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Workers Compensation and Nominal Insurers

Workers Compensation and Nominal Insurers 

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Demasi v Foundation Marketing Pty Ltd & Anor [2016] 179 NSWWCC

This case was decided on two separate occasions by the New South Wales Worker’s Compensation Commission. The first decision was made on 16 May 2016 and the second was made on 26 July 2016.

Background information- The Nominal Insurer

The Nominal Insurer is a body which was created to ensure that injured employees are covered in different situations. If a claim is made and the employer cannot pay the claim, it is paid by the Nominal Insurer. The Nominal Insurer is administered by a committee made up of insurers, self-insurers and government members. It is funded by contributions made by licensed insurance companies and employers who ensure themselves.

The Nominal Insurer will pay a claim in situations such as:

  • The employer not holding a workers compensation insurance policy.
  • The employer cannot be located and hence cannot make the payment.
  • The employer has experienced bankruptcy.
  • The insurance company where the employer holds the workers compensation insurance policy is insolvent.
  • The employer is unable to meet its liabilities under the workers compensation insurance policy.

The facts of the case 

The case of Demasi v Foundation Marketing Pty Ltd & Anor [2016] NSWWCC 124 was originally decided on 16 May 2016. In that case, it was found that the worker, Mr Demasi had sustained injuries to multiple body parts during the course of employment. The court made orders for weekly payments as per sections 36(1)(b), 37(2)(b)and 60 of the Workers Compensation Act 1987.

However, on the same day, the Nominal Insurer who was the second respondent in the matter made a request that the Commission reconsider the orders made in the Certificate of Determination. The Certificate of Determination is the document which contains the orders relating to costs in a matter. The Nominal Insurer asked that the court reconsider the worker’s pre-injury average weekly earnings.

On 9 March 2016, the Nominal Insurer made a work capacity decision which was not included in the evidence that was available to the Commission when the Commission made the first decision in May 2016.

The orders made by the arbitrator were challenged on the basis that they were inconsistent with the work capacity decision submitted by the Nominal Insurer and that calculations of compensation must be made in accordance with the work capacity decision. This was based on section 43(1)(d) of the Workers Compensation Act 1987.

Mr Demasi argued that the Nominal Insurer’s letter on 9 March 2015 was merely a provisional acceptance letter and not a valid work capacity decision, hence mustn’t be considered in coming to a final decision.

The decision

The Arbitrator refused to reconsider the previous decision. Reconsideration of the issue was declined and the previous orders made regarding the calculation of the pre-injury average weekly earnings were upheld.

The Arbitrator made statements to the following effects.

  • The letter submitted by the Nominal Insurer on March 9 2016 was not new evidence. This principle was set out in Port Melbourne Authority v Anshun Pty Ltd[1981] HCA 45 and cited in Samuel v Sebel Furniture Limited [2006] NSWWCCPD 141.
  • It is possible that the letter from the Nominal Insurer was, in fact a work capacity decision under s 43(1)(d) of the Workers Compensation Act 1987, however this is not the issue which the arbitrator was considering in this case. Although the letter did make reference to the workers pre-injury average weekly earnings, the previously made orders in May 2016 provide a more reliable basis of pre-injury average weekly earnings. However, as stated previously, whether or not the work capacity decision was valid is not the question of this decision.
  • The way which the Nominal Insurer lodged the complaint was incorrect. The complaint should have been lodged as an arbitral appeal and not a request for reconsideration under section 350 of the Workplace Injury Management and Workers Compensation Act 1998.
  • The first determination made in May 2016 was consistent with the Nominal Insurer’s decision in the letter because “although there is no specific reference to the extent of the applicant’s capacity in the letter or the attachment, the applicant was to be paid as if he had no current work capacity … The only difference related to the calculation of the pre-injury average weekly earnings”.
  • The work capacity decision was the only written correspondence in relation to the possible provisional liability for a 12 week stretch of time.
  • The Nominal Insurer had plenty of time to raise the issue of the letter containing the potential work capacity decision. This issue was not raised in the notices issued on 20 May 2015 or 25 November 2015.