same stage of) the employee’s life.
In assessing the contribution of employment, this would require consideration of issues such as genetic predisposition, prior traumatic events, personal and social factors which influence how a person perceives or experiences events to which they are exposed, whether that be in their employment or everyday life.
Similar considerations exist under State and Territory workers’ compensation legislation, for example, paragraph 9A(2)(d) of the Workers Compensation Act 1987 (NSW); and  any other matters affecting the employee’s physical or psychological health.

The amendments will empower Comcare to determine a Compensation Standard that relates to a specified ailment and sets out the factors that must, as a minimum, exist before it can be said that an employee is suffering from the ailment.
Those matters must be taken into account Department of Employment Page 11 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 in determining whether the ailment was contributed to, to a significant degree, by the employee’s employment.
Designated injuries The Bill introduces four new categories of ‘injury’ based on the concept of a ‘designated injury’ which is defined to include specified heart, brain and spinal injuries consisting of, caused by, resulting from, or associated with a ‘pre-existing ailment’.
The effect of these amendments is to ensure that a designated injury, or an aggravation of a designated injury, will only be compensable if it was contributed to, to a significant degree, by:  the employee’s employment; or  a pre-existing ailment (where that ailment is a ‘disease’ that was contributed to, to a significant degree, by the employee’s employment).

This amendment gives effect to recommendation 5.3 of the 2012 Review.
There is little justification for employers having to insure against the costs of heart attacks, strokes and similar incidents that are manifestations of an underlying genetic or lifestyle- based disease process, which may be entirely un-related to work, where the only connection to employment is that the incident happened to occur at the workplace.
Community standards would indicate that workers’ compensation should only be available where either an underlying condition, or the culmination of that condition (such as a heart attack or stroke), is contributed to, to a significant degree, by the employee’s employment.

Perception-based disease claims The Bill contains provisions that increase the threshold for perception-based disease claims.
In Wiegand v Comcare [2002] FCA 1461; (2002) 72 ALD 795 the Federal Court held that an employee’s perception about something related to his or her employment would be a sufficient basis to connect the employee’s psychological reaction to his or her employment, provided that the perception was a perception about an incident or state of affairs that actually happened and regardless of whether the perception was reasonable or itself reflected reality.
The 2012 Review found that the effect of the Federal Court’s judgment places an unfair burden on employers.

The Bill negates the effect of the Wiegand decision by providing that, in determining whether an employee’s employment contributed to an ailment or aggravation that is wholly or principally attributable to an employee’s perception of an incident or state of affairs, regard must be had to whether the employee had reasonable grounds for that perception.
These amendments introduce further rigour into the determination of liability for psychological injuries.

The amendments are intended to give effect to recommendation 5.2 of the 2012 Review.

Reasonable Administrative Action The Act currently aims to prevent compensation claims from being used to obstruct legitimate and reasonable management action by excluding from the definition of ‘injury’ any condition (usually a psychological condition) that has arisen as a result of such action).
To this end, subsection 5A(1) currently provides that the definition of ‘injury’ does not include a Department of Employment Page 12 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 disease, injury or aggravation suffered as a result of reasonable administrative action taken in a reasonable manner in respect of the employee’s employment.
Courts have narrowly interpreted the definition of ‘reasonable administrative action’ over time, which has resulted in some unintended consequences.
The Bill expands the scope of the ‘reasonable administrative action’ exclusion currently in section 5A of the Act in two ways:  firstly, the exclusion will apply to ‘reasonable management action’ more generally, including operational decisions of employers (such as corporate restructures or instructions to employees to perform work at a particular location, or to perform particular duties).

This is consistent with a similar exclusion from the bullying provisions of the Fair Work Act 2009.
These provisions recognise that employers have rights and obligations to take appropriate management action and make appropriate management decisions; and  secondly, the exclusion will extend to an employee’s anticipation or expectation of such action being taken, for example, if an employee has engaged in misconduct and sought immediate medical treatment as a result and prior to any administrative or management action being taken.
Department of Employment Page 13 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Quality of medical treatment and support services At the moment, compensable medical treatment under the Act is not clearly defined or based on objective standards, and does not require providers to meet a level of national accreditation.

There is also a lack of clarity about the assessment or delivery of support services provided in the home.
This puts injured employees at risk, increases costs for employers, and delays recovery and return to work.

The Bill contains amendments that ensure that compensable medical treatment is based on evidence and provided by appropriately qualified health practitioners.

It will also introduce assessment and accreditation requirements for the provision of support services provided in the home.
These measures will improve the health and return to work outcomes of injured employees, ensure better care and service provision, remove the potential for fraud or misuse by providers and injured employees, and meet community expectations.

Compensable medical treatment The Bill imposes more rigorous requirements in relation to determining when compensation is payable under section 16 of the Act in respect of medical expenses incurred by an injured employee and the amount of compensation payable.
The Bill amends the definition of ‘medical treatment’ to ensure that injured employees receive appropriate and quality medical treatment in respect of their injury.

In particular, the amendments:   require that therapeutic treatment be carried out by, or under the supervision of, a medical practitioner registered under a Health Practitioner Regulation National Law in one of the listed professions or a person accredited by Comcare as a healthcare practitioner for the purposes of the Act.
This gives effect to recommendation 7.21 of the 2012 Review; impose additional requirements in relation to the compensability of prescription medicines, Schedule 8 medicines and medicines which are a ‘registered good’ under the Therapeutic Goods Act 1989.

This gives effect to recommendations 7.25 and 7.26 of the 2012 Review;  provide compensation for ‘treatment and maintenance as a resident in a nursing home’.
This gives effect to recommendation 7.24 of the 2012 Review;  define the terms ‘nursing care’ and ‘registered nurse’.

This gives effect to recommendation 7.27 of the 2012 Review;  enable Comcare to disclose information relating to medical treatment obtained in relation to an injury suffered by an employee to a professional disciplinary authority.
This amendment gives effect to recommendation 7.29 of the 2012 Review; and  enable legislative rules to empower Comcare to approve specified types of medical treatment obtained by an employee outside Australia.
Department of Employment Page 14 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Reasonableness of medical treatment The Bill empowers Comcare to determine Clinical Framework Principles specifying matters in relation to items of medical treatment that compensation payers under the Act must have regard to in determining whether medical treatment was reasonably obtained.
The Clinical Framework Principles will be based on principles issued in 2005 by Worksafe Victoria and the Victorian Transport Accident Commission.

Compensation payers under the Act will be required to have regard to the Clinical Framework Principles, and such other matters as they consider relevant, in determining whether it was reasonable for an employee to obtain medical treatment.

Similar requirements are contained in subsection 223(2) of the Victorian Workplace Injury and Compensation Act 2013 (Vic).
This amendment gives effect to recommendation 7.28 of the 2012 Review.

Medical examination The Bill amends subsection 57(1) of the Act – which currently empowers the relevant authority to require an injured employee to undergo an examination by a nominated medical practitioner – to enable the relevant authority to require an injured employee to undergo an examination by a nominated medical practitioner or other suitably qualified person, or by a nominated panel.
A refusal or failure to undergo a medical examination, or obstruction of a medical examination is a breach of an obligation of mutuality which may attract sanctions under the Act, including suspension and cancellation of compensation and rehabilitation rights.

The sanctions framework is discussed below.


Examination by mental health practitioner The Bill provides that compensation for a psychological or psychiatric ailment is not payable beyond an initial 12 week period unless the diagnosis is confirmed by a ‘mental health practitioner’ – defined as a psychiatrist, clinical psychologist or a general practitioner who has completed mental health training to a standard approved by Comcare.
The confirmation diagnosis must be certified by the mental health practitioner in a form approved by Comcare.

This requirement for a confirmation diagnosis does not apply where the initial medical examination was conducted and certified by a mental health practitioner.

At present, compensation for psychological injuries can be paid on the basis of a General Practitioner’s report and can be paid for significant periods of time without any confirmation of that diagnosis by a specialised practitioner.
This amendment recognises that the diagnosis and treatment of psychological injuries calls for relevant expertise.

The purpose of requiring the confirmation diagnosis is to ensure that the employee has been examined by a fully qualified mental health practitioner, so as to encourage the employee to seek effective treatment.
By allowing compensation to be paid for psychological injuries for an initial period of 12 weeks without confirmation diagnosis by a mental health practitioner, the provision strikes an appropriate balance between ensuring appropriate diagnosis of psychological injuries on the one hand and issues of access and equity, particularly for employees in rural and regional areas, on the other.
Department of Employment Page 15 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 This amendment gives effect to Recommendation 9.4 of the 2012 Review.

An employee’s refusal or failure, without reasonable excuse, to undergo an examination by a mental health practitioner may result in a suspension of the employee’s right to compensation and rehabilitation.
Further medical treatment The Bill requires an injured employee to obtain further medical treatment when advised by a qualified medical practitioner or dentist to do so.

A refusal or failure to do so, without reasonable excuse, is a breach of an obligation of mutuality which may result in the imposition of sanctions under the Act, including suspension and cancellation of compensation and rehabilitation rights.
Independent assessment of an injured employee’s need for household services and/or attendant care services The Bill requires an independent assessment of an injured employee’s need for household services, attendant care services or both.

The assessment must be conducted by a registered occupational therapist or a registered physiotherapist nominated by the relevant authority.

This gives effect to recommendations 7.35 and 7.36 of the 2012 Review.
A refusal or failure to undergo an assessment, or obstruction of an assessment, is a breach of an obligation of mutuality which may attract sanctions under the Act, including suspension and cancellation of compensation and rehabilitation rights.

The sanctions framework is discussed below.


Accreditation of attendant care providers The Bill requires attendant care services to be provided by an accredited, registered or approved provider in order to be compensable and makes provision for the accreditation, registration and approval of providers.

If satisfied that there are special circumstances, a relevant authority can authorise an individual to provide attendant care services.

This gives effect to recommendations 7.37 of the 2012 Review.
Legal and medical costs Costs for medical treatment, medical reports and legal services under the Act are determined on a case by case basis and do not necessarily reflect the standard of service provided, or the outcome.

The Bill contains measures that will seek to contain the costs payable for medical treatment, medical reports and legal services.

This will ensure accountability for taxpayer and employer costs, and provide certainty for service providers and injured employees.
It will also ease rapidly escalating legal and medical scheme costs, reduce lengthy dispute timeframes, and provide greater transparency.

Department of Employment Page 16 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 Limits on medical costs The Bill imposes more rigorous requirements in relation to the amount of compensation payable in respect of medical expenses incurred by an injured employee.
The Bill empowers Comcare to prescribe a medical services table that sets out items of medical treatment and specifies the amount of compensation payable in respect of each item.

The amount of compensation payable in respect of medical treatment will be limited to the amounts specified in the medical services table.

This amendment gives effect to recommendation 7.30 of the 2012 Review.
The Bill also empowers Comcare to make a Medical Examination Rates Determination that sets out the amount of compensation payable by Comcare in respect of specified medical examinations.

Compensation payable in respect of a medical examination required under section 57 of the Act will be limited to the amount specified in the medical examination rates determination.
Both the medical services table and the Medical Examination Rates Determination will be legislative instruments for the purposes of the Legislative Instruments Act 2003.
Limits on legal costs The Bill contains a range of amendments designed to control, and thereby reduce, costs under the Comcare scheme associated with proceedings brought before the Administrative Appeals Tribunal (AAT), noting that Comcare scheme disputes take far longer to resolve than disputes in other Australian workers’ compensation schemes.
The amendments:  empower Comcare to prescribe, by disallowable legislative instrument, a Schedule of Legal Costs that provides for the maximum amount of costs that may be awarded or reimbursed to a claimant in certain circumstances, including where there is a decision or settlement agreement in relation to proceedings instituted after commencement, and which must be complied with by all relevant authorities and the AAT;  seek to avoid potentially lengthy and expensive merits review proceedings by introducing an incentive and mechanism to resolve claims before proceedings are commenced.
The Bill empowers relevant authorities to reimburse costs incurred by a claimant in connection with the reconsideration of a determination after commencement, subject to certain conditions including that the claimant undertake not to apply for review to the AAT and that the claimant repay the amount if he or she subsequently withdraws the undertaking; and  require all parties to a proceeding (including employers and third parties) to disclose any evidence that they intend to adduce at least 28 days prior to the first day of hearing.
This gives effect to recommendation 9.12 of the 2012 Review.

Jurisdictional efficiency The Bill empowers the AAT to address cases where jurisdictional constraints delay the dispute resolution process without any appreciable benefit.
Where a determination is relevant Department of Employment Page 17 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 to an existing proceeding before the AAT, the AAT may alter the decision under review to incorporate the determination if the parties to the proceeding agree, in writing.
Further amendments to enhance scheme integrity The Bill makes a number of miscellaneous amendments to the Act to improve the integrity and financial viability of the Comcare scheme.

Accrual of leave while receiving compensation The Bill amends section 116 of the Act to provide that leave entitlements under the National Employment Standards do not accrue while an employee is on compensation leave.
Improved information gathering powers The Bill contains a number of provisions which enhance information gathering powers under the Act.
These include:  aligning the time frames in respect of information requests from claimants (under section 58) and employers (under section 71);  enabling a relevant authority to request a third party to provide information or documents relevant to a claim;  empowering a relevant authority to seek information from a claimant, an employer or a third party in relation to the management of an ongoing claim;  imposing a general obligation on claimants to notify their relevant authority of any change to their circumstances.
This will complement the specific requirements to provide information; and  enhancing the existing notification requirements in section 120 for recipients of compensation proposing to leave Australia.

These amendments give effect to recommendations 9.17 and 9.18 of the 2012 Review.
A claimant’s refusal or failure, without reasonable excuse, to comply with the requirements to provide information is a breach of an obligation of mutuality that attracts sanctions under the Act, including suspension and cancellation of compensation and rehabilitation rights.

The sanctions framework is discussed below.


The Bill requires licensees to inform Comcare when they commence legal proceedings under the Act and empowers Comcare to request documents relevant to any proceedings brought against, or instituted by, a licensee.

This will enable Comcare to monitor and, if necessary, intervene in proceedings involving licensees to ensure that they do not establish precedents which undermine the integrity of the Comcare scheme as a whole.
The Bill contains similar provisions in relation to a relevant authority for a group employer licence.
Third party indemnity Department of Employment Page 18 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 The Bill contains provisions that require a liable third party to indemnify a compensation payer under the Act where the same event or occurrence gives rise to both an obligation to pay compensation under the Act and a liability on the part of the third party to pay damages.
This will enable compensation payers to recover compensation paid in respect the injury, loss, damage or death directly from the liable third party.

This amendment gives effect to recommendation 10.1 of the 2012 Review.

Recovery of overpayments The Bill enables Comcare to recover overpayments of compensation that have been made to an employer for the benefit of an injured employee.

This amendment gives effect to recommendation 9.19 of the 2012 Review.
Compensation for defective administration The Bill will empower Comcare to make discretionary payments to people who have suffered detriment due to defective administration on Comcare’s part.

This replicates, in statutory form, the administrative Scheme for Compensation for Detriment caused by Defective Administration (the CDDA scheme) which is generally available to non-corporate Commonwealth entities under the Public Governance, Performance and Accountability Act 2013.
The CDDA scheme does not apply to Comcare because the Act provides a comprehensive regime in relation to the payment of compensation.

The amendment places Comcare in the same position as other non-Corporate Commonwealth entities.

This amendment gives effect to recommendation 9.20 of the 2012 Review.

Sanctions A viable and robust workers’ compensation scheme must necessarily be supported by an appropriate sanctions regime.
The Bill streamlines and enhances the existing regime of sanctions by:  identifying key requirements of the Act that an injured employee must comply with as ‘obligations of mutuality’; and  where obligations of mutuality are breached, providing for the application of sanctions in stages, culminating in the permanent cancellation of compensation and rehabilitation rights.
Obligations of mutuality The Bill identifies the following employee requirements as ‘obligations of mutuality’:    to seek, accept an offer of, or engage in suitable employment; to undergo a medical examination when required by a relevant authority to do so; to follow reasonable medical treatment provided by a qualified medical practitioner or dentist to do so; Department of Employment Page 19 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22      to fulfil responsibilities under a workplace rehabilitation plan; to undergo a work readiness assessment; to undergo an assessment for the need of household or attendant care services; to comply with a reasonable requirement for the purposes of a third party recovery claim; and to provide certain information, documentation or declarations when required or requested to do so.
An employee’s failure, without reasonable excuse, to comply with these requirements is a breach of an ‘obligation of mutuality’.

The Bill requires a liable employer to inform the relevant authority of any breach by the employee of an obligation of mutuality of which the liable employer becomes aware.

If a relevant authority is satisfied that an employee has breached an obligation of mutuality, the relevant authority must make a determination applying the sanctions regime.
Sanctions regime Employees who breach an obligation of mutuality in relation to the same injury or an associated injury will be subject to a 3-stage sanctions regime.

For the first breach, the relevant authority must determine that the employee is subject to the level 1 sanctions regime.

A determination must be made if the relevant authority is satisfied that an obligation of mutuality has been breached at any time in the past 12 months.
The determination must be made even if the breach has been rectified prior to the determination being made.

A determination comes into force at a time specified in the determination which must not be earlier than the date of the breach and must not be later than the day on which the determination is given to the employee.

A determination remains in force indefinitely, unless the employee becomes subject to the level 2 sanctions regime.
The consequences of a level 1 sanctions determination will depend upon the nature of the breach:   in the case of a breach of an obligation related to suitable employment, the employee’s weekly incapacity payments will be reduced by the amount that the employee is able to earn in suitable employment in accordance with subsection 19(4) of the Act; in the case of any other breach, other than a breach that has been rectified prior to the determination being made, the employee must be directed to remedy the breach within a specified period and the employee’s rights to compensation (other than compensation for medical treatment) and to institute or continue any proceedings in relation to compensation (other than proceedings in the Administrative Appeals Tribunal in relation to the imposition of the sanction) are suspended until the breach is rectified.
Department of Employment Page 20 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22 A failure to remedy a breach when directed to do so within the specified period will be treated as another breach of an obligation of mutuality.

For a second breach (including a failure to remedy the first breach) the relevant authority must determine that the employee is subject to the level 2 sanctions regime.
A determination must be made if the relevant authority is satisfied that an obligation of mutuality has been breached at any time in the past 12 months.

The determination must be made even if the breach has been rectified prior to the determination being made.

A determination remains in force indefinitely, unless the employee becomes subject to the cancellation regime.

The consequences of a level 2 sanctions determination are the same as under the level 1 sanctions regime.
For a third breach (including a failure to remedy the second breach) the relevant authority must determine that the employee is subject to the cancellation regime.
Under the cancellation regime the employee’s rights to compensation and rehabilitation, and to institute or continue any proceedings in relation to compensation (other than proceedings in the Administrative Appeals Tribunal in relation to the imposition of the sanction) in respect of all current and future associated injuries attributable to the same incident or state of affairs are permanently cancelled.

A determination that an employee is subject to the cancellation regime is irrevocable.
However, the cancellation of an employee’s right to compensation will not affect the right of the employee’s dependants to claim compensation if the employee subsequently dies as a result of an injury in respect of which compensation has been cancelled.

Department of Employment Page 21 Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015Submission 22