What's New in Commonwealth Compensation

Decisions for fortnight ending 6 August 2010 regarding:

• Liability
• Procedure & costs
• Medical expenses

Liability

Eagle and Military Rehabilitation and Compensation Commission [2010] AATA 584 (6 August 2010) Perth

The Applicant had been a member of the Australian Army Reserve from August 2003. In March 2007, he made a claim under section 319 of the Military Rehabilitation and Compensation Act 2004 (Cth) (“2004 Act”) for acceptance by the Respondent of liability for an injury which he described as "tooth injury” and which he claimed had occurred on or about 18 May 2005 when he was participating in an “Army Mod II” course. In January 2008, a delegate of the Respondent made an “original determination” under section 333 of the 2004 Act rejecting the Applicant’s claim for acceptance of liability in respect of “fractured front tooth”.

Following a request by the Applicant in January 2008, for review by the Veterans’ Review Board (“VRB”) of the abovementioned original determination, another delegate of the Respondent made a determination in April 2008 amending the description of the injury in the original determination (namely, “fractured front tooth”) to “fractured tooth” but otherwise confirming that determination. In November 2008, the VRB made a “reviewable determination” under Part 4 of the 2004 Act affirming the abovementioned original determination (as amended). The Applicant subsequently applied to the Tribunal for review of the VRB’s reviewable determination.

It was common ground that the Applicant sustained an “injury” for the purposes of the 2004 Act, namely, “fractured tooth” (“the injury”) and the Applicant was, at all material times, a member of the Defence Force rendering “defence service” – specifically, “peacetime service” – as defined in section 6(1) of the 2004 Act. The matter in dispute was whether the injury sustained by the Applicant was a “service injury”, as defined in section 27 of the 2004 Act – in particular, whether:

• the injury “resulted from an occurrence that happened while the [Applicant] was a member rendering defence service” (section 27(a)); or
• the injury “arose out of, or was attributable to, any defence service rendered by the [Applicant] while a member” (section 27(b)); or
• in the Tribunal’s opinion, the injury was sustained “due to an accident that would not have occurred ... but for the [applicant] having rendered defence service while a member” (section 27(c)(i) and (iii)).

The Tribunal highlighted that, pursuant to section 335(3) of the 2004 Act, this matter must be decided by the Tribunal “to ... its reasonable satisfaction” – that is, on the balance of probabilities: Repatriation Commission v Smith (1987) 15 FCR 327. As regards the application of section 335(3), it was common ground that the Repatriation Medical Authority had neither determined a Statement of Principles under section 196B(3) of the Veterans’ Entitlements Act 1986 (Cth), nor declared that it did not propose to make such a Statement of Principles, in respect of the kind of injury sustained by the Applicant, namely, “fractured tooth S O 2.5”.

The Tribunal noted that each of the three relevant alternative bases on which the injury sustained by the Applicant might be determined to be a “service injury” (as defined in section 27 of the 2004 Act) involved the requirement of a causal relationship between the defence service rendered by the Applicant and his sustaining that injury: see Woodward v Repatriation Commission [2003] FCAFC 160; (2003) 131 FCR 473 at 488; Roncevich v Repatriation Commission [2005] HCA 40; (2005) 222 CLR 115 at 126; Military Rehabilitation and Compensation Commission v Roberts [2007] FCA 1; (2007) 93 ALD 554 at 565.

The Tribunal noted that although there was some evidence of a temporal relationship between the Applicant’s participating in the “Battle PT Course” run in the course of his defence service and his sustaining the injury, there was no evidence before the Tribunal regarding a causal relationship between his participating in the “Battle PT Course” run and his sustaining the injury. There was no dental or medical evidence before the Tribunal relating to the cause of the injury, and the Applicant himself was at a loss to explain how, or, indeed, precisely when, the injury occurred.

Although the Tribunal may have been satisfied, on the basis of the Applicant’s evidence, that he sustained the injury while participating in the “Battle PT Course” run in the course of his defence service, in the absence of any evidence of a causal relationship between the applicant’s defence service and his sustaining the injury, the Tribunal could not be reasonably satisfied that that injury was a “service injury” within the meaning of paragraphs (a), (b) or (c) of section 27 of the 2004 Act. The presence of a temporal relationship between the Applicant’s defence service and his sustaining the injury was not of itself sufficient to satisfy paragraphs (a), (b) or (c) of section 27 of the 2004 Act.

It was common ground that paragraphs (d) and (e) of section 27, and sections 29 and 30 (which also relate to the meaning of the phrase “service injury”), of the 2004 Act, were not applicable in this case. Accordingly, the Tribunal concluded that the injury was neither a “service injury” nor a “service disease” for the purposes of the 2004 Act and, therefore, was not compensable under that Act.

The Tribunal affirmed the decision under review.

Procedure & costs

James v Military Rehabilitation and Compensation Commission [2010] FCAFC 95 (28 July 2010) Melbourne

The Appellant, an officer of the Royal Australian Navy, made a claim under section 319 of the Military Rehabilitation and Compensation Act 2004 (Cth) (“2004 Act”) in respect of a right knee injury suffered in February 2005. Prior to the commencement of the 2004 Act, the Appellant had earlier suffered two other injuries: an injury to his right ankle (resulting in early osteo-arthritis), and an injury to his left knee (specifically, an aggravation of a pre-existing medial meniscus injury). The Appellant’s entitlement to compensation for these earlier injuries arose, and was satisfied, under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“1988 Act”).

The Respondent assessed the impairment suffered by the Appellant as a result of his right knee injury under the 2004 Act. In order to determine the compensation for this impairment, the Respondent applied a method which offset the compensation already paid to the Appellant under the 1988 Act in respect of the left knee and right ankle injuries. This offsetting method is prescribed by Chapter25 of the Guide to Determining Impairment and Compensation (“GARP M”). The Appellant appealed to the Tribunal in respect of this decision and in respect of other decisions of the Respondent relating to claims by the Appellant under the 1988 Act for his earlier injuries. In October 2009, the Respondent’s decision was affirmed by the Tribunal. The Appellant now appealed to the Federal Court from the decision of the Tribunal.

Pursuant to section44 of the Administrative Appeals Tribunal Act 1975 (Cth), the Court noted that it’s jurisdiction to entertain an appeal from the Tribunal existed only in respect of errors of law on the part of the Tribunal. The principal issue here related to the proper mode of calculating the compensation payable to a claimant under the 2004 Act, where the claimant has a previous entitlement to compensation under the 1988 Act. The issue here was whether the provisions of Chapter 25 of GARP M were valid. The resolution of this issue involved a consideration of the 2004 Act and of the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 (Cth) (“Transitional Act”).

In the Tribunal proceedings, the parties agreed that the Appellant suffered a level of impairment assessed in accordance with GARP M as follows:

(a) 12 points for the loss of range of movement of the right knee joint;

(b) nil points for resting joint pain; and

(c) a rating of 4 for lifestyle effects.

The reference to 12 points was to impairment points out of 100 where 100 represents maximum impairment. The Appellant argued that the amount calculated under Chapter 25 of GARP M for the impairment resulting from the right knee injury, taking into consideration the proper award under the 1988 Act for his earlier injuries, would be minus $4.23 per week if Chapter 25 was valid. The Appellant’s principal argument was, of course, that Chapter 25 was not valid. If this argument were correct, he would have been entitled to an award of compensation. The Respondent contended that the award under the 1988 Act for the left knee and right ankle had to be subtracted from the amount calculated for the right knee injury under the 2004 Act, producing minus $6.55 per week. If the Respondent’s contentions were correct, no compensation would be payable under the 2004 Act. The Tribunal seemed to have apprehended that acceptance of the Respondent’s submission led to a result that the amount payable was $0.95 per week.

The parties to the appeal to the Court agreed that the Tribunal’s calculations could not stand. They also agreed that, once the principal point in the appeal was to be determined, i.e. whether Chapter 25 of GARP M was valid, the Respondent should undertake the necessary recalculation. It was unnecessary for the Court to be concerned with the detail of these calculations; it was noted, however, that the parties agreed that if Chapter 25 of GARP M was valid then its application would lead to the conclusion that no compensation was payable under the 2004 Act in respect of the Appellant’s right knee injury.

The Court indicated that the Tribunal erroneously proceeded on the footing that the impairment resulting from the Appellant’s ruptured anterior cruciate ligament of the right knee injury consisted of 12 impairment points and a lifestyle rating of 2. It was common ground between the parties that this impairment consisted of 12 impairment points and a lifestyle rating of 4. The Respondent conceded that the Tribunal fell into error proceeding on a factual basis that was contrary to a fact agreed between the parties. Specifically the agreed lifestyle rating for the purposes of Chapter 22 of GARP M was a rating of 4, not 2 as the Tribunal seemed to have supposed.

In Court, the Appellant argued that the Tribunal erred in law in misconstruing the provisions of the 2004 Act. In particular, the Appellant contended that the offsetting method provided by Chapter 25 of GARP M was in excess of the power conferred on the Respondent by the 2004 Act and the Transitional Act. In particular, it was argued on behalf of the Appellant that:

• The text of section 13 of the Transitional Act did not support Chapter 25 of GARP M in that it was concerned only with Special Rate Disability Pensions;
• Chapter 25 of GARP M was not a reasonably proportionate effectuation of the delegated legislative power conferred by section 67 of the 2004 Act and section 13 of the Transitional Act;
• Section 13, and especially section 13(4), of the Transitional Act should have been read down so as not to permit an unintended destruction of a claimant’s right to seek damages at common law;
• Section 13, and especially section 13(4), of the Transitional Act should have been read down because it was concerned with the quantification not the creation of a claimant’s entitlement to compensation.

In relation to the first issue, the Court noted that the guide contemplated by section 67(1) of the 2004 Act was required to be concerned with the determination, for the purposes of section 68(2), of "the degree of impairment suffered by the person as a result of the compensable condition", being the "service injuries or diseases ... of the person" referred to in section 68(1). The Court noted that expression did not include an injury or injuries suffered prior to the operation of the 2004 Act. The Court noted it was section 13(4) of the Transitional Act which expressly addressed the relationship between the service injury which constituted the compensable condition for the purposes of section 68 of the 2004 Act and earlier injuries which were compensable under the earlier regime. The Court noted it was difficult to see that there was anything in Chapter25 of the GARP M regime which was not expressly authorised by section 13.

It was argued on the Appellant’s behalf that Chapter 25 of GARP M may be applied to produce a negative figure, and that is said to be a result so absurd that it cannot be attributed to the legislature. However, it was acknowledged on the Appellant’s behalf that a negative figure did not oblige the claimant to make any payment to the Commonwealth: it simply meant that no compensation was payable for the impairment the subject of a claim under the 2004 Act. The difficulty the Court had with the argument advanced on behalf of the Appellant, and which, in the end, it considered to be insuperable, was that Chapter 25 of GARP M was expressly authorised by the text of section 13(4) of the Transitional Act. The Court highlighted that there was no way of reading that text down so as to rob Chapter 25 of GARP M of the support afforded by that text.

On the Appellant’s behalf it was argued, with diminishing conviction as the argument proceeded, that the Explanatory Memorandum revealed section 13 of the Transitional Act was only concerned with special rate disability pensions (“SRDPs”). The Appellant submitted that, because the explanatory memorandum referred to SRDPs as examples of payments that may be affected by section 13, the section was therefore limited in its application to the determination of entitlement to an SRDP. The Court did not consider this submission to be compelling. The Court noted that nothing in the text of section 13 of the Transitional Act suggested that its operation was confined to the determination of SRDP entitlements. Indeed, the contrast between the open-ended language of section 13, and especially section 13(4), and the specific reference in section 14 to SRDPs was distinctly, in the Court’s opinion, against the Appellant’s argument in this respect. The Court indicated it was also the case that, in truth, the Explanatory Memorandum, when read in full, did not seek to limit the application of the section exclusively to SRDP entitlements.

Finally, on this point, the Court noted that the reading down of the section for which the Appellant contended was inconsistent with section 13(1) which applies if "a claim is made" under section 319. The Court noted that SRDPs are only payable once a claim under section 319 has already been made and determined. It was also inconsistent with section 13(4) insofar as it applied to "compensation a person is entitled to under Pt 2 of Ch 4" of the 2004 Act. The Court further noted SRDP payments are payable under Part 6 of Chapter 4, not Part 2.

Regarding the second issue, the Court noted that in this case there was certainly no "limit" set by the legislation against which one could measure the operation of Chapter25 of GARP M. There was also no doubt that the introduction of the provisions of Chapter 25 of GARP M was not beyond the real exercise of power conferred by the Transitional Act. The Court noted that section 13(4) of the Transitional Act specifically contemplates that entitlements under the 1988 Act may be offset by GARP M against 2004 Act entitlements, without fixing a limit as to the effect of that setting off before reaching the point of zero entitlement.

With respect to the third issue, the Appellant referred to section 388 of the 2004 Act which bars claims against the Commonwealth for injuries and diseases suffered by service members, and to section 389(1) which allows a person to seek common law damages for non-economic loss, provided that "compensation is payable under section 68, 71 or 75 in respect of a service injury or disease of the person but the compensation has not yet been paid". The argument advanced for the Appellant was that if Chapter 25 of GARP M is effective to allow compensation payments under the 1988 Act to be offset against entitlements under the 2004 Act, there will be some circumstances (such as the present), where the net compensation in respect of an injury will be zero. As a result, so the argument goes, no compensation will be payable under section 68 and the exception to extinguishment under section 389(1) will not apply. The Appellant submitted that this was a "significant reduction in the rights of injured persons".

The Court considered it was clear that the purpose of section 388 of the 2004 Act was to extinguish common law rights and to replace them with rights under the 2004 Act. Furthermore, it stressed that section 13(4) of the Transitional Act specifically contemplates offsetting 1988 Act entitlements against 2004 Act entitlements. The Court noted this process was obviously apt to result in no compensation being payable in particular cases. In such a case, the Court indicated that the applicant is in no worse position than some other injured persons to whom no compensation is payable, such as an applicant who does not meet the minimum number of "impairment points" required by section 69. In that respect, the Court noted that such a person will also not be entitled to bring an action within the scope of section 389(1).

Regarding the final issue, on behalf of the Appellant, reference was made to the decisions of the House of Lords in Lysons v Andrew Knowles & Sons Ltd [1901] AC 79 esp at 85-86, 92 and of the High Court in Nash v Sunshine Porcelain Potteries Ltd [1959] HCA 7; (1959) 101 CLR 353 esp at 361 as authority for the proposition that as a matter of statutory construction a provision of a statute which creates a right to compensation is not to be read down because of difficulty in accommodating provisions concerned with the quantification of compensation to the circumstances of the case.

In this regard, the Court indicated that reference to this principle of construction did not avail the Appellant. The Court noted that insofar as section 13(4) of the Transitional Act may affect the operation of sections 67, 68 and 69 of the 2004 Act, it was concerned not merely with the quantification of compensation but with the ascertainment of the impairment on which the liability of the Commonwealth to satisfy an entitlement to compensation depends. The Court found that in any event, there was no need for recourse to principles of statutory construction which were designed to assist in the resolution of a doubtful case. The effect of section 13(4) of the Transitional Act was clearly not in doubt.

The Court ordered that the decision be set aside and be remitted to the Respondent for determination in accordance with law.

Medical expenses

Douglas and Military Rehabilitation and Compensation Commission [2010] AATA 575 (3 August 2010) Melbourne

In May 1955, the Applicant’s right upper lateral incisor tooth (tooth 12) was fractured during his reserve duties. Liability under the Commonwealth Employees' Compensation Act 1930 (“1930 Act”) was accepted. All procedures performed on the Applicant’s teeth since then were paid for by the Department of Defence, at that time the relevant department responsible for administering legislation for military compensation.

In January 2006, the Applicant was advised that he had developed a peri epical infection in the root of tooth 46 (the second right pre molar in the lower jaw) and sought approval and payment for treatment of this tooth. The Respondent sought medical opinion which reiterated an earlier finding that there was no evidence of a relationship between the compensable tooth (originally tooth12) and tooth 46. On this basis liability was denied in February 2006 and affirmed upon reconsideration in March 2007. This was the subject of the first application in these proceedings

The second application related to treatment to tooth 16. In March 2006, the Applicant’s treating doctor had requested funding for treatment of this tooth as it had developed pulpitis and required root canal treatment. This tooth had a crown that had previously been funded by the Respondent in July 2002. Liability was denied by inFebruary 2007 and affirmed upon reconsideration in April 2007. The Applicant applied to the Tribunal inJuly 2007 for review of both of these decisions.

The issues before the Tribunal were as follows:

• Were the disease processes in teeth 16 and 46 related to the original compensable injury to tooth 12; and
• If so, was the treatment proposed by the Applicant’s treating doctor appropriate in terms of being reasonable?

It was not disputed that the Department of Defence’s acceptance of liability for the damage to the Applicant’s right second incisor tooth was correct and in accordance with the 1930 Act. Since 1955, various departments had paid for dental treatment arising from the loss of this tooth which in dental terminology was tooth 12. Between 1956 and 1991, all treatment conducted was regarded by both the Respondent and the dental experts as being appropriate and reasonable throughout that period. Following the Applicant’s transfer to the care of his treating doctor in 1991 routine dental care was provided and paid for by the Applicant until his doctor advised in 1998 that the bridge involving the lost tooth 12 and adjacent teeth 13, 14 and 15 be replaced. The medical reason given for the planned replacement was that the bridge was not ideal given the advances in dental treatment that had occurred since 1991. As the doctor’s clinical records were sparse and his memory of events had faded with the passage of time, it was not clear to the Tribunal as to whether or not there were any other indications for replacing the bridge.

In 1998, the Applicant’s treating doctor had recorded that he advised the Applicant that he required a full mouth reconstruction. Between 1998 and 2001, his doctor sought departmental funding to pursue this full reconstruction. It was not until December 2001 that an opinion was obtained from a consultant dentist by the Department of Defence SRCA delegate. The consultant dentist had advised that there was a lack of evidence to justify further new crowns for teeth previously not involved in relation to the treatment of tooth 12. Despite this advice extensive reconstruction work was undertaken and eventually the department accepted liability and paid the Applicant’s doctors fees.

In these proceedings, the Respondent attributed the payment of these fees to the Applicant’s treating doctor as an administrative error, the nature of which was not advised. While not pertinent to this decision, the Tribunal assumed this administrative error was founded either by the failure to follow the consultant dentist’s expert advice or the payment of the Applicant’s treating doctor’s fees for treatment to the left sided dentition (upper left lateral incisor) in December of 2005 after the MRCA commencement date, when liability under the Act for the unintended consequences of medical treatment paid for by the Commonwealth ceased (section6A(2A)(c)).

The issues before the Tribunal related only to the past and planned future treatment of tooth 16 for which the Applicant’s treating doctor sought acceptance of liability for root canal treatment in March 2006 and the planned replacement of tooth 46 with an implant supported crown. Tooth 46 had previously been crowned with liability for this procedure accepted in July 2002. A split had developed in tooth 46 necessitating its extraction in approximately 2007. It was not clear from the treating doctor’s clinical notes when exactly tooth 46 was extracted. The basis for these claims was essentially that earlier dental work (in 2000 and 2002) had been accepted as compensable by the Department of Defence under the Act.

In summary, the opinions of a prosthodontist and associate professor were that past and planned treatment of teeth 16 and 46 was unrelated to the original compensable injury to tooth 12 and could only be indirectly linked with this injury as a result of the Applicant’s treating doctor’s previous care plan. In their opinion the latter had not been clinically indicated, was in fact deleterious in that it was irreversibly destructive and was not a course of treatment accepted by the core of the dental profession. Alternative simpler, more protective and less expensive treatment had not been considered by the treating doctor. Both experts considered the full mouth reconstruction undertaken by the treating doctor to have been unreasonable treatment leading to the pathology of teeth 16 and 46.

The Tribunal determined that there was not and never had been a direct relationship between the compensable injury to tooth 12 and any treatment undertaken or planned to tooth 16 and tooth 46. The contended link between tooth 12 and tooth 46 and tooth 16 had arisen indirectly from the Applicant’s doctor’s overall care plan of the Applicant’s dentition. This care plan and the treatment it included was unreasonable for the reasons given by the specialist doctors and to such a degree that section16 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) was not satisfied.