26 November 2018

Baldacchino – The NSW Court of Appeal reviews the exceptions to Section 59A and defines the scope of what is an ‘artificial aid’

The NSW Court of Appeal recently dealt with the issue of whether a proposed knee replacement is an ‘artificial aid‘ within the meaning of section 59A of the Workers Compensation Act 1987 (1987 Act).

Section 59A(1) of the 1987 Act provides that compensation is not payable for medical treatment, related services or assistance given or provided after the expiry of the compensation period and section 59A(2) defines the compensation period.

Section 59A(6) provides a number of exceptions to the disentitlement in respect to specified types of ‘medical and related treatment’. They are;

‘The provision of crutches, artificial members, eyes or teeth and other artificial aids or spectacles (including hearing aids and hearing aid batteries).’

It was the employer’s contention that the proposed knee replacement was not an ‘artificial aid‘ and therefore did not fall within the exceptions outlined in section 59A(6).

Facts

Mr Baldacchino sustained a compensable injury to his left knee during the course of his employment on 27 October 1999. On 1 December 1999, he underwent a left knee arthroscopy medial meniscectomy. He is currently 67 and retired in 2014.

He has been advised that he requires a total knee replacement and claimed compensation pursuant to section 60 of the 1987 Act for the costs of and incidental to the procedure.

Liability in relation to the surgery was declined on the basis that the procedure fell outside of the time limits prescribed by section 59A(2) of the 1987 Act and he commenced proceedings in the Workers Compensation Commission.

Workers Compensation Commission Proceedings

The Arbitrator found in favour of Mr Baldacchino at first instance. Critical to the decision was the 1979 NSW Court of Appeal decision of Thomas v Ferguson Transformers Pty Ltd [1979] [1] NSWLR216.

In Thomas, it was held that the cost of the modification of a motor vehicle to enable it to be driven by a worker, who was disabled by a workplace injury, and the cost of special driving lessons for the worker, were costs of the provision of ‘artificial aids’ within the meaning of section 10 of the Workers’ Compensation Act 1926 (the predecessor to section 60 of the 1987 Act).

In Thomas, Justice of Appeal Hutley stated that:

An artificial aid, in my opinion, is anything which has been specially constructed to enable the effects of a disability (the result of injury) to be overcome …

The essential quality of an artificial aid is that it is an aid specially tailored to the needs of a person, which flow from the injury.’

The decision was appealed by the employer. However the appeal was dismissed with the Deputy President of the Workers Compensation Commission agreeing that the total knee replacement was an ‘artificial aid’ within the meaning of section 59A(6) of the 1987 Act and therefore, the worker was entitled to having the medical and related expenses for the knee replacement paid for by his employer.

The employer appealed.

Court of Appeal decision

The employer contended that artificial aids should be seen as composite or single objects working to assist a person’s disability, such as walking sticks, crutches, hearing aids. It was submitted that they could be partially internal, such as dentures or conventional hearing aids and in rare cases, implanted as internal devices, such as pacemakers or cochlear implant hearing aids.

The employer also submitted that an ‘artificial aid’ is an article or object, complete in itself, which serves a purpose.

In the case of a knee replacement, the employer contended that on no proper interpretation of an expression like ‘artificial aid’ could two or three pieces of plastic surgically inserted in a knee to a replace lengths of human bone that were excised come within the definition.

The employer also submitted that the decision in Thomas is no longer relevant having regard to the subsequent changes in the law that had taken place since 1979.

The employer also argued that if compensation was payable, it was only liable for the materials to be used in the knee replacement, not the cost of the surgery itself.

Justice McFarlan, with Justices Simpson and Payne agreeing, held that the internal character of the replacement knee does not take it outside the legislative provision, nor does the fact that it comprises a number of material elements which, when affixed or installed, are designed to operate together to alleviate the disability.

The court disagreed with the employer’s interpretation and found that ‘artificial aids’ worked to ameliorate the effect of a person’s disability and may comprise a single object or a composite of objects operating together and that a knee replacement has these characteristics.

The court found that the insertion of pieces of plastic between the bones as reconstructed are designed to facilitate the movement and use of the knee after the operation, therefore easing the patient’s disability.

As the provision of the knee replacement cannot occur without surgical intervention, the cost of the surgery, therefore, falls within the statutory provision as well, thereby rejecting the employer’s contentions regarding its liability for the costs of the surgery only.

The Court of Appeal held that the principles outlined in Thomas were still relevant to the extent that the cost of a modification such as a knee replacement, should not be the subject of a time limit.

Implications

The implications of the decision are significant for a number of reasons.

The decision is the first time since Thomas in 1979 that the courts have been required to give consideration what constitutes an ‘artificial aid’, particularly within the context of section 59A.

The definition of what constitutes an ‘artificial aid’ is now much broader than what it once was and may extend to items such as disc or hip replacements, stents and other pieces of hardware inserted during surgery.

With the significant advances in medical technology since Thomas was decided and many medical procedures now frequently involving the use of a single or composite objects, affixed or installed during surgery that are designed to alleviate the disability, the decision has the potential to impact many workers who have had compensable claims in the past.

The cohort of potential claimants is significant given the increasing number of aging workers who now require surgery as a result of the natural progression of their earlier work injuries that require the use of an ‘artificial aid’. In this case, the claim file was open between 1999 and 2001 and had been closed for 15 years until being reactivated after the claim for the surgery was made.

While each claim involving the use of an ‘artificial aid‘ will need to assessed on its merits, the increased number of reactivations as a result of this decision will inevitably impact employer liabilities, not just in relation to the costs of the surgery, but also ancillary costs such as rehabilitation, and physiotherapy over and above any compensable periods of incapacity post-surgery.

Another potential flow on could be an increase in whole person impairment or work injury damages claims as workers progress from one threshold to another as a result of the surgery.

In this case, it arguable that a worker could receive an assessment of around 20% whole person impairment following a knee replacement.

We also envisage that there may be further litigation around this issue as workers will inevitably seek to broaden the definition of ‘artificial aid‘ so as to avoid the prohibitive effects of section 59A of the 1987 Act.

Contact

Rhett is the National Insurance Practice Head and is responsible for the driving and coordinating the strategy for the firm’s national insurance practice.

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