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No.8 October 2009

Re James and Military Rehabilitation and Compensation Commission

[2009] AATA 842

TRIBUNAL   AAT, Melbourne
MEMBERS Deputy President Forgie
DATE OF DECISION 30 October 2009
DECISION MRCA matter affirmed (SRCA matters affirmed by consent)
ISSUES MRCA - permanent impairment – previous SRCA injury –
chapter 25 of GARP M

Facts

The Military Rehabilitation and Compensation Commission (Commission) decided that Lieutenant James was entitled to compensation for permanent impairment in respect of a right knee injury.  Lieutenant James had two previous injuries accepted under the SRCA, and the issue before the Tribunal was the manner in which permanent impairment was assessed. Counsel for Lieutenant James submitted that permanent impairment should be assessed in a way that led to a lump sum of $32,966.70. Counsel for the Commission submitted that Lieutenant James’ entitlement amounted to a lump sum of $1,209.45.

Issues

There were five issues for the Tribunal to consider. At the outset, DP Forgie noted that he would not decide the fourth and fifth questions, as they did not arise in relation to the decision under review. Further, DP Forgie noted that the questions should be answered in the context of a decision that does raise them so that they may be properly canvassed.

  1. Section 68 of MRCA confers an entitlement in respect of a permanent impairment. What is its proper construction?
  2. Does Chapter 25 of GARP M operate in a way that reduces, diminishes or destroys the entitlement conferred by s 68?
  3. Do the MRCA Transitional Provisions Act or Regulations authorise Chapter 25 of GARP M to operate in such a way that a person’s entitlement under s 68 of the MRCA is reduced?
  4. Does Chapter 25 of GARP M operate for all purposes of the MRCA?
  5. If Chapter 25 does reduce or extinguish a person’s entitlement under s 68 of the MRCA, is it permissible that it does so?

The Tribunal’s reasoning

SRCA claims: right ankle injury & left knee injury

Lieutenant James had asked for a further assessment of his SRCA injuries. By consent, the parties agreed that Lieutenant James was not entitled to a further amount of compensation in respect of his right ankle injury. In respect of his left knee injury the parties agreed by consent that his level of impairment had increased from 10% to 20% when assessed in accordance with the approved Comcare Guide and as such, Lieutenant James was to be paid $17,859.55.

MRCA claim

Construction of section 68 of MRCA & “compensable condition”

DP Forgie first considered the preconditions for permanent impairment compensation, which are the criteria set out in section 68(1) of the MRCA. DP Forgie noted the first criterion that must be satisfied is that the Commission must have accepted liability “for one or more service injuries or diseases” which together are described as the “compensable condition”.

The Tribunal noted that on the face of section 68(1)(a), there was no suggestion that the Commission only looks to the service injury or disease that is the subject of the most recent application for compensation for PI that has not been determined.  DP Forgie considered that:

…the compensable condition” must include those service injuries or diseases in respect of which the Commission has accepted liability in response to a previous claim or claims under s 319 and in respect of which a claim for compensation for permanent impairment has been made under s 319. The “compensable condition” does not include service injuries or diseases the subject of previous claims for permanent impairment made under s 319.

DP Forgie went onto note the second and third criteria: that the person has suffered an impairment, the impairment is likely to continue indefinitely, and the person’s compensable condition “and so, one or more service injuries or diseases have stabilised”.

Minimum impairment threshold levels

After considering the above three criteria, DP Forgie noted that the next issue for the decision maker to determine included the degree of impairment suffered by the person as a result of the compensable condition and the date on which the person suffered a permanent impairment as a result of the compensable condition. However, before determining these issues, DP Forgie first considered in respect of what is compensation payable under s68. Specifically, whether Parliament had taken a path different from the that in the SRCA.

In considering this issue, the Tribunal examined the recent decision of the majority of the High Court in Fellowes v  Military Rehabilitation and Compensation Commission1. DP Forgie said:
[91]…From my analysis of s 68, Parliament has taken a path different from that it took in s 24(1) [SRCA]. It has not made the Commonwealth liable in respect of an injury when that injury results in a permanent impairment…

… [96] The difference in wording between the two definitions when read with the differences in wording between ss 24(1) and 68(1) is crucial. Provided the other two criteria in s 68(1) are met, the focus of the entitlement to compensation for permanent impairment under the MRC Act is upon the person’s having suffered an impairment and the loss that is represented by that impairment to the person. The focus is not upon the loss that is represented by that impairment to someone who is not the person in respect of whose permanent impairment compensation is being claimed. The provisions of the MRC Act lead, therefore, to a conclusion different from that reached by the majority of the High Court in Fellowes when they concluded that the Guide determined by Comcare did not direct attention to the effect of an injury or disease on a particular individual. Under the MRC Act, the Commission must determine GARP M so that it does direct attention to the effect of a service injury or disease on the particular individual who suffered the service injury or disease for which compensation is claimed.

Returning to the minimum threshold impairment points, while Lieutenant James clearly met the requirement (with 12 impairment points determined for his MRCA condition), DP Forgie nonetheless considered the issue and noted that the emphasis of s 69 is upon impairment points and, in particular, upon the “impairment suffered by the person” constituting the minimum number of points designated for the circumstances. The Commonwealth’s liability to pay compensation under s 68 is not approached by reference to the injury. Rather, it is approached by reference to the impairment suffered by the person as a result of the service injury or disease or service injuries or diseases. DP Forgie noted that the same considerations also applied in relation to s 70 and compensation in respect of a single aggravated injury or disease. DP Forgie said:
…The scheme of the MRC Act is that compensation for permanent impairment is given in respect of that permanent impairment provided it attracts the requisite number of impairment points. It does not provide for compensation in respect of a service injury or disease.

GARP M

Turning to consider the issues in relation to GARP M, DP Forgie concluded that the Commission is not only empowered to determine a guide under s 67 of the MRCA but is also required to do so. Without the guide, a person’s right to compensation under the MRCA would be a right to an indeterminate amount.

Considering Transitional act and regulations, DP Forgie considered that these formed part of the MRCA and the guide (be it GARP V (M) or GARP M)  each formed part of a scheme and that, together, they formed the whole scheme.

Further, in considering whether the transitional Provisions or Regulations authorise Chapter 25 of GARP M to operate in such a way that a person’s entitlement under s 68 of the MRCA is reduced, DP Forgie noted that the combination of points necessarily leads to a lower assessment of impairment than addition of impairment points. However, DP Forgie went onto note that this was consistent with a scheme of compensation that has, at its heart, an assessment of whole person impairment rather than of compensation by reference to the impairment resulting from each injury or disease.

Noting his view of the decision in Fellowes, and that the basis on which compensation for permanent impairment is paid differs between the SRCA and the MRCA, DP Forgie considered that this difference could not change the fact that Chapter 25 of GARP is consistent with the formulae set out in the Transitional Regulations. The Tribunal noted that chapter 25 has provided for an offset of the payments a person has received under the SRCA. An offset is clearly contemplated by s 13(4) of the Transitional Act. DP Forgie concluded:

[164] When regard is had to the whole of the provisions of the MRC Act, the Transitional Act and the Transitional Regulations, the method that is adopted in GARP M in relation to old injuries or diseases under the VE Act or the SRC Act and compensation received in relation to them is consistent with the method adopted in the MRC Act when a person has two or more unrelated service injuries or diseases in respect of which compensation is claimed for permanent impairment under the MRC Act. It is consistent with that adopted in relation to the aggravation of the earlier by a later service injury or disease. It is consistent with it in that it, like those under the MRC Act, is based on whole person impairment. By providing for whole person impairment and deducting from the amount of weekly compensation otherwise payable under the MRC Act, the amount of weekly compensation represented by the lump sum under the SRC Act, the method in Chapter 25 seeks to ensure that compensation is paid for impairment for which the Commonwealth is liable but has not previously compensated the person for. That method is consistent with that provided under the MRC Act for service injuries or diseases for which the Commonwealth is liable and which are not within the purview of the VE Act or the SRC Act.

[165] It follows that I regard the method provided for in Chapter 25 to be reasonably proportionate to the power given to the Commission under the MRC Act and the Transitional Act to determine a guide.

DP Forgie also noted that while chapter 25 does not provide for a situation where a person has an old injury or disease under both the VEA and SRCA, the method in chapter 25 is intended to, and does, cover both situations.

Formal decision

The Tribunal affirmed the decision that Lieutenant James was entitled to compensation for permanent impairment as a result of his right knee injury amounting to $0.95 per week or, a lump sum of $1,209.45.

Editorial Note

The James case considereda number of issues in relation to the transitional provisions and permanent impairment compensation under the MRCA, including:

Please note that the transitional provisions do not apply to a person whose eligibility for compensation or other benefits arises only under the MRCA.

Entitlement to Permanent Impairment Compensation

In relation to the preconditions for permanent impairment compensation, DP Forgie’s decision emphasises that it is necessary for a decision maker to consider allservice injuries and diseases, not merely the one or more for which the person is seeking compensation. This is particularly important when considering whether the person’s compensable condition has stabilised. If there is a service injury or disease that has not stabilised then the precondition in section 68(1)(b)(iii) is not satisfied and the Commonwealth is not liable to pay compensation. 

Similarly, DP Forgie’s comments in respect of the minimum threshold impairment points emphasises that s 69 not approached by reference to the injury, rather, it is approached by reference to the impairment suffered by the person as a result of the service injury or disease or service injuries or diseases. As such, impairment points from more than one accepted condition can be combined to meet the 10 impairment point requirement. Aggravations are subject to the same minimum threshold impairment points.

DP Forgie’s decision in relation to the minimum threshold impairment points did not specifically comment on the Commission’s policy that accepted VEA and SRCA conditions can be combined to meet the 10 impairment point requirement. Probably, this was the case as Lieutenant James clearly meet the requirement (with 12 impairment points determined for his MRCA condition). Nonethless, from DP Forgie’s comment that the old injury or disease “…should be read as a reference to the old injury or disease in relation to which liability has been accepted under the VE Act or the SRC Act..” and that “this interpretation is not inconsistent with the direction given to the Commission that it determine the impairment points constituted by the impairment suffered as a result of the old injury or disease” it could be infered that it is a person’s total impairment rating, which is the impairment rating to be used to assess eligibility in respect of minimum threshold impairment points under sections 69, 70, 71, 72 and 75 of the MRCA. 

A person’s total impairment rating is arrived at by determining the impairment points suffered as a result of the person’s VEA and/or SRCA condition and the impairment points suffered as a result of the person’s MRCA conditions and combining the two ratings under Table 18.1: Combined Values Chart. 

Practical tip: when combining impairment ratings by applying table 18.1, it is important to remember that the combined impairment rating is not to be rounded. Rounding is unnecessary since impairment periodic payments are based on whatever impairment rating is determined and are not in multiples of 5 or 10 as in the VEA.

Chapter 25 of GARP M

While DP Forgie’s decision acknowledged that the combination of points, under the chapter 25 method of assessment, necessarily leads to a lower assessment of impairment than addition of impairment points, it emphasises that the method in Chapter 25 seeks to ensure that compensation is paid for impairment for which the Commonwealth is liable but has not previously compensated the person for. If the method in chapter 25 was not used to assess compensation for permanent impairment, it could result in dual entitlements for people receiving, or eligible to claim, benefits under the MRCA and the VEA and/or the SRCA.

Further reading: For a detailed discussion of Chapter 25 of GARP M  and for steps on how the ‘bringing across’ process works, please see chapter 15, page 103 and 104 of the Handbook for Representatives VeRBOSITY special issue 2006.

1 [2009] HCA 38

All Practice Notes