Throwing a spanner in the Queensland WorkCover regime again…

The Palaszczuk government's proposal to reverse many of the Newman government's changes to the Workers' Compensation and Rehabilitation Act 2003 will potentially have significant financial consequences for public liability insurers, third parties and employers.

Newman government introduces 5% impairment threshold

Queensland has been on a legislative rollercoaster ride in recent years.
 
The introduction of the Civil Liability Act 2003 (Qld) (CLA) and its various amendments caused disruption to the practical running of concurrent public liability and WorkCover claims in Queensland. This is because that Act, in conjunction with the Workers' Compensation and Rehabilitation Act 2003 (Qld) (WCRA), restricted a worker's entitlement to damages from his or her employer but, at the same time, allowed that worker to pursue non-employers under the Personal Injuries Proceedings Act 2002 (Qld) (PIPA). The effect of this was that the old 25:75 ratio (commonly adopted as a starting point following decisions such as TNT v Christie [2003] NSWCA 47) did not reflect the true position as WorkCover's 25% contribution was only to the damages to which it was exposed under the WCRA. The PIPA respondents were exposed to significantly higher common law damages and costs.
 
Just when insurers and third parties were getting used to the different assessments and how this affected their exposure and reserves in practical terms, the Queensland government, via the Workers' Compensation and Rehabilitation and Other Legislation Amendment Act 2013 (Qld), which took effect from 15 October 2013, "changed the rules" and created a 5% impairment threshold preventing employees from pursuing common law WorkCover claims.

Impairment threshold cancelled right of contribution in tort

Of course, this did not prevent those same workers pursuing non-employers under PIPA. It simply meant that those non-employer entities had to be quickly identified and there had to be a valid cause of action to sustain a public liability claim.
 
From 15 October 2013, those PIPA respondents could not then pursue a contribution claim from the actual employer in tort. As a result of the threshold, there was no right of contribution in tort for an injury that, say, a host employer, principal or head contractor was able to seek from the employer for an injury with an impairment of 5% or less.

Effect on claims under contract

Many Queensland practitioners then anticipated that there would be an increase in claims for contractual indemnity or insurance as a result. This has been a "grey area" causing a great deal of confusion because of subsequent case law.
 
For injuries sustained post 15 October 2013, the decision of Byrne v People Resourcing (Qld) Pty Ltd & Anor [2014] QSC 269 cannot be used as authority to argue that WorkCover must cover the actual employer for a contractual indemnity or insurance claim made by a PIPA party. This is because the 2013 WorkCover legislation makes it very clear that that Act no longer applies where there is an assessment of permanent impairment of 5% or less - it is irrelevant whether the contribution claim is made in tort or contract.
 
Further, most public liability policies contain employee exclusions which would therefore, in practice, leave the employer "uninsured" for such a claim.
 
Removal of permanent impairment threshold among Palaszczuk government proposals
 
Queensland then had a change in government and the Labor Party on 15 July 2015 introduced into Parliament the Workers' Compensation and Rehabilitation and Other Legislation Amendment Bill 2015 (Qld). This Bill proposes to reverse many of the changes implemented by the 2013 WCRA reforms and indeed, is intended to apply retrospectively from 31 January 2015 (ie. the date of the election).
 
Specifically, the Bill proposes to:

• remove the 5% permanent impairment threshold such that any injured worker (even with a 0% impairment) can access common law damages from his or her employer via WorkCover

• allow workers injured between 15 October 2013 and 31 January 2015 who have been assessed with an impairment of 5% or less and who have not accepted a lump sum award to apply to obtain additional compensation

• allow those injured after 31 January 2015 to apply for a review of any notice of assessment but only where no statutory lump sum has yet been accepted

Employers to be pursued for contribution in both contract and tort for accidents post 31 January 2015

By removing the 5% threshold for injured workers to bring a common law WorkCover claim, by extension, co-tortfeasors (such as PIPA respondents) will then be able to pursue employers for contribution as long as the injured worker has sued his or her employer. This, however, will only be the case for those accidents occurring post 31 January 2015.

If WorkCover are "back in the picture" as a tortfeasor, consequently Byrne will then remain good authority to require WorkCover to indemnify employers in relation to valid contractual indemnity claims.

Insurers, third parties and employers should consider impact of reforms

Queensland waits with bated breath the finalisation of the process and a date for the Bill to come again before parliament for re-enactment.

In the meantime, insurers, third parties and employers all need to be aware of this changing landscape and how these further reforms could impact them financially.