May v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT CHRISTCHURCH Decision No. 60 /95 IN THE MATTER of The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an Appeal pursuant to Section 91 of the Act BETWEEN KEVIN EDWIN MAY DCA 72/97 Appellant AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 12th day of November 1997 APPEARANCES: Ms F L Burrows for appellant Mr J S McHerron for respondent DECISION OF JUDGE MJ BEATTIE The issue in this appeal is whether the Corporation's decision of 8 November 1996 to cancel all the appellant's entitlements under the Act pursuant to section 73(1) of the Act was correct. 2 Background Facts On 21 March 1990 the appellant lodged a claim with the Corporation. The claim form states that on 8 February 1990, he suffered an injury to his wrist and shoulder while nailing ceiling joints as part of his employment as a carpenter. At the time of his injury he was employed by Stewart Construction Ltd as a Foreman/ Carpenter. The appellant commenced receiving Earnings Related Compensation and continued to do so from March 1990 until it was suspended on 31 January 1996. During the time the appellant was receiving weekly compensation he provided medical certificates which certified that he was either unfit for work or only fit for selected or light work. On 5 October 1995 the appellant was examined by Dr Mcmillan, Orthopaedic Surgeon, who concluded that: "Taking him as a whole it is my opinion that he is fit only for selected work and would not be fit to return to carpentry. The selected work would need to be light and not involved working in confined spaces or in a bent position. In my opinion he would be fit for light assembly line duties or light store work or jobs that he could do at his own pace such as green keeping. However, to be realistic in the present environment it is highly unlikely that anyone of the age of 50 with chronic back, shoulder and wrist complaints will be offered employment by any employer." During the period of time that the appellant had been receiving weekly compensation he had been regularly required to advise whether he had 3 resumed work in a partial or full capacity and in particular, on 17 May 1995 he signed a declaration stating that: "I have not undertaken any paid work or unpaid work that has not been notified to my Case Manager while I have been in receipt of weekly compensation payments". On 1 November 1995 the appellant signed a further declaration in the above terms and in addition that document stated: "I have been advised and fully understand that if I undertake any form of paid work or any form of unpaid work other than every day domestic duties at my residential address that I am to inform my Case Manager". That as a result of information received, the Corporation suspended payment of weekly compensation on 31 January 1996 alleging "due to the fact that you have, over the past months, been working while providing the Corporation with medical certificates certifying you unfit to do so, together with your failure to advise the Corporation of that work". The information that the Corporation had was that the appellant had been working at various times in 1995 doing carpentry work or supervising the same for three different property owners. On 18 September 1996 the appellant was prosecuted for fraud in relation to this matter but the charges against the appellant were not proven and he was acquitted. It was following that acquittal that the Corporation issued a new decision pursuant to section 67A (b) of the Act, that decision letter being as follows: 4 "In ACC's previous decision letter of 12 June 1996 you were advised that your ACC entitlements, including medical costs, were suspended as from 1 February 1996 pending a decision on legal action. I now wish to advise that under section 67A(b) of the ARCIA 1992 the decision of 12 June 1996 has now been revoked and a new decision substituted. Under section 73 (1) of the Act all entitlements have been ceased as from 1 February 1996 as ACC is not satisfied on the basis of information in its possession that you are entitled to continue to receive any assistance under this Act. The points relevant to this decision are: 1. You failed to advise ACC that you were undertaking work as a builder. 2. You exacerbated your injury by undertaking building work 3 . You did not inform your General Practitioner that you were undertaking building work 4. You were certified as unfit while working as a builder 5. You wilfully mislead ACC by signing a declaration stating that you had not undertaken any paid or unpaid work. If you are not satisfied with this decision, or if there is something you do not understand, you should contact me immediately and discuss your concerns. I will explain the decision and will explain your right to ask that the decision be reviewed." The Review Officer in his decision dated 19 December 1996 referred to the fact that the appellant had applied for three building permits to the Waimati 5 District Council. The first, was for extensions to the existing premises of his partner on 2 April 1995, in which he was shown as the Builder and the value of the work to be done $9,800.00. The second, was on 22 June 1995 for the alternations to the existing house of a Mr Hays including the kitchen and lounge areas and installation of a log burner. The third permit, was for the erection of a new building for a Mr and Mrs Boys, that application being made on 10 August 1995. The Review Officer also found that at those times medical certificates indicated that at no stage was the appellant certified fit to carry out such work, those certificates either stating that he was fit only for selected work or totally unfit. Then on 27 November 1995 the appellant made a statutory declaration at the request of ACC, the contents of which was as follows: "I have been working on a contract for building a house of Mr and Mrs Peter Boys of Hakataramea Valley Road between the dates of 11 October to 23 November 1995. I worked out a total contract price and subcontracted the work out, paid the subcontractors and so far have kept no payment for my services. Job is not yet completed. I decided to undertake this work as a trial to determine whether or not I could physically undertake this type of work. I have decided that it is beyond my physical capabilities to do this work. I intend to complete this job but do not intend to accept payment but, I do wish to see the job to completion." Relevant Statutory Provisions The Corporation's decision letter of 8 November 1996 states that section 73(1) of the Act was relied on. That section states as follows: 6 73. Suspension, cancellation, or refusal of compensation and rehabilitation --- (1) The Corporation shall, if not satisfied on the basis of the information in its possession that a person is entitled to continue to receive any treatment, service, rehabilitation, related transport, compensation, grant, or allowance under this Act, suspend or cancel that payment for treatment, services, or related transport, or the payment of compensation, grant, allowance, or provision of rehabilitation. (1A) Where the suspension, cancellation, or refusal under this section is in respect of a matter that is the subject of an agreement or contract or arrangement under section 29A of this Act, the Corporation shall notify the appropriate purchaser of the suspension, cancellation, or refusal within 14 days or such other period as is specified in the agreement. For the sake of completeness subsection 2 of section 73 states as follows: (2) The Corporation shall, upon the unreasonable refusal or failure of any person to -- (a) Comply with any requirement made under any provision of this Act relating to any claim; or (b) Undergo medical or surgical treatment in respect of personal injury (irrespective of whether the Corporation is required or permitted to contribute towards the costs of that treatment); or ( c ) Agree to, or comply with, an individual rehabilitation programme,-- decline to make any payment under this Act. Review Officer's decision The Review Officer held that the appellant had wilfully mislead the Corporation by signing a declaration stating that he had not undertaken any paid or unpaid work when in fact he had. He took the view that the forms which the appellant had been required to sign clearly set out his obligation and he stated "I am therefore satisfied that Mr May carried out work as a builder on three separate properties without informing the Corporation as required by the certificates". The Review Officer then went on to state: "There is no doubt in my mind that Mr May worked as a builder during a period that he was regarded as either totally unfit or fit only for selected work. It is my view also that Mr May was aware of what he was signing on 17 May 1995 and 1 November 1995 when he stated that he was not doing any paid or unpaid work that had not been notified to his Case Manager. Whilst I can accept that there are different clauses which effect entitlement I am satisfied that in this case the Corporation does have the right to consider the information on file and make its decision as to whether or not there should be ongoing entitlements. I am satisfied that Mr May is an intelligent person who knew exactly what he was doing when he carried out the building work for his partner, Mr Hays and the Boys' family. This he did without advising either of his medical advisors or the Corporation and on that basis therefore I am satisfied that the Corporation has made a correct decision to cease entitlements in terms of section 73(1)." 8 Appellant's Submissions Counsel for the appellant submitted that the provisions of section 73(1) require the Corporation to show that on the information in its possession the appellant is no longer entitled to receive compensation. Counsel submits that the Corporation must consider all information in its possession and it cannot just be selective. Counsel submits that the appellant's entitlement to compensation is on the basis of his incapacity and provision for compensation is provided by section 37 of the Act. Counsel submits that on the basis of section 37 which gives rise to entitlement because of incapacity, the Corporation must be satisfied that all entitlement has ceased before it can invoke section 73(1). In that regard it must be satisfied either (a), that the applicant has recovered at 85% of his capacity for work for which he is qualified or, (b) the applicant has earnings in excess of $50.00 per week which would bring in the abatement provisions of section 47. Counsel submits that the Corporation had medical certificates, including a detailed report from an Orthopaedic Surgeon, Mr McMillan which confirmed the appellant's continued incapacity. Counsel further submits that whilst the appellant did undertake work it was certainly not done with a view to profit and there is no evidence that the appellant has obtained any financial benefit or has obtained earnings as that word is defined under the Act as a consequence of any such work. 9 Counsel submits that even if the appellant had mislead the Corporation by signing declarations that he had not undertaken any paid or unpaid work when in fact he had that alone did not permit the Corporation to invoke its powers under section 73(1). Respondent's Submission Counsel submits that when the Corporation cancelled the appellant's compensation it had information in its possession which indicated that he was not entitled to continue to receive it. Counsel then made submissions under section 73(2) and section 64 of the Act contending that the appellant had failed to furnish relevant information when required by the Corporation. Counsel submits that the information regarding work, paid or unpaid, is relevant for the determination of the appellant's ongoing entitlements. Counsel submits that the Corporation's power to cancel under section 73(2) exists irrespective of whether the claimant still retains incapacity. If the appellant has failed to provide relevant information when reasonably requested under section 64 it must decline to make payment to weekly compensation. Decision It is as well to be clear on what the parameters of this appeal are. The Corporation's decision letter of 8 November makes it clear that it is acting under section 73(1) of the Act, contending that the Corporation is not satisfied on the basis of information in its possession that the appellant was entitled to continue to receive any assistance under the Act. It was 10 consideration of that section that the Review Officer based his decision and he states so in his decision. Accordingly, I find that this Court on appeal is required to confine itself to considering whether the Corporation's decision, affirmed as it was by the Review Officer, was correct and thus considerations of section 73(2) and obligations under section 64 are not relevant in this appeal even though the same were put forward in argument by counsel for the respondent as justification for the Corporation's decision. It is to be noted that section 73(1) is the one provision in the Act which empowers the Corporation to suspend or cancel entitlements. The wording of the section is clear that that power can be invoked where the Corporation is satisfied that the person is no longer entitled to receive it. Thus, I find that this section is confined to considerations of whether the person continues to have eligibility for any entitlement that the Act may provide, having regard to the criteria that the Act provides for such eligibility. In the case of this appellant, the determination is whether the appellant maintains an eligibility for weekly compensation by virtue of his incapacity under section 37 of the Act. Section 37 itself sets forth the situations under which entitlement may cease. Similarly, under section 27 of the Act the cost of any treatment, service, physical rehabilitation, related transport or certificate will be met provided the entitlement comes within the criteria set out in regulations made under the Act. Again eligibility relates to the personal injury and the consequences of it and all entitlements stem from the fact of the personal injury for which the person has cover under the Act. 11 The Act constitutes a complete code and provides a regime for benefits and entitlements where a claimant can bring himself within the statutory criteria laid down for same. Similarly, I find that those benefits or entitlements cannot be removed until the person is shown to no longer meet the particular statutory criteria in question. Under the Act, an earner who has suffered personal injury by accident is entitled to weekly compensation during the period of his incapacity. In the case of this appellant the medical evidence is that he had a continuing incapacity. The extensive orthopaedic report commissioned by the Corporation said as much. It is a fact, and I have no quarrel with the findings of the Review Officer as such, that the appellant did engage in "work" during the time he was medically incapacitated but there is no evidence either produced to this Court or within the Corporation's possession that the appellant's entitlement to weekly compensation ought to cease as a consequence of the operation of section 37A or section 37B or section 51 of the Act - these being the provisions under which entitlement may cease as provided by section 37(3). Whilst the Review Officer found that the appellant had engaged in work there was no finding of him receiving any monetary remuneration which would bring about the abatement provisions of section 47. The evidence suggests that some form of "contra" arrangement was envisaged between the appellant and those for whom he was providing the service. The grounds stated in the Corporation's decision letter of 8 November 1996 do not entitle the Corporation to cancel weekly compensation under section 73(1). I find that this section cannot be, and is not intended to be used as some means of punishment for a claimant who is failing to honour his 12 obligations under the Act. Such persons are intended to be dealt with under the provisions of section 73(2). I make no findings as to whether any grounds exists under section 73(2) on the facts of this case but, for the sake of completeness I do observe that, whereas section 73(1) gives us power to suspend or cancel, subsection 2 simply gives power "to decline to make any payment". This provision I interpret as being the punishment provision where a person is refusing to comply with his obligations, particularly the requirements set out in section 64 of the Act, but there are other provisions of the Act which also give rise to specific obligations and which if they are not met would enable the Corporation to invoke 73(2). The provisions of section 73(2) I find are intended to enable the withdrawal of a benefit pending compliance with the particular requirement. There is no power to cancel under that subsection. I note the contents of the 2 forms completed by the appellant and to which exception is taken. The first dated 17 May 1995 gives no warning of any consequences of it failing to be true and correct. The second dated 1 November 1995 states warning "Failure to return this declaration may result in suspension or cancellation of weekly compensation under s.73 2(a). This declaration is requested in terms of s.64 of the Act." Further it states: "I have also been advised and fully understand that failure to advise ACC of any of above matters may lead to criminal prosecution" 13 The information requested and the consequences of non compliance are thereby stated. Neither form purports to give rise to a loss of entitlement by the fact of providing incorrect information. Concealment could give rise to criminal prosecution but that is all. Furthermore, I find that the "Warning" in the latter form is incorrect. There is no power to suspend or cancel under s.73(2). Until compliance the Corporation can only "decline to make any payment under the Act." Accordingly, I find that the Corporation did not have information in its possession which would entitle it to cancel the appellant's entitlements under the Act. Initially, it may have had information which would have permitted it to suspend payment, something which in effect it did, but once the full picture had been obtained (that picture coming by way of statements from the appellant to the Corporation and in the course of the prosecution which it brought against him for fraud) it ought to have recognised there was no basis to consider that the appellant no longer had entitlements under section 37 of the Act. The actions of the appellant in not keeping the Corporation informed of his activities does him no credit and the position ought to have been that once the Corporation were aware of them they ought to have investigated them further and then in the light of that investigation determine whether the appellant still "qualified" for compensation under the Act. The cancellation of entitlements cannot and should not be used as a punishment for non-compliance. The very purpose of section 64 and section 73(2) is to enable the Corporation to be in possession of all the necessary information with which it can then make decisions under section 73(1) should that information establish that there is no longer a basis for entitlement. Until it has such information it cannot invoke s.73(1). 14 I find that the Corporation and the Review Officer have both mis-understood the separate and distinct purposes of section 73(1) and (2) of the Act. Their decisions in that regard were wrong and accordingly are revoked. I allow the appellant $800.00 costs. DATED at WELLINGTON on this 3" day of April 1998 Beathe M J Beattie District Court Judge May.doc(gm