Permanent Impairment: Is your assessor correctly assessing psychological injuries?

Key Points
  • The worker must have undergone effective long-term treatment which has resulted in apparent substantial or total elimination of permanent impairment. It is not sufficient for the worker’s treatment to have led to some improvement in the worker’s condition. 

  • The assessment of the effects of treatment for psychological injuries requires a comparison between a worker’s pre-treatment impairment and impairment following the treatment.

  • Consideration of the likelihood of the worker reverting to the original degree of impairment if treatment is withdrawn is then required.

In New South Wales, the State Insurance Regulatory Authority (‘SIRA’) provides Guidelines for the Evaluation of Permanent Impairment in Workers Compensation claims.

The purpose of the Guidelines is to ensure trained medical assessors consistently provide objective, fair and consistent assessments of permanent impairment.

Clause 1.31 directs an assessor of whole person impairment to use the appropriate sections of the Guidelines to evaluate and consider the effects of treatment when arriving at a final percentage of impairment.

The principles of assessment for adjustment where the treatment of a condition leads to a secondary impairment are contained in clause 1.32 of the Guidelines:

“Where the effective long-term treatment of an illness or injury results in apparent substantial or total elimination of the claimant’s permanent impairment, but the claimant is likely to revert to the original degree of impairment if treatment is withdrawn, the assessor may increase the percentage of WPI by 1%, 2% or 3%."

More specifically, when assessing psychological injuries clause 11.8 provides when considering the effects of treatment, an assessor should:

“Consider the effects of medication, treatment, and rehabilitation to date. Is the condition stable? Is treatment likely to change? Are symptoms likely to improve?”

In practice, one finds psychiatric assessors tend to approach assessment of this element in a haphazard manner, and quite frequently fail to have regard to the over-arching requirements in clause 1.32.

The correct approach to application of the Guidelines has been the subject of two recent decisions which hopefully will provide clarity to psychiatrists, in particular.
Nestle Australia Ltd v Santimano [2024] NSWPICMP 37
A Medical Appeal Panel (MAP) considered the relevant provisions of the Guidelines in relation to treatment effects in the decision of Nestle Australia Ltd v Santimano [2024] NSWPICMP 37, stating the reference in clause 11.8 to the effects of treatment is only in the context of whether an injury is stable.
In relation to clause 1.32, the MAP stated the “words of the Guidelines connote a very significant improvement as a result of treatment such that impairment is greatly ameliorated’.
Further the MAP stated: “The history the Medical Assessor obtained, and his examination findings do not support a conclusion that Mr Santimano has undergone treatment which has led to ‘an apparent substantial or total elimination of his permanent impairment’. The test is not whether treatment has led to some improvement in a worker’s condition or even to some reduction in permanent impairment.”

As treatment had not substantially eliminated the claimant’s permanent impairment, there was no basis to allow the additional 1%.
The MAP stated: “If 15% permanent impairment represented a substantial or total elimination of impairment, the Medical Assessor should indicate when there was a much greater impairment and how this still significant impairment represents substantial elimination of that prior much greater WPI.”
Zoric v Secretary, Dept of Education [2024] NSWSC 131
In the Supreme Court, Justice Chen has also recently provided a clear set of steps for assessors to follow when determining the additional WPI to be included for the effects of treatment in the decision of Zoric v Secretary, Dept of Education [2024] NSWSC 131.
In this case, the worker lodged an appeal against the MAC in respect of the Medical Assessor’s omission of an allowance for the effects of treatment.
The MAP accepted the Assessor did not discuss the additional allowance for treatment effects as required by the Guidelines. The MAP declined to make any allowance, stating:
“Obviously, the elimination has not been total. ‘Substantial’ in general terms means significant, considerable, or large and we are not persuaded that Ms Zoric has demonstrated an elimination of her WPI that could meet the definition of ‘substantial’.
In our view, the evidence does not support such a finding. With such a significant permanent WPI still remaining despite this treatment this test is not met.
Notwithstanding that the Medical Assessor did not consider whether Ms Zoric is likely to revert to the ‘original degree of impairment if treatment is withdrawn’, we do not accept that he has erred in failing to make an allowance for the effects of treatment.”

The worker lodged an appeal in the Supreme Court of NSW. Justice Chen stated clause 1.32 requires findings about the following “steps”:
  1. First, whether there has been effective long-term treatment of an illness or injury. 
  2. Secondly, whether that treatment results in apparent substantial or total elimination of the claimant’s permanent impairment.
  3. Thirdly, whether the claimant is likely to revert to the original degree of impairment if treatment is withdrawn.
For the first point, there needs to be a finding about the “illness of injury” which results in permanent impairment and if there has been effective long-term treatment of that “illness or injury”.
The second step involves a comparative exercise being performed.
To this end, Justice Chen held “what is required by cl 1.32, is a comparative exercise between the plaintiff’s original degree of impairment before the “effective treatment” and the plaintiff’s degree of impairment following that treatment: it is only by undertaking that comparison at those times can a medical assessor (or, in the present case, the Appeal Panel) determine whether the treatment “results in apparent substantial... elimination” of the plaintiff’s permanent impairment.”
“In relation to the third step, the question is whether the claimant’s impairment is likely to revert to the original degree of impairment if treatment is withdrawn.” The third step should be informed by the enquiries required by the first and second steps.

These recent decisions highlight the lack of precision by medical assessors when making allowances for additional impairment for the effects of treatment.

For an allowance to be made, the primary consideration is whether the treatment under consideration has led to an apparent “substantial or total elimination” of the worker’s permanent impairment, which involves a comparative exercise of the worker’s impairment before and after the treatment.

Having regard to the numerous thresholds in the legislation, the addition of an extra 1% - 3% WPI for the effects of treatment may be wholly determinative of the scope and longevity of a worker’s entitlements under the Scheme.

It is vital that insurers and their advisors ensure qualified assessors adopt the correct approach when tackling this issue.

Article written by Hicksons’ Special Counsel, Belinda Brown, and Solicitor, Connor Wares.

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