Article #3 – What are the defences against a claim of psychiatric injury?
In this series of articles, Thomas Felizzi from our Compensation Law Team looks at Psychological and Psychiatric injuries in Workers Compensation including:
- What constitutes a psychological injury?
- Is a psychiatric injury a disease, a personal injury or both?
- What are the defences against a claim of psychiatric injury?
- Discrimination damages versus workers compensation benefits
In this third article of the series, Thomas looks at the defences against a claim of psychiatric injury.
What are the defences against a claim of psychiatric injury?
A claim for psychiatric injury can also be denied by an insurer if it is established that the insurer/employer who has the onus of proof, that the injury occurred in the context of reasonable action taken by the employer in relation to dismissal, retrenchment, transfer, performance appraisal, disciplinary action or deployment.
Section 11A of the 1987 Act provides a complete defence to the claim of psychological injury and it states:
11A No compensation for psychological injury caused by reasonable actions of employer
No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.
“psychological injury” is an injury (as defined in section 4) that is a psychological or psychiatric disorder. The term extends to include the physiological effect of such a disorder on the nervous system.
(7) In the case of a claim for weekly payments of compensation in respect of incapacity for work resulting from psychological injury, the medical certificate required to accompany the claim must (in addition to complying with the requirements of section 65 of the 1998 Act) use, for the purpose of describing the worker’s condition, accepted medical terminology and not only terminology such as “stress” or “stress condition”.
Please note this section not quoted in full.
The first issue in this defence that must be addressed by a claimant, is whether the psychological injury was an injury that was wholly or predominately caused by purported reasonable action. If the claimant can establish that the injury was not caused wholly or predominately by the purported reasonable action, then the question of reasonableness does not arise and so the defence is avoided. The purported reasonable action will need to be specified in the section 78 notice of the insurer.
There will usually be evidence that the worker’s psychological injury was caused by other factors in their employment, such as bullying and harassment, discrimination, sexual harassment which, led to a development of a psychological condition.
If it can be shown that these other factors led to a downturn in the worker’s productivity which then lead to performance appraisal or discipline in respect of the worker, which may be referred to in the section 78 notice, then the defence can be avoided.
Generally, section 78 notices rely on only a few incidents where as the claimant will usually rely on conduct that is completely external and outside of those incidents relied upon by the employer/insurer. Even though the onus is with the employer to demonstrate the defence is applicable, the applicant must demonstrate the conduct outside of it contributed to their condition (with reference to either sections 4 and 9A) which may in turn have affected their performance and subjected them to work performance appraisals, discipline a transfer or demotion.
Again medical expert opinion is necessary to establish causation, both for the worker and the employer in respect of the substantial contributing factor, main contributing factor and whether the injury was wholly of predominately caused by the reasonable action of the employer.
Deputy President Snell in Hamad v Q Catering Ltd (2017) NSW WCCPD6 (Hamad) discussed the necessity of expert evidence at paragraph 88, which emphasised the obligation to obtain expert medical evidence connecting the psychological injury to the actions relied upon by the employer when a matter encompasses possible multiple causes for the injury.
A worker applicant will always point to conduct that falls outside of the purported reasonable conduct that caused the psychiatric injury, therefore if the medico-legal psychiatric expert of the respondent does not point to anything that in fact can be used to support the making out of the 11A defence, the defence will ultimately be unsuccessful i.e. there needs to be evidence that there were no other causative factors other than the reasonable conduct taken by the employer.
If the employer is able to establish that the injury was wholly or predominantly caused by the purported reasonable action, the next issue to be determined is whether the action taken or proposed was objectively reasonable. When determining whether the action taken or proposed to be taken is reasonable, consideration must be given not only to the end result but also the manner in which the action was proposed to be taken. Considerations would include whether procedural fairness was recorded, whether the notice was given in respect of any meeting or disciplinary matters, was there an opportunity to have a support person, was there an opportunity to respond to complaints, was a consultation not provided before a transfer was completed.
What is considered “reasonable” is helpfully summarised in the Court of Appeal decision of Northern NSW Local Health Network v Heggie  NSW CA 255 (Heggie) per Sackville AJA at  which identified the applicable propositions in construing section 11A as follows:
A broad view is to be taken of the expression “action with respect to discipline”. It is capable of extending to the entire process involved in disciplinary action, including the course of an investigation.
(ii) Nonetheless, for s 11A(1) to apply, the psychological injury must be wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer.
(iii) An employer bears the burden of proving that the action with respect to discipline was reasonable.
(iv) The test of reasonableness is objective. It is not enough that the employer believed in good faith that the action with respect to discipline that caused psychological injury was reasonable. Nor is it necessarily enough that the employer believed that it was compelled to act as it did in the interests of discipline.
(v) Where the psychological injury sustained by the worker is wholly or predominantly caused by action with respect to discipline taken by the employer, it is the reasonableness of that action that must be assessed. Thus, for example, if an employee is suspended on full pay and suspension causes the relevant psychological injury, it is the reasonableness of the suspension that must be assessed, not the reasonableness of other disciplinary action taken by the employer that is not causally related to the psychological injury.
(vi) The assessment of reasonableness should take into account the rights of the employee, but the extent to which these rights are to be given weight in a particular case depends on the circumstances.
(vii) If an Arbitrator does not apply a wrong test, his or her decision that an action with respect to discipline is or is not reasonable is one of fact. 
Webb v State of NSW  NSWWCCPD 50
An Aboriginal Health Care worker claimed compensation in respect of a work-related psychological injury. The matter concerned whether a defence to section 11A of the 1987 Act was available to the employer having regard to whether its actions were performed in reference to “discipline.”
In this matter the employer was notified by the General Manager of Community Health and the manager of the Building Strong Foundations service that a mandatory report to the child protection hotline of child related offences involving the worker had been made.
Following, an officer of the employer conducted a risk assessment to determine whether it was safe for the worker to remain in his position during the investigation. That office formed the view that, as the worker’s role required exposure to children, he should be placed on alternate duties. HR and the relevant director were notified pursuant to policy guidelines.
The employer received confirmation that the matter would not be investigated due to a lack of information.
The worker was then advised that he was required to attend a meeting the following day in relation to a “confidential matter”. At the meeting he was advised that an allegation of misconduct had been made against him regarding an incident which had allegedly occurred outside of the workplace, at the workers homes. The worker was advised that an investigation would take place, his name would be placed on a service check register and he would be transferred to office duties while the investigation took place. The worker ceased work, remained off work and the following investigation again exonerated the worker. Following, a claim was made for psychological injury and associated benefits.
The was no dispute that the worker sustained a psychological injury however the matter turned on whether the injury was caused by reasonable action in respect of discipline, as considered by section 11A of the 1987 Act. The Arbitrator held the defence was made out.
The matter went on appeal and it was determine by Deputy President Wood at paragraphs 141 and 142:
141. The more recent authorities indicate that what is involved in “discipline” stems from action taken in respect of the worker’s conduct or performance in the workplace, or arising out of the worker’s employment (Dennis). Discipline can include offering support and training to improve performance (Soutar). As Snell AP determined in Mascaro, communicating adverse findings as to conduct in employment, requiring and administering a mentor program intended to improve performance, and advising that the worker’s mentoring program was to continue because of the worker’s unsatisfactory progress are all matters that fall within the scope of “discipline.” Of course, what was referred to by Neilson CCJ in Kushwahaas the narrow definition of discipline, chastisement, and actions implementing adverse consequences for inappropriate behaviour in the workplace will also be matters of discipline.
142. As I observed when considering the Arbitrator’s determination, the actions taken by the respondent in the present case were not undertaken for any of those purposes and were not in response to the appellant’s work practices. On that basis, and for the reasons expressed by me for determining error on the part of the Arbitrator, the actions taken by the respondent are not actions with respect to discipline.
Assuming the injury is made out for reasons other than what is contained in the 78 notice, and any defences are overcome, the next step in bringing a psychiatric injury claim goes to assessments of work capacity for weekly benefits, reasonableness o of medical treatment and assessment of the injury pursuant to the PIRS by an appropriate medical assessor, but these are all topics that will not be considered in this paper or this presentation, but it is important to consider them.