Scoring NEL in pre-1/12/88 cases affected by new s 27(3)

Scoring NEL in pre-1/12/88 cases affected by new s 27(3)

The effect of s 27(3)

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).  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 pre-1/12/88 clients receiving NEL compensation even though NEL was not compensated under the 1971 or 1930 Acts.

The Schlenert entitlement to NEL for clients with a pre-1/12/88 injury was contrary to the original intention of the 1988 Act and has been 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.  This exclusion of NEL payments for pre-88 impairments applies only where the application for permanent impairment compensation is made on or after 7 December 2000.

The Permanent Impairment Calculator identifies that s 27(3) affects the case under consideration by displaying a Screen Warning in the Non-Economic Loss Tables screens in the following terms:

Note. There is at least one 1971 and/or 1930 impairment that is not eligible for NEL compensation under s 27(3).  Refer to commentary for assistance in determining the appropriate NEL scores.

If this Warning is displayed, the Commentary below on “Determining the appropriate scores for NEL” gives guidance on scoring NEL.

Note also that cases determined between 1 December 1988 and 30 September 1995 may not have included a Schlenert NEL entitlement.  Any such cases should be dealt with as discussed in the Commentary “Pre-Schlenert assessments may require a correction for NEL entitlement” below

Determining the appropriate scores for NEL

The exclusion of NEL compensation in pre-1/12/88 cases by new s 27(3) is not intended to affect NEL payments already determined and paid.  Therefore, where an NEL entitlement was properly paid under the previous law, the client continues to be entitled to that amount and it must not be recovered by default by allowing it to be offset against a new s 24 entitlement arising from a reassessment.

Where an assessment or reassessment involves only 1971 Act or 1930 Act impairments, the Permanent Impairment Calculator ensures that an appropriate assessment is made by the Calculator - this Warning will not be displayed and NEL compensation will not be awarded.

Where, however, there are both 1971/1930 Act impairments and 1988 Act impairments, the Calculator collects only one current NEL score in respect of each NEL Table.  It is the responsibility of the assessor to ensure that these scores are appropriate, ie. they do not allow additional compensation for the NEL effects of 1971/1930 Act impairments and they do not take away a previous lawful NEL entitlement paid in accordance with the Schlenert decision.

The key to obtaining a correct current score for NEL is to ensure that the current Non-Economic Loss Questionaire is based only on the NEL effects of the 1988 impairments.  Any NEL effects of the 1971/1930 impairments (eg. pain, suffering, effect on mobility and social relationships) must not be included in the current score.  If the Questionaire is not sufficiently clear in this regard, it should be returned to the medical practitioner for amendment, or the scores could be renegotiated with the client to exclude the 1971/30 impairments.

For a first assessment, the appropriate scores to be entered are those recorded in the Questionaire as resulting from the effects of the 1988 impairments alone.

In a reassessment, the appropriate scores to be entered are the higher of the score recorded in the Questionaire and the previous NEL score (which is likely to include the effects of the 1971/1930 impairments as well as 1988 impairments).  Choosing the higher score ensures that a previous lawful NEL entitlement is not recovered by default and avoids the inherent difficulty in dissecting an NEL Questionaire completed several years earlier.  The Table below illustrates this approach.

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 (ie. 1 December 1988 to 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 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 towards the end of the investigation.  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.