The recent decision of Member Carolyn Rimmer in Hackett v Chatswood RSL Club [2025] NSWPIC 421 highlights how important considering a secondary psychological condition is when an insurer makes a work capacity decision.
The claim
Mr Hackett sustained an injury to his lower back on 27 September 2017 whilst employed by Chatswood RSL Club.
Mr Hackett sustained a further injury to his lower back on 25 August 2023 with a different employer called Hort Grade PTY LTD.
Following a dispute of liability, the Commission determined that the injuries were ongoing. Liability was apportioned 70% to Chatswood RSL Club and 30% to Hort Grade PTY LTD.
Following this, the insurer for Chatswood RSL Club would act as the lead agent in the management of the claim and take responsibility for seeking recovery from the insurer of Hort Grade PTY LTD for their contribution from time to time.
In addition to the accepted back injury, Mr Hackett had also been diagnosed with a secondary psychological condition which had been accepted by the insurer.
Treatment
Of note, Mr Hackett had surgery to his lower back in 2018 and then revision surgery in December 2023.
Return to work status
Mr Hackett had obtained casual employment after his 2023 revision surgery in the form of work as a swimming instructor for children on a 25 hour week basis.
By all accounts Mr Hackett was doing well in his work as a swimming instructor. He had even been offered a promotion into a supervisory role which he turned down because he did not feel that psychologically he could handle the stress of a supervisory responsibility at the time (para 97).
The Work capacity decision
Pursuant to section 43 of the Workers Compensation Act NSW 1987, the Insurer made a work capacity decision (WCD) dated 26 February 2025 determining that Mr Hackett could work in suitable employment on 30 hours a week basis.
The ‘suitable employment’ identified were all managerial roles consisting of Sports Centre manager, hotel or motel manager or property manager (para 14).
These roles were provided in a vocational assessment (VOC) undertaken in 2022. A labour market analysis (LMA) was undertaken in 2025 contacting advertised employers for the employment options reported on in the 2022 vocational assessment.
In determining the hours of week of capacity for work, the insurer relied on certificates of capacity which indicated Mr Hackett could work in suitable employment on a 30 hours a week basis along with a medical endorsement of the roles listed in the vocational assessment by the nominated treating doctor (para 32).
Prior to the WCD, Mr Hackett would have received ‘make up pay’ being the difference between his actual income as a swimming instructor and the maximum payable under either section 37(2) or section 38(7).
The practical effect of the insurer’s WCD was to reduce Mr Hackett’s weekly compensation replacing what his actual earnings as a swimming instructor were with the assessed ability to earn.
The Member’s decision
The Member found that the work capacity decision needed to be set aside.
From paragraph 139 through to 165 the Member listed and elaborated on seven reasons why the work capacity decision had issues.
It seems though that the failure to take into account the accepted secondary psychological condition was one of the primary reasons why the Member felt the Work capacity decision was flawed (para 154).
The Member noted the LMA only considered Mr Hackett’s physical capacity for work and did not consider the psychological capacity for work at all:
151. The applicant’s psychological symptoms were not discussed with any of the employer contacts. I find it is unlikely on the balance of probabilities that the applicant fulfills such psychological criteria identified in the Labour Market Assessment Report, based upon the applicant’s evidence and that of Dr Singer and Ms Hando.”
Noting the accepted secondary psychological condition, the Member found the identified employment roles did not amount to ‘suitable employment.’ The Member felt Mr Hackett was not psychologically well enough to manage the responsibilities that came in management positions:
“148. Fourth, the report of 26 February 2025 only really focuses on the applicant’s physical restrictions. However, the applicant has a secondary psychological condition which is not disputed… The applicant has required intensive psychological and psychiatric treatment for his psychiatric comorbidities which included depression, anxiety, emotion lability, hazardous use of alcohol, tobacco, and gambling. This evidence is not challenged…
150. I accept that the roles described in the Labour Market Assessment Report are management roles and would require mental skills including a high degree of cognitive functioning with communication, interpersonal, administration, organisational, problem solving and decision-making capabilities…
154. I am satisfied that Mr Little failed to take into account the secondary psychological condition when making his recommendations and assessing the applicant’s suitability for the three vocational options outlined in the report. I find that this failure is a significant shortcoming of the report.
In contrast with the insurer’s assessment, the Member noted and seems to have accepted the opinion of the consultant occupational physician Dr Benson Pek that Mr Hackett could not manage more work than his current 25 hours as a Swimming Instructor recording:
“100. Dr Pek considered that the applicant had sourced suitable work within his functional limitations, that being work as a swimming instructor since November 2024. He noted that the applicant had progressively increased his hours and found the work physically and psychologically suitable at 25 hours a week, and hopes for 30 hours.”
The Member also had other concerns including:
- The labour market support in 2025 referring to a non-existent 2024 VOC (para 145)
- A failure to list the qualifications of the individual who conducted the labour market assessment (para 140)
- A failure to consider the medications being taken and their bearing on capacity for work (para 155)
- A concern that Mr Hackett may not have had the necessary qualifications for the management roles identified (para 162)
- A failure to consult with Mr Hackett in the development of the LMA and a failure to consider the work Mr Hackett had been doing at the time of the LMA and treatment he had undertaken since the VOC had been done in 2022 (para 163)
Ultimately the Member determined that Mr Hackett only had capacity for the 25 hours per week of work he was performing as a swimming instructor.
This helpful decision reflects the importance of an accepted secondary psychological condition in the context of a work capacity decision. In this instance the failure to properly consider the secondary psychological condition and the impact it caused on Mr Hackett’s cognitive function led to the Member not being satisfied that the roles relied on by the insurer truly amounted to suitable employment.
If you have had a work capacity decision made on your claim and you need advice concerning it please reach out to our team.
