Procedural fairness today keeps the Supreme Court away

A recent decision by the Supreme Court of New South Wales (the court) emphasises the importance of procedural fairness and highlights that psychological injury claims can’t be won with documentation alone.  In this article, we’ll discuss what happened in the case, what the court found, and what employers should take away from the court’s decision.

The psychological injury and disputed impairment rating

The worker, who had been employed by a local council (the council) for 14 years, ceased work in November 2020 due to serious psychological conditions. While the council’s insurer accepted liability for the worker’s injury, they disputed the level of permanent impairment – a key factor for determining the amount of compensation owed.

• Initial assessment
  The worker’s permanent impairment was assessed at 22 per cent.
• Second assessment
  After the employer introduced additional evidence (including surveillance footage and bank records), a reassessment reduced the impairment rating to 19 per cent.

Both assessments were conducted remotely, taking into consideration clinical observations and detailed interviews. Despite the employer-supplied surveillance footage, the original medical assessor maintained that the worker’s evidence supported the initial impairment rating.

Where does procedural fairness fit into this case?

Unhappy with the second assessment, the council turned to a medical appeal panel, which further reduced the worker’s impairment rating to 8 per cent. However, no fresh clinical examination was conducted, and the panel relied heavily on documentary evidence – mainly surveillance reports and financial records, to question the worker’s credibility and everyday functioning.

This raised serious concerns for the worker about whether procedural fairness was afforded, particularly when the panel was forming conclusions about the worker’s reliability without direct clinical interaction. So, the worker decided to challenge their decision in court.

What did the court find?

The Supreme Court found a few key things that resulted in the worker’s claim being successful:

1. The panel was required to conduct its own consultation and clinical examination before making credibility assessments that materially affected the worker’s entitlement.

1. Procedural fairness wasn’t met where the panel shifted away from clinical evidence to documentary-only analysis without giving the worker an opportunity to respond in person.
2. Given the complexities of psychological injury, clinical observations – including mannerisms, affect, and mental state are essential elements of a proper evaluation.

The judgment stated:

“The medical questions involved in the matter, regarding the psychological assessment of [the worker], required that a clinical examination take place.”

Due to the three findings above, the court set aside the appeal panel’s decision and ordered that the matter be referred to a new medical panel, unless the parties reached an agreement outside of court.

What should employers take away from this decision?

1. Clinical assessment is critical

Psychological injuries require face-to-face clinical evaluation. Documentary evidence alone may be insufficient to fairly assess impairment or credibility.

2. Ensure procedural fairness

When challenging a worker’s injury claim, businesses must ensure all reviews and assessments comply with fairness principles. Shortcuts can expose employers to legal risk.

3. Respect the complexity of psychological injuries

Psychological injuries are highly nuanced. Surveillance footage or financial records can’t replace thorough clinical assessments in understanding a worker’s mental health.

4. Review current practices

Organisations involved in workers’ compensation claims should review how medical evidence is gathered and assessed to ensure compliance with procedural fairness requirements.

Psychosocial claims aren’t surface-level!

This case reinforces that psychological injury assessments can’t be reduced to documentation only. Fair, comprehensive clinical examinations remain central to protecting worker rights and maintaining the integrity of workers’ compensation processes.

Employers should treat this decision as a warning to prioritise clinical evidence and maintain robust, fair review processes when managing psychological injury claims, as well as supporting documentation.

How can Citation Safety help?

Australia’s workplace laws are complex and confusing, which can make it hard to know if you’re doing everything right when it comes to WHS. That’s where we come in. We give you the tools, technology, advice and support you need to build a positive safety culture in your workplace through our WHS Software and around-the-clock Safety Advice Line. Contact us today to see how we can help.

About our Author

Jack Bowkett is a Workplace Health and Safety Consultant at Citation Group. He has an interest in all things safety-related and regularly provides pragmatic advice on how businesses can comply with their WHS obligations and create a good working environment.