(a) the Application to Resolve a Dispute and attached documents;

(b) the Reply and attached documents;

(c) the Application to Lodge Additional Documents lodged by the applicant on

18 February 2025 and 11 March 2025, and

(d) the Application to Lodge Additional Documents lodged by the respondent on

24 March 2025.

1. Michael Merlo (the applicant) claims 41% whole person impairment arising out of injuries sustained in the workplace with Everly Howison Pty Ltd (the respondent) relating to his lumbar spine, scarring and a consequential sleep disorder (obstructive sleep apnoea).
2. The respondent accepts the claims made in relation to the lumbar spine and scarring are valid and capable of referral to a Medical Assessor but submits the obstructive sleep apnoea claim is invalid because the assessment has been made solely on the basis of chronic pain and not due to any impairment of the respiratory system. As the assessment is flawed, it submits the claim is invalid and seeks an award.
3. The matter ultimately proceeded to conciliation/arbitration followed by timetabled written submissions. Mr Stanton of counsel instructed by Mr Bechara represented the applicant.

Mr Perry of counsel instructed by Ms Whiting represented the respondent. 4. In the course of my decision making I had regard to the documents attached to the Application to Resolve a Dispute (ARD), the Reply and the Applications to Lodge Additional Documents filed by both parties. I also considered the detailed written submissions which repeated the history and referred to various aspects of the Workers Compensation Act 1987 (the 1987 Act), the Workplace Injury Management Act and Workers Compensation Act 1998 (the 1998 Act), the American Medical Association Guides to the Evaluation of Permanent Impairment, 5th ed (AMA 5) and SIRA Guidelines and much case law. 5. The sole issue for determination is whether a "valid claim" has been made with respect to obstructive sleep apnoea. The validity of the claim will ultimately depend on an interpretation of the medical evidence. Parties agreed that if I find that the impairment relating for obstructive sleep apnoea solely arises due to chronic pain, the applicant's case will fail. However, if I find that the evidence establishes otherwise, referral to a Medical Assessor is appropriate.

1. The applicant qualified Dr Friedberg who provided multiple reports. Following a sleep study he ultimately diagnosed "moderate obstructive and central sleep apnoea, severe in supine position".[1] He concluded that this developed since workplace injury because of jewel narcotic analgesics before retiring.[2] In a further report he considered:

"the propensity for the apnoea has been caused by the positional change in his sleep as a result of his workplace injury, but enhanced by nocturnal analgesic respiratory suppressant medications... sleep study proves that the shift from the side to the supine position has precipitated severe sleep disordered breathing. His insomnia is directly related to his pain which has reduced his sleep duration by 40%. There are frequent spontaneous awakenings and arousals due to pain...He was totally asymptomatic from a sleep perspective prior to the workplace injury. There is no history to suggest insomnia prior to the workplace injury with uninterrupted eight hours of sleep and no daytime hyper somnolence."[3]

1. In his report dated [4] 21 February 2025, he concluded (unedited):

"Mr Merlo's has developed sleep disordered breathing as a result of the use of multiple respiratory suppressant medications before retiring as a consequence of a workplace injury including Palexia and Norspan.

In addition to this prior to his workplace injury he was a side sleeper and as a direct consequence of his lumbar spine injury he now needs to sleep on his back. His diagnostic sleep study indeed confirmed in the pre-injury side position his sleep disordered breathing was borderline mild with a respiratory disturbance index of 7/hour and in the supine position his obstructive sleep apnoea was extremely severe with an RDI of 59/hour (RDI>30 is severe obstructive sleep apnoea).

It is estimated that more than 50% of obstructive sleep apnoea patients experience a positional component where their apnoea-hypopnoea index (AHI) (similar to the RDI quoted above) is significantly higher when they sleep on their back compared to other positions.

The fact that the ENT surgeon Dr Kenneth Howison did not find any craniofacial features to predispose him to sleep disordered breathing reinforces that it is the above described effects of positional change and respiratory suppressant medication usage that has precipitated this man's severe supine obstructive sleep apnoea.

Therefore this man's severe supine obstructive sleep apnoea is a direct consequence of his workplace injury as is his insomnia due to pain."

1. Further, responding to the allegation that the sleep disorder (insomnia) arose solely out of chronic pain, he reported (unedited):

"Insomnia is a recognised sleep disorder, not just a side effect of pain. The insurer's position assumes that sleep disturbances caused by chronic pain are merely secondary symptoms rather than an independent condition. However, this is inconsistent with both medical literature and real-world clinical experience.

Insomnia is well-established as a primary sleep disorder when it persists beyond three months, regardless of its original trigger. The International Classification of Sleep Disorders (ICSD-3) defines chronic insomnia disorder as difficulty initiating or maintaining sleep, accompanied by daytime impairment, even when sleep opportunity is adequate.

The AMA-5, page 4, Table 1-2 recognizes that a restful nocturnal sleep pattern is essential to activities of daily living. Furthermore, page 317 clearly states that an Epworth Sleepiness Score of 10 or higher equates to excessive daytime sleepiness and a Class 2 Impairment.

This means that once insomnia persists and affects daytime function, it qualifies as a sleep disorder under the Sleep and Arousal Disorders section of the AMA-5 impairment guidelines. It is no longer just a symptom of pain it is its own medical condition.

Chronic pain and insomnia develop a self-perpetuating cycle. It is well known that chronic pain and insomnia reinforce each other. While the initial sleep disturbance may have been caused by pain, over time, insomnia takes on a life of its own. This happens through central sensitization, increased inflammation, and behavioural conditioning.

Poor sleep lowers pain thresholds by increasing neuronal hyper excitability in pain-processing areas of the brain. This means that even if the original injury stabilizes, pain sensitivity remains heightened.

Sleep deprivation elevates pro-inflammatory markers like IL-6 and TNF-alpha, which further amplify pain perception and disrupt sleep.

Many patients develop maladaptive sleep beliefs ('I'll never get a good night sleep again'), which lead to chronic hyperarousal. Even if their pain improves, they struggle to break the insomnia cycle.

This transition from pain-related insomnia to primary insomnia explains why treating the pain alone does not resolve sleep disturbances. Insomnia must be addressed separately as an independent disorder."

1. Dr Howison, ENT was qualified on behalf of the applicant and reported on 4 February 2025.[5] He concluded that he could not provide a craniofacial cause for the sleep apnoea especially given that the applicant's weight was below what it was prior to the back injury in 2021.
2. Dr Dimitri, respiratory physician was qualified for the respondent. He reported twice. Initially on 17 July 2024[6] he considered the accepted back injury caused insomnia arising from chronic pain. Relevantly he stated (unedited):

"the diagnosis is that this patient has insomnia due to chronic pain. Additionally, he sleeps in the supine sleeping position now due to his back pain. He has severe sleep apnoea in the supine position. Prior to the injury, he slept in the non supine position, in which he has mild sleep apnoea. Additionally, he is on a number of respiratory depressant medications, which would contribute to his daytime somnolence as well as worsen his sleep apneoa. The overall effect of this is that he has significant daytime somnolence with an Epworth score of 16....

...his workplace incident on 24 November 2021 to his lower back is the main factor contributing to his sleep disorder...

1. In his report dated 6 November 2024[7] he confirms the above diagnosis stating relevantly (unedited):

"I note that he also takes respiratory suppressant medications for his pain, Gabapentin, Palexia and Norspan patch. These would worsen his sleep apnoea..."

1. The report continues by estimating a whole person impairment due to sleep disorder and making deductions for pre-existing sleep apnoea, however a final assessment of impairment was not afforded due to the absence of an ENT report at that time excluding other possible factors as the cause to the disorder.

1. In its s 78 notice dated 24 December 2024,[8] the grounds for disputing the sleep disorder impairment claim are nominated as follows (unedited):

"Dr Freiberg, your qualified Sleep Physician, in a report of diagnosed you as having insomnia due to pain and positional severe obstructive sleep apnoea.

In response to your client's claim, we had arranged for you to be examined by Dr Andrew Dimitri.

Dr Andrew Dimitri, in his report of 6 November 2024 diagnosed you as suffering insomnia due to chronic pain. However, he observed that you have pre-existing sleep-apnoea which was likely more severe prior to the injury as you are now at a lighter bodyweight.

We note that before permanent impairment can be assessed for obstructive sleep apnoea, a worker must have appropriate assessment and treatment by an ear, nose and throat surgeon (my emphasis)

We have not been served with any evidence from an ENT surgeon and Dr Dimitri notes in his report that you had not undergone an assessment by an ENT. As a result, Dr Dimitri was unable to provide a final impairment rating as Clause 8.9 of the SIRA Guides has not been satisfied.

We further note that 13.3c of AMA 5 provides that impairment categories that may arise from sleep disorders relate to the nervous system, mental and behavioural factors, the cardiovascular system and the hematopoietic system as well as the respiratory system.

We note that the SIRA guides specifically exclude pain from assessment under AMA-5 of permanent impairment. (my emphasis)

As Dr Freiberg and Dr Dimitri refer to 'insomnia due to chronic pain' as a result of musculoskeletal conditions, we consider that 'sleep' is not identified as a body part or system to be assessed as contributing to the level of permanent impairment, that like pain itself, such indirect effects must be incorporated into the assessment of the part or system which is the source of the pain.

As it is found you have sustained sleep disturbance due to pain resulting from a compensable condition and not as a result of a primary neurological disorder, we do not believe it is eligible to be assessed for whole person impairment.

Therefore, we do not consider that 'sleep disturbance caused by chronic pain' (my emphasis) is an assessable condition in accordance with the AMA-5 and the SIRA Guidelines for the Evaluation of Permanent Impairment."

1. In written submissions the respondent advanced:

(a) Dr Friedberg's assessment provides an impairment of sleep dysfunction (insomnia) arising from chronic pain;

(b) the SIRA Guides, and specifically cl 1.2 state "that conditions associated with chronic pain should be assessed on the basis of the underlying diagnosed condition, and not on the basis of chronic pain", and

(c) insomnia due to chronic pain is not a condition capable of assessment under the SIRA Guidelines and so does not constitute a valid claim. There should be an award for the respondent, this being consistent with the approaches taken in Voudouris[9] and Stafford.[10]

(a) the respondent's case must fail. The diagnosis of Dr Friedberg has been misinterpreted as both he and Dr Dimitri have assessed impairment arising from a combination of pain and the use of respiratory suppressant medications as a consequence of the lumbar spine injury, including Palexia and Norspan both known to "worsen sleep apnoea";

(b) the applicant has made a valid claim globally, and

(c) the respondent's request that I interrogate the guidelines in an attempt to answer whether a "valid claim" exists is beyond my jurisdiction. I was referred to the comments of Basten AJ in Bucca[11] with confirms determination and interpretation of the guidelines are the exclusive domain of Medical Assessors and falling outside of the role of a judicial type decision maker.

1. The law regarding valid claims is technical and complex. It is important to highlight here that the respondent does not allege the applicant has failed to make a proper claim (as it admits that all relevant particulars have been provided[12] specifically with reference to the lumbar spine and scarring) but rather asserts that the claim for the sleep disorder is invalid because its assessment has been made solely on the basis of a chronic pain condition, specifically excluded by the Guidelines in the assessment of any respiratory system impairment. I have not ignored the submissions of the respondent who invited me to make a finding that no valid claim exists with reference to the authorities of Bucca, Voudouris and Stafford. Careful assessment of these authorities confirms different factual situations which bear no relevance to the medical case before me.
2. The respondent seeks a finding that no valid claim exists. I disagree. This is because I find;

(a) the foundation of the respondent's assumption that the chronic sleep apnoea is "solely" the result of chronic pain is wrong. Dr Friedberg diagnoses the obstructive sleep apnoea as being multifactorial including a combination of insomnia arising from pain; the use of multiple respiratory suppressant medications as a consequence of the workplace injury to the lumbar spine and psychological changes in the form of "central sensitisation, increased inflammation and behavioural conditioning";

(b) Dr Dimitri also concludes the sleep disorder is multifactorial also referring to the impact of respiratory suppressant mediations as "worsening the sleep apnoea", and

(c) the applicant has been assessed by an ENT surgeon which is a prerequisite prior to assessment of permanent impairment.[13]

1. Despite the suggestion of a significant divergence in medical opinions, I find there are more similarities than differences in the competing qualified medical assessments namely both specialists confirm:

(a) the applicant has a sleep disorder;

(b) the sleep disorder is a consequential condition resulting from the accepted back injury;

(c) the cause of the sleep disorder is multifactorial and not just limited to insomnia arising from pain, and

(d) there are no other causes for the sleep disorder apart from factors resulting from the lumbar spine injury.

1. It can be seen the assumptions made by the respondent ultimately leading to the allegation that a valid claim does not exist has been made on a narrow and incorrect interpretation of the medical evidence as explained above. Overall, I find that a valid claim for lump sum compensation has been made with regards to the sleep disorder (respiratory system) as the medical evidence establishes that there are multiple causes for the impairment and it does not solely arise from chronic pain. I find the evidence does establish that the applicant has met the baseline threshold for assessment of the respiratory system as he has been examined by an ENT and medically documented there is a respiratory disorder. As a result and in the interests of brevity, I have declined to slavishly expand on each ground raised by the respondent, noting that the assumptions raised on misinterpreted medical evidence entirely disrupt its case theory.
2. I further find that a medical dispute exists with reference to s 319 (c) and (d) of the 1998 Act, namely, the degree of impairment and whether any such proportion of impairment is due to pre-existing condition or abnormality (such as pain). I am satisfied that the entirety of the claim can and must[14] be assessed by a Medical Assessor. I have deliberately avoided the temptation to refer to the Guidelines and the AMA V as it is beyond my jurisdiction to comment on the interpretation of these matters[15].

1. For these reasons, I made the orders set out on page 1 of the Certificate of Determination.

[4] Folio 4 ALAD filed by the applicant 11 March 2025.

[5] ALAD filed by the Applicant 18 February 2025.

[9] Voudouris v TDV Constructions Pty Ltd [2023] NSWPICPD 53.

[10] Woolworths Limited v Stafford [2015] NSWCCPD 36.

[11] Bucca v QBE Insurance (Australia) Ltd [2024] NSWSC 1099 specifically paragraph 78.

[12] Ottomen Pty Ltd ATF Labour ADM t/as Otto Design Interiors v Lee Chee [2013] NSWCCPD 42.

[13] Chapter 8, paragraph 8.9 of the PI Guidelines.

[14] Trustees for the Roman Catholic Church for the Diocese of Bathurst v Hine [2016] NSWCA 213 specifically paragraph 56.

[15] Skates v Hills Industries Ltd [2021] NSWCA 142 at [33]