WCRA: Demise of Byrne, Rise of NIIS & Clarity of Time for Fraud Prosecutions

The Workers’ Compensation and Rehabilitation (National Injury Insurance Scheme) Amendment Bill 2016 proposes changes to the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (the Act). The Bill was introduced to Parliament on the 14 June 2016.

 Legislative amendments to maintain the status quo in the workers’ compensation scheme

Demise of Byrne

Clause 5 and 31 of the Bill provide that an insurer is not liable to indemnify an employer for a liability to pay damages incurred by a third party contributor under a contractual arrangement. These clauses reverse the effect of Byrne v People Resourcing (Qld) Pty Ltd & Anor [2014] QSC 269See earlier post.

Clause 5 of the Bill amends section 10 of the Act by inserting subsection 4, which provides:

  • Further, a reference in subsection (1) to the liability of an employer does not include a liability to pay damages, for injury sustained by a worker, arising from an indemnity granted by the employer to another person for the other person’s legal liability to pay damages to the worker for the injury.

Clause 5 effectively prohibits the contractual transfer of liability for injury costs from principal contractors or host employers to employers with a workers’ compensation insurance policy (such as subcontractors or labour hire employers). This restores the policy intention that an insurer is only liable to indemnify an employer for its legal liability to pay damages to the worker.

Clause 31 inserts new section 236B in to the Act. The section ensures that an agreement between an employer and a third party, under which the employer indemnifies the third party, does not prevent the insurer from adding the third party as a contributor. The new section also provides that in such an agreement is void and the third party cannot recover the amount of an award or settlement made against them from the employer.

 When passed, the amendments made by clauses 5 and 31 will apply to claims currently in process, if settlement or a legal proceeding has not occurred before commencement.

 Fraud knowledge and commencement of proceedings

As a response to the Industrial Magistrates Court decision of Simon Blackwood v Colin Hinder, clause 45 of the Bill changes whose knowledge is relevant to the timeframe for commencement of fraud proceedings.

Section 579(3) of current Act provides that a proceeding must start –

  • within 1 year after the commission of the offence; or
  • within 6 months after the commission of the offence comes to the knowledge of –
    • (i) for a proceeding mentioned in subsection (IA) – the Regulator; or
    • (ii) for a proceeding mentioned in subsection (2) – the Regulator or WorkCover;

whichever is the later.

Under the current Act, fraud proceedings fall under subsection (2), and therefore the knowledge of both the Regulator and WorkCover is relevant to determining the timeframe for commencement of proceedings. Clause 45 of the Bill amends section 579(1A) to provide that fraud proceedings fall within subsection (1A) as a “prescribed offence”. This change ensures that where fraud prosecutions are to be commenced by the Regulator, only the knowledge of the Regulator is relevant to the timeframe for commencement of proceedings. Additionally, under clause 41 of the Bill, insurers are bound to refer fraud allegations to the Regulator as soon as they have a reasonable belief that the fraud has occurred.

 Rise of the National Injury Insurance Scheme

Clause 30 of the Bill provides for the insertion of new chapter 4A into the Act to implement a model for the NIIS for workplace accidents which is consistent with the NIIS for motor vehicle accidents under the National Injury Insurance Scheme (Queensland) Act 2016. Clauses 12 – 25 and 27 – 39 of the Bill relate to the insertion of this new chapter into the Act.

Self-insurance legislative amendments

Clause 8 of the Bill amends section 84 of the Act by proposing a more flexible arrangement for self-insurers to provide security to the Regulator.  The current Act stipulates security must be given in the form of cash deposit or unconditional bank guarantee. The Bill proposes unconditional financial guarantees issued by general insurers also be accepted as security. Additionally, the Bill removes the $5M security value requirement, instead calculating the value required as a percentage of the self-insurer’s estimated claims liability.

Legislative amendments to prevent financial hardship

Clause 11 of the Bill also proposes to amend the indexation method for statutory compensation entitlements and common law damages entitlements under the Act. The amendment proposed will not result in a reduction to compensation payments as a consequence of the reduction in value of the QOTE.

David Cormack – Brisbane Barrister & Mediator

 

 

 

 

 

 

 

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