Simplifying Impairment Assessments: The Power of Section 323(2)

Section 323 of the Workplace Injury Management and Workers Compensation Act 1998 (“the act”) mandates that when assessing the degree of permanent impairment resulting from a work-related injury, a deduction must be made for any proportion of the impairment that is attributable to a pre-existing injury, condition or abnormality.

This deduction ensures that the impairment rating reflects only the impairment caused by the current injury.

However, determining the exact contribution of pre-existing injuries or conditions to the current impairment can be challenging. The legislation acknowledges this difficulty in section 323(2) of the act, which allows for an assumed deduction of 10% of the impairment if determining the precise contribution would be “difficult or costly”.

This provision is designed to prevent disputes and simplify the process when medical evidence is absent.

We recently secured a major win for one of our clients by overturning a Medical Assessment Certificate (“MAC”) upon appeal.

Factual Background
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The injury occurred on 4 February 2020, when the Appellant fell from a ladder while working, leading to severe pain in his right hip and increased lower back pain.

Subsequent surgeries and treatments, including a total right hip replacement, were required. The injury also led to left hip symptoms due to the appellant placing more weight on his left leg following his right hip surgery.

An Application to Resolve a Dispute in the Personal Injury Commission was filed by us on behalf of the Appellant, seeking a determination on a claim for permanent impairment lump sum compensation made against his employer (“the Respondent”).

The appellant was referred to a Medical Examiner and a MAC was issued.
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Medical Assessment Summary

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1. Right Hip
   • Initial Rating: 20% Whole Person Impairment (“WPI”)
   • Deduction for Pre-Existing Conditions: 25%
   • WPI After Deduction: 15%
2. Left Hip
   • Initial Rating: 2% WPI
   • Deduction for Pre-Existing Degeneration: 50%
   • WPI After Deduction: 1%
3. Lumbar Spine
   • WPI: 4%
4. TEMSKI (Scarring)
   • WPI: 1%

Total WPI: 20%

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Appellant’s Key Submission

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We submitted that the Medical Assessor did not explain how the pre-existing conditions in the hips contributed to the permanent impairment. Additionally, we argued that the Medical Assessor's deductions—one-quarter (25%) for the right hip and one-half (50%) for the left hip—were arbitrary.

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Grounds of Appeal

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1. The assessment was made based on incorrect criteria.
2. The MAC contains a demonstrable error.

Appeals, reviews, reconsiderations and correction of obvious errors in medical disputes are determined by an appeal panel.

In the case of Cole v Wenaline, Justice Smith outlined the legal test for applying Section 323, emphasising that the medical members of an appeal panel must utilise their medical judgment, knowledge, and experience without making assumptions to determine:

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“Firstly, what was the level of impairment after the second injury. Secondly, whether a proportion of that impairment was due to the first injury. Thirdly, what that proportion was.” 1

Findings by the Appeal Panel

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In this case, the Appeal Panel found that determining the exact extent to which the Appellant's pre-existing conditions contributed to the permanent impairment of his right hip was difficult or costly. Several factors influenced this conclusion:

1. s 323 Deductions: The Medical Assessor identified pre-existing conditions, including “coxa profunda, FAI, and osteoarthritis”. These conditions, in the panel’s view, contributed to the appellant’s need for the hip replacement surgery, which led to the impairment rating.
2. Lack of Specific Evidence: While the Medical Assessor identified pre-existing conditions in the appellant's right hip, the evidence did not clearly indicate how much these conditions contributed to his impairment. The appellant had no significant symptoms from these conditions before the injury, making it challenging to gauge their impact.
3. Complexity of the Condition: The appellant's right hip had multiple pre-existing issues, including structural abnormalities and degenerative changes. These conditions likely contributed to his impairment, but their exact role was complicated by the subsequent injury. This complexity made it difficult to isolate the contribution of the pre-existing conditions from the effects of the injury.

Given the difficulties outlined above, the Panel concluded that:

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“The appellant had not been impeded prior to his suffering an injury from his pre-existing abnormality and condition. Thus, whilst these matters contributed to his permanent impairment it is just simply not possible to conclude to what extent that contribution is. Hence, in accordance with s 323(2), it must be assumed as one-tenth because that is not at odds with the evidence.” 2 [48]

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For these reasons, the Appeal Panel decided to revoke the previous MAC and issue a new one. The new MAC raised the final WPI from 20% to 22%.

While this increase might seem modest, it has substantial benefits for our client. It qualifies him as a high-needs worker, making him eligible for weekly benefits up to one year beyond the retirement age and coverage for reasonably necessary medical expenses for life.
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When evidence does not clearly define the impact of pre-existing conditions on a current impairment, section 323(2) offers a practical solution with a 10% deduction, streamlining the process and avoiding costly disputes. Our recent success in appealing this MAC showcases how strategic use of the law can deliver results. This case underscores our expertise in navigating complex impairment issues to achieve the best outcomes for our clients.

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1 Cole v Wenaline Pty Limited [2010] NSWSC 78, 38.

2 M1-W1085/4 Jonathan William Willing v Ivy Contractors Pty Ltd, Personal Injury Commission – Workers Compensation Division, 19 August 2024.