This Letter was sent to 126 MPs and only one has actually responded and its
not Mr Holding either! It just goes to shows their concern about the injured
workers of Victoria.
Dear Ministers,
COMMON LAW INCLUSION
As you are all aware, “The Hanks Report” has been delivered to Mr Holding
and given the continual changes to the compensation scheme since 1985 and
in particular those applying to the operation of common law rights we the
Victorian Workers have the right to request that this Government consider
our complaints regarding any of the changes made by the Kennett Government,
the Bracks Government and the Brumby Government to the Accident
Compensation Act of Victoria.
BREACHES OF CRIMINAL CODE BY MINISTERS KENNETT & HALLAM -
INCLUDED WITH THE PROTECTION OF THE WHISTLEBLOWERS
PROTECTION ACT 2001
The Kennett government made claims for common law changes with a
crude and dishonest use of financial statistics.
In October 1997, shortly before abolishing common law rights for seriously
injured Victorian workers the then Minister for Finance and responsible
for the Workcover scheme, Roger Hallam, issued a press release which
provided reasons for the abolition of common law that essentially relied
on financial issues, and notions of “more equitable and fairer” treatment
for injured workers. It was claimed by Hallam and Kennett that
Workcover common law payments had increased from $17.9 million in
1995/96 to $139.7 million in 1996/97.
Mr Hallam claimed that common law claims constituted 20% of
Workcovers liabilities, yet less than 3% of injured workers received
common law settlements. He also claimed that lawyers were receiving
$100 million a year from Workcover and that this money would be
better off going to injured workers.
Not only were there ‘lies and faked Workcover statistics’, but Hallam’s
use of them in this way represented an attempt by the Kennett government
to portray criticism as merely an obscure debate between the government
and ‘greedy lawyers’ about money, not principle.
The figures utilised by the Kennett government drew on a false hump of
claims created by the Kennett Governments own amendments in 1992
and then they plotted a false growth of claims from a zero base also.
What was a natural and expected statistical phenomenon was portrayed
as an alarming and uncontrolled exponential growth in these claims.
Abolition of common law was portrayed as cost neutral and the proposal
as merely removing money from the pockets of lawyers to be returned
to injured workers, which it did not.
The above factors merged, with the now well documented inability of the
Workcover Authority to manage common law damages claims included an
inflexible approach to the management of claims; the exclusion of skilled
insurance staff and their conversion to mere ‘post boxes’ for claims; lack
of integration between common law and the rehabilitation and compensation
process generally; inconsistency of approach to serious injury applications
and common law claims owing to a high level reliance on a relatively large
number of defendant panel law firms; and the ‘infamous’ barristers strike
in late 1997 when the VWA arbitrarily reduced fees. In fact I would go as
far as to say that at a senior level the VWA management used the other
factors to deflect justified criticism of their incompetence. In doing so, the
Victorian Workcover Authority skilfully manipulated a government back-
bench committee which met in secret to consider the issue, and found a
willing ally in a particularly ambitious back-bench member of the
government. As often at decisive historical moments, individuals can
play a key role, and the debate in late 1997 about abolition of common
law was no exception.
With the Kennett cabinet uncertainty about the issue, particularly in the
face of minor but escalating public opposition,(72% of the public voted
against any changes being made but Kennett went ahead anyway) the
then CEO of the VWA returned from overseas to stiffen the ‘resolve’
of his Minister. The die was cast, and the legislation passed, ignoring
all opposition from the public and fellow ministers.
It’s interesting to note that without a bill of rights being actioned in
Australia that the government is still required to consider any
alternatives and complaints before they are able to pass legislation.
It seems that this Government believes that it can institute new
legislation without considering the Victorian workers views on this
very distressing issue when in actual fact they should not.
From 1992 and leading up to the abolishment of common law in 1997
some of the major Kennett government changes included:
1992 – 1997 Workcover Changes
· A requirement that employment be a significant contributing factor
· The exclusion of some categories of stress claims
· The exclusion of injuries which occur on the way to or from work
· The introduction of the concept of notional earnings which is the amount
actually earned or the amount that Workcover believes a worker could be
earning in suitable employment even if no such job exists
· The introduction of the concept of serious injury
· Significant changes to the weekly payments structure
· Termination of payment of routine or non-essential medical expenses
12 months after weekly payments cease
· Employer control of injured workers access to rehabilitation services
· Removal of ‘mental disorder’ as a basis for lump sum compensation
· Abolishing the specialist Accident Compensation Tribunal (including
sacking the Judges), and abolishing the Workcare Complaints Commissioner
· Introducing impairment thresholds for hearing loss compensation
· Increasing the role and power of Medical Panels including redefining
medical questions to include questions of fact and removing judicial review
of decisions
Whilst the government reintroduced rights to claim pecuniary damages in
1992, it introduced the threshold requirement of ‘serious injury’ by way of
30% whole person impairment based on AMA Guides, or satisfaction of a
‘narrative’ test for access to common law, and placed monetary thresholds
on both heads of damages. A particular aim being to discourage common
law claims which has left workers with no recourse for their workplace
injuries.
Between 1992 and 1997 the government further tightened access to
common law entitlements by removing secondary psychological injury
from the assessment of impairment, and the imposition of cost penalties
including requiring the plaintiff to pay her/his own costs if damages were
assessed but could not be awarded.
The Kennett government also sought to substantially reduce the various
statutory entitlements including weekly payments, and lump sum
compensation for permanent impairment. Accordingly the abolition of
common law rights in 1997 can be seen as a continuation of the Kennett
government’s determination to restrict access to, and the benefits
available under, the Workcover scheme of Victoria.
Up until November 1997 there had been a limited assault on common law,
primarily due to tightening access. The fact that the Kennett government
moved to abolish common law rights after five years in office was curious.
The answer lies in the process of change that began in 1992 and carried out
up until 1997. But the major reason lies in a convergence of factors merging
in late 1997 that provided the political force by the Kennett Government
to abolish common law rights.
In my view the Kennett government changes in 1997 were driven by a
coming together of at least three factors, namely:
· A desire for a significant levy reduction couched in the economic
speech-making of employer associations who portrayed Workcover
premiums as a tax on profitability and jobs and support for this within
government.
· the remnants of support for the 1960’s & 1970’s philosophical
opposition to common law genuinely held by senior policy makers
within Treasury and the VWA and shared by some sections of the
labour movement and the chronic inability of the Victorian Workcover
Authority to in particular manage the existing common law claim process.
· Common law was portrayed as anti-rehabilitative, as it, rather
than the fact of negligence caused injuries, was seen as the destroyer
of the employment relationship.
During this process, the position of twenty five of the twenty six self-insurers
in Victoria at this time opposed the abolition of common law. They were large
corporations employing substantial numbers of Victorians who were just as
interested in the issue of business costs, but as self-insurers would have no
benefit from a levy reduction. I would suggest that their support for the
retention of common law was not an act of self-sacrifice per se, but more a
recognition that access to common law was an important component of the
compensation ‘tools’ necessary to effectively manage their industrial injury
portfolios. The self-insurers found no obstacle in common law to effective
rehabilitation.
In 1997 the Kennett government committed three fatal misrepresentations.
Firstly, those involved in the political process failed to comprehend the ability
of the existence of common law damages to deflect community focus on the
inadequacy of statutory benefits.
The second misrepresentation, intimately connected with the first,
involved a gross misrepresentation as to the nature and saleability of
the “improved” impairment benefits scheme that accompanied the
abolition of common law damages.
Finally, the decision to also totally abolish rights against a third party
was astounding and was readily comprehended as such by the community.
The impairment benefit scheme enshrined in s98C and s98E of the
Accident Compensation Act relied on the component of impairment
benefits on a whole person basis substantially assessed under the
American Medical Association Guidelines for the Evaluation of
Permanent Impairment (fourth edition).
Whilst the government and the Victorian Workcover Authority then
contended that the impairment benefits scheme was a dramatic
improvement in the position of injured workers, the reality was very
different, many of the injured workers were denied benefits, medical
and alike expenses were reduced or stopped, and many have finished
up without injuries being repaired and being left on Disability Pensions,
Sickness Benefits or job search.
This does not show any improvement to the system for workers as
stated by Kennett and Worksafe.
The transfer to the AMA fourth Edition Guides and the imposition of
a 10% threshold meant that the new impairment scheme represented
a dramatic reduction in impairment payments alone, not taking account
of the loss of general damages at common law.
This flaw was quickly comprehended by some stakeholders, particularly
trade unions and plaintiff lawyers, and quickly became the subject of
"before and after” advertising by the Australian Plaintiff Lawyers
Association.
Despite a hasty modification of the 1997 legislative package both the
government, and extraordinarily expensive advertising by the VWA,
they were unable to regain the momentum in the public debate. The
momentum was translated into a well-funded coalition of trade unions,
plaintiff lawyers, injured workers and other community groups that
developed a sophisticated campaign strategy focussing in particular
on the ‘human face & story’ of those seriously injured workers whose
benefits and entitlements were being reduced.
An analysis of the VWA’s projections of the cost of the “improved”
impairment benefits under s98C and s98E in the most recent review
has demonstrated the Authority’s costing to be greatly miscalculated
and misrepresented.
In the Review conducted by the Workcover Advisory Committee in
1999/2000 material, particularly comparative studies, undertaken
by the medical panel and a study of Slater & Gordon cases demonstrated
that significant lower payment was made under s98C than its predecessor
these studies together with other material provoked a market revision
of actuarial estimates of the projected costs of s98C claims.
Plaintiff lawyers then commissioned Marsden Jacob Associates to apply
similar research techniques to the Australian labour market, and
examine who pays for workplace accidents and insurance compensation
levies.
In summary their research revealed that:
· Over 80% of the cost of workers’ compensation insurance levies
are shifted back to workers by the operations of the labour market
and the action of employers, particularly via lower take-home pay,
and as a result employment costs to employers are only temporarily
changed by a change in the insurance levy.
Employers actually pay for less than 10% of the total costs to the
Australian economy of workplace accidents and injury
There is no doubt that the issue of the removal of common law damages
was a significant issue in the 1999 general election which continued to
resonate in the subsequent Frankston East, Burwood, and Benalla by-
elections.
It is unacceptable, given the prominence of the issue, that the Victorian
government did not take the opportunity to deliver more meaningful
benefits to its constituency through a marginal extension of the levy
from 2.18% to 2.25% of payroll.
This extension would have allowed both a meaningful substituted
common law payment to be made to workers injured between
the 12th November 1997 and the 19th October 1999, and the
government to urgently address the substandard benefits that remain,
particularly in s98C and s98E of the Accident Compensation Act.
Legislation reintroduced the ability for a group of specific workers to
pursue a claim for common law damages against their employer or third
party leaving a 2 year gap of injured workers whom are not being
included in the reintroduced legislation.
The reform is not fully retrospective and only applies to injuries
occurring on or after the October 20th 1999. The formal justification
for failing to date the reforms back to the November 12th 1997
was the general philosophical opposition to the use of retrospective
legislation. Whilst I understand the reluctance of governments to
utilise retrospective legislation it would be discriminatory for them
not to include all injured workers.
I contend that there is a qualitative difference between legislation
removing rights and legislation restoring those rights.
The Bracks government, in my view, made the decision not to restore
the rights retrospectively firstly, on an economic basis, ie its commitment
to keep the premium level within 2.18% of wages, and secondly, on the
political judgment that the loathing that would come from its failure to
restore rights would be borne by the Liberal and National parties.
Whatever the justification given by the Government, the failure to
introduce fully retrospective legislation is shear negligence and a tragic
abandonment and of those workers who are injured within the window
period.
Perhaps the most marked changes that have been affected related to
an application for serious injury based on a “loss of earning capacity”.
It was generally recognised that in respect of injuries prior to the 12th
November 1997 a loss of earning capacity was one of the major factors
that influenced courts in its assessment of whether an injury constituted
the serious injury within the meaning of s135A of the Act.
A moderate earning loss when projected over a workers’ potential
working life was generally considered to be of serious consequence
for an injured worker thus justifying the granting of a serious injury
certificate.
The new provisions seek to ensure that an actual loss of a defined
extent can only be taken into account in the establishing of a loss
of earning capacity for the purposes of serious injury certification.
Subsection 134AB(38)(e)(i) & (ii) will require a worker to have a
loss of earning capacity of at least 40% as at date of serious injury
certification and that the injury will be productive of a financial loss
of 40% or more permanently into the future which is unreasonable.
It must be recognised that if there is a significant trend to pursue
claims for damages in respect of non-pecuniary loss only this will
inevitably raise major prudential issues for the Victorian Workcover
Authority. If there is no award for pecuniary loss then the Workcover
Authority does not receive the benefit of the redemptive effect of a
common law damages claim as the worker will continue to receive
entitlement to weekly payment of compensation in accordance
with the Act.
The reintroduction of common law in Victoria has a degree of fragility
and it is probable that some strain will be imposed on the control
mechanisms in future years.
Injured workers of the Kennett changes need to be included in all the
common law changes being made or previously made to ensure all
fairness and equality for all.
Please help us push for further legislation changes so as, the injured
workers of the Kennett era can be included in the common law
changes introduced by a government who cares more about money
than the workers they are supposed to protect.
We are asking you to block any changes proposed by Mr Holding
from the Hanks Report until all injured workers are included in the
common law changes and the VWA are made accountable for their
inability to manage injured workers and common law damages.
BILL OF RIGHTS REQUEST
We are also requesting that a Bill of rights be legislated in Victoria/
Australia to assure that the VWA & the Victorian State Government
are also policed to also be legislation compliant and to ensure that
injured workers rights to compensation & common law are not
removed under any circumstances.
Yours Sincerely
Workcover Victims Victoria
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