Employer fails to recover payments from worker who lodged a false claim

20 August 2019

A worker was paid compensation with respect to a claim which was later found to be false. The decision considers an employer’s right to recover the compensation payments pursuant to section 71 of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act).

In issue

  • The decision concerns a false claim for compensation, and the right to recover payments from a worker who lodged a false claim.

The background

On 2 June 2015 the Worker claimed she had injured her right knee at work on 28 May 2015 when she struck it on a stainless steel tub (the incident). She subsequently made a claim for workers' compensation.

On 16 June 2015 the insurer accepted liability for a contusion or bruising of the right knee and started paying weekly payments of workers' compensation.

The Worker underwent an MRI of her knee on 1 October 2015 which found a meniscal tear which had not been present on prior imaging.

By early 2017, the Employer obtained medical evidence which indicated both that the meniscal tear was not consistent with the incident, and that the Worker had suffered from problems with her right knee before the incident – something which had not been disclosed by the Worker in her workers' compensation claim forms or to the specialist medical practitioners who had reviewed her in respect of her claim.

The Employer filed an application to discontinue compensation payments. The compensation payments were discontinued pursuant to orders made by Arbitrator Nunn, who determined that there was a genuine dispute as to the liability to make weekly payments under s60.

The Worker filed an application seeking a determination that she did suffer an injury, and that she was entitled to ongoing compensation payments. The Employer sought an order that the respondent repay compensation payments of $121,262.54 on the basis that the Worker had no entitlement to those payments pursuant to s71.

The decision at Arbitration

The Arbitrator dismissed the worker's application for compensation. The Arbitrator found that the Worker had withheld significant or critical information about her past knee conditions. He made specific adverse findings about the credibility of the Worker, finding that she was not a credible witness and that she had deliberately withheld information about her previous right knee discomfort and medical attendances from her workers' compensation claim form and had given the impression to the medical practitioner who saw her that she did not have any past medical history or issue with her right knee at all.

The Arbitrator found that he was unable to accept the Worker's evidence that there was a specific incident in the workplace on 28 May 2015 which resulted in her knee making contact with a stainless steel tub, and was not satisfied that there was such an incident.

The Arbitrator found that the Worker had no lawful entitlement to compensation payments and expenses. Having made that finding, this enlivened the discretion to make an order for a refund sought by the Employer, pursuant to s71 of the Act.

The Arbitrator stated, that by the barest of margins, compassionate grounds tipped the scales in favour of not making an order for refund. The compassionate grounds were that the Worker and her family did not live a lavish lifestyle, did not have an abundance of cash savings, and had relatively modest assets.

The decision on appeal

The Employer appealed the Arbitrator’s decision to the District Court. The Judge dismissed the Appeal, and did not interfere with the discretionary decision of the Arbitrator. The Judge accepted that a different Arbitrator may have exercised the discretion to order repayments by the Worker, but this did not amount to an appealable error. As there was no error in the way the Arbitrator considered and exercised the discretion, the Appeal was dismissed.

Implications for you

The decision highlights the difficulty employers have in recovering workers’ compensation payments even after there is a finding that a claim was submitted falsely.

D’Orsogna Limited v Zhang [2019] WADC 73

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