Thinking | 28 July 2016
Compensation fast-tracked for fatal work-related asbestos diseases
The Australian Capital Territory Legislative Assembly has passed amendments to the Workers Compensation Act 1951 (ACT) aimed at ensuring that workers who suffer from an imminently fatal asbestos‐related disease receive timely access to compensation. For the most part these are sensible. However, the changes appear to have been introduced without considering some of the practical realities of the existing workers’ compensation regime.
The amendments will drastically modify how the Default Insurance Fund (DIF), employers and private insurers are to approach fatal asbestos-related claims from 1 July 2017:
- The legislation will differentiate between ‘asbestos-related disease’ and ‘imminently fatal asbestos-related disease’ (fatal asbestos disease). Examples of the latter definition will also be provided for in the regulations to assist doctors with their diagnoses of claimants. A worker will only be able to be diagnosed with fatal asbestos disease by a doctor who specialises in either oncology, respiratory medicine or cardio-thoracic surgery.
- Any worker diagnosed with fatal asbestos disease will be automatically entitled to receive 100% of the statutory maximum amount payable for permanent injuries (although this is in addition to any applicable weekly compensation and medical expense payments). The intention is to remove the need for the worker to seek legal advice for the purpose of negotiating a compensation amount for their permanent injuries.
- The DIF will be the relevant insurer for the purposes of all claims that relate to fatal asbestos disease. Therefore, affected workers must submit their claims directly to the DIF, not their employer or their employer’s insurer. As a consequence:
- Employers must, within 7 days of receiving a fatal asbestos disease claim, forward the claim to the DIF. The penalty for failing to do so will be approximately $25,000, which is more likely to be pursued since the DIF will be the insurer for all such claims.
- Employers will not be liable to repay the DIF three times the settlement amount between the DIF and the claimant for fatal asbestos disease claims. This is a departure from the usual rule that applies where the DIF settles claims involving uninsured employers.
- The DIF will have an unlimited amount of time to consider the claim before accepting or rejecting it. This is an exception to the usual 28 day requirement for all other claims and insurers.
- The DIF will be able to recover its payments made to the worker from current or former employers, their insurer(s) or any other entity liable in tort. Recoverable amounts must be agreed or determined by ‘arbitration’.
The amendments are important because they effectively redirect all fatal asbestos disease claims to the DIF, who then may pursue other liable parties after the claimant is compensated. However, once the amendments are considered in the light of current workers’ compensation practices it appears that the haste with which the changes were made has led to some unusual results.
How will an employer know they have received a fatal asbestos claim that should be forwarded to the DIF?
The amendments appear to assume that all fatal asbestos disease claims will be made with a valid certification from an authorised doctor. In reality, this is unlikely to be the case, and there are inevitably going to be situations where a fatal diagnosis is made after a non-fatal asbestos claim is initially made. What if an insurer has already accepted liability? Would an employer or insurer receive credit for any payments made on the claim prior to the DIF becoming involved once a the fatal diagnosis is made and if the DIF pursues recovery later? The amendments cannot respond to any of these questions.
Why is the DIF not required to determine claims within 28 days?
The amendments release the DIF from any obligation to accept or reject fatal asbestos claims within the otherwise standard period of 28 days. The unconvincing reason provided by the government for this exception is that ‘the [DIF] may require additional time to obtain historical records from employers and insurers.’ It should be remembered that all other claims are deemed accepted if not determined within 28 days. This is a significant incentive to investigate and confirm liability quickly, yet the legislature has removed it for the most urgent of claims.
The exception also runs contrary to the idea that workers diagnosed with fatal asbestos disease should receive compensation first, and the DIF should investigate later. Even if historical records (including liable insurers) are identified, the new legislation clearly establishes the DIF as the default insurer. As such, the existence of other liable entities does not abrogate the DIF’s responsibility to make compensation payments, which can only be recovered by the DIF after they are paid.
The amendments do require the DIF to provide reasons if liability is still undetermined after 28 days, but there are no consequences for failing to do so.
How will the Court approach the recovery process if the DIF pursues an employer or insurer?
It is unclear how the ACT Industrial Court will determine recoverable amounts in the absence of agreement between the parties. The Industrial Court has only ever determined disputes about the payment of compensation. Until now it has not previously had to determine issues of recovery. This may also be particularly contentious where the worker is deceased at the time the DIF pursues recovery (a likely outcome given the fatal nature of the diagnosis).
Furthermore, the amendments require either agreement or ‘arbitration’ of recoverable amounts. The latter of these terms is defined by Part 3.13 of the Court Procedure Rules 2006 (ACT) (Rules), which currently only facilitates arbitration between workers and employers/insurers. It is unclear how the DIF will be able to commence arbitration proceedings against an employer or other insurer without minor amendments to the Rules and the official forms prescribed to be used by them. As the legislation currently stands the DIF does not appear to be entitled to bring a general civil action for recovery of fatal asbestos disease payments, which it can do with all other types of claims it administers.
Although there is some uncertainty in how the amendments are going to be applied by the DIF and the ACT Industrial Court, this may not ultimately cause problems. A mass of fatal asbestos disease claims may not eventuate, and even if they do it appears that the DIF may have no viable recovery options where there is no other existing and identifiable liable entity.
For employers and insurers, it is more important to remember that from 1 July 2017 all fatal asbestos disease claims must be forwarded to the DIF, but also that this does not necessarily absolve the employer or relevant workers’ compensation insurer from liability. Until 1 July 2017, employers should continue to handle any fatal asbestos claims by forwarding them to their workers’ compensation insurer.
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