Compensation for non-economic loss in relation to 1971 Act injuries
In Schlenert v Australian and Overseas Telecommunications Corporation (1994), the Full Federal Court held that an impairment which became permanent under the 1971 Act or the 1930 Act was compensated both under s 24 for the impairment (with the quantum calculated under the previous Acts) and under s 27 for non-economic loss (NEL). The decision was based on a particular statutory interpretation of ss 24, 27 and 124 of the 1988 Act by the Court and resulted in clients with pre-1/12/88 injuries receiving NEL compensation even though NEL was not compensated under the 1971 or 1930 Acts.
This entitlement to NEL for pre-1/12/88 clients was contrary to the original intention of the 1988 Act and was expressly excluded by the insertion of new s 27(3) by the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2001 which commenced on 1 October 2001. Subsection 27(3) states:
27(3)This section does not apply in relation to a permanent impairment commencing before 1 December 1988 unless an application for compensation for non-economic loss in relation to that impairment has been made before the date of introduction of the Bill for the Act that inserted this subsection.
The date of introduction of the Bill was 7 December 2000. Accordingly, an application for PI compensation made on or after Thursday 7 December 2000 is affected by the new NEL rules. An application is “made” when it is received by MCRS or another relevant authority.
The new rule that NEL is not payable under s 27 applies to clients whose compensable impairment became permanent before 1 December 1988 and who made an application for compensation for permanent impairment (under s 24 and/or s 27) on or after 7 December 2000 (either as new claim or as a reassessment).
The new NEL rule does NOT apply to clients in the following circumstances:
- the client's date of injury is on or after 1 December 1988; or
- the client's pre-88 impairment became permanent on or after 1 December 1988; or
- the client made a written application for compensation for permanent impairment before 7 December 2000.
Note that, where a person applied for compensation for permanent impairment before 7 December 2000 and an interim payment under s 25 was made because the impairment was not yet stable, the client is entitled to an NEL payment when a final assessment is made, whether or not the request for reassessment was made before or after 7 December 2000. In this case, the original application for compensation is taken to preclude the effect of s 27(3).
Pre-Schlenert assessments may require a correction for NEL entitlement
In Schlenert v Australian and Overseas Telecommunications Corporation (1994), the Full Federal Court held that an impairment which became permanent under the 1971 Act or the 1930 Act must be compensated both under s 24 for the physical effect of the impairment (with the quantum calculated under the previous Acts) and under s 27 for non-economic loss (NEL).
Where an assessment of entitlement to compensation for a pre-1/12/88 permanent impairment was carried out before the Schlenert decision was implemented by MCRS (between 1 December 1988 and 30 September 1995), it is likely that compensation for NEL was not paid even though it was subsequently established by the Federal Court that an entitlement existed. In most cases, the assessment will predate the introduction of Defcare and the Permanent Impairment Calculator.
If such a case is discovered in an investigation or a reassessment, the original assessment should be reinvestigated using the Permanent Impairment Calculator (using the date of the prior determination as the Date of Assessment). The Calculator will calculate the total entitlement amount including NEL. The compensation previously paid under s 24 should be entered as a Correction on the Deductions and Clearances Screen. The resulting s 27 entitlement should then be paid to the client.
A second assessment should then be conducted for the later claim (for the subsequent deterioration). Care should be taken to enter only the s 24 payment in the Previous 1971 Compensation Paid box. That amount will be deducted from the total current assessment amount. As from 1 October 2001, NEL amounts will be excluded from 1971 Act impairments where the application is made on or after 7 December 2000.