Precedent (Australian Lawyers Alliance)
‘MENTAL HARM INJURIES ARE DIFFERENT’
COMCARE AND PSYCHOLOGICAL INJURIES
By Angela Sdrinis
Comcare, or the national workers’ compensation scheme, is not particularly well known to the general public or indeed to most lawyers. However, personal injury lawyers should take an interest in the scheme which may, over time, supersede state-based schemes particularly if the conservative side of politics continues to favour a national no-fault workers’ compensation scheme.
While the Comcare scheme was initially developed to cover Commonwealth employees, it has been steadily expanded to allow national companies to cover their workers under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRCA). There are currently 30 national companies (licensees) who are licensed under Part VIII of the SRCA to administer their workers’ compensation claims.
The attractions are obvious. National employers find dealing with a number of state-based schemes expensive and time consuming. Employers are also attracted to the Comcare scheme because common law rights under the SRCA are restricted and seldom accessed by workers. This is because while it is still technically possible to sue for damages under the SRCA, common law damages have been restricted since the scheme was introduced in 1988 to non-economic loss, with a cap for damages of $110,000. This is in contrast to state-based workers’ compensation schemes such as the Victorian WorkCover scheme, where the maximum payable by way of pain and suffering damages is currently $511,920, a figure which is indexed annually. The damages cap under the SRCA has not been indexed since 1988 when the scheme was introduced. There is no power for employees covered by the SRCA to sue outside the SRCA for damages for an injury which occurred at work.
For these and other reasons, including what many regard as a less robust workplace safety regime under the Commonwealth scheme, unions have generally been opposed to the expansion of coverage under the SRCA. The ALA has also been critical of Comcare’s health and safety record. In 2007, in part because of union concerns, the then Labor government imposed a moratorium on new licensees entering the Comcare scheme.
Not surprisingly, the conservative side of federal politics has always been much keener to expand the Comcare scheme so that it covers as many workers as possible. The Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014, which was introduced by the Abbott Government, and is currently languishing in the Senate, lifts this moratorium.
According to Dr Joanna Howe, a law lecturer from the University of Adelaide, this Bill, if passed, will throw open the doors for another estimated 2,000 companies to self-insure and leave state schemes. If this were to occur, the viability of state-based workers’ compensation schemes could seriously be compromised.
The Abbott government also introduced another Bill that would further amend the SRCA, the Safety Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015 (the ICS Bill). ‘Improving the Comcare Scheme’ is code for making the scheme less expensive which is, of course, achieved by eroding workers’ rights in the hope that these changes will further encourage national employers to join a scheme which is currently viewed by some employers as too soft and too costly. Indeed, the ACT’s recent exit from the scheme was reported in the Canberra Times:
‘The Territory’s government has lost patience with Comcare after being hit with a premium bill approaching $100 million and is exasperated at the pace of reform to a scheme that can allow public servants to sit at home for decades, in some cases, while being paid generous compensation benefits. It is nearly two years since a review (the Hanks Review) of the scheme urged sweeping reform to cut down on dubious claims for psychological injuries, payouts for dodgy therapies, doctor shopping and decades-long compensation sagas.’
The Canberra Times, which is probably the only media outlet in Australia that regularly reports on Comcare matters (Canberra is a city of Commonwealth public servants after all), has been scathing about the scheme. The reportage generally suggests that workers covered by Comcare claim excessive and unreasonable benefits. For example, the strong implications of the reporting of the ‘sex in the hotel room’ claim (Comcare v PVYW), which was widely publicised, and not just in Canberra, was that claims brought by workers covered by Comcare are outrageous, despite the fact that workers’ compensation law throughout Australia has generally recognised (until this case) that injuries that occur while a worker is away from home for work are generally regarded as compensable.
Headlines in the Canberra Times such as ‘$600,000 legal bill for public servants sex romp’ (26 March 2015); ‘Far out Friday: Employee taking legal action after being refused Comcare funded breast reduction’ (17 April 2015); and ‘Public servant's $67,000 massage bill to deal with PTSD knocked back’ (22 July 2015) are some recent examples of the way in which workers seeking compensation under the Comcare scheme are portrayed in the media.
Workers who suffer mental harm injuries would say that the compensation ‘stigma’ is even worse for them than for those who suffer physical injuries.
CLAIMS FOR PSYCHOLOGICAL INJURIES ARE ‘DIFFERENT’
In Comcare v Mooi, Drummond J said it was ‘...essential for...a worker to be able to demonstrate that, having regard to his circumstances, he is in a condition that is outside the boundaries of normal mental functioning and behaviour’. Essentially, this case clarified that workers wanting to claim for psychological injuries must show that they have suffered a recognised medical condition.
In other words, anger, distress, upset or ‘stress’ are not enough to constitute an ‘injury’ within the meaning of the SRCA. A worker must have suffered a diagnosable psychiatric condition to be eligible to claim compensation.
So-called ‘dubious’ claims for psychological injuries are a favourite whipping boy for governments and workers’ compensation insurers throughout Australia. The Insurance Council of Australia recently released a report prepared by Finity Consulting Pty Ltd, ‘A Best Practice Workers’ Compensation Scheme’. Claims for psychological injuries are dealt with under the heading, ‘Mental harm claims are different’. The assertion is that mental harm claims need to be thought about and managed differently because (1) immediate return of the worker to the previous workplace can be counterproductive; and (2) it can be more difficult to form an objective assessment of a claim’s severity, and of a claimant’s recovery.
Workers who suffer psychological injury report that they experience the prejudice that is found generally in society regarding people with mental health issues, but also often experience disbelief, cynicism and a ‘why don’t you just get over it’ attitude which makes it more difficult to recover.
When prevalent in the workplace, these attitudes also make it more difficult for workers with mental harm injuries to recover and to return to work.
INCREASE IN THE INCIDENCE OF CLAIMS FOR MENTAL HARM
On 30 July 2015, the Canberra Times reported that the annual bill to taxpayers for bullying, harassment and ‘occupational violence’ in the public service is now approaching $80 million.
The Department of Employment noted a 61 per cent increase in the incidence of mental stress claims under Comcare between 2009-10 and 2013-14, which was significantly higher than the average cost of other claims (see figures 2.4 and 2.5 below).
Figure 2.4: Incidence of mental stress claims (Source: Department of Employment, Submission 22, p7).
Figure 2.5: Average total cost of mental stress claims
LEGISLATION AND CASE LAW
Section 5A of the SRCA contains the relevant provisions regarding psychological injuries:
‘(1) ‘injury ‘ means:
(a) a disease suffered by an employee; or
(b) an injury (other than a disease) suffered by an employee; that is, a physical or mental injury arising out of, or in the course of, the employee's employment; or
(c) an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee's employment), that is an aggravation that arose out of, or in the course of, that employment;
but does not include a disease, injury or aggravation suffered as a result of reasonable administrative action taken in a reasonable manner in respect of the employee's employment.
(2) For the purposes of subsection (1) and without limiting that subsection, reasonable administrative action is taken to include the following:
(a) a reasonable appraisal of the employee's performance;
(b) a reasonable counselling action (whether formal or informal) taken in respect of the employee's employment;
(c) a reasonable suspension action in respect of the employee's employment;
(d) a reasonable disciplinary action (whether formal or informal) taken in respect of the employee's employment;
(e) anything reasonable done in connection with an action mentioned in paragraph (a), (b), (c) or (d);
(f) anything reasonable done in connection with the employee's failure to obtain a promotion, reclassification, transfer or benefit, or to retain a benefit, in connection with his or her employment.’
The above provisions of subsection 2 are commonly known as the ‘RAA’ (reasonable administrative action) exclusionary provisions, and were introduced on 13 April 2007 after the proclamation of the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act (SRCOLA). Another change introduced by SRCOLA was that in order for a ‘disease’ to be compensable, employment must contribute to the development of the disease to a ‘significant degree’ rather than to a ‘material degree’, which was the former, lower test. The combination of these changes made it substantially more difficult for workers to successfully claim compensation for pure mental harm injuries.
Taken in combination with the 2005 decision of the full Federal Court in Hart v Comcare, which found that if any one action within the exclusionary provisions, in a series of employer actions, was found to be one of the contributing factors to a psychiatric injury, there would be no liability, has meant that establishing liability in mental harm claims has become extremely difficult for many workers where, as is more commonly the case, the injury has arisen as a result of a course of conduct. Mental harm claims will become even more difficult to pursue should the ICS Bill be passed.
SAFETY REHABILITATION AND COMPENSATION AMENDMENT (IMPROVING THE COMCARE SCHEME) BILL 2015
The proposed changes to the SRCA that will affect claims for mental harm can be found under a number of broad headings in Schedules 1, 2 and 15 to the amending ICS Bill.
Schedule 1 would amend the Act to alter eligibility requirements for compensation and the definition of significant degree to mean a ‘degree that is substantially more than material’. The Bill provides that certain matters are to be taken into account in determining whether an ailment or aggravation was contributed to, to a significant degree, by an employee‘s employment, and new eligibility criteria for compensation for designated injuries and aggravations of designated injuries will apply.
These changes will widen the ‘significant degree’ test so that the state of a worker’s physical and psychological health before their injury must be taken into account, requiring that consideration be given to the probability that the worker would have suffered from the injury, or a similar injury, at about the same time or stage of their life regardless of employment. It is difficult to know how this will be achieved. Doctors will presumably be asked to comment on these probabilities. While experts are often required to comment on possibilities and probabilities, one wonders with what degree of accuracy any expert will reliably be able to comment on this issue.
The threshold for perception-based disease claims will also be raised. The law regarding perception-based injuries was expressed by Von Doussa J in Wiegand v Comcare, where he said:
‘..... there is no requirement at law that the interpretation placed on the incident or state of affairs by the employee, or the employee’s perception of it, is one which passes some qualitative test based on an objective measure of reasonableness. If the incident or state of affairs actually occurred, and created a perception in the mind of the employee (whether reasonable or unreasonable in the thinking of others) and the perception contributed in a material degree to an aggravation of the employee’s ailment, the requirements of the definition of disease are fulfilled.’
Under the proposed changes in the Bill, ‘liability will not extend to underlying mental health conditions which manifest in the workplace but have no significant basis in employment’. In other words, a worker will have to have ‘reasonable’ grounds to believe that a particular incident or state of affairs has caused his or her injury.
The scope of the ‘reasonable administrative action’ exclusionary provisions will also be widened to encompass injuries suffered as a result of reasonable management action generally (including organisational or corporate restructures and operational directions) as well as an employee’s anticipation or expectation of such action being taken.
The inclusion of ‘reasonable management action’ in the RAA exclusionary provisions has been introduced to deal with the decision in Reeve v Commonwealth. In Reeve, the Full Court held that the exclusionary action had to relate directly to the worker’s actual employment as opposed to action forming part of the everyday tasks and duties of a worker.These everyday tasks were identified as ‘operational duties’. Accordingly, tasks performed as part of the work routine or related to operational issues could not constitute ‘reasonable administrative action taken in respect of the employee’s employment’.
The addition of ‘management action’ to the exclusionary provisions is meant to ensure that claims for psychological injuries will fail if the injury occurs as a result of these normal operational duties, hence negating the effect of Reeve. Effectively, these proposed changes mean that it will be even harder for workers to claim for psychological injuries and many workers (who would presently be eligible to claim compensation under the current legislation) will be locked out of the scheme.
While all state-based workers’ compensation schemes contain exclusionary provisions in relation to psychological injuries, passing the Safety Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill will usher in the harshest provisions in the country.
Schedule 2 amends the rehabilitation and return-to-work requirements in the SRCA. Positive changes include more emphasis on getting workers back to work and putting pressure on employers to provide suitable duties. Under the proposed changes, workers would be able to request rehabilitation plans and decisions regarding rehabilitation could be appealed to the Administrative Appeals Tribunal (AAT). It is, however, disappointing that employers who fail to provide suitable duties in circumstances where there is evidence that alternative work could be made readily available face no penalties.
These changes will directly impact on workers with psychological injury who find it notoriously difficult to return to work, particularly to the workplace where their injury occurred.
The expansion of the definition of ‘suitable employment’ to include a requirement for a worker to change his or her place of residence provided it is reasonable to do so is onerous. A change of residence inevitably requires expense and dislocation for a worker and his or her family. One wonders in what circumstances this requirement could possibly be regarded as reasonable. Surely removing a worker with psychological injuries from extended family and their support networks is likely to aggravate his or her injury? Relocation is also likely to place even more pressure on families that are already struggling with the consequences of having to deal with a parent or family member who is suffering from a mental health injury.
Schedule 15 proposes changes which are meant to ‘streamline and enhance the existing regime of sanctions’. Again, the proposed changes seem to punish workers rather than create a system of trust and mutuality. Notably, there are no sanctions proposed for employers who lie or fail to provide all material relevant to a claim.
The proposed s29H requires that a diagnosis of a psychological injury must be made by a ‘mental health practitioner’. In other words, a woker suffering a mental health injury will not be entitled to claim ongoing benefits on the basis of GP certification alone. Again, this seems to be unduly punishing of workers with mental health injuries and continues the theme throughout the Bill – that workers with psychological injuries are treated differently and more harshly than workers with other injuries. Of most concern is the capacity to suspend incapacity payments where a worker does not follow medical advice. Importantly, a refusal to have surgery and/or take a particular medication cannot be relied upon by a relevant authority under this section.
Finally, the proposed sanctions regime is harsh and punishing and is unlikely to foster trust and mutual respect in the compensation relationship. The fact that the sanction regime means that workers can permanently lose their rights to any compensation at all (save for in death claims and claims for funeral expenses) would seem to be unnecessarily harsh and does not bode well for restoring trust between a psychologically injured worker and his or her employer.
SECONDARY PSYCHOLOGICAL INJURIES
Workers who develop a psychological injury secondary to an accepted physical injury can seek an extension of liability to include the psychological condition. An acceptance of liability for a secondary condition can give rise to an entitlement to claim a lump sum for permanent impairment.
The Comcare Guide to the Assessment of the Degree of Permanent Impairment is based on the proposition, similar to the AMA Guides, that impairments from related but separate conditions should be assessed under the Combined Values Chart.
Adding impairments under the Combined Values Chart changed with the decision in Canute v Comcare. Comcare’s jurisdictional policy advice issued after the Canute decision explained the High Court’s approach in this way:
‘Where a compensable injury gives rise to a subsequent injury (a sequela), that satisfies the definition of injury in section 4 of the Act, that subsequent injury is to be treated as a separate injury, with all the entitlements of a separate injury; this includes entitlement to a separate assessment for compensation under sections 24 and 27 of the SRC Act.’
Schedule 12 of the Bill returns the calculation of impairment to the pre-Canute position; that is, impairments will be combined under the Combined Values Chart. However, the right to claim lump sum impairment for secondary psychiatric injuries is abolished, which is further evidence that workers who suffer mental harm injuries are being punished under the proposed legislation.
Establishing liability for claims for psychological injuries is already difficult under the SRCA. The Safety Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015 proposes to further erode the rights of injured workers across a range of entitlements but, most significantly, adversely affects workers who have suffered psychological injuries.
On the one hand, governments and society generally are expressing concern at the prevalence of workplace bullying and of stress in the workplace. Many workers never recover from the effects of workplace stress/bullying and some actually take their own lives. It was in part a response to one young woman who took her life that laws regarding workplace bullying were introduced in Victoria. Brodie’s Law was introduced in Victoria in 2011, making serious bullying a crime punishable by up to 10 years’ imprisonment.
Federally, concerns about bullying in the workplace gave rise to new powers to the Fair Work Commission, which were introduced in 2014. These powers allowed the Commission to investigate allegations of bullying in the workplace and introduced a mechanism whereby workers could approach an outside agency to try and deal with alleged bullying while it was happening.
These are conflicting messages: on the one hand, governments express concern about bullying in the workplace and have introduced very serious penalties to combat this. On the other hand, when it comes to dealing with bullying from a workers’ compensation perspective, the bar has been lifted higher and higher when it comes to workers being able to access adequate compensation for their workplace injuries.
The Bill before federal parliament is a kneejerk reaction to a real workplace problem, but instead of making it harder for workers to claim compensation for injuries caused by workplace stress and/or bullying, government and employers should be asking why our workplaces are making people sick and taking steps to reduce the incidence of workplace stress, not punishing the victims. A more constructive approach would result in savings from a compensation point of view while reducing the appalling human suffering caused by workplace psychological injuries.
Finally, to add insult to injury, at the same time that the Safety Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill was introduced, Eric Abetz, Minister for Workplace Relations at the time, was quietly introducing a ‘special’ workers’ compensation scheme for federal parliamentarians. In the words of the Canberra Times:
‘While the minster has been pushing legislation that will strip workers' compensation entitlements from hundreds of thousands of public servants and private sector workers, work has been going on behind the scenes on a different coverage arrangement for 225 federal parliamentarians.’
Angela Sdrinis is a Director of Angela Sdrinis Legal and has been a PI accredited specialist since 1993. She was a founding member of the ALA (formerly the Australian Plaintiff Lawyers Association) and was the first Victorian president of APLA. Angela also specialises in Comcare claims and has acted for workers covered by the scheme since 1982. PHONE (03) 9041 8811 EMAIL firstname.lastname@example.org.
 <http://www.comcare.gov.au/about_us/access_to_information/information_publication_scheme/self_insurance2/self_insurance/current_licensee_list> .
 SRCA s45.
 <http://www.themandarin.com.au/35695-comcare-responds-work-health-and-safety/?pgnc=1> .
 Heath Aston, ‘Dr Joanna Howe says Abbott government's proposed changes to national workers' compensation scheme is a “favour” to big business’, Sydney Morning Herald, 22 March 2015: <http://www.smh.com.au/federal-politics/political-news/dr-joanna-howe-says-abbott-governments-proposed-changes-to-national-workers-compensation-scheme-is-a-favour-to-big-business-20150322-1m4xjf.html#ixzz3otQUDY92> .
 Noel Towel, ‘ACT dumps Comcare’, Canberra Times, 25 February 2015: <http://www.canberratimes.com.au/national/public-service/act-dumps-comcare-20150225-13o86a.html> .
 Comcare v PVYW  HCA 41.
 (1996) 23 AAR, para 12, p165.
 <http://www.google.com.au/url?sa=t & rct=j & q= & esrc=s & source=web & cd=1 & ved=0CB0QFjAAahUKEwif1ZaRyqzHAhXiIaYKHYOlA6I & url=http%3A%2F%2Fwww.insurancecouncil.com.au%2Fassets%2Freport%2FMay%25202015%2520-%2520a%2520Best%2520Practice%2520Workers%2520Compensation%2520Scheme.pdf & ei=ifjPVd_sNOLDmAWDy46QCg & usg=AFQjCNHoamfm1kuDvDfMAdKG0ELhIjP1cg> .
 Ibid, p25.
 Noel Towell, ‘Revealed the cost of bullying and violence in the Australian Public Service’, Canberra Times 30th July 2015 : <http://www.canberratimes.com.au/national/public-service/revealed-the-cost-of-bullying-and-violence-in-the-australian-public-service-20150729-gimwfr.html> .
 <http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/Improving_Comcare_Scheme/Report> .
 Section 5B(1), SRCA.
  FCAFC 16; (2005) 145 FCR 29.
 (2002) FCA 464.
 Ibid,para 31.
 <https://employment.gov.au/safety-rehabilitation-and-compensation-amendment-improving-comcare-scheme-bill-2015> Schedule 1 proposed 5B(2)(da).
 (2012) FCAFC 21.
 <http://www.comcare.gov.au/Forms_and_Publications/publications/services/claims/claims/guide_to_assess_of_the_degree_of_perm_impair> , 2006.
  FCA 299.
 The Crimes Amendment Bullying Act (Vic) 2011.
 Noel Towell, ‘New Workers’ Comp Cover for Federal Politicians’, Canberra Times, 14 May 2015.