Nelson Marlborough Health Services (McKenzie) v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 25 /99 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act BETWEEN NELSON MARLBOROUGH HEALTH SERVICES (MCKENZIE) Appellant (Appeal No. DCA 52/98) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARING at CHRISTCHURCH on the 11th day of December 1998 APPEARANCE/COUNSEL A J Cadenhead for appellant J Cheyne for respondent RESERVED JUDGMENT OF JUDGE A W MIDDLETON This appeal raises two issues which were considered by the review officer, being: (a) whether Mr Mckenzie's injury of 4 June 1991 was correctly classified by the respondent as a work injury as defined in the Experience Rating Regulations 1993; and (b) if so, whether all the costs should be attributable to the appellant. 2 The background to the appeal is that the appellant's employee Mckenzie lodged a claim with the respondent on 7 June 1991 reporting that he had suffered an accident on 4 June 1991 which was diagnosed by his general practitioner as "lumbar sacral sprain with muscle spasm" which had occurred while " driving hospital van, lifting heavy objects and developed pain in back". Following the lodging of the claim the appellant paid Mckenzie until it notified the respondent on 8 May 1992 that "as Mr Mckenzie has been off work for a period of six months as a result of his injury and as that is the maximum period that we continue to pay the compensation through our payroll system, it would be appreciated if you would commence payment direct to him from 18 May 1992." The file records that for the period from the date of accident until that notification in May 1992 the respondent reimbursed the appellant for the payments made to Mckenzie. On 26 May 1993 the file records a memorandum of an informal review undertaken by Mr G Beer, the respondent's experience rating review officer, that he had discussed the file with representatives of the appellant and noted the record that " Board want to investigate this matter further & will be set down for another meeting. There then follows a similar file memorandum made by Mr Beer on 11 August 1993 in which he recorded that "further discussions were held with the staff management Group to day. This client has been retired by the Board on medical grounds. No prospect of re- employment or retraining. Claim costs remain with the Board. No revision." While various medical inquiries were made, I do not propose to refer to them as the decision I have reached in this appeal does not require reference to the medical situation. On 20 August 1996 the appellant wrote to the respondent regarding a number of work injury claims in respect of its employees and including Mckenzie. On 12 September 1996 the respondent wrote to the appellant's solicitor advising that the Mckenzie claim was considered to be a work accident and it would therefore stay on the appellant's claim history. The letter stated: "NMAHB have accepted being experienced rated for Mr Mckenzie's accident to date. They will not be experience rated after 4 June 1996 which is five years post accident." The letter then indicated that if the appellant was not satisfied with that decision it was entitled to apply for a review. On 27 November 1996 the appellant lodged an application for review in respect of the contents of the letter of 12 September 1996 and sought a review of the "decision determining this to be a work related accident". On 7 January 1997 the appellant's solicitor inquired as to the status of the review application and was advised by the respondent that the Mckenzie file did not contain a work injury report as the claim had been lodged prior to 1 July 1992. It appears that in conjunction with other cases in which the appellant was involved with work related claims the respondent had not issued a formal written decision to the appellant. An employee of the respondent then took the view that in order to activate the already filed review application it was necessary for it to issue a decision 3 that the Mckenzie claim was a work related injury. Consequently a letter was issued on 9 January 1997 stating that the respondent accepted the Mckenzie claim as a work injury under s.6 of the 1992 Act and that it would be attributed to the appellant for the purposes of experience rating. The letter stated further "the costs in respect of this claim that are subject to experience rating will be apportioned to Nelson/Marlborough Health Services Lid at the rate of 100%". The letter also confirmed that the appellant's solicitor had previously indicated an intention to review that decision. As a result the matter proceeded to a review hearing on the basis of the application for review which limited the hearing to whether or not Mckenzie had suffered a work injury. In the result the review officer held that under the Experience Rating Regulations 1993 Mckenzie had suffered a work injury, the costs of which were attributable to the appellant. It is against that decision which the appellant now appeals. Leave was granted to the appellant to adduce in evidence a report from Mr OR Nicholson an orthopaedic surgeon, but as I have already stated because of the decision I have reached in this case I do not propose to deal with medical issues. The respondent raised two issues in regard to jurisdiction on the basis that: (a) There was no right of review available to the appellant in relation to whether the June 1991 injury was a work injury; and (b ) the appellant's application for review did not seek a review in respect of attribution and, at the time of the application for review there was no reviewable decision at issue by the respondent. Both counsel addressed the issue of jurisdiction and both referred to the decisions of this Court in Cadbury Confection Ltd (207/98); Evans (113/97); Taylor (212/98); and Lane Walker Rudkin Ltd (149/97). The background to the Cadbury case involved the issue of whether or not two applications for review were valid within the meaning of s.89 of the Act. In that case the employer had completed a work injury report accepting the employee's 0OS injury of 5 November 1992 as a work injury. Subsequently the appellant in that case objected to the employee's injuries being included in its claims history because it considered the employee had a pre-disposition to the problem which had been caused by her earlier employment and out of work activities. Various interim problems occurred in relation to the hearing of the review application but the review officer subsequently declined the application for review on the grounds that the respondent had not issued a decision which was reviewable. On appeal Judge Beattie found that what the appellant in that case was seeking was to review a decision of the respondent where all it had issued to the respondent was an employer claims history notification (ECHN) indicating that the employee's injury would be included in the appellant's claims history. Judge Beattie held that there was a difference between an ECHN and an ERA (experience rating assessment). He held that the only decision of the respondent which could be the subject of a review pursuant to s.89 of the Act was an ERA which had not been issued. He accordingly held that in that case the application for review was not an application for review of a decision in s.89(4) of the Experience Rating Regulations. He then ruled that that appellant could not: "seek by review to revisit the fact that the respondent determine (sic) that Ms Pool's injury was a work injury and thereafter treated it as such. There are two reasons: firstly, as I have previously noted no such decision was required because of the acceptance of the fact by the appellant. However, even if there could be regarded as being some form of notional decision by reason of that acceptance, the application for review of that decision was made considerably more than three months after that decision would be deemed to have been made and therefore any right of review is extinguished." In that decision Judge Beattie also held: 'Section 65 of the Act gives an employer certain rights and safe guards in relation to work injury claims lodged by employees. Subsection 6 requires that where there is a dispute as to whether or not a work injury has occurred, that matter shall be determined by the respondent and a decision in writing given. Such a decision is specifically identified as a decision giving rise to a right of review in section 89(2) of the Act. The evidence in this case makes it clear that no such decision was ever made in terms of section 65(6) as the appellant accepted that Ms Pool's injury was a work injury. There was therefore, no substantive issue to be determined and thereafter the fact of it being a work injury was thereupon administered by the respondent in accordance with the Act and in accordance with regulations which affected the employer as to payment of premium and its accident Experience Rating. I find that it is quite clear that once three months have elapsed since the acceptance of a claim by the employer as being a work injury, its rights to contest that fact are extinguished." In the case of Evans Judge Ongley held that the 1992 Act does not confer review rights on employers in the case of claims for cover accepted by the respondent under the 1982 Act for accidents arising out of and in the course of employment. The Judge held that a review officer did not have jurisdiction to consider that issue. In that case the appellant had argued that s.65 of the 1992 Act did not apply where a 1982 Act injury had already been accepted by the respondent and that by virtue of s.135(1) it is deemed to be a 1992 Act personal injury that is covered by the 1992 Act. It was submitted that s.89 therefore gave no jurisdiction for a review of the decision of the respondent confirming the existence of cover. Judge Ongley considered that s.65(6) was not intended to deal with disputes over past claims and considered that s.67A was the provision which enabled the respondent to review those decisions. Judge Ongley stated: "I think that the correct way of viewing the matter is that there was no decision at all under s.65 or under s.67A. The only relevant decision was the decision of the Corporation in accepting the claim in 1988. What occurred afterwards was not another decision but the consequences of enactment of s. 104 of the 1992 Act. The employer can 5 still apply to the Corporation for an extension of time to apply for review of the 1988 decision with consequential appeal rights to the Accident Compensation Appeal Authority contained in Part IX of the 1982 Act preserved by s.152 of the 1992 Act. There is of course a new decision applying experience rated levies. That decision may be reviewed pursuant to s.89(4) of the Act, but no argument has been heard as to whether such a review could extend to the validity of the claim for cover." In his decision in Taylor Judge Beattie found that a claimant could not require the respondent to invoke s.67A and then contend that if it elected not to do so that that election became a decision capable of review. He considered that "the provisions of s.67A are clear that it is only an amended decision or a substituted decision that constitutes a fresh decision and which is capable of being the subject of review." The Lane Walker case concerned a different issue from that in Evans. . It was concerned with the scope of a review of the assessment of a premium by the Corporation under the Experience Rating Regulations in which the appellant sought the right to reconsider the circumstances of a 1989 accident in order to dispute that it was a qualifying claim under the Regulations. In that case the claim was made in 1989 but the employer had not accepted that an accident or injury had occurred in employment and did not exercise its review rights. The employer was therefore out of time to lodge a review when the 1992 Act came into force. In considering that appeal, Judge Ongley found that the appellant may have had an opportunity to apply for a review when the respondent wrote to the appellant in 1993 noting that the employee's claim would remain on the appellant's claim history and stating that that decision contained review rights. While there is nothing in the decision to indicate why that letter was written, Judge Ongley held that it was unnecessary in the appeal "to decide what kind of decision was contained in the letter and what opportunity of review would have been available to the appellant". Following an inquiry in December 1993 the respondent advised that appellant that it could apply for a review in February 1994 when the experience rating notifications were issued. Subsequently the appellant applied for a review when an experience rating credit note was issued for the year ending 31 March 1994. In his decision Judge Ongley found that his decision in Evans was not applicable because it was not argued that there had been a decision under s.65 which carried out the right of review under s.89(2). Judge Ongley considered the issue was in relation to s.89(4) and he held: "In this case, the premium loading decision that is under review includes a number of questions, particularly the classification of the claim as a 'qualifying claim', the attribution of the claim to the appellant, the calculation of costs relating to the claim and also the attribution of costs to one or more employer. The appellant submits that the only question that cannot be reviewed is the question whether the costs would have been properly applied if the claimant had cover in respect of the injury. It would follow that, on the making of a premium loading decision in any particular year, the employer has an opportunity for review of all questions raised in the premium loading decision except questions of entitlement of the claimant to actual payments or rehabilitation provision in the event that the claimant does not have cover. It does not follow that the employer would be able to obtain repeated reviews of the accident classification question. The doctrine of issue estoppel will prevent classification questions being re-litigated once they have been decided at review or appeal level.' Mr Cadenhead has stressed that this case can be distinguished from the Cadbury case because in that case no decision letter was issued while in this case the respondent had issued the letter of 9 January 1997 confirming that Mckenzie had suffered a work injury which would be attributed to the appellant for the purposes of experience rating. It is clear that the appellant had accepted for the period between June 1991 and May 1992 that Mckenzie had suffered a work injury and this was specifically confirmed by the tone of its letter of 8 May 1992. It was not until the issue of attribution arose that the appellant raised doubts regarding the nature of Mckenzie's injury. Section 89 empowers an employer who is dissatisfied with the decision of the respondent under s.65 or s.107 of the Act to apply for a review of that decision. It is clear that both the appellant and the respondent had accepted that Mckenzie had suffered an accident under the 1982 Act which by virtue of s.135 of the 1992 Act was deemed to be personal injury under the 1992 Act. While the Cadbury case related to the application of s.65 but involved the acceptance by the employer of a work injury, I consider that the same principle applies in this case. The appellant had at all times accepted that Mckenzie had suffered a work injury and there was therefore no need for the respondent to issue a decision and accordingly no right of review was available. On the basis of Judge Beattie's findings in Cadbury which I respectfully adopt, I consider that having accepted that the appellant had suffered a work injury prior to the introduction of the 1992 Act, the appellant was then out of time for the lodging of a review of that decision. I do not consider that the mistake which occurred in the respondent's office whereby the letter of 9 January 1997 was issued should be invoked to place this appellant in a different position from that of the appellant in Cadbury. I do not consider that it is open to the appellant to now seek to reopen the issue of whether or not Mckenzie's injury was a work injury. As I have found that the appellant could not file an application for review under s.89(2) which the appellant now seeks to do, I am satisfied on the basis of the decision in Evans that no decision was made under s.65 or could have been made when dealing with a 1982 Act work injury claim. As no ERA assessment notice has been issued in this case, so far as I am aware, there could be no question of a review under s.89(4) regarding the classification of the injury as a work injury. Furthermore, the appellant has not sought a review under s.89(4). As I have already said, I have not included details of the specific medical reports because I consider that the review officer did not have the jurisdiction to issue the decision she did in relation to the finding that the appellant had suffered a work injury as the respondent was not required to issue the purported decision of 9 7 January 1997. I consider also, that as the respondent had not made a primary decision in regard to attribution, the review officer had no jurisdiction to deal with that issue. Accordingly the appeal is dismissed. DATED at WELLINGTON this \ \ day of February 1999 A W Middleton District Court Judge dca31298.doc(rd)