Plaintiff v First, Second and Third Defendants

Supreme Court of Victoria|2011-06-24|Before: J FORREST J

ADMINISTRATIVE LAW - Judicial review - Determination of Medical Panel - Sections 91, 104B of the Accident Compensation Act - Pre-existing impairment - Apportionment of impairment resulting from pre-existing impairment - Unrelated injuries or causes.

1 On 5 August 2008, Mr John De Haas, the fourth defendant sustained an injury to his lower back in the course of his work with the plaintiff, Alcoa. He lodged an application for compensation pursuant to the Accident Compensation Act 1985 (Vic).

2 Alcoa accepted liability for his injury,[2] but there was a dispute as to the resultant degree of impairment. Ultimately Mr De Haas' claim for a lump sum benefit necessitated an impairment assessment which ended up before a Medical Panel comprised of the second and third defendants, Mr Pianta, an orthopaedic surgeon, and Dr Francis Gallichio, a general practitioner. The first defendant, Dr Lowthian, was the convenor of the Panel.

3 The Panel determined that Mr De Haas had sustained a 5% whole person impairment.

4 The issue that arises is whether the Panel lawfully arrived at this conclusion. The Panel was obliged to apply the provisions of the AMA Guides,[3] as modified by the Act in determining Mr De Haas' impairment. The gravamen of the complaint by Alcoa relates to the Panel's approach to Mr De Haas' acknowledged pre-existing back disability (i.e. before the work incident) which, it concluded, was aggravated by the compensable injury. The Panel, whilst accepting the existence of the pre-existing condition, determined that it should not take it into account in formulating its impairment assessment. Alcoa says that it was required to do so by both the provisions of the Guides and the Act itself.

5 Alcoa also contends that the Panel disregarded the medical opinion of Mr Michael Troy of 2 May 2005, which it was bound to take into account.

6 Alcoa says that on each of these bases the Panel fell into jurisdictional error and its decision should be quashed.

7 Mr De Haas commenced work at Alcoa in September 1980 as an ingot mill operator. On his own account this was "quite a physical job".[4]

8 During the course of his employment he sustained a number of injuries to his back. Minor injuries were sustained in 1990, 1991, 1993 and 1996. In May 1999 he sustained a significant injury to his lower back[5] which effectively required Mr De Haas to be allocated light duties. Subsequently, he was employed in the quantometer laboratory. He lodged a claim for compensation on 5 June 1999.[6]

9 On 5 August 2008, Mr De Haas slipped on an oil spill and fell, sustaining a further injury to his lower back which aggravated his pre-existing condition. He has not worked since.

10 On that day he completed a "Worker's Injury Claim Form" identifying his injury as "lower back/sacral pain".

11 On 10 September 2009, Mr De Haas submitted a claim for impairment benefits pursuant to s 98C and s 98E of the Act. His injury was described as "aggravation of lower back".

12 Once Mr De Haas had submitted his claim, Alcoa was obliged to obtain a medical assessment of Mr De Haas' impairment and so on 11 January 2010, he was seen by Mr Keith Elsner, orthopaedic surgeon.

13 On 18 January 2010, Mr Elsner provided two separate opinions to Alcoa's solicitors concerning Mr De Haas' back condition. The more substantive medical report detailed Mr De Haas' medical history, examination, investigations and provided an opinion. The second report provided an assessment in accordance with the Guides. He concluded that there was a 5% whole person impairment.

14 On 29 January 2010, Mr Elsner, having been asked to consider the question of apportionment by Alcoa's solicitors, attributed 15% of his current level of impairment to the compensable injury (the equivalent of a whole person impairment of 0.75% (i.e.15% of 5%)).

15 On 9 February 2010 and pursuant to s 104B(2), Alcoa wrote to Mr De Haas and his solicitors advising that it accepted liability for the lower back injury and that it assessed his whole person physical impairment at 0.75%. This meant that Mr De Haas had no entitlement to lump sum compensation.

16 On 18 February 2010, Mr De Haas disputed Alcoa's decision in respect of the impairment assessment (he accepted the liability determination).

17 On 12 March 2010 as required by s 104B(9) of the Act, Alcoa referred two medical questions to the Panel for opinion. Each mirrored the requirements of s 104B(9)(a) and (b).

18 In the letter of referral of 12 March 2010, Alcoa described the issues and reasons for referral as follows:

ISSUES AND REASONS FOR REFERRAL

The Worker lodged a Section 98C/E claim in respect of an aggravation of a lower back injury on 5 August 2008. Liability was accepted for a lower back injury sustained on 5 August 2008.

The Worker was examined by Mr Keith Elsner, orthopaedic surgeon, on 11 January 2010. Mr Elsner assessed the Worker as suffering a 0.75% whole person impairment in relation to the accepted injury.

On 9 February 2010, a Notice of Entitlement was issued to the Worker on behalf of Alcoa Australia Rolled Products based upon the assessment of Mr Elsner. The Worker has accepted the liability determination but disputed the assessment of his physical impairment.

A large amount of documentation was attached to the referral; details were set out in a schedule which can be summarised as follows:

(a) four Accident Incident Reports relating to the minor back incidents in 1990, 1991, 1993 and 1996;

(b) the claim for compensation in relation to the May 1999 injury;

(c) nine medical reports relating to the May 1999 injury produced by medical practitioners between October 1999 and April 2007. Amongst those reports were the reports of three orthopaedic surgeons;

(d) a variety of reports of investigations of Mr De Haas' lumbar spine, including CT scans, a nuclear bone scan, a medial branch investigation and lumbar discography, obtained between July 1999 and July 2005.

(e) reports of medical practitioners and investigations from August 2008 to January 2010; and

19 I will not descend into the detail of the contents of the medical practitioners' reports, save to note the following:

(a) the various injuries sustained by Mr De Haas prior to May 1999 had not led to any ongoing permanent impairment;

(b) the May 1999 injury was to the low back and was productive of ongoing impairment and loss of function;

(c) the May 1999 injury was managed by a general practitioner with a referral to two orthopaedic surgeons and a wide range of therapies;

(d) all of the doctors diagnosed the May 1999 injury as being one to the lower back; some described it as an internal disc disarrangement at L4/5.[7] Others described it as multi-level lumbar disc degeneration;[8]

(e) the medical opinions concerning the May 1999 injury from 2002 onwards accepted the existence of a permanent lower back injury which impaired Mr De Haas' function and required him to work on light duties;[9]

(f) a number of the medical practitioners who examined Mr De Haas subsequent to August 2008 regarded the compensable injury as producing an exacerbation of his pre-existing symptoms.[10]

20 On 7 April 2010, the two members of the Medical Panel examined Mr De Haas.

21 On 22 July 2010, the Medical Panel forwarded its Certificate of Opinion (dated 9 July 2010) and its Reasons for Opinion (dated 9 July 2010). It concluded that Mr De Haas had a 5% whole person impairment. I will set out its reasoning later.

22 On 25 August 2010, Alcoa issued an originating motion seeking judicial review of the Medical Panel's opinion.

23 The originating motion, in essence, asserted two grounds for complaint namely:

(a) that the impairment assessment of Mr De Haas was carried out wrongly; in contradiction of s 91(7)(c) of the Act and of the provisions of the AMA Guides and amounted to jurisdictional error; and

(b) that there was a delay in the Medical Panel delivering its opinion and reasons, after its examination of the worker and this in some way negated the decision reached by the Panel.

24 On 9 March 2011, Alcoa's solicitors advised Mr De Haas' solicitors that it proposed to seek leave to amend the originating motion to add a new ground asserting, in effect, that the Panel's written statement of reasons was inadequate.

25 A barrage of correspondence ensued with the end result that on 18 May 2011, Mr De Haas' solicitors advised Alcoa's solicitors that it was conceded that the reasons of the Panel were inadequate and that the questions should be remitted to the Panel for further consideration.

26 Further salvos were then exchanged by the parties as to what was to happen to the originating motion. Mr De Haas' solicitors contending that, given the concession made, the matter should be sent back to a medical panel, and that there was no utility in the Court determining the application. Alcoa asserted that the manner in which the Panel approached impairment assessment was misconceived and in all likelihood this error would be repeated unless there was guidance from the Court.

27 On 3 June 2011, I heard argument from the parties as to the disposition of the proceeding. The end result was that Alcoa abandoned the delay point and sought that I deal solely with the impairment assessment point. After some discussion, Alcoa agreed to pay Mr De Haas' costs on a party/party basis from 9 March 2011, assuming that I determine the impairment assessment issue. This struck me as a realistic and sensible proposal, given that there is force in Alcoa's submission that without some guidance on the question, this Panel (and perhaps others) may fall into error.

28 The solicitor for the Panel and the Convenor attended this hearing. He provided considerable assistance as to the process adopted by the Convenor and medical panels. He also confirmed that the Panel and the Convenor adopted a Hardiman position in relation to the determination of the impairment assessment issue. Mr De Haas was, therefore, the contradictor of Alcoa's originating motion.

29 On 9 June 2011, I heard argument from counsel for Alcoa and Mr De Haas concerning:

(a) whether the Panel in its application of the Act and/or the Guides had fallen into jurisdictional error;

(b) whether the Panel's analysis of the evidence, and in particular the report of Dr Troy, amounted to jurisdictional error.

30 Mr De Haas made a claim for compensation pursuant to s 98C and s 98E of the Act. A calculation of compensation under s 98C is dependent upon an evaluation of a whole person impairment in accordance with the Guides, but subject to any statutory modification. In particular, s 98C(1) provides:

A worker who suffers an injury which entitled the worker to compensation is, in respect of an injury resulting in permanent impairment as assessed in accordance with section 91, entitled to compensation for non-economic loss calculated in accordance with this section.

31 Before I turn to the critical section, s 91, I should briefly mention s 98E. It is headed "No disadvantage - compensation table" and provides for minimum compensation payable where "total loss" has been determined. There was no issue that Mr De Haas did not have an entitlement under s 98E.

32 Section 91 is headed "Assessment of impairment". In effect, it sets out the method by which a Panel carries out the task of assessing the level of impairment. The provisions relevant to its determination are:

(1) In this Part, a reference to the assessment of a degree of impairment in accordance with this section is a reference to an assessment-

(a) made in accordance with-

(i) the A.M.A Guides as applicable subject to subsections (1A) and (1B); or

(ia) the A.M.A Guides as applicable subject to subsections (1A) and (1B) and guidelines in accordance with subsection (6), (6A) or (6B); or

(ii) methods prescribed for the purposes of this section- and in accordance with operational guidelines (if any) as to the use of those Guides or methods issued by the Minister; and

(b) if the Minister has approved a training course in the application of those Guides or methods, made by a medical practitioner who has successfully completed such a training course.

(1A) Despite anything to the contrary in the A.M.A Guides, an assessment under subsection (1) of the degree of impairment resulting from an injury must be made-

(a) after the injury has stabilised; and

(b) subject to subsection (7), based on the worker's current impairment as at the date of the assessment, including any changes in the signs and symptoms following any medical or surgical treatment undergone by the worker in respect of the injury.

...

(7AA) For the purposes of section 98C(2A)(a)(ii) and (iii), assessments of spinal impairment are to specify the whole person values derived in accordance with section 3.3 of Chapter 3 of the A.M.A. Guides.

For the purposes of section 98C-

(a) impairments other than psychiatric impairments resulting from injuries which arose out of the same incident or occurred on the same date are to be assessed together using the combination tables in the A.M.A. Guides;

(b) if a worker presents for assessment in relation to injuries which occurred on different dates, the impairments are to be assessed chronologically by date of injury;

(c) impairments from unrelated injuries or causes are to be disregarded in making an assessment;

(d) assessments are to specify the whole person values for each chapter of the A.M.A. Guides used in the assessment.

33 The Fourth Edition of the Guides was published in June 1993. In the foreword, the following is said:

The Fourth Edition continues to convey several basic principles. A key tenet is that the book applies only to permanent impairments, which are defined as adverse conditions that are stable and unlikely to change. Evaluating the magnitude of these impairments is in the purview of the physician, while determining disability is usually not the physician's responsibility. This edition emphasizes that impairment percentages derived by using Guides criteria represent estimates rather than precise determinations. Permanent impairments are evaluated in terms of how they affect the patient's daily activities, and this edition recognizes that one's occupation constitutes part of his or her daily activities.

The purpose of the Guides is to provide standard protocols and criteria for estimating the degree of permanent impairment.

34 Section 1.3 of the Guides reads as follows: the Guides 'do not and cannot provide answers about every type and degree of impairment' because, among other things, 'the field of medicine and medical practice is characterized by constant change in understanding disease and its manifestations, diagnosis, and treatment'.

Section 1.7 then states:

[e]ven though rating or estimating impairments cannot be totally objective, use of the Guides increases objectivity and enables physicians to evaluate and report medical impairment in a standardized manner, so that reports from different observers are more likely to be comparable in content and completeness.

35 Chapter 2 of the Guides deals with records and reports.

36 Evaluating the permanent impairment of the lumbrosacral spine is dealt with in chapter three. The Guides provide for two models for evaluating the impairment, namely an "injury model" entitled the Diagnosis-Related Estimates (DREs) which are referable to a series of criteria set out in the Guides and the Range of Motion Model (ROM).

37 The Guides require the ROM to be used only if the DRE is not applicable. In this case, the Panel considered that Table 72 was the appropriate DRE table. It reads as follows:

% impairment of

the whole person

Minor impairment: clinical signs of lumbar injury are present without radiculopathy or loss of motion segment integrity

Radiculopathy: evidence of radiculopathy is present

Loss of motion segment integrity: criteria for this condition are described in Section 3.3b, p.95

Radiculopathy and loss of motion segment integrity

Cauda equine-like syndrome without bowel or bladder impairment

Cauda equine syndrome with bowel or bladder impairment

38 Chapter 3.3 deals with the spine and the following statements are relevant here:

Symptoms related to the back and the spine are among the most common of adults' everyday complaints. In most instances, people accept and tolerate the symptoms as one of the consequences of growing older, making minor concessions in activity. When the symptoms follow an injury or illness, sorting out the injury or illness component from the age-related component may be difficult or impossible.

...

The evaluator assessing the spine should use the Injury Model, if the patient's condition is one of those listed in Table 70 (p 108). That model, for instance, would be applicable to a patient with a herniated lumbar disk and evidence of nerve root irritation. If none of the eight categories of the Injury Model is applicable, then the evaluator should use the Range of Motion Model.

39 Under the heading "Specific Procedures and Directions" in Chapter Three the following matters are addressed:

(3) selecting the region that is primarily involved: lumbosacral, thoracolumbar or cervicothoracic spine region;

(5) determine the spine-related whole person impairment using the impairment table referable to that region;

(6) if a patient cannot be placed into an impairment category, then use the ROM;

(7) the consideration of combined impairment assessments if long-tract signs are present;

(8) the use of the combined values chart if more than one spine region is impaired, and significantly here;

(9) for the purposes of this case the following clause is important and is set out verbatim:

from historical information and previously compiled medical data, determine if there was a preexisting impairment. If the previously compiled data can be verified as being accurate, they may be used in apportionment (see Glossary). The percent based on the previous findings would be subtracted from the percent based on the current findings;[11]

(10) Use of a standard report form for the evaluation of the spinal disability.

40 Apportionment is defined in the Glossary as follows:

This is an estimate of the degree to which each of various occupational or nonoccupational factors may have caused or contributed to a particular impairment. For each alleged factor, two criteria must be met:

The alleged factor could have caused or contributed to the impairment, which is a medical determination (see "causation," p.316)
In the case in question, the factor did cause or contribute to the impairment, which usually is a nonmedical determination. The physician's analysis and explanation of causation is significant.

41 The questions referred to the Medical Panel and its answers were as follows:

Question 1

What is the Worker's degree of permanent whole person impairment resulting from the accepted injury as assessed in accordance with section 91 [of the Act] and is the impairment permanent?

In the Panel's opinion the worker has a 5% whole person impairment resulting from the accepted lower back injury when assessed in accordance with Section 91 for the purposes of Section 98C and 134AB(3) & (15) of the Act. The degree of impairment is permanent.

The degree of impairment includes a 5% whole person impairment assessed in accordance with Chapter Three of the AMA Guides to the Evaluation of Permanent Impairment.

Question 2

Does the worker have an accepted injury which has resulted in a total loss injury mentioned in the table section 98E(1)?

No

42 The members of the Panel interviewed and examined Mr De Haas on 7 April 2010. Mr De Haas told the Panel of four separate incidents prior to the compensable injury:

(d) on 29 May 1999, when he again suffered severe lower back pain. This condition was also treated conservatively (physiotherapy, hydrotherapy and the use of a lumbar brace) but he was transferred to laboratory duties rather than labouring tasks. He told the Panel that a discogram was carried out in March 2002 which apparently evoked significant pain at L4/5 and L5/S1. He continued with conservative management of his back and continued to work in the laboratory.

43 The subject incident occurred on 5 August 2008. Mr De Haas told the Panel that he "slipped on a propenol spill and fell onto his back and suffered the recurrence of severe low back pain". He said that he had not worked since that incident and continued to suffer ongoing back pain which radiated into his right buttock and down the back of the right thigh.

44 The members of the Panel then carried out an examination of Mr De Haas and examined numerous sets of radiology dating from February 1999.

that the worker is suffering from restricted function of the lumbrosacral spine following an aggravation of pre-existing soft tissue injury with disc degeneration relevant to the accepted low back injury.

It also concluded that the condition had stabilised.

46 The Panel assessed Mr De Haas' impairment in the following way:

The Panel considered the DRE Impairment Category Differentiators in Table 71 of Chapter Three and noted that the lumbosacral spine displayed clinical signs of lumbar injury without clinical signs of radiculopathy. The Panel therefore concluded that the appropriate category for the lumbosacral spine is DRE II pursuant to Table 72 of Chapter Three, resulting in 5% whole person impairment. The Panel considered that the degree of impairment is permanent in view of the nature of the back condition and the length of the history.

As the impairment attributable to the lumbar spine could be assessed in accordance with the Diagnosis-Related Estimates (DRE) Model, the use of the Range of Motion Model is not appropriate.

The Panel noted the submissions made on behalf of the worker dated 19 April 2010 and the contents of the letter from Sparke Helmore dated 12 May 2010.

47 The Panel concluded that the appropriate assessment was of 5% whole person impairment which it said accurately reflected the DRE category when assessed in accordance with the instructions in the Guides.

48 It also stated that the 5% whole person impairment was applicable for the purposes of s 98C and ss 134AB(3) and (15) of the Act and that the degree of impairment was permanent, and that there was no total loss or loss of use injury when assessed pursuant to s 98E of the Act.

49 In practical terms, if the Panel's opinion was implemented, the result was to provide Mr De Haas with the benefit in the form of a s 98C payment of $11,275.00. No amount was payable under s 98E.

50 I now return to the reasons of the Panel in relation to its evaluation of any pre-existing injury or impairment. As I have noted, the issue had been canvassed by Alcoa in its submissions to the Panel which ultimately concluded that it was not required to take into account any pre-existing impairment, reasoning as follows:

The Panel also considered the submissions made on behalf of the self-insurer (undated) and provided under covering letter of the self-insurer's lawyers dated 17 March 2010 together with a copy of a decision of His Honour Kyrou J in H J Heinz Company Australia Ltd & Or v Kotzman & Ors [2009] VSC 311.

The Panel notes paragraph 5.4 of the self-insurer's submission to the Panel states "...that the AMA Guides also requires that an estimate is made of the impairment resulting from the unrelated complaints and that this estimate is then deducted from the present impairment in order to account for the effects of the pre-existing impairment."

In this respect, the Panel considered clause 9 of Section 3.3f Specific Procedures and Directions in Chapter Three of the Guides which states:

"From historical information and previously compiled medical data, determine if there was a pre-existing impairment. If the previously compiled data can be verified as being accurate, they may be used in apportionment (see Glossary). The percentage based on the previous findings would be subtracted from the percent based on the current findings."

The Panel assessed impairment resulting from the accepted back injury using the Diagnosis-Related Estimates (DRE), and although the Panel acknowledges that the worker has pre-existing lower lumbar degenerative changes and a history of back pain prior to the incident of 5 August 2008, it notes that there are no medical reports in the referral documenting any impairment assessment of the back conducted in accordance with the DRE as specified in the AMA 4 Guides for any back injuries prior to the accepted lower back injury on 5 August 2008.

The Panel further noted that the reports of Mr K Elsner dated 18 and 29 January 2010 wherein he assessed a DRE category II impairment of 5% and apportioned this impairment between pre-existing and unrelated conditions or injuries; and that although Mr Elsner used the DRE method to assess the worker's impairment resulting from the accepted back injury of with a designated injury date of 5 August 2008, the apportionment of impairment is not based upon medical evidence of any prior impairment assessments of the lower back being conducted in accordance with the DRE as specified by the AMA4 Guides.

The Panel considered it had no verifiable or complete evidence of the degree of impairment of the lumbar spine attributable to any pre-existing condition or injury as required by the Guides.

The Panel has therefore assessed the impairment resulting from the accepted lower back injury in accordance with the Diagnosis Related Estimates (DRE) method and as such has assessed impairment resulting only from the accepted lower back injury occurring on the designated injury date of 5 August 2008. Therefore it is inappropriate for the Panel to consider whether there should or should not be an apportionment of the degree of impairment for episodes of lower back pain since 1990.

51 The key findings of the Panel can be summarised as follows:

(a) The compensable injury resulted in Mr De Haas sustaining an aggravation of a pre-existing injury to his lower back;

(b) No allowance in its assessment of Mr De Haas' current impairment was made for any pre-existing component of that impairment;

(d) The assessment impairment using the DRE model was 5% of the whole person.

The relationship between the Act and the Guides

52 The statutory genesis for the application of the Guides is s 91 of the Act which is, as has been seen, directed towards the assessment of impairment. The legislative aim seems clear. Where a claim is made by a worker for lump sum compensation (be it under s 98C or s 98E), the impairment assessment is the essential ingredient in the calculation of a worker's entitlement to compensation (if any). Assessments of impairment and the degree of impairment must be carried out in accordance with the Guides, as modified by the Act. Where there is any inconsistency, the Act must prevail.

53 This week the High Court in Maurice Blackburn Cashman v Brown said:

Section 91 prescribed how the assessment of a degree of impairment of a worker was to be made. In most cases the assessment was to be made in accordance with a specified edition of the American Medical Association's Guides to the Evaluation of Permanent Impairment ("the AMA Guides") as modified by the Act and any regulations made under the Act. In the case of psychiatric impairment the AMA Guides were modified pursuant to s 91(6), but the detail of the modifications made need not be noticed. [12]

54 In Taylor v Mountain Pine Furniture Pty Ltd, Bongiorno J said of the application of the Guides:

The Accident Compensation Act 1985 requires the Medical Panel to assess impairment using the AMA Guides. This attempt by the legislature to introduce some degree of objectivity into the assessment of impairment for compensation purposes represents a significant application of the rule of law in an area where one of the fundamental principles of justice - that like cases should be treated alike - has particular importance. Nothing would discredit a compensation system more quickly than the idiosyncratic application of criteria to the determination of an injured person's impairment and hence their entitlement to compensation at a particular level. Although the efficacy of the application of the AMA Guides to achieve a just result for injured people may be debated, as the law stands they must be applied regardless of any personal view of the assessor called upon to make the assessment. Whilst the interpretation of medical matters referred to in the Guides and the exercise of clinical judgment must be left to the medical examiner who is applying them, it is not within that medical examiner's remit to ignore an express direction contained in the Guides as to how a particular objective fact is to be treated in making an assessment. Thus it was not within the power of the Medical Panel in this case to reach its assessment of Mr Taylor's impairment after taking into account the effects of surgery performed on his cervical spine.[13]

55 In H J Heinz Company Limited v Kotzman, Kyrou J carefully set out general principles for interpreting the Guides which I adopt:

The interpretation of the Guides is a question of law. The determination of a level of impairment is a question of fact.

It has been said that to the extent that an Act requires determinations of impairment to be made in accordance with the Guides, the Guides has the force of law and is a legislative document.

However, the Guides is, as its title suggests, a guide. It was written by expert medical practitioners and not by statutory draftspeople, and should not be overlaid with legalistic - or a lawyer's precise - interpretation. It is of paramount importance to be faithful to the Guides' plain words. The Guides should not be interpreted as if it was a statute.

The use of the Guides is designed to promote precision, certainty and consistency. Its purpose is to make as objective as possible the process of estimating impairment by reference to sufficient medical and non-medical information to justify the estimate.

If there is any inconsistency between the AC Act and the Guides, the AC Act will prevail. If there is any inconsistency between the text in the Guides and an example which seeks to illustrate what is said in the text, the text will prevail.[14] (citations omitted)

56 In H J Heinz Kyrou J went on to say as to the use of the Guides by a Medical Panel:

In order for a medical Panel to assess impairment 'in accordance with the [Guides]' as required by s 91 of the AC Act, it must act in conformity with the Guides. This means that it must apply the methodologies, processes and criteria set out in the Guides for the relevant condition, body part or system and adhere to any minimum or maximum values set out in the Guides for that condition, body part or system. Where the Guides contains a table that is applicable to a condition, body part or system, an assessment based on that table will not be in accordance with the Guides unless the categories, descriptions, criteria, ranges, adjustments and other elements of the table that are relevant to the condition, body part or system are adhered to and complied with.

Some provisions of the Guides, including some tables, provide alternative methodologies or set out ranges, and require the exercise of professional judgment in selecting the most appropriate methodology or in determining where in the range the relevant condition or body part falls. However, the Guides does not permit the exercise of professional judgment at large, unconstrained by the specific requirements of each methodology or table that it sets out. Once a particular methodology or table is selected, its requirements, including any limitations, must be applied in the manner set out by the Guides even if the outcome may appear sub-optimal. This is so because the role conferred by the AC Act on a Panel is not to arrive at a correct or fair assessment, but rather to arrive at an assessment that is the product of the application of the Guides.

The Guides itself makes it clear that the protocols and methodologies it sets out are intended to be standardised processes which produce similar outcomes irrespective of who conducts the assessment. In particular, the statement in s 1.2 of the Guides which I have set out in [11] highlights that in order for an assessment to be in accordance with the Guides, the Panel must follow the protocols and tables in the Guides.[15]

57 I would add (and this is clear from Kyrou J's earlier remarks), in relation to the last sentence and relevant to this case that the protocols and tables in the Guides must be followed but only to the point that they are consistent with the provisions of the Act.

58 Several parts of s 91 are intended to clarify, modify, or restrict the use of the Guides in assessing the relevant impairment assessment.

59 At first glance s 91(7)(a) may convey two possible meanings. One, that in reaching the impairment assessment the requirement to disregard "an unrelated injury or cause" means the Panel simply focuses on the current impairment and ignores any other contributing factor - such as a prior or subsequent injury. Such an interpretation would result in a windfall to the worker with compensation being paid for a degree of impairment that had no connection with the compensable injury. Indeed this construction was not suggested by counsel for Mr De Haas.

60 The second and correct meaning, in my view, is that, in making an impairment assessment, any impairment from an unrelated injury or cause is disregarded so as to ensure that the impairment assessment relates solely to that resulting from the compensable injury.

61 It was not suggested by counsel for Mr De Haas that his pre-existing impairment was not due to an "unrelated injury or cause". The definition of "unrelated" in the Oxford English Dictionary 2nd edition is, not unsurprisingly: "not standing in relationship or connexion". Accordingly, an unrelated injury means a separate or discrete injury not connected to the compensable injury - be it to the same part of the body as that affected by the compensable injury or to a separate part.

62 Mr De Haas' pre-existing back condition resulting from the May 1999 injury is an unrelated injury and therefore its contribution to the current impairment of Mr De Haas must be put to one side. Indeed, whether the injury happened at work or at home is irrelevant. It is the existence of an impairment from a non-related injury or cause which is of importance.

63 In Millane v Hacker & Greenberg, Balmford J considered the decision of a Medical Panel which had found a psychiatric impairment of 50% but also concluded that only 20% of that impairment resulted from the injury which was the subject of the worker's claim for compensation. The worker attacked the manner in which the Panel had applied s 91(7)(c). Her Honour concluded that the section meant what it said - that the previous psychiatric symptoms not related to the subject injury were to be disregarded. Her Honour said as follows:

The assessment is to be "in accordance with section 91" and section 91(7)(c) requires that "impairments from unrelated injuries or causes are to be disregarded in making an assessment". The question is, "unrelated to what?" It would appear to me that that provision is concerned with injuries or causes which are unrelated to the injury the results of which are being assessed; that is, the injury in respect of which the claim was made. The logic of that provision is thus that compensation, in respect of a particular claim under section 98C, is, by virtue of section 91(7)(c), to be paid only in respect of the results of the employment out of or in the course of which the injury sought to be compensated arose and which was a significant contributing factor to that injury, in terms of section 82(1). In particular, I can see no other meaning to be given to the expression "impairments from unrelated causes". The cause of an impairment must be related to that impairment. The expression cannot be intended to mean "causes of an impairment which are unrelated to that impairment". Nor can it be intended to mean "causes of an impairment of the worker which are unrelated to the worker". The applicant's previous history of psychiatric illness was related to the applicant and related to her psychiatric condition, but was not related to the injury of 12 February 1999. Thus, in making the assessment of the results of the 1999 injury in terms of the degree of the applicant's impairment, any impairment resulting from that previous history is to be disregarded.[16]

64 Her Honour concluded that it was open to the Panel to reach the conclusion that it did and to apportion psychiatric impairment as it did.

65 Subsequent to Millane, Kyrou J in Vegco v Gibbons[17] was required to determine whether a Medical Panel, in determining a claim under s 98C and s 98E of the Act, had wrongly ignored a subsequent injury which had exacerbated the compensable injury, the subject of the claim. The Panel concluded that the worker had a 15% whole person impairment. Kyrou J upheld the employer's contention that the Panel had fallen into jurisdictional error by failing to take into account the impairment related to the aggravating injury. His Honour said as follows:

Section 91(7)(c) of the AC Act contains a clear legislative direction to medical Panels to disregard impairments from unrelated injuries or causes in making their assessment. It follows that if a medical panel takes into account an impairment from unrelated injuries or causes in making its assessment, it will have taken into account a consideration it is bound not to take into account.

Section 91(7)(c) of the AC Act required the medical panel to disregard any impairment to Mr Gibbs from unrelated injuries or causes. Any aggravation to the injuries sustained by Mr Gibbs from his employment with Vegco arising from his subsequent employment in Broome constituted an impairment from unrelated injuries or causes within the meaning of s 91(7)(c). It is clear from the medical panel's reasons that it did not disregard the impairment Mr Gibbs suffered from the unrelated Broome injury in making its assessment and that it considered that impairment as material. It thus failed to comply with s 91(7)(c) of the AC Act. In failing to disregard such impairment, the panel took into account a consideration it was bound to ignore and therefore made a jurisdictional error. [18]

66 Both these decisions demonstrate that the statutory command to the Panel is to evaluate only the impairment related to the compensable injury and to put to one side any impairment produced by non-related injuries or causes. Accordingly, if the evidence establishes a pre-existing impairment from an unrelated injury or cause, then the Panel is obliged to consider that impairment and to ensure its estimate of the current impairment disregards any pre-existing impairment (or for that matter, any subsequent impairment flowing from an unrelated injury or cause).

67 The Panel, in determining what matters it is to disregard, is not bound to apply the Guides. I do not accept the argument put on behalf of Mr De Haas that the evaluation of the unrelated impairment must be carried out applying the tests laid out in the Guides.

68 First, s 91(7)(c) does not mandate that such an assessment be carried out in accordance with the Guides. If the legislature had wished to impose such a requirement then it would have said so, as it did in s 91(7)(a) and s 91(7)(d) as well as in a number of the other provisions of s 91.

69 Secondly, to require an assessment would be patently unreal where the Panel was required to disregard an impairment of another body part. It would be a nonsense to require the Panel to utilise the Guides to conduct an assessment of the impairment of, say, a leg injury when the compensable injury was to the back. The obligation on the Panel under the Act is to disregard the unrelated impairment: it is not bound to carry out this exercise by a slavish application of the Guides (in particular clause 9).

70 Indeed, there is a potential tension between the manner in which the Guides in clause 9 deal with a pre-existing impairment and the manner in which the Act requires such an impairment to be disregarded. The Guides mandate a two step approach in making an apportionment between the pre-existing contribution and that of the subject injury. First an assessment is to be made of the pre-existing impairment. It requires such a determination to be made from historical information and previously compiled medical data which "can be verified as being accurate". Second, it is implicit from the example that an assessment of the pre-existing impairment then be subtracted from that of the current impairment assessment.

71 In addition, clause 9 states that the determination of the pre-existing impairment "may be used in apportionment".

72 The Act, however, does not permit any discretionary evaluation. The previous impairment from an unrelated injury or cause must be disregarded. Nor does the Act insist upon the historical information and previously compiled medical data being "verified as being accurate". Rather, it obliges the Panel to evaluate the unrelated impairment on the material presented to it.

73 In engaging in its statutory task the Panel must do the best it can to evaluate the extent to which impairment from the unrelated injury or cause is playing a part in the worker's current impairment.[19] If the evidence enables it to determine the extent of the present impairment and that of the pre-existing impairment, then it must make allowance for the pre-existing impairment.

74 It follows that the Panel is not obliged to follow the two step process set out in clause 9. As I have already said, it has no discretion in relation to ignoring the evidence of a pre-existing impairment. It may, of course, be that the two step test laid out in the clause can be utilised and is an appropriate way by which to comply with the provisions of the Act, such as in assessing the pre-existing impairment and deducting it from the current impairment (for example, a current assessment of impairment of 10% with an assessment of an unrelated injury impairment of 5% could lead to an apportionment and result in a 5% impairment related to the subject injury). But on the other hand, there may also be cases where the evidence is insufficient to satisfy the conditions of clause 9 but is sufficient to enable the Panel to apply the provisions of the Act and disregard any relevant pre-existing impairment. For instance, the Panel may be able to carry out an apportionment as Mr Elsner did in determining the impairment assessment related to the compensable injury.

75 Alternatively, it may be that the Panel using its collective expertise and knowledge simply attributes an estimate of the compensable injury related impairment after taking into account (and disregarding) the non-related contribution to the impairment. The Panel's reasons, of course, should reveal how it has approached the task.

76 In summary, the Act and the Guides require the following approach where there is evidence of a pre-existing impairment of the same body part:

(a) if the evidence is sufficient to demonstrate the existence of a pre-existing impairment from an unrelated injury or cause, then the Panel must, as best it can, determine the extent of that impairment so it can be disregarded and evaluate the impairment related solely to the compensable injury;

(b) the Panel is required to apply s 91(7)(c); this does not necessitate the application of clause 9 in evaluating the pre-existing impairment. Indeed, in some cases, to utilise the clause 9 criteria (and its inbuilt evidentiary requirements) would result in error; and

(c) in an appropriate case, the two-step approach provided for in clause 9 may be appropriate, provided that in conducting the evaluation the assessment complies with the obligation imposed by the Act. There is no discretion in the Panel (as clause 9 would seem to convey) to ignore any pre-existing impairment.

77 It is well established that a Medical Panel is amenable to judicial review and jurisdictional error may lead to its opinion being quashed.[20]

78 A Medical Panel may fall into jurisdictional error in a number of ways: [21]

(a) it may misconstrue the relevant statute and thus misconceive the nature of the function which it is performing; or

(b) it may identify a wrong issue or ask itself a wrong question; or

(c) it may ignore a matter it is bound to take into account (or alternatively have regard to a matter it is bound to ignore) and such a failure materially affects its decision.

Was the Panel's approach to the question of impairment consistent with its statutory obligation?

79 The Panel had received submissions from Alcoa as to the application of the Act which it specifically noted. Alcoa referred to the necessity for the Panel to disregard the pre-existing impairment which it contended was due to an unrelated injury. However, in the Panel's reasons, notwithstanding reference to the Alcoa submissions, there is no specific mention of the application of s 91(7)(c). Rather, as its reasons demonstrate, the Panel chose to apply clause 9 and ultimately determined that it had no "verifiable or complete evidence of a degree of impairment of the lumbar spine attributable to any pre-existing condition or injury". Putting to one side the fact that the Panel had a wealth of information concerning the pre-existing impairment to the lumbar spine, its approach to the issue was wrong.

80 I do not accept the submission on behalf of Mr De Haas that there was, in effect, no evidence of impairment prior to the compensable injury - only evidence of injury. Why, one might ask rhetorically, was Mr De Haas performing light duties if he was not suffering from an impairment consequent upon the May 1999 injury. On his own account to the Panel (putting aside the contents of the medical reports) he was impaired in his activities prior to the compensable injury.

81 I also reject the submission on behalf of Mr De Haas that the assessment of the pre-existing impairment necessitated the use of Chapter 2 of the Guides. The Act, as I have said, establishes the nature of the obligation in relation to the consideration of pre-existing impairment. Moreover, Chapter 2 deals with Records and Reports and the methods of evaluating subject injury impairment assessments. It is a guide to the carrying out of medical assessment and impairment. The specific manner by which the Guides deals with apportionment is set out in clause 9.

82 For reasons I have endeavoured to set out, it was necessary for the Panel to apply the provisions of s 91(7)(c). The questions that it should have posed for itself were as follows:

(a) was there evidence of a pre-existing impairment due to an unrelated injury or cause?; and

(b) if yes, does the current impairment assessment disregard any contribution from the pre-existing impairment due to an unrelated injury or cause?

Or, to put it another way, has the Panel evaluated the impairment of Mr De Haas by reference solely to the compensable injury?

83 The Panel did not have a discretion to ignore the effect of the pre-existing impairment. It was required to take into account its contribution to Mr De Haas' current impairment. There was sufficient evidence available to it to make this assessment.

84 If it had posed for itself either of the questions I have identified in [82], then it was bound to direct its attention to the evidence relevant to the pre-existing impairment, including Mr De Haas' history, and the many medical reports related to his pre-existing condition and the related investigations.

85 Only then could it determine the question appropriately and fulfil its statutory obligation. By having recourse to clause 9 and referring, somewhat obliquely and without explanation to "no verifiable or complete evidence of the degree of impairment", it fell into error.

86 I should add that I reject the submission on behalf of Mr De Haas that Alcoa's attack on the Panel's determination is simply an attempt to re-agitate the factual basis of the Panel's impairment assessment. The essence of Alcoa's complaint is that the Panel did not apply the Act or the Guides as it should have and therefore fell into error.

87 In summary, the Panel failed to apply s 91(7)(c) to its determination and therefore posed for itself the wrong question. It was not obliged to consider the question of impairment by reference solely to the Guides, as it did. It misconstrued the requirements of the statute.

Did the Panel take into account all relevant material?

89 The primary issue here was whether the Panel took into account the evidence of Mr Troy who had seen Mr De Haas in May 2005.

90 Mr Troy produced a comprehensive report setting out the nature of Mr De Haas' condition, his history and his interpretation of the radiology.

91 The Panel at the commencement of its reasons asserted that it formed its opinion by reference to the documents described in the enclosures, which included the report of Mr Troy. However, it then went on to say that there were no medical reports in the referral documenting "any impairment assessment of the back conducted in accordance with the DRE as specified in the Guides".

92 In fact, Mr Troy had conducted just such an impairment assessment using the DRE as specified in the Guides. He had, using table 74 of the Guides, arrived at a 5% whole person impairment.

93 Mr Troy's diagnosis was of multiple level degenerative changes to the lumbar spine as identified by the discogram of 2002. He clearly made an impairment assessment of the same part of the spine which Mr De Haas alleged had been aggravated by the compensable injury. Both his impairment assessment and his evidence as to the nature of the 1999 injury and its effect upon Mr De Haas needed to be considered by the Panel. Notwithstanding its reference to its assessment of all the documentation, it is clear, I think, that it failed to consider the contents of Mr Troy's report.

94 I do not accept this submission made on behalf of Mr De Haas that the Panel must have excluded Mr Troy's opinion because it related to an impairment assessment carried out using table 74 rather than table 72 - the table used by the Panel. There is no mention in the Panel's reasons of any defect in Mr Troy's report owing to the use of table 74. Moreover, what the Panel was looking for (but said it could not find) was a DRE impairment assessment as specified by the Guides for any back injury prior to 5 August 2008 - which is exactly what was performed by Mr Troy. In any event, it will be seen that the description of impairment category II under table 72 and table 74 differ marginally. What was clear was that both the Panel and Mr Troy were looking at - and assessing - the same part of the lumbar spine which had been aggravated by the compensable injury. The other complaints made by Mr De Haas about Dr Troy's report are trivial and, more importantly, were not articulated by the Panel, which appears to have ignored his report.

95 I also reject the submission on behalf of Mr De Haas that the Panel reached its determination as to the degree of impairment "exclusively" by reference to the compensable injury. To the contrary, the Panel appear to have accepted the existence of a prior impairment but to have concluded that there was "no verifiable or complete evidence" of a pre-existing impairment for the purpose of an apportionment. For the reasons I have set out, this analysis was erroneous.

96 A further point should be made here given what I have said about the obligations of the Panel. It was not only required to consider Mr Troy's impairment assessment but also his diagnosis of Mr De Haas' back condition and the findings he made at the time of his examination. Mr Troy's evidence was significant in that he conducted an examination of Mr De Haas some six years after the 1999 injury when it could be confidently thought that Mr De Haas' condition had stabilised prior to the compensable injury. If the Panel had considered his evidence, it would have reinforced the other evidence marshalled by Alcoa demonstrating the existence of a pre-existing impairment which had to be disregarded by the Panel in making its impairment assessment.

97 The failure by the Panel to take into account Mr Troy's report was erroneous. It was patently relevant to its determination and consideration of the pre-existing impairment of Mr De Haas. On this ground, this decision should be quashed.

98 This ground of complaint concerning the reasons provided by a Medical Panel has been a fertile area for complaint and judicial analysis since the seminal decision of Masters v McCubbery.[22] Fortunately it is not necessary for me to consider the effect of the amendment to s 68(2) of the Act in the light of the Court of Appeal decision in Sherlock v Lloyd & ors[23] as the parties agreed that the Medical Panel's reasons were inadequate.

99 In my view, they were correct to do so. The Panel failed to explain why the material relevant to Mr De Haas pre-existing impairment was not sufficient to attract the operation of clause 9. Notwithstanding that there was a wealth of information concerning Mr De Haas' level of impairment prior to the compensable injury, including Dr Troy's report and assessment, no attempt was made to explain why the Panel declined to make an apportionment on that basis. This was a critical matter which should, even if briefly stated, have been explained.

100 As I have resolved this matter on the basis of jurisdictional error, it is not necessary to say anymore about this question.

101 Subject to hearing from counsel I propose to make the following orders:

(b) that the medical questions be remitted to a differently constituted Panel to be convened in accordance with the Act.

[3] "the Guides". Australian Medical Association Guides to the Evaluation of Permanent Impairment 4th edition

[4] Mr De Haas' account to Dr Elsner CB 153.

[9] Reports of Dr Horsley June 2002, CB 100, Mr Troy May 2005, CB 103, Mr Shannon January 2007, CB 112, Dr Carroll CB 116.

[10] E.g. Dr Davey CB 128, CB 134, Mr Elsner, CB 150.

[14] [2009] VSC 311, [24]-[28].

[16] [2003] VSC 72, 6-7 [11].

[19] In a similar way to the evaluation of loss by a trial judge on limited evidence, he or she must "do his or her best to quantify the loss": Wellington Shire Council v Steedman [2003] VSCA 115 [46]. See also State of New South Wales v Ross [2000] NSWCA 133; (2000) 54 NSWLR 536 [71], [87].

[21] Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24, 39-41; Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163, 179; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 [82]-[83]; Kirk v Industrial Court (NSW) (2010) 239 CLR 531 [72].

[23] [2010] VSCA 122. See also Abbott v Eptec Victoria Pty Ltd and Ors [2011] VSC 267.

Compensation Act 1985

At a glance

Court

Decision date

Before

Source

Judgment (195 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (5)