Crushed finger leads to claim and Court

Regularly in OHS  submissions to the government and on OHS discussion forums, safety professionals state that industrial relations should be kept separate from workplace safety issues.  In a perfect world ? Possibly, but there was a court decision on 13 November 2009 in Australia that shows that this separation is not possible in the modern world.

According to a media statement from WorkSafe Victoria:

Concrete panel supplier, The Precast Company, pleaded guilty in the Dandenong Magistrates Court on Friday 13 November to failing to provide an injured worker with suitable employment as required under Victoria’s workers compensation legislation.

The Court heard that the injured worker was employed as a crane operator when he suffered a crush injury to his finger. He attended Dandenong hospital and 5 days later was certified as being fit for alternative duties.

Two weeks later, he left work early on a Friday to attend his doctor. When he returned to work the following Monday he was informed that he had abandoned his employment and had no right to be there.

At the time, the company defended its action stating the worker had not been dismissed, but instead had walked out of the workplace half way through the day without reason.

As the injured worker had an accepted workers compensation claim, The Precast Company, in dismissing the injured worker, had failed to provide suitable employment despite the worker being certified as fit for alternative duties. Under the State’s workers compensation laws, an employer is required to provide employment to an injured worker who has a capacity for work.

The company pleaded guilty to one charge of failing to provide suitable employment and was fined $2,500 without conviction and agreed to pay costs of $1,500.

WorkSafe’s own summary of court action provides more details:

The defendant company operates in the building and construction industry. It has declared annual remuneration of about $2 million and has 45 full-time employees.  An employee working as a crane operator suffered a crush injury to his finger on 1 April 2008 and was issued with a certificate of capacity certifying him ‘unfit for all duties’ from 2-4 April and fit for alternative duties from 5-16 April. The worker returned to work on 7 April on light duties.  He left work early to attend a doctor’s appointment and returned to work on 14 April and continued light duties. He saw his doctor on 17 April and was issued a further alternative duties certificate from 17 April -1 May.

On 18 April the worker left work around midday to attend his doctor’s later that afternoon when he was issued with another certificate. At this stage he had still not submitted a claim form. When he arrived for work on 21 April he was told that he had abandoned his employment and had no right to be there. He went home and soon after sought legal advice. He lodged a claim for compensation that day which CGU accepted.

The defendant company’s director wrote to WorkSafe stating that the worker was not dismissed but had abandoned his employment on 18 April 2008. The director was overseas on that date and his explanation is based on what other staff have told him. The foreman provided a statement to a circumstance investigator that on 18 April the worker “just walked out of the workplace half way through the day. He would not provide a reason. As far as I was concerned he was abandoning his employment at this time.”

On 23 June 2008, the date that the worker’s claim was accepted, he was issued with a certificate of capacity certifying him fit for alternative duties until 21 July. By dismissing the worker the defendant company failed to meet its obligation to provide him with suitable employment once his claim had been accepted.

These are the only public details available at the moment but clearly effective communication was not occurring between the employee and the company.  Sometimes circumstances that involve safety become a more complex industrial relations issue which may lead to Court, no matter how hard you try to compartmentalise them.

Tasmania’s workers compensation changes pass

It is easy to forget that workers compensation is clicking along during this intense period of analysis of OHS laws.  Workers compensation legislation passed through Tasmania’s House of Assembly this week (it still needs to get through the Legislative Council).  The Minister for Workplace relations, Lisa Singh, highlighted the following components of the changes in a media release on 6 November 2009.

“The key reforms will:

  • Improve access to common law damages for compensation by reducing the whole of person impairment threshold from 30% to 20%;
  • Amend the first step-down to 90% of normal weekly earnings rather than 85% of normal weekly earnings;
  • Delay the operation of the first step-down, so that it comes into effect at 26 weeks of incapacity rather than 13 weeks;
  • Streamline the management of injury and illness to deliver better health and return to work outcomes for injured workers and lower costs to employers;
  • Foster and reinforce a return to work culture among employers, workers and other stakeholders;
  • Provide greater income security for injured workers by increasing the duration and reducing the “step-down” of weekly compensation payments for injured workers;
  • Increase lump sum compensation up to $250,000 for permanent impairment or death to levels more comparable to those provided in other states and territories;
  • Provide additional financial incentives for workers and employers to participate in rehabilitation.”

The reforms are based on the Government’s response to the recommendations of Victorian consultant Alan Clayton and the Return to Work and Injury Management Model developed by the WorkCover Tasmania Board.

Alan has been a prominent advisor on workers compensation to governments around Australia for some time.  His Tasmanian review and recommendations were in 2007 and are available online.  The Government’s response is also available.

The Minister has said

“With the range of views that were put forward during consultation I am confident that this legislation strikes the right balance of fairness for workers and their families and support for employers and business.”

Simon Cocker, of Unions Tasmania, said in response to the Bill:

“The Workplace Relations Minister is to be congratulated for pursuing these improvements which will ensure that injured workers are better supported when they return to work and are paid more appropriate rates of compensation while off work.”

“The step-down provisions that currently operate have been shown to be unfair and place injured workers and their families under financial stress at a time when they are often struggling to cope with the impact of a serious injury.”

“Delaying the step down and softening its financial impact is an improvement.”

The Australian Government paid considerable attention to the Victorian OHS Act  because it was the most recent review of that legislation.  If the government continues this trend, the Tasmanian changes may be very significant for the rest of the country.

Kevin Jones

UPDATE: 19 November 2009

Tasmanian workers’ compensation laws passed the Legislative Council on 18 November 2009.

Flawed basis for OHS decision-making

Most strategic plans made by OHS regulators in Australia are based on workers’ compensation statistics.  Everyone agrees that this is a huge underestimation of the work-related injury and illness rates but no one yet has tackled this information deficiency.

Australia’s OHS harmonisation might attempt this but it will not be until the government harmonises the States’ workers’ compensation system that Australians can have unified and consistent statistics.  Yet even then, the reliance on workers’ compensation data will continue to understate the significance of work-related injuries on the community.

The Australian inaction contrasts to activity undertaken in the United States by the Government Audit Office (GAO).  An October 2009 report by the GAO, released online on 16 November and discussed in blogs and one US newspaper, shows the state of OHS statistical play in the US through its audit of the operations of the Department of Labor’s Occupational Safety and Health Administration.

  • OSHA only audits 250 of the 130,000 high hazard worksites each year.
  • All of the data available is provided by employers.  Workers are not interviewed.
  • If the worker has left the company’s employment, they are unable to be interviewed.
  • “OSHA also does not review the accuracy of injury and illness records for worksites in eight high hazard industries because it has not updated the industry codes used to identify these industries since 2002. “
  • Statistics supplied to the Bureau of Labor Statistics by employers are not verified. (BLS is not required to do this)
  • The GAO identified disincentives on both employers and employees for reporting illnesses and injuries – potential job loss, fear of increasing workers’ compensation premiums or losing out on work contracts.
  • The disincentives may lead to a reduced medical treatment so as to avoid injury reporting and the issues associated with the reporting. (A third of health practitioners interviewed admitted to being pressured about workplace injuries)

On this last point, those OHS professionals who advocate safety incentive schemes may wish to consider the graphic below

Pressure From Workers to Downplay Injuries and Illnesses and Awareness of Incentive Programs

Of the 47% who said they were pressured to downplay injuries and illnesses, over 60% were from workplace s that had incentive programs.  This is a serious statistic that incentive advocates must address in their programs.

Australia has tried to gain greater accuracy to OHS data over many years.  The (then) National OHS Commission published several very useful statistical reports into various industries but they could not provide an easily understood national picture because of State variations on reporting criteria.  Australia is much less complex than the US and the task of achieving better OHS statistics should be easier, as long as there is the political will.

The importance of accurate statistics in decision-making at the policy level as well as that at individual workplaces cannot be overstated.  The GAO report summarises the significance in its report.

“Accurate injury and illness records are important because they assist Congress, researchers, OSHA, BLS, and other agencies in describing the nature and extent of occupational safety and health problems.  These records are also vital to helping employers and workers identify and correct safety and health problems in the workplace.  In addition, these records help OSHA evaluate programs, allocate resources, and set and enforce safety and health standards.  Without accurate records, employers engaged in hazardous activities can avoid inspections because OSHA bases many of its safety inspections on work-related injury and illness rates.”

Kevin Jones

My thanks to Workplace Professor Blog for bringing the report to our attention.

Justice in workers’ compensation reforms

A South Australian colleague has pointed out some interesting elements in WorkCover SA’s review of employer incentives discussed earlier.

The following text are some of the aims of South Australia’s Workers Compensation and Rehabilitation Act.

(1) The objects of this Act are—

(a) to establish a workers rehabilitation and compensation scheme—

(i) that achieves a reasonable balance between the interests of employers and the interests of workers

(iv) that reduces the overall social and economic cost to the community of employment-related disabilities

(2) A person exercising judicial, quasi-judicial or administrative powers must interpret this Act in the light of its objects without bias towards the interests of employers on the one hand, or workers on the other.

My colleague points out that a review of employer incentives is well and good but what are the incentives for employees, given the objects of the Act concerning balance and bias?

She also criticises

“…the current incentive for employers of paying the first two weeks of the injured workers income payments if the employer supplies the claim agent with the employer section of the injury/incident report goes against the intent as outlined in Objects of the Act, as there is not any corresponding incentive offered to the injured worker.”

Whether the injury report is valid or useful is irrelevant to the incentive as it is the lodgment of the form that generates the incentive rather than any rehabilitation action for the injured worker.

There is no doubt that the workers compensation scheme needed a review.  The recent Return-To-Work (RTW) conference in Adelaide had an atmosphere of hope after the introduction of the RTW coordinator requirements for businesses.

South Australia is different from most other Australian States where a single company handles workers compensation insurance, Employers Mutual.  Not only is there a huge lack of competition in South Australia but the government and the insurer are close.

There is also a political element with Paul Caica being given the portfolio in order to fix it.  In June 2009, the Minister announced a range of projects from a fair pool of funds but many of them are focused on the workers rather than providing structural change to the system.  It is hard not to speculate how workers may benefit if the insurance industry in the State had competition.

The need for reform was clear as the South Australian workers’ compensation scheme was bleeding money but it must have been politically attractive to try to postpone an analysis of the system until the Federal Government started its national review of workers’ compensation system in a few years’ time.  It may have been that such a strategy was planned until the global financial crisis changed the public’s tolerance for government debt forcing the SA government had to act.

Kevin Jones

Fixing what is broken

WorkCover in South Australia has released a discussion paper for public comment on 9 November 2009.  The paper is called “Consultation on a new framework for employer incentives” and poses the following questions:

  • Do you think there should be any financial incentives for employers in relation to workers rehabilitation and compensation?
  • What do you think about the proposed design principles?
  • Do you have any specific ideas for employer incentives that encourage return to work?

cover Employer incentivesThis discussion paper is part of the review process by the WorkCover Corporation and should be supported.  Public comments close on 18 December 2009.

The paper itself has some points of considerable interest.  The existing incentive scheme is called a Bonus/Penalty Scheme which has existed for almost 20 years.  PricewaterhouseCoopers undertook a review and below are the findings, according to WorkCover:

“WorkCover has been working with PricewaterhouseCoopers (PWC) to gain a better understanding of the effectiveness of the Bonus/Penalty Scheme in South Australia.  Only very weak links were found between the Bonus/Penalty rate and claim outcomes.  No evidence was found to suggest that the Bonus/Penalty Scheme has delivered better health and safety outcomes for workers in South Australia.”

That last sentence seems to be a phenomenally honest statement about a scheme that has existed since 1990, been so persistent and continues to be so popular with employers.  Such forthrightness from a government authority about one of its own programs is rare.

At some point in the past there may have been some logic in the scheme as similar elements existed under the WorkCare scheme in Victoria many years ago.  But since the preventative arm, Safe Work SA, split from WorkCover around 2005, the incentive scheme has not sat comfortably with the government’s RTW focus.

The discussion paper goes on to state:

“WorkCover has not seen much evidence that the Bonus/Penalty Scheme has either reduced injury rates or made workplaces safer.  If anything it appears to have had some adverse side-effects, such as encouraging stakeholders to focus excessively on claim costs, the claim costs ‘window’ and coding, instead of return to work.”

Regardless of pointing out the difference between “no evidence” and “much evidence”, WorkCover’s comments illustrate a reality that OHS and RTW professionals have been wrestling with for years, companies have been encouraged to focus on financial cost of Return-To-Work rather than on the injured worker.

As part of WorkCover’s analysis of the existing incentive scheme, it undertook a literature review on experience ratings systems and found the following

“There were some noteworthy findings about experience rating systems, for example:

  • there is no clear consensus that they have reduced injury rates or made workplaces safer;
  • they have created perverse motivations, for example to suppress claims, dispute the coding of claims, or only focus on reducing claims within the ‘experience window’;
  • they may reduce claim numbers but not average claim costs, and average claim severity tends to increase – this is further evidence that the reporting of small claims is sometimes ‘suppressed’; and
  • there is no obvious link between experience rating bonuses/penalties and an employer’s commitment to safety and return to work.”

The Productivity Commission in 2004 (as discussed in Alan Clayton’s workers compensation review for the Tasmanian Government) recommended experience ratings for large employers as a contributor to the full funding of workers compensation schemes. ( p.44)  It is strongly suggested that those wanting to comment on this South Australian WorkCover paper should closely look at the recent changes to workers’ compensation made by the Tasmanian Government.

But it is not all gloom and doom as WorkCover SA has set the parameters for the next scheme.  In the discussion paper, they list 11 proposed design principles for consideration:

  • Focus on return to work
  • Be affordable and sustainable
  • Have a direct and substantial effect
  • Target the right employers
  • Tailor to specific employer groups
  • Loss matters
  • Be simple to explain and run
  • Use a mix of solutions
  • Capitalise on the tools and resources we already have
  • Be transparent
  • Use an evidence-based approach

In anticipation of the Federal Government’s plans to harmonise workers compensation once OHS is out of the way, such discussion papers, reviews and, more importantly, the public submissions, may provide some clues to how Australia workers compensation and RTW programs may look in ten years time.

Kevin Jones

Combining safety and RTW awards

Finally, a State-based safety awards night that has both OHS and Return-to-Work awards.  On 27 October 2009, Workplace Health & Safety Queensland held its annual safety awards night as part of Safe Work Australia Week.  In a media release, the Minister for Industrial Relations, Cameron Dick, said

“The inaugural Return to Work Awards are run by Q-COMP – the statutory authority that oversees workers’ compensation in Queensland – to showcase the state’s top employers who understand the importance of helping injured workers make a successful return to work.”

It is curious that other States do not also have combined awards.  The logic of the combination would, perhaps, be easiest for Victoria as the Victorian Workcover Authority handles rehabilitation through VWA as well prevention through WorkSafe Victoria.  The combination may be simpler for those States that have a single insurer for workers compensation.

It is noted that one workers compensation insurer in Victoria, xchanging (formerly Cambridge), has conducted its own awards for several years.  (The author was a judge of these awards several years ago)  The judging process was tripartite with applicants from a pool of the insurer’s clients.  Whether an insurer would relinquish such a role is unknown but the opportunity for State recognition of RTW performance should be attractive.

It should also be noted that winners of State OHS awards are also nominated for national OHS awards conducted by Safe Work Australia.

SafetyAtWorkBlog has questioned the plethora of OHS awards nights in the past as Australia has a fairly small industry and as OHS and workers compensation laws are becoming harmonised, it seems sensible for Safe Work Australia, or the Australian Government more generally, to start harmonising the award processes.  Just imagine how many corporations would be champing at the bit to receive an award for safety that covers all aspects of their safety management.  It would be an award for leadership that may just be warranted.

Kevin Jones

HWCA could be influential in Australia’s workers’ compensation reforms

Australia and New Zealand have a small strategic organisation called the Heads of Workers’ Compensation Authorities (HWCA, pronounced “howca” by those in the know).  It is a regular meeting (some say “love-in”, others say “coven”) of the CEOs of the various workers’ compensation bodies in Australia and New Zealand.  Over the next five years, as the Australian Government begins to harmonise/reform the workers’ compensation system, HWCA will be important to watch.

In early October 2009, HWCA met and endorsed a coordination strategy, that has yet to be publicly released.  The main objectives of the strategy were noted in a media release (also not yet publicly available) to mark the latest meeting.

  • “To deliver best practice services to injured workers and employers to assist recovery: and
  • to build sustainable workers’ compensation schemes.”

The terminology of the first objective may provide a good indication of the type of organisation HWCA seems to be.  “Best practice services”???  “Best practice” is one of the worst corporate jargons being used at the moment.  This article at Wikipedia outlines the context of the phrase well.

“As the term has become more popular, some organizations have begun using the term “best practices” to refer to what are in fact merely ‘rules’….”

In other words, HWCA has a strategy to do what its member organisations should have been doing all along – enforcing the rules of good customer service and providing the best level of service to injured workers.

Perhaps it is the second strategic objective that best illustrates the aims of HWCA – to make sure that the workers’ compensation schemes do not lose money.

According to the communique that is released after every meeting (top points for open communication)

“HWCA agreed the Bio-psychosocial Rehabilitation Working Group would develop a national action plan regarding prevention of long-term disability and work loss, which will support the strategy.”

Prevention is the role of the OHS authorities in Australia and the Department of Labour in New Zealand.  Clearly HWCA will be discussing these strategic aims with those in charge of preventing injuries and illnesses.  But can the various WorkCovers and WorkSafes cope with biopsychosocial hazards?  Surely HWCA will also be talking with all the NGOs who lobby on depression, anxiety, fatigue, stress, wellness, happiness ………….. (Get ready for even more influence for BeyondBlue)

Consultation will also be needed with the various government departments involved with health promotion, public and occupational.  Not to mention the unions, employer associations and health professional bodies.

A strategy of such magnitude would require considerable resources and horse-trading through government ranks in all jurisdictions.  It is hard to see this being achieved through a meeting of Chief Executive Officers, and should such a strategy be pushed through individual workers’ compensation bodies anyway?

To achieve true reform of workers’ compensation and to resist the substantial pressure that is likely to come from the Australian and international insurance companies, the Australian government is going to need considerable negotiating skills.  Because of the involvement with the financially influential insurance companies, it is doubtful the intended reforms will be achieved. (HWCA already has discussions with the “Heads of Compulsory Third Party Insurers” according to the communique)

Almost as a post-script, it is noted that Greg Tweedly, CEO of WorkSafe Victoria, takes over the chairmanship of HWCA from the CEO of WorkCover NSW, Jon Blackwell.  Tweedly is a very busy CEO and will become more so, if the rumour proves true that he will be joining the National Board of the Safety Institute of Australia.

As the chairmanship moves from New South Wales, so will HWCA’s administrative support.  The next HWCA meeting is scheduled for 5 February 2010 and will be coordinated through the Victorian Workcover Authority or Comcare.

Kevin Jones

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