Are our compensation systems an occupational hazard?


According to Wikipedia, ‘A hazard is a situation that poses a level of threat to life, health, property, or environment’ and, in relation to Workplace Health & Safety:

‘Although work provides many economic and other benefits, a wide array of workplace hazards also present risks to the health and safety of people at work. These include but are not limited to, “chemicals, biological agents, physical factors, adverse ergonomic conditions, allergens, a complex network of safety risks,” and a broad range of psychosocial risk factors.’

The publication “Compensable Injuries and Health Outcomes” published by the Australasian Faculty of Occupational Medicine/Royal Australasian College of Physicians (AFOM/RACP) in 2001 draws the following conclusions:

‘There is good evidence to suggest that people who are injured and claim compensation for that injury have poorer health outcomes than people who suffer similar injuries but are not involved in the compensation process’


‘Although most people who have compensable injuries recover well, a greater percentage of these people have poorer health outcomes than do those with similar but non-compensable injuries. There is sufficient good quality evidence to show this to be true, and significant agreement among practitioners in all relevant fields (medical, legal, insurance, government oversight bodies) to support the evidence and to suggest that a complex interaction of factors is responsible for this.’

In addition to individual factors that lead to susceptibility, the AFOM/RACP document lists some of the likely reasons for poorer health outcomes:

‘The initial response to claimants by insurers, the management of initial treatment not encouraging resumption of normal behaviours as far as possible or encouraging return to work or normal activities, the handling of case management by insurers, the handling of case management by treating doctors, including specialists and the number and type of medical examinations required by the insurers and by the claimant’s lawyers.

The effect of these appears to be twofold: to entrench illness behaviours and to prejudice the claimant further against the insurance company’

While in a later publication entitled the “Health Benefits of Work”, AFOM, (now the Australasian Faculty of Occupational & Environmental Medicine – AFOEM) concluded overall positive benefits from involvement in work. This publication balanced the previous emphasis on the negative aspects of work and has been widely used by occupational practitioners to support an emphasis on the value of return to work for injured workers.

There is no doubt in my mind that, while there are a range of health hazards associated with work, engagement in the workforce has  an overall beneficial effect on physical and psychological health. The important strategy is to identify hazards to health that occur in the workplace and manage them appropriately.

More recent research has confirmed that it is likely that some aspects of the claims management process are a significant contributor to the hazards from compensation systems. In my earlier blog article about research I discussed the lack of research, but there is now a growing evidence-base.

A recent article by Kilgour et al ‘Interactions between Injured Workers and Insurers in Workers Compensation Systems’  highlights all the issues familiar to doctors who treat patients in the WC system.

An important principle in workplace hazard management is the ‘hierarchy of controls’. The priority to manage any hazard is the eliminate or modify the hazard by ‘engineering’ means, so that the hazard is removed or its effects reduced. If that is not possible there is an accepted hierarchy of measures, including administrative controls to separate workers from the hazard and finally provision of ‘personal protective equipment’. A strategy based purely on treating injuries and rehabilitation is unacceptable.

It seems to me that, as currently constituted, our workers compensation system, can be a hazard, at least for some injured workers. Should not the same principles be applied to manage any risks associated with that hazard, in accordance with accepted WHS principles?

Some workers are more vulnerable to the effects of a hazard than others. The workers exposed to our workers compensation systems are those who have had already had a physical or psychological injury. Those vulnerable to injury for whatever reason are the ones exposed to the additional hazard of our compensation systems.

Can we apply the hierarchy of controls here?

An occupational physician colleague who works in the public sector recently suggested that compensation systems create too many additional problems and we might be better off without these systems altogether. While it is very doubtful that there would be many who would support such a radical move, it is useful to consider the alternative to a specific system to manage work-related injuries. Could funding for treatment for work injuries be carried by our Medicare and Private Health Insurance schemes? What impact would the decoupling of the cost of workplace injury from employers have on workplace health and safety programmes? How would our other systems that provide income support function, in the absence of a workers compensation system i.e. could employer sick leave systems or private income protection insurance schemes be extended,  or perhaps expand the government social security safety net to provide income support. I think not. Even if we did, I suspect we might substitute just another hazard for the one eliminated.

While we might not be able to eliminate the hazard, can we ‘engineer’ the system to make it safer? I think the answer is a resounding ‘YES’ once the risk is identified and we know what aspects of the system contribute to the hazard. Recent research is highlighting how we can better design our compensation systems to reduce the risks of secondary injury.

We cannot rely on the lower rungs of the hierarchy against hazards ladder i.e. ‘personal protective equipment’. While in the context of the hazards discussed here, an argument could be made for protecting workers by providing ‘resilience training’ or some similar strategy, this would be very impractical and I am very doubtful of any useful benefit.

It troubles me that some other IME doctors actually contribute to the hazard discussed here through their role as part of the claims management system. Rather than being part of the solution, they are part of the problem! Occupational Physicians are doctors with expertise in the identification and management of workplace hazards. The emphasis by doctors, particularly occupational physicians, should be on providing advice about hazard reduction.

Redesign of our workers’ compensation system to address the hazards is the way to go.

Yes, and occupational hazard management can be applied!



About Tasworkdoc

As an occupational physician in private medical practice in Hobart, Tasmania - the southernmost state of Australia, I see workers referred by their general practitioners with various types of work-related injuries and diseases. These are mostly musculoskeletal injuries, both of traumatic and gradual onset as well as various associated psychological disorders. With interaction with patients for treatment and providing advice about rehabilitation, I have the opportunity, first-hand, to observe interactions between individual patients and compensation systems. I also conduct independent medical assessments, including impairment assessments for musculoskeletal injuries and asbestos-related disease compensation. This provides another perspective of workers within compensation systems.
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One Response to Are our compensation systems an occupational hazard?

  1. Lionel Brown says:

    Well Dr Sharman, your question “Could funding for treatment for work injuries be carried by our Medicare and Private Health Insurance schemes?” is certainly interesting.

    If we look at how motor vehicle insurance functions – if there is a motor vehicle accident between two vehicles (assuming both are insured), the cars are repaired first, the insurance companies fight out who is liable to carry the cost.

    This would indeed focus workers compensation on the injured worker, their injury & rehabilitation. This would be a true “no fault” system and prevent hopefully prevent the demonization of injured workers & lead to a more sustainable system & outcomes.

    The emphasis then becomes focused on true rehabilitation.The insurer, Medicare or private health insurer lawyers can knock themselves out fighting over the liability & costs. So the system can still waste lots of money (maintaining the status quo) without dragging the injured & vulnerable through endless IME assessments to prove or disprove that an injury actually exists.

    Yes, there will still be fraud (including injured workers, doctors, treatment providers), but if the focus of the system is on rehabilitation, not compensation, it should minimise the desirability of “worker fraud” to “try for a payout”. The Medicare system currently monitors over-servicing by medical practitioners, surely other providers could be incorporated in a similar monitoring system.

    Regarding varying degrees of permanent injury, the workers compensation insurance changes in many States already have a system of cost shifting to the Medicare system and to the Disability Support Pension (hence the Commonwealth complaining of a blow-out in DSP costs).

    Assessing permanent disability should be conducted by a truly independent system, possibly administered by government & funded by industry/insurers. The current system, with both sides employing their own “corruptible experts” to assess injury achieves very little for the injured, but does keep IMEs and lawyers very well compensated.

    But, alas, there is no incentive to truly fix the system – there is too much money to be made maintaining it as it is.

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