Death and indemnity

05 May 2009 Topics: Workers’ compensation

Difficult issues for the workers’ compensation insurer

WorkCover Qld v AMACA Pty Ltd & Anor [2009] QCA 72

This recent Court of Appeal decision is likely to call into question the commercial viability of some third party recovery actions involving deceased workers.

WorkCover Queensland, pursuant to its statutory obligations under the Workers’ Compensation & Rehabilitation Act 2003 (WCRA), had paid lump sum benefits of $340,000 to an injured worker who later died. The injured worker had developed mesothelioma as a result of being exposed to asbestos manufactured and supplied by the two respondents. The injured worker did not commence an action against the respondents; however, by operation of section 66 of the Succession Act 1981 his estate had the right to bring a limited claim for damages. WorkCover relying upon the equivalent of section 207B(7) of the WCRA sought to recover the full amount of benefits it had paid to the injured worker.

A number of inter-related questions arose for the Court to determine, the effect of which were:

  1. Should WorkCover’s entitlement to damages be assessed at the date of trial/judgment or some other earlier date?
  2. Should WorkCover’s entitlement to damages be reduced by operation of section 66 of the Succession Act 1981 or was the indemnity claim under s207B(7) WCRA independent of section 66 Succession Act 1981?
  3. If the respondents are held liable for the injuries, are the respondents liable for the whole of the assessed damages or simply their proportionate contribution to the injury?

The Court unanimously found that damages would be assessed at the time of trial/judgment and not earlier. This made the injured worker’s death highly relevant to the assessment.

The Court also unanimously found that if the respondents were liable for the injured worker’s injury, they would be liable for the whole of the damages, and not just a proportionate share.

In terms of the second question, by a 2/1 majority verdict, the Court found that section 66 of the Succession Act 1981 limited WorkCover’s recovery rights under s207B(7) WCRA to those damages which the deceased’s estate would have been able to recover, had his representatives brought a claim. WorkCover could therefore not recover an amount equivalent to damages for pain and suffering, probable future earnings or curtailment of life expectancy, making the recovery action far less attractive.

In this case, had the injured worker commenced, but not finalised, an action before his death, WorkCover would then have had the benefit of section 66(2A) Succession Act 1981 and had an increased right of recovery. That provision relates to dust diseases claims only.

There will be situations where a claimant may die from a non-compensable injury or other causes which will also affect a worker’s compensation insurer’s recovery rights.

As always, a cost – benefit analysis will have to be performed in each individual case. If the pain and suffering component was likely to be a significant part of the claim, then it may not be commercially sensible to pursue the subrogated recovery rights.

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