Mirarchi v CPA Australia Ltd

The facts

1. Subsequent to her injury, the plaintiff claimed that she had difficulties with both her shoulders. The first defendant's insurer, QBE Workers Compensation (NSW) Limited (QBE), paid the expenses associated with medical treatment and surgery for both upper limbs although no separate injury had been identified. It appears to have been accepted, or at least it was not challenged, that the symptoms in the plaintiff's left upper limb were the consequence of the work-related injury to her right upper limb which was reported in November 2006.
2. Prior to July 2010 the plaintiff claimed lump sum compensation for permanent impairment in both upper limbs pursuant to s 66(1) of the Workers Compensation Act 1987 (NSW) (the 1987 Act). Her claim was resolved by a complying agreement made in accordance with s 66A of the 1987 Act dated 16 July 2010, as a result of which she was paid $2,500 for the right upper limb, the left being excluded from consideration. At the time of the complying agreement, a worker was entitled to make several claims for permanent impairment over time. Thus, at the time, the making of the complying agreement did not prejudice the plaintiff's rights to make a further claim if her condition worsened or if symptoms appeared in further body parts as a result of the original injury.
3. Prior to 2012, s 66(1) of the 1987 Act provided that a worker who received an injury that resulted in "permanent impairment" was entitled to receive compensation as provided by s 66, and such "permanent impairment" compensation, was in "addition to any other compensation" under the 1987 Act. The amount of permanent impairment compensation was calculated by reference to s 66(2) of the 1987 Act. Of present relevance, if the degree of permanent impairment was not greater than 10%, the amount was calculated as D x $1,375, where D is the number derived by expressing the degree of permanent impairment as D%.
4. Subsequently the 1987 Act was amended by the Workers Compensation Legislation Amendment Act 2012 (NSW) to confine the right to lump sum payment for permanent impairment so that, in substance, only "one claim" could be made and no amount was payable unless the degree of permanent impairment was greater than 10%. That this was the effect of these provisions was confirmed by the Court of Appeal in Cram Fluid Power Pty Ltd v Green [2015] NSWCA 250.
5. On 15 September 2015, the plaintiff made a further claim for lump sum compensation. She relied, in support of her claim, on two reports from Dr Terry Kwong dated 19 September 2011 (the 2011 Report) and 18 February 2015 (the 2015 Report). In the 2011 Report, Dr Kwong diagnosed right lateral epicondylitis, right radial tunnel syndrome and a "complex regional pain syndrome with bilateral frozen shoulder after her right elbow and right radial tunnel release surgery". To these diagnoses Dr Kwong added reactive depression in the 2015 Report. In the 2015 Report, Dr Kwong assessed the plaintiff as having 28% impairment of the right upper extremity, giving rise to a whole person impairment (WPI) of 17% and a 20% impairment of the left upper extremity, giving rise to a WPI of 12%. He assessed the combined WPI as 27%.
6. The plaintiff's claim was rejected by QBE on the basis of Cram Fluid Power Pty Ltd v Green. Subsequently regulations were enacted to ameliorate the prejudice to persons in the category to which the plaintiff belonged. It was common ground that the effect of these regulations was that the plaintiff had a statutory right to make one further claim. As a result, on 25 January 2016 the plaintiff requested a review of her claim for lump sum compensation. The first defendant's solicitors wrote to the plaintiff's solicitors on 8 February 2016 to foreshadow that the plaintiff was required to be examined by a medical examiner.
7. On 2 March 2016 the plaintiff was examined by Professor Cumming at the request of QBE. Professor Cumming opined as follows: "A frozen shoulder is a very common condition in ladies in this age group and I do not see a relationship between the frozen shoulder and her work situation as she was not working for some years at the time. With regard to her carpal tunnel syndrome, this has been dealt with above, I am not of the opinion on today's examination that she is suffering from carpal tunnel syndrome for the reasons clearly outlined above. The one area of doubt in my mind regarding her whole person impairment assessment is in relationship to the scars where I consider that she has scarring which has been performed for what was accepted by the insurers as a work related matter and if that is the case, then the scars would be considered as a complication of the surgery. In these circumstances I provide allocation for this."
8. Professor Cumming's assessment of WPI was as follows: "I provide a 1% whole person impairment related to the scarring on the anterior aspect of her right elbow in accordance with the TEMSKI scar scale."
9. On 29 March 2016 QBE notified the plaintiff that her claim was denied in a document which purported to be a notice pursuant to s 74 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the 1998 Act) (the s 74 Notice). In the s 74 Notice, QBE explained that liability had been denied on the basis that s 66 of the 1987 Act requires that an injury (work-related) must result in more than 10% permanent impairment before compensation is payable. Under the heading of the s 74 Notice, "Issues relating to the dispute", QBE included the following summary of Professor Cumming's report: "ISSUES RELEVANT TO THE DISPUTE Your claim has been declined as a result of the following documents: Medical evidence Prof William Cumming, Orthopaedic Surgeon, provided a report dated 2 March 2016, Prof Cumming considered that you experienced lateral epicondylitis in the right elbow as a result of your work which had resolved. He did not consider that you presented with symptoms consistent with carpal tunnel syndrome, and if you did then it was not related to your injury. The Doctor reported that there was significant variation and voluntary alteration in the joint range of movement in the shoulder which was inconsistent with the pathology present. He found no relationship between your injury as described and the bilateral frozen shoulder conditions. The Doctor provided his assessment of permanent Impairment of 1% WPI relating to the scarring on the anterior aspect of your right elbow in accordance with the TEMSKI scale."
10. Under the heading of the s 74 Notice, "Reasons for Denying Liability", QBE said: "You have not suffered greater than 10% permanent impairment as a result of a work injury. Section 66 of the 1987 Act requires that a work injury result in more than 10% permanent impairment in order to obtain compensation. Our evidence indicates that you have sustained 1% WPI as a result of your injury, and therefore liability to pay permanent impairment compensation pursuant to Section 66 of the 1987 Act is declined. Section 323 of the 1998 Act provides that, when assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any portion of the impairment that is due to a previous injury, condition1 or abnormality. We consider that your pre-existing condition(s) should be taken into account and deducted from any assessment of your permanent impairment, if any, (which is disputed)."
11. As a consequence of receiving the s 74 Notice, the plaintiff's solicitors filed an Application to Resolve a Dispute in an approved form under s 288 of the 1998 Act which provides: "288 Referral of disputes to Commission (1) Any party to a dispute about a claim may refer the dispute to the Registrar for determination by the Commission. However, if the dispute is about lump sum compensation, only the claimant can refer the dispute. Note. A medical dispute concerning the claim can also be referred for assessment under Part 7 (Medical assessment). (2) The Registrar may not accept a dispute for referral for determination to the Commission if the dispute is a dispute that, under this Part, cannot be referred for determination by the Commission."
12. There are restrictions on the referral for the determination of the Workers Compensation Commission of New South Wales (the Commission) of a dispute about a claim for lump sum compensation (s 289(3) of the 1998 Act). For example, such a claim cannot be referred to the Commission unless the insurer disputes liability for the claim in whole or in part.
13. On 14 July 2016 QBE lodged a Reply to Application to Resolve a Dispute in which it confirmed the matters in dispute as per the s 74 Notice. As a consequence, the Registrar of the Commission (the second defendant), referred the dispute, which was treated as a medical dispute, for assessment pursuant to s 319 of the 1998 Act (the Referral). The medical dispute was referred to Dr Faithfull (the third defendant), an approved medical specialist whom the parties had jointly requested. Section 319 relevantly defines "medical dispute" as follows: "medical dispute means a dispute between a claimant and the person on whom a claim is made about any of the following matters or a question about any of the following matters in connection with a claim: (a) the worker's condition (including the worker's prognosis, the aetiology of the condition, and the treatment proposed or provided), (b) the worker's fitness for employment, (c) the degree of permanent impairment of the worker as a result of an injury, (d) whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion, (e) the nature and extent of loss of hearing suffered by a worker, (f) whether impairment is permanent, (g) whether the degree of permanent impairment of the injured worker is fully ascertainable."
14. The terms of the second defendant's Referral to the third defendant were as follows: "1. MEDICAL DISPUTE REFERRED FOR ASSESSMENT (S319 1998 Act) - the degree of permanent impairment of the worker as a result of an injury (s319(c)) - whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion (s 319(d)) - whether impairment is permanent (s319(f)) - whether the degree of permanent impairment of the injured worker is fully ascertainable (s319(g)j Date of Injury: 3 November 2006 Body part/s referred: Left upper extremity (shoulder) Right upper extremity (shoulder, wrist and elbow) Method of assessment: Whole Person Impairment"
15. The third defendant conducted an assessment which resulted in a finding of 1% WPI. His finding was based in part on his opinion that was largely in accordance with Professor Cumming's view: that the symptoms and conditions in the left upper limb were not related to the work-related injury. He said: "Mrs Mirarchi has suffered bilateral tennis elbow, bilateral carpal tunnel syndrome and bilateral frozen shoulders. In my opinion, the condition of right lateral epicondylitis is consistent with the history she gave. It is possible that she may have suffered some problem with the left elbow as a result of the over use from the right, but she has a full range of movement in the left elbow now. Compression of the posterior radial nerve was found at operation 2009. The bilateral frozen shoulder is unrelated to the problem with her right elbow or any injury at work. There was a five year gap. Dr Mahony 06/02/2008 made a medicolegal report in which he noted the onset of the elbow symptoms. He noted the shoulders had a full range of movement. The bilateral carpal tunnel syndrome which she suffered is unrelated to the particular incident at work which she described and is not related to the tennis elbow. There was a seven year gap between the injury in 2006 and the onset of carpal tunnel symptoms in 2013 consistency of presentation."
16. As a consequence of his findings on causation, the third defendant assessed only the reduced range of movement in the plaintiff's right elbow (which he assessed at 1%). He did not assess the left shoulder, right shoulder or right wrist "as the condition is not the result of the incident of 03/11/2006". He issued a certificate to that effect (the Original Certificate).
17. The parties accepted in this Court that the Original Certificate ought be set aside on the basis of jurisdictional error. It was common ground that the parties had intended that all of the body parts referred in the Referral set out above be assessed for degree of permanent impairment, without regard to whether the assessor considered that they were caused or otherwise related to the injury of 3 November 2006. They had intended their dispute to encompass only the degree of permanent impairment associated with those body parts referred to in the Referral, as opposed to issues of causation. QBE was particularly concerned about the result since it had, as referred to above, paid for medical expenses associated with the other body parts referred to in the Referral and did not (notwithstanding Professor Cumming's report) consider it to be appropriate that that question of causation be revisited.
18. Following the assessment by the third defendant, the plaintiff appealed to the Medical Appeal Panel of the Commission (the fourth defendant) pursuant to s 327(3) of the 1998 Act on the following grounds: the assessment was made on the basis of incorrect criteria (s 327(3)(c)); and the medical assessment certificate contains a demonstrable error (s 327(3)(d)). The first defendant opposed the appeal. The fourth defendant, by reasons given on 15 November 2016 dismissed the appeal on the basis that no error had been shown. In its reasons it found that the shoulder was unrelated to the work injury and found that there was no error in the Original Certificate or the reasons of the third defendant. By Certificate of Determination issued by the second defendant on 20 December 2016 the Commission confirmed the assessment of 1% permanent impairment.

Conclusion

1. The result of the events summarised in the narrative set out above is that the plaintiff has not had her claim for permanent impairment determined in accordance with the s 74 Notice and the first defendant (or its insurer, QBE) has not had the opportunity to have its assertion tested that, even taking into account all the symptoms in the body parts referred, the permanent impairment does not exceed the threshold of greater than 10%.
2. I am satisfied, in light of the joint submissions of the parties that the second defendant misapprehended the ambit of the dispute which was the subject of the s 74 Notice, which was intended to be confined to the degree of permanent impairment of the right and left upper limb. This led the second defendant to refer the medical dispute to the third defendant in terms which did not make it clear that the parties' dispute was confined to the degree of permanent impairment and did not require resolution of any issue concerning causation since this was not a matter in dispute. The fourth defendant dealt with the appeal on the basis that the certificate and reasons of the third defendant were within his jurisdiction and were valid.
3. I note that the initial misapprehension which appears to have led the third and fourth defendant's to misconstrue the ambit of the dispute, arose from the s 74 Notice sent by QBE which summarised Professor Cumming's opinion as to causation. His opinion as to causation was irrelevant to the "dispute" between the parties, since there was no issue of causation between them. The circumstances of this case highlight the care which must be taken when defining a dispute in such a notice, since the s 74 Notice will inform the exercise of the Registrar's power to refer the dispute for medical assessment. The medical practitioners who are in the position of the third or fourth defendants can hardly be expected to refrain from expressing their opinions on causation when they are led to believe it arises, unless they appreciate that their opinions are not sought on that question.

The form of orders

1. In these circumstances it is appropriate to make the orders largely in terms of the prayers in the summons. Because of the nature of the error it is necessary to set aside the Original Certificate, the decision of the Appeal Panel and the Determination of the Commission so that the process can begin again on a valid footing. In so far as the prayers in the amended summons seek a piecemeal setting aside, I reject the application.
2. The first defendant submitted that I ought order the second defendant to remit the assessment of the plaintiff's permanent impairment that results from the injury back to the third defendant in accordance with that referral dated 7 July 2016. I do not consider it to be appropriate to be as prescriptive as the first defendant contended. Apart from other considerations, there is no evidence to indicate that the third defendant would be willing and able to accept such a referral. When error has been found and consequential relief granted, it is appropriate for this Court to refer the matter back to the point of validity without seeking to direct matters beyond that: see, for example, Motor Accidents Authority of NSW v Mills (2010) 78 NSWLR 125; [2010] NSWCA 82 at [74] (Giles JA, Tobias JA and Handley AJA agreeing). This approach is consistent with the terms of s 69 of the Supreme Court Act, which is the basis of this Court's jurisdiction in the present case.

Costs

1. I heard argument on costs at the conclusion of the hearing. The plaintiff only raised the point which led the first defendant to concede that the orders should be made in her submissions dated 2 May 2017. The first defendant made the concession in its submission filed on 15 May 2017. The submissions which had earlier been exchanged dealt with other matters to which it is unnecessary, for present purposes, either to address or refer. On one view this ought lead to the plaintiff obtaining only a portion of her costs. However, I have decided that costs ought follow the event because the matter was not without difficulty and the plaintiff ought not have to bear the costs of bringing to this Court's attention an admitted error.

Orders

1. I make the following orders: 1. Set aside the decision of the fourth defendant made on 15 November 2016, purporting to confirm the medical certificate issued by the third defendant pursuant to s 328 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) on 9 August 2016 (the Medical Certificate). 2. Set aside the Medical Certificate referred to in order (1) above. 3. Set aside the Determination of the Workers Compensation Commission of New South Wales made by the second defendant on 20 December 2016 confirming the assessment of 1% permanent impairment. 4. Remit the matter back to the second defendant to be determined in accordance with law. 5. Order the first defendant to pay the plaintiff's costs of the proceedings.

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