Procedural Direction WC8 – Commutations

Introduction

1. This Procedural Direction concerns the procedure for applications seeking approval of a commutation agreement in the Personal Injury Commission.
2. A commutation is a lump sum payment to a worker which discharges liability for on-going workers compensation entitlements in respect of an injury, by way of a commutation agreement entered into by a worker, their employer and insurer.
3. A commutation agreement is only effective once it is approved by the President, under section 87H of the Workers Compensation Act 1987 (1987 Act).
4. The procedure for the approval of a commutation agreement is designed to be quick, informal and cost effective.

Preliminary

5. This Procedural Direction is made by the President under section 21 of the Personal Injury Commission Act 2020 (the PIC Act).
6. The President or a member before whom a matter is listed may excuse a party from complying with any aspect of this Procedural Direction before or after the time for compliance with any action required.
7. Nothing in this Procedural Direction prevents the President or a member directing a party to take any appropriate step in proceedings.
8. This Procedural Direction is to be read with and subject to any provision of the PIC Act, the enabling legislation, and the Personal Injury Commission Rules 2021 (the PIC Rules).

Applicable Legislation and Rules

9. Parties should be familiar with the following provisions:

   (a)  Part 3, Division 9 of the 1987 Act,

   (b)  Part 9A of the Workers Compensation Regulation 2016 (the Regulation), and

   (c)  Rule [82] of the PIC Rules.

10. Part 9A of the Regulation provides for the classes of cases that may be commuted, and requirements for those classes.
11. Under Part 3, Division 9 of the 1987 Act, the President may approve a commutation agreement lodged at the Commission if satisfied that:

    (a)  the pre-conditions to commute have been met, outlined at section 87EA(1) of the 1987 Act, or

    (b)  the commutation relates to a class of case prescribed by Part 9A of the Regulation, and the lump sum monetary amount is not inadequate and not excessive (sections 87EA(2) and (2A) of the 1987 Act).

Commutation Agreements

12. Commutations are only available for workers whose cases meet certain legislated requirements. Commutation agreements must not be entered into unless the worker has first received legal advice as to the implications of the agreement, and the desirability of obtaining financial advice as to the consequences of the agreement. If the proposed monetary amount is more than $100,000.00, financial advice is mandatory.
13. Liability can only be commuted for injuries which meet the legislated requirements for commutation. Commutation agreements that include other body parts or injuries that do not meet these requirements will not be approved. Medical expenses also cannot be commuted for catastrophic injuries, as defined by the State Insurance Regulatory Authority’s Workers Compensation Guidelines.

Making an application for approval

14. A party to a commutation agreement may lodge with the Commission an Application to Approve a Commutation Agreement (Form 5A) for approval.
15. Applications must be lodged through the Commission’s online portal.
16. A commutation agreement can be withdrawn by the worker at any time prior to approval, by giving written notice to the insurer and to the President through the Commission’s online portal. The worker should consider this at the time an application is lodged, as approval can occur quickly following lodgement.
17. An application must include the contact details, including email addresses, of all parties to the commutation agreement and their legal representatives (if appointed). Parties must also indicate in their application any prior or concurrent proceedings on foot in relation to the worker.

18. Once a compliant application is registered, the Commission will share the application with the other parties listed in the application through the online portal.
19. All relevant supporting documents on which the applicant intends to rely in the application must be attached in a single document bundle which is clear, logical and legible, and:

    (a)  indexed in a coherent way;

    (b)  sorted by document category;

    (c)  paginated, with consecutively numbered pages;

    (d)  does not contain any duplicate or irrelevant material, and

    (e)  does not exceed 500 pages.

20. Parties wishing to lodge documents in excess of 500 pages in their application, must lodge an Application to Lodge Additional Documents (see rule 67B, 67C, and Procedural Direction PIC 12).

Evidence supporting an application

21. The application must attach the documents which provide evidentiary support for the approval of the commutation agreement, and the matters the President must be satisfied of to approve the agreement.
22. The documents must include:
23. the commutation agreement (in the form approved by the State Insurance Regulatory Authority and published on its website) executed by the parties,
24. a statement from the worker:
    1. confirming that they have received legal and/or financial advice as required, and understand the effect and implications of the commutation agreement, and
    2. addressing the pre-conditions under section 87EA(1), or
    3. addressing the requirements under section 87EA(2) and (2A) that they meet a class of case prescribed by Part 9A of the Regulation, and that the amount is not inadequate or excessive with regard to their injury, age, general health, occupation at the time of injury, ability to compete in the open labour market, benefits from another source they may be entitled to, or any other relevant matter, and
25. evidence as to the degree of permanent impairment assessed and agreed to by the worker and insurer, such as a Medical Assessment Certificate (which is not subject to an appeal), a Certificate of Determination, a complying agreement or an agreement made under Part 6 of the 1987 Act, or written agreement between the parties as to the degree of permanent impairment assessed by an independent medical examiner, and
26. any documentation or evidence exchanged between the parties and relied upon in the process of entering the commutation agreement and reaching the lump sum amount (such as medical reports), and
27. written confirmation from the worker’s legal representative that they recommend the lump sum amount in the commutation agreement.
28. In addition, the application may include evidence which supports the above legislated pre-conditions or requirements under sections 87EA(1), (2) and (2A) of the 1987 Act and Part 9A of the Regulation, such as:

    (a)  a list of payments evidencing the payment of weekly compensation, medical expenses or permanent impairment compensation paid, and the periods in which it has been paid,

    (b)  dispute notices as evidence of a dispute about liability to pay compensation,

    (c)  medical, rehabilitation or occupational reports as evidence as to all opportunities for injury management or return to work being fully exhausted (section 87EA(1)), or as to the worker’s health or ability to compete in an open labour market (section 87EA(2A)).

29. As the party lodging the application must attach the relevant supporting documents, there is no requirement for a Reply to be lodged.
30. Should any party to the agreement wish to provide the Commission with information not already contained in the application, or wish to be heard, they are to notify the Commission’s Registry as soon as possible.
31. The Commission may also determine the commutation of liability for a person under legal incapacity, which may be lodged under a Form 5C - Application for Determination to Commutate Liability which must enclose the relevant supporting evidence required by the pre-conditions or other legislated requirements.

Conduct of Proceedings

32. If the application is compliant, it will be referred for a determination on the papers as soon as possible.
33. In circumstances where further information is required for approval or a preliminary view is formed that the application should not be approved, directions may be issued or a preliminary conference may be arranged swiftly to ventilate those issues.
34. It is expected that the worker, the insurer and their legal representatives are available to participate in the conference. An employer representative may also participate. A request to participate should be made to the Commission prior to the conference to ensure that all parties are joined and proceedings are not delayed.
35. At the conference, the parties will be notified of the deficiencies in the application and may be asked to make submissions addressing requirements the President must be satisfied of to approve an agreement.

Determination

36. The parties will be issued with written orders confirming the agreement is approved if the requirements to approve the agreement are met.
37. When a commutation agreement is approved by the President and paid by the insurer, a worker has no further entitlement to workers compensation benefits for that injury, and the worker cannot bring a future claim in relation to that injury including for work injury damages.
38. Where parties are unable to satisfy that the requirements are met, the agreement may not be approved, and a decision will be issued setting out brief reasons why the agreement is not approved.