Departmental Instruction

DATE OF ISSUE:  11 June 2013

Determining claims where a “Ceased Effects” determination was made prior to 2004

Replaces DI No.



The purpose of this Departmental Instruction is to provide policy guidance on determining claims relating to an injury or disease for which a “ceased effects” decision was issued under the Safety, Rehabilitation and Compensation Act 1988 (SRCA) prior to 2004.


The concept of “ceased effects” determinations under the SRCA originated prior to 2004. “Ceased effects” determinations were routinely issued when medical evidence established that the impairment or incapacity effects of an accepted condition no longer existed or were found to have resolved after liability had been accepted.

The effect of such decisions was interpreted at the time as essentially removing a person's future entitlement to treatment (and compensation benefits) for that particular condition.  The wording of the ceased effects decision letters may have indicated that future claims would be rejected.

In April 2003, the Federal Court issued a decision in the case of Australian Postal Corporation v Oudyn (2003) which was significant to liability determinations under the terms of section 14(1) of the SRCA.

The Oudyn decision

The Oudyn decision primarily related to the wording of the letters provided with the ceased effects decisions, stating that the letters illegally indicated that there could be no future liability for the relevant conditions.  The decision held that a ceased effect notification did not mean that the Commission could prevent or reject future claims in relation to a condition for which liability had previously been accepted.

Effectively, the Oudyn decision meant that any condition that was the subject of a ceased effects decision should still be regarded as having initial liability accepted.

A distinction is made between the liability decision made under s 14 of the SRCA and any subsequent decisions made in relation to benefits payable for the effects of the condition.  For example, where a condition results in an incapacity for work or an impairment, but that incapacity or impairment ceases, the benefits payable can be terminated.

Following the Oudyn decision, a policy directive was issued to DVA claims assessors in May 2004 [TRIM reference 1176034E] advising that the practice of issuing ceased effects decisions which bind the Commission to any future application for compensation should be discontinued.

Status of conditions subject to a 'ceased effects' decision

The original decision to accept liability for a condition under s 14 of the SRCA cannot be overturned, unless it was made in error.  This means that any ceased effect decision that has been issued should not be regarded as having reversed the liability decision for the condition.

Rather, the ceased effect decision should only be regarded as a determination that, at the time, the condition no longer met the legislative requirements to receive payments of permanent impairment, incapacity payments and/or coverage for treatment.

A ceased effects decision also does not have the effect of preventing future payments or treatment coverage for the condition should the status of the condition change and once again satisfy those requirements.

Any subsequent claim for compensation or treatment relating to the accepted condition must be considered under the premise of the accepted liability. However, it would be appropriate to investigate whether the incapacity for work or impairment is related to the condition for which liability has been accepted.

Dealing with claims from clients with a previous ceased effects decision

As the initial liability decision for the relevant conditions was not undone by the ceased effects decision, the most practical way to move forward with these cases is to treat any claim for compensation as a claim for a benefit based on an existing liability, not a new initial liability claim.

Incapacity payments may be made for any periods of lost income due to the condition in the intervening period between the ceased effects decision and the new claim, where there is appropriate evidence to support backdated payments. Impairment payments may be payable where it can be established that the condition caused a permanent impairment.

As ceased effects decisions were made on the basis of clear medical evidence that the effects of the decision had resolved, it will be important for delegates to be satisfied that any impairment or incapacity claimed subsequent to a ceased effects decision is related to the condition for which liability was originally accepted.

Importantly, the investigation of such claims should not be treated as a “request for reconsideration” or a “review of own motion” under s 62 of the SRCA. This would have the unintended effect of removing a person's ability to have a decision reviewed internally by DVA before having to apply to the Administrative Appeals Tribunal.  Instead, claims should be investigated and determined in the same manner as any new claim for benefits which is received under the Act (making specific reference in the determination letter to the fact that the purported removal of ongoing Commonwealth liability in the earlier decision is no longer applicable).

Suggested paragraph for determination letters

The following paragraph may be used for determination letters to explain the earlier ceased effects letter and that it is no longer applicable:

The Commission has previously accepted liability for this condition, but after liability was accepted it was found that medical effects from this condition had ceased, and payment of benefits was discontinued.  In Australian Postal Corporation v Oudyn (2003) the Federal Court clarified that liability for this condition did not cease, even where eligibility for compensation had ceased due to no impairment or incapacity for work being present. As a result, I have considered your claim for compensation for this condition under the premise that liability for this condition has already been accepted.

Identifying the condition

It is important to note that there are two situations in which entitlements may be provided in relation to a condition with a previous ceased effects decision:

  • where the original condition has continued to exist or recurred (where the recurrence is a recurrence of the original condition and not a new instance of that condition. For example, tinea that had responded to treatment but then after ceasing treatment came back, rather than a new instance contracted at the local pool); or
  • where a new condition has arisen from the originally accepted condition (for example, an injury to a joint has led to osteoarthritis in that joint).

Evidence requirements

Should a client with a previous ceased effects decision for a condition approach the Department to lodge a claim for entitlements relating to that condition, they should be asked in the first instance to provide a medical opinion from their General Practitioner or treating doctor that:

  • the client has the claimed condition;
  • the client is experiencing medical effects from the condition; and
  • the condition that is the subject of this claim is the same condition for which liability was previously accepted, or arises from that condition, and is not an entirely new condition, including reasons for this view.

Once this information is received, the Delegate can identify questions relevant to the particular client and condition and seek further information from the treating doctor or an appropriately qualified specialist.


Any claims relating to conditions for which liability has been accepted and a ceased effects letter has been issued are to be entered into the existing claim for the condition in Defcare.

CLIK location

Chapter 2.3.8 of the SRCA Liability Handbook provides information on the Oudyn decision and the circumstances under which a liability decision can be reversed.

Further assistance

Any further queries regarding this instruction can be directed to the Liability & Service Eligibility mailbox.

Mark Harrigan

Assistant Secretary

Rehabilitation & Entitlements Policy Branch

          June 2013