Moy v Emoleum Services Pty Ltd

1. [1]

   The Plaintiff seeks judicial review of a decision of the Medical Appeal Panel of the Workers’ Compensation Commission. The certificate of the Panel with the Statement of Reasons was given on 10 October 2014.

Factual background

1. [2]

   The Plaintiff suffered injury to his right knee and back in the course of his employment as a foreman of traffic control on 19 May 2008, when he tripped and fell into a drainage hole, and continued to roll about 10 feet down an embankment, coming to a rest at the bottom of a drain.

2. [3]

   The Plaintiff noted immediate pain in his right knee associated with swelling, as well as lower back and left leg pain.

3. [4]

   The Plaintiff returned to work, but the right knee symptoms of pain failed to improve.

4. [5]

   An x-ray was taken on 4 June 2008, which demonstrated advanced medial tibiofemoral joint osteoarthritis, with mild osteoarthritis seen at the other compartments. He was treated with analgesic, but he continued to complain of pain.

5. [6]

   An MRI was conducted on the right knee on 2 December 2008 which showed a chronic tear within the anterior cruciate ligament, as well as a tear of the posterior horn of the medial meniscus with a detached meniscal fragment, which was causing irritation to the bone and joint generally.

6. [7]

   He underwent arthroscopic surgery on 6 July 2009, which confirmed the medial meniscus fragmented tear with a large anterior horn fragment protruding, as well as medial compartment osteoarthritis. The anterior horn fragment was removed, and the joint was washed out.

7. [8]

   Following initial improvement in the symptoms of pain, the right knee deteriorated, resulting in reported feelings of instability, pain when weight-bearing, discomfort after walking, swelling and pain when turning in bed at night. A right total knee replacement was recommended to alleviate the symptoms, and this was undertaken on 2 November 2011. The insurer accepted liability for the right total knee replacement.

8. [9]

   Prior to the right total knee replacement a claim for lump sum compensation in respect of permanent impairment resulting from the injuries received on 19 May 2008 was made on 22 October 2010. The claim was made in respect of both the lumbar spine and the right knee. Liability for the lumbar spine was disputed on 17 March 2011.

9. [10]

   An Application to Resolve a Dispute was lodged in the Workers Compensation Commission ('the Commission') but those proceedings were discontinued on 20 July 2011.

10. [11]

    A further claim was made for lump sum compensation in respect of permanent impairment on 18 September 2012 for both the right knee and the lumbar spine. Injury to the lumbar spine was still disputed.

11. [12]

    An Application to Resolve a Dispute was lodged in the Commission on 20 February 2013.

12. [13]

    On 10 March 2014 the Commission issued a Certificate of Determination pursuant to s 294 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ('the 1998 Act'), inter alia, referring the medical dispute, being the dispute regarding the degree of permanent impairment (s 319 of the 1998 Act), to an Approved Medical Specialist (AMS) pursuant to s 321 of the 1998 Act. This was on the basis that liability for both injuries had been conceded (s 321(4)(a) of the 1998 Act).

13. [14]

    The AMS issued a Medical Assessment Certificate (MAC) on 19 May 2014 in which he assessed 15 per cent whole person impairment ('WPI') for the right lower extremity (right knee), and 7 per cent WPI for the lumbar spine resulting from injuries sustained to those body parts on 19 May 2008. The AMS then applied a four-fifths deduction to the assessment for the right lower extremity resulting in an impairment rating of 3 per cent WPI, and a three-sevenths deduction to the assessment for the lumbar spine, resulting in an impairment rating of 4 per cent WPI. The final total WPI was 7 per cent.

14. [15]

    Such an assessment precludes the Plaintiff from obtaining compensation for permanent impairment because it does not exceed 10 per cent WPI for the payment of lump sum compensation (s66(1) of the Workers Compensation Act 1987 (NSW) ('the 1987 Act')), and also precludes the Plaintiff from any 'work injury damages', which requires a threshold of 15 per cent WPI being reached (s151H of the 1987 Act).

15. [16]

    Relevantly, the AMS explained the reason for the deduction in respect of the right lower extremity (right knee) at [11] of the MAC as follows:

16. [17]

    An appeal was brought by the Plaintiff from the MAC pursuant to s 327(3)(d) of the 1998 Act in respect of both the right lower extremity and the lumbar spine, on the basis that it contained a demonstrable error.

17. [18]

    The Plaintiff submitted that the AMS had made incorrect adverse credit findings about the Plaintiff on the basis of an erroneous conclusion that the AMS did not have all the clinical records before him, and on the basis of his mistaken belief that there were missing clinical records regarding the right knee from the Plaintiff's treating general practitioners between 2006 and 2009.

18. [19]

    The AMS did not accept the Plaintiff's evidence that he had not "had problems with his right knee in the past"; nor did he accept that the Plaintiff had not had ongoing problems with his right knee during that two-three year period between 2006 and 2009, on the basis that the AMS believed that he would have had ongoing problems with his right knee, despite there being no evidence to support such a conclusion.

19. [20]

    The First Defendant opposed the appeal, but conceded that the AMS "failed to appreciate that the complete bundle [of clinical records] had been annexed to the reply", and was before the AMS.

20. [21]

    The Second Defendant was satisfied that the appeal ought to proceed (s 327(4) of the 1998 Act) to the Third Defendant (“the Panel”) because at least one of the grounds for appeal had been made out.

21. [22]

    The Panel issued its Statement of Reasons and MAC on 10 October 2014. The Panel revoked the earlier MAC on the basis that it found that the earlier MAC contained a demonstrable error.

22. [23]

    The Panel stated in its Statement of Reasons:

23. [24]

    The errors which the Plaintiff submits impugn the Panel’s decision, such that it is vitiated, are contained at [27] of the Statement of Reasons:

Submissions

1. [25]

   There are four relevant categories of errors identified in this paragraph. They are that the Panel:

(a) First error – erroneous conclusion

1. [26]

   The Plaintiff submitted there was no sufficient explanation nor reasons provided as to why the Panel adopted the approach it did. On the face of it, the approach was illogical, irrational and legally unreasonable. There was no probative evidence to support a finding of four fifths and the Panel did not identify such evidence. The assertion that the pre-existing condition was integral did not have the relevant causal character for the application of s 323 of the 1998 Act other than to demonstrate the presence of a pre-existing condition.

2. [27]

   The First Defendant submitted that the Statement of Reasons makes it clear that the Panel did not adopt the reasoning of the AMS when it reached its conclusion of a four-fifths deduction. On the contrary, the Reasons show clearly that the Panel considered that the AMS had made demonstrable errors.

3. [28]

   The First Defendant submitted that, although it was not possible to determine precisely the extent of the Plaintiff’s impairment due to pre-existing osteoarthritis and while it was difficult to determine it precisely that did not mean that the two orthopaedic surgeons on the Panel could not use their expertise to determine that the assumption of 10% was at odds with the available evidence.

4. [29]

   Further, the First Defendant submitted that the Plaintiff’s complaint that reaching a conclusion of a four-fifths deduction was wrong, and illogical, was premised on the assertion that the AMS was correct in assessing four-fifths on the evidence he had available to him but did not have regard to. That is, if the AMS was correct in finding that the Plaintiff had ongoing problems with his knee at the time of the injury, he was still wrong in assessing four-fifths as the deduction.

(b) Second error – failing to take account of a relevant consideration

1. [30]

   The Plaintiff submitted that the evidence which the Panel failed to consider was the Plaintiff’s evidence that he was not suffering symptoms in the right knee at the time of his injury, the clinical records of the general practitioner that supported his evidence that his right knee was asymptomatic at the time of the injury, and the evidence that supported the finding that the injury precipitated persistent symptoms requiring treatment.

2. [31]

   The Plaintiff submitted that although the Panel expressly referred to that evidence, the Panel’s engagement with it was not “proper, realistic and genuine”, echoing the requirements stated by Gummow J in Khan v Minister for Immigration and Ethnic Affairs [1987] FCA 457; (1987) 14 ALD 291. This was because the Panel’s focus was directed to the finding it made that the present impairment rating was based on his now having an artificial joint, and the finding that the surgery for a total knee replacement was to get rid of the arthritic joint.

3. [32]

   The Plaintiff submitted that in the face of the evidence constituting the relevant consideration, the reinstating of the AMS finding of four fifths was illogical, irrational and legally unreasonable.

4. [33]

   The First Defendant submitted that the Statement of Reasons shows clearly that it accepted that the Plaintiff was asymptomatic prior to the injury. It follows that the Panel took that evidence into account when reaching its decision. The findings the Panel made were not illogical, irrational or unreasonable because it did not adopt the conclusion of the AMS.

5. [34]

   The question the Panel had to answer was not “what impairment results from the soft tissue injuries suffered” (because soft tissues had been taken away), but “what impairment results from the total knee replacement” (accepted now at 15%) and “what proportion of the impairment should be deducted that is due to any pre-existing condition. The significant matter was, the First Defendant submitted, that by the time it came to prepare its Reasons the Plaintiff had undergone a total knee replacement. That was what the Panel had to deal with in making its assessment.

(c) Third error – asking the wrong question

1. [35]

   The Plaintiff submitted that the Panel first found that the pre-existing osteoarthritis was an integral part of his present impairment because the surgery was necessary to get rid of the arthritic joint and to replace it with an artificial joint. The Panel then stated that the Plaintiff’s impairment rating was based on his having an artificial joint, that it was not possible to be precise and that the best that could be done was to approximate the proportion of impairment due to the pre-existing condition.

2. [36]

   The Plaintiff submitted by approaching its task in this way the Panel fell into error by asking itself the incorrect questions of “what is the impairment resulting from the artificial joint?” and “what part did the pre-existing osteoarthritis play in the injury necessity for the artificial joint?”. The correct questions were “What is the impairment resulting from the work injury?” and “What proportion of that impairment is due to the pre-existing condition?”

3. [37]

   The First Defendant submitted that, as paragraph [26] of the Statement of Reasons makes clear, it determined that it had to re-assess the medical dispute because of the error made by the AMS and it asked itself the right question, namely, what was the deduction to be made for the pre-existing condition or abnormality, in accordance with s 323(1).

(d) Fourth error – inadequate reasons

1. [38]

   The Plaintiff submitted that the Panel failed to provide reasons or adequate reasons as to why it assessed the deduction under s 323(1) as four-fifths, particularly in the light of its having agreed that the AMS’s assessment of four- fifths was based in part on an erroneous finding. Stating that the pre-existing condition was an integral part of the present impairment was not an explanation of how the deduction of four-fifths reflected the contribution made by the pre-existing osteoarthritis to the impairment after the injury.

2. [39]

   The First Defendant submitted that its reasoning was clearly exposed. In particular the Statement of Reasons show that the four-fifths deduction was based on the Plaintiff’s “extensive and pre-existing osteoarthritis” being an integral part of his present impairment. In setting out its acceptance of the evidence and providing those reasons the Panel complied with its obligations identified in Campbelltown City Council v Vegan [2006] NSWCA 284 ; (2006) 67 NSWLR 372.

Consideration

1. [40]

   At the outset of the hearing Mr Dodd of counsel for the First Defendant sought to cross-examine the solicitor for the Plaintiff who had sworn an affidavit annexing the evidentiary material relevant to the Panel’s decision. The particular matters about which he sought to cross-examine were two entries on 3 and 11 April 2006 where the general practitioner referred to having prepared letters which were apparently sent to the First Defendant’s solicitor in these proceedings. The letters were said not to have been produced anywhere. The First Defendant did not know whether the letters concerned the knee problem the subject of the present proceedings or whether they were in relation to something else entirely. Mr Dodd said that the Plaintiff had had other accidents. He said that the matter went to my discretion whether or not, if I found error, to send the matter back to the Panel for reconsideration.

2. [41]

   I declined to permit cross-examination and I said that I would include my reasons for doing so in this judgment.

3. [42]

   The issue appears to me to be a simple one. If I find error in relation to the way the Panel went about its decision-making I would ordinarily quash the certificate and direct the Panel to consider the matter according to law. It would open at that time for the letters referred to on these dates to be called for and placed before the Panel if they are relevant to the knee injury. If I was of the opinion that there was no error in the Panel’s decision-making the letters would cease to have relevance.

4. [43]

   An application of the present type is not a merits review of the matter before the Panel. The consideration is only one of the procedure and decision- making process adopted by the Panel as is evidenced in the report of the Panel. It would not assist me to have additional material that was not before the Panel.

5. [44]

   Section 323 of the 1998 Act deals with the deduction for a previous injury or a pre-existing condition. That section relevantly provides:

6. [45]

   The approach to the task was explained in Elcheikh v Diamond Formwork (NSW) Pty Ltd (in liquidation) [2013] NSWSC 365 by Schmidt J who said:

7. [46]

   The Panel said at [27] of its Statement of Reasons that it accepted the Plaintiff’s submission that he was not suffering symptoms in his right knee at the time he suffered his injury. That does not result in no finding of a deduction for a pre-existing condition.

8. [47]

   In Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 it was made clear that, even though a pre-existing condition may have been asymptomatic, if it is a contributing factor to the permanent impairment then a deduction is required. Basten JA (with whom McColl JA and Handley AJA agreed) said:

9. [48]

   It is not suggested in the present case that the Panel did not adopt this approach when dealing with the second step identified in Elcheikh. The errors were said to have taken place at the time the Panel dealt with the third step.

10. [49]

    As noted earlier, the Plaintiff was critical of the Panel saying that the pre-existing condition was an “integral” part of his present impairment. That criticism relied on what Campbell J said in Ryder v Sundance Bakehouse [2015] NSWSC 526:

11. [50]

    Whilst I consider that it is unfortunate that the Panel failed to refer to the words of the section in performing its task, which was to deduct from its assessment of permanent impairment any proportion of the impairment “that is due to any pre-existing condition”, and that it referred to the pre-existing condition as integral to the present impairment, I do not see that those matters themselves constitute error if, at that point, the Panel was carrying out the second step in Elcheikh. Describing the pre-existing condition as integral in that way is simply another way of saying that the pre-existing condition contributed to the impairment. The Plaintiff appeared to accept that this was so but submitted that the use of “integral” at the third stage was an error.

12. [51]

    I find, however, that the Panel fell into error at the time it performed the third step identified in Elcheikh, that is, assessing what proportion of impairment was due to the pre-existing condition. In my opinion three errors are established. First, the reasons given by the Panel are entirely inadequate. Secondly, to the extent that any reasons are given, the deduction was based on assumption or hypothesis. Thirdly, the conclusion is not supported by probative or logical grounds.

13. [52]

    As far as the absence of adequate reasons is concerned, the only reason given for the conclusion is “the extensiveness (sic) of the osteoarthritis”. The Panel does not elaborate on the extent of the osteoarthritis. They referred earlier in paragraph [27] to an x-ray done shortly after the Plaintiff’s injury which revealed “bone on bone osteoarthritis” in the right knee. The x-ray report in fact did not use that description but that was Dr Bodel’s conclusion from having examined the scan (that description appears in his report of 16 July 2010 which the Panel had).

14. [53]

    In the light of the Panel’s determination that the precise proportion would be too difficult to determine, the starting point ought to have been s 323(2). If the proviso was to be applied, which is what ultimately happened, the 10% assumption had to be at odds with the available evidence. The available evidence is identified but how it was used to reach the conclusion of four-fifths is not disclosed. The requirement for adequate reasons was heightened in the present case because the AMS had deducted four-fifths for the pre-existing condition and that conclusion was said by the Panel to have been brought about by a mistaken conclusion on the AMS’s part. The Panel said:

15. [54]

    If the error about one matter (the Plaintiff experiencing ongoing problems with the right knee at the time of the injury) contributed to the conclusion of a four-fifths deduction, one could expect cogent reasons for the Panel to reach the same result even although it took into account the evidence that it had and which was before the AMS and should have been taken into account by him. As Basten JA said in Campbelltown City Council v Vegan at [121]:

16. [55]

    In Vitaz in the passage immediately following what is set out at [47] above, the Court said:

17. [56]

    In the present case there was a contest about whether the pre-existing condition contributed to the level of impairment and, if so, to what extent. The result must be that reasons must be provided for the conclusion reached even if intuition from experience forms some part of the process.

18. [57]

    Further, recognising that s 323(2) had at least to be considered, the Panel said only “it would simply be at odds with the evidence to assume it is 10 per cent”. The evidence is not identified, nor is it said how that evidence would mean that 10 per cent was not appropriate, nor how four-fifths was appropriate.

19. [58]

    The reasons provided for the deduction were inadequate. Error is thereby demonstrated.

20. [59]

    The second error involves reliance by the Panel on assumption and hypothesis. In Cole v Wenaline Pty Limited [2010] NSWSC 78 Schmidt J said:

21. [60]

    The Panel said “it is not possible” to determine precisely the extent of the impairment due to the pre-existing osteoarthritis and that the best that could be done was to “approximate” this. They also noted that it would “too difficult to determine” precisely the proportion, and “it would simply be at odds with the evidence to assume it is 10 per cent”. What little reasoning there is seems to suggest is that because there was extensive pre-existing arthritis there must have been impairment to a marked degree. An assessment of four-fifths tends to support this view.

22. [61]

    I agree with the Plaintiff’s submission that, in that way, the Panel made the assessment on an assumption or hypothesis that because there was extensive pre-existing osteoarthritis that meant that there was extensive impairment. The matter, in that regard, is not distinguishable from what was said in Cole at [30] and [31], such approach being approved in Vitaz at [30].

23. [62]

    As to the third error, the Panel assessed the same proportion for the deduction as the AMS where that proportion was said to have been based on an erroneous conclusion. In the absence of adequate reasons, that outcome can only be said not to be supported by some probative or logical grounds: Minister for Immigration v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at [147]. It could also be described as illogical, irrational and legally unreasonable: Re Minister for Immigration and Multicultural Affairs; Exp Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 at [37] and [52] but cf [4], [5] and [9]; Minister for Immigration and Multicultural Affairs v SGLB Minister [2004] HCA 32; (2004) 78 ALJR 992 at [38]. Whatever terminology is employed, error is demonstrated.

24. [63]

    That conclusion is not to accept the Plaintiff’s characterisation of the Panel adopting the AMS’s assessment. Demonstrably the Panel did not do that. In paragraph [29] of its Reasons, although dealing with the other matter which is not in dispute in these proceedings, the Panel said:

25. [64]

    The problem is, however, that the outcome, without adequate reasons for it, is on its face illogical and irrational. Nor does that criticism assume the correctness of the AMS’s assessment in the manner the First Defendant submitted.

26. [65]

    Although it is not strictly necessary to consider the other bases in respect of which the Plaintiff asserts error I will say something briefly about them.

27. [66]

    As far as the asserted error that the Panel asked itself the wrong question is concerned, the inadequacy of the reasons leave it unclear whether error has occurred. As discussed earlier, if the notion of the pre-existing osteoarthritis being integral to the Plaintiff’s present impairment is related to the second step in Elcheikh, although the terminology is unfortunate, I do not think that error is demonstrated. However, the placement of the reference to the “integral part” of his present impairment suggests that the Panel may at that point be engaging in the third step of determining what proportion is due to the pre-existing condition.

28. [67]

    I cannot be satisfied, because of the inadequacy of the reasons, whether error has occurred by the reference to the “integral part”. It is not clear what question the Panel was asking at that point and for what purpose. However, it is not necessary to determine this matter because error is demonstrated by the inadequacy of the reasons in any event.

29. [68]

    Nor I am persuaded that the Panel has failed to have regard to a relevant consideration. What appears at [27] of the Statement of Reasons demonstrates that the Panel did have regard to the relevant material. I do not think that it can be said that the Panel did not give “proper, realistic and genuine” consideration to the material. The fact that the Panel drew a conclusion from the material that was ultimately unfavourable to the Plaintiff (the four-fifths deduction) does not, of itself, mean that proper consideration was not given to the material. Express mention was made of the relevant evidence. Although I have held that the conclusion reached was irrational and illogical, that does not necessarily mean that proper attention and regard was not had to the evidence concerned. The conclusion was likely reached because of the way the evidence was used, not by a failure to have proper regard to it.

Conclusion

1. [69]

   In addition to orders in the nature of certiorari and mandamus the Plaintiff seeks a declaration that the Certificate and Statement of Reasons are void. Where those orders are to be made no point is served by such a declaration, as the Plaintiff came to accept.

2. [70]

   I make the following orders:

   1. (1)

      An order quashing the Certificate and Statement of Reasons issued by the Second Defendant, constituted by the Third Defendant on 10 October 2014.

   2. (2)

      An order remitting the matter to the Second Defendant for referral to a different Medical Appeal Panel to determine the dispute according to law.

   3. (3)

      The First Defendant is to pay the Plaintiff’s costs of the proceedings.

   4. (4)

      No order as to the costs of the Second and Third Defendants.