Stowe Australia Pty Ltd v Sara Melody Kelly  ACTCA 18 (10 May 2013)
This series of decisions, culminating in a decision of the full ACT Court of Appeal, relates to the interpretation of section 132 of the Workers Compensation Act 1951 (ACT) and clarifies the circumstances in which an insurer can reject a workers' compensation claim after being in receipt of the claim for more than 12 months.
The worker injured her left knee, initially in July 2007 and then on 26 October 2007 when exiting a work van in the course of her employment as an apprentice electrician. The first injury was reported to the employer, but no claim for workers' compensation was made. Workers' compensation claim forms were submitted for the second injury on 31 January 2008, after delay due to the worker's belief that the injury would improve. The claim was accepted and the insurer made weekly incapacity and medical expense payments. Medical treatment expenses were paid until March 2009.
On 19 July 2010, we filed an application at the ACT Magistrates Court seeking leave for the insurer to reject the claim pursuant to section 132 of the Act.
ACT Magistrates Court decision (unreported)
Magistrate Lalor heard the insurer's application to reject the claim on 9 February 2011.
The worker's counsel submitted that as the insurer was not making payments of weekly incapacity payments or medical expenses there were no "live claims" for the insurer to reject, and accordingly, there was nothing for the Court to make a determination on.
His Honour accepted the submissions of the worker's counsel and found that the worker had a continuing right to submit "claims" in the future, if necessary. The insurer's application to reject the "claim" was rejected.
The effect of the submissions of the worker's counsel, and of His Honour's decision, was that s 132 of the Act was that "claim for compensation" should be interpreted as meaning a claim for a specific payment, such as an incapacity payment or treatment expense. Accordingly, if no "claim" was on foot, there was nothing for a court to determine under s 195 of the Act and applications of the type filed by the insurer were doomed.
ACT Supreme Court decision1
Master Harper heard the insurer's appeal on 22 August 2011.
It was noted that the word "claim" is not defined in the Act. It was accepted that Part 6.2 of the Act did apply to "entire claims", rather than simply individual claims for an incapacity payment or medical expense.
However, Master Harper accepted that as there were no payments being made by the insurer, it was not seeking leave to reject the claim "ab initio" or to stop ongoing weekly incapacity payments to a worker who had, for example, recovered from an injury. The insurer was instead seeking to leave to reject possible future claims for incapacity payments or medical expenses and "close its file". An application of this type was found to be "misconceived and bound to fail" and the court ordered the insurer to pay the worker's costs.
Master Harper found that, theoretically, an insurer could never reach a point in which it could be sure its workers' compensation liability was finalised if a worker could continue proving that the requirement for incapacity payments and medical treatment remained causally related to the original injury, unless there was a settlement or common law judgment in favour of the worker.
ACT Court of Appeal decision2
The full Court of Appeal, consisting of Burns, Cowdroy JJ and Neild AJ, heard the insurer's further appeal on 18 and 19 February 2013.
The Court accepted that the word "claim" in s 132 of the Act referred to an entire claim for workers' compensation and not simply individual claims for incapacity payments or medical expenses. The Court found that ss 130, 131 and 132 of the Act, relating to the rejection of a workers' compensation claim, were designed to deal with a "wide range of factual circumstances" in which an insurer may seek to reject a claim. It is not necessary for weekly incapacity payments to be ongoing in order for an insurer to "stop" payments.
The Court found that workers would have an ongoing right to workers' compensation under s 4 of the Act in circumstances in which they could show an aggravation, acceleration or recurrence of the original injury. The Court found that insurers should be able to reject claims under s 132, even if there are no "live claims" being made, as this would provide a greater degree of certainty and reduction in the cost of managing claims.
The implications for insurers of these decisions are succinctly summarised by the full Court of Appeal and provide certainty that a claim has been finalised and reduce the ongoing costs of managing these types of claims by enabling applications for rejection of claims under s 132 of the Act.
In practice, it has always been very common for insurers to seek to reject claims under s 132 of the Act, even if weekly incapacity payments and medical expenses have not been made for a considerable period as a means of finalising claims at the earliest opportunity and in the most cost-effective way. With this judgment, insurers have resoundingly regained an unfettered right to seek to reject these types of claims.