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Accident Compensation Cases

Scragg v Accident Compensation Corporation (DC, 29/05/13)

Judgment Text

Judge D A Ongley
This is an appeal against a decision in which the respondent exercised a discretion to decline funding for skills training because it would not be cost efective. 
The appellant seeks a decision by the Court directing that the training should be funded, but it is a discretionary question and the Court has limited jurisdiction to interfere. However there is an argument that the Corporation failed to properly exercise its discretion and that the matter should be referred back for a further and better decision. 
Mr Scragg is now aged 55 and is likely to have a continued entitlement to weekly compensation for the next ten years. 
An injury to his left brachial plexus in 1999 left him with significant dysfunction, neuropathic pain and associated sleep disturbance. He also sustained fractures around the C1 level with a traction injury on the left side cervical nerve roots. He has carpal tunnel symptoms affecting his right hand, which compounds his left side disability. He has osteoarthritis of the left knee. Before his injury he had worked as a builder. 
Mr Scragg is highly motivated and keen to work. He is unable to work for 30 or more hours a week because he suffers fatigue associated with pain and lack of sleep. He is also slow in physical functioning and says that his rate of work is not acceptable to a reasonable employer. He is confined to sedentary work, but even so, he has been assessed as working at a rate that would require a considerate and understanding employer. 
Mr Scragg offers a solution. He says that if he can get a marketable qualification, he will be able to work part time at his own pace and earn enough to relieve ACC of its weekly compensation obligations. 
All other vocational rehabilitation has been completed and he has not been able to be assessed as vocationally independent. 
The application for funding 
Mr Scragg made his application in September 2010 for funding for qualification as a Bachelor of Engineering Technology. He had not been assessed for vocational independence, so at that time there was still a possibility that he could be fit to work for 30 hours or more per week, thus relieving ACC of responsibility for weekly compensation. That was an important aspect of Mr Scragg's case because it would obviously make a difference to the cost effectiveness of funding for training. If ACC had a responsibility for another 13 years of weekly compensation, it could well be cost effective to train the appellant for a qualification that would equip him to work part time for a reasonable economic return. 
His application followed a Complex Initial Medical Assessment assessment by Dr David Ruttenberg, occupation medicine specialist, in March 2010. Dr Ruttenberg noted that Mr Scragg had succeeded with pain management but had a relapse in pain related symptoms. Nevertheless he appeared to be fit for roles that do not involve intensive use of the left hand and upper limb. He could not do heavy work. This preliminary assessment did not comment on ability to sustain full time work. Mr Scragg told Dr Ruttenberg that he needed a power nap 3 or 4 times a week in working hours. Dr Ruttenberg thought that he could do this in lunch breaks. He reported that both pain and an element of anxiety were aspects of the need for periods of sleep. He recommended a psychological review. Psychological assistance was provided in November 2010. 
Meanwhile, in August 2010, Mr Scragg applied for funding for the qualification of Bachelor of Engineering Technology. The training institute is at the Open Polytechnic and the University of Southern Queensland and requires residence in Queensland while training. The qualification is recognised by the Institute of Professional Engineers in New Zealand as well as in Australia. 
There has been no dispute in this appeal concerning the nature of the qualification, or concerning the appellant's cross crediting of existing subjects, his ability to manage the course of study and training, and his intentions regarding work prospects when obtaining the qualification. 
In his application to the Corporation, he stated that “This qualification should position me so that even part-time employment could pay sufficient remuneration so as to alleviate my dependence on top ups of Weekly Compensation from ACC”. He stated that full time employment was his ultimate goal, carrying through to retirement in 15 years. At that time, ACC would have been liable for weekly compensation for 15 years if the appellant were not found vocationally independent. He submitted, in his application, that “the greater value of my work contribution due to this further education may help carry me through whatever adjustment is needed. This option would more likely see me employed in a position where my disability and sleep problem are of negligible impact and willingly accommodated by my employer”. He submitted that gaining this qualification would unequivocally improve his chances of employment in a wide range of engineering fields with various companies in the greater Tauranga area. 
Mr Scragg produced material from the Institute of NZ Professional Engineers concerning the predicted numbers of engineers required each year for the next five years. He made out a case for the demand for qualified persons in engineering fields in sectors that he would be able to access. After taking account of cross crediting, the whole course would take him three years with course fees of $7,735, CAD computer equipment of $5,500 and fares and accommodation of $3,000 - a total of $16,235. 
The Corporation then issued its decision on 29 October 2010, refusing funding, and giving the reasons: 
“The Initial Medical Assessment report completed by Dr Ruttenburg 15 March 2010 identified a number of job options medically sustainable and considering there were no further recommendations for vocational rehabilitation. ACC has declined your application as we believe that your vocational rehabilitation is now complete and your request for funding is deemed not to be cost effective or appropriate under section 87(I)(b) & (c). ”
It was logical enough for the Corporation to consider cost effectiveness on the basis that vocational rehabilitation had been completed and the appellant would probably be vocationally independent (on the basis of Dr Ruttenberg's opinion) thus relieving the Corporation of further weekly compensation liability unless there was a deterioration in the appellant's ability to work. The decision was made before vocational independence had been assessed. It has to be regarded as a peremptory decision on grounds that had not been fully investigated. The Corporation did not know whether it would have an ongoing liability for weekly compensation and did not conduct any investigation of the viability of training and future engineering employment. 
There are several sections in the Act that are relevant to extended training for qualifications by way of vocational rehabilitation. The purpose of vocational rehabilitation is contained in s 80: 
“80 Purpose of vocational rehabilitation 
The purpose of vocational rehabilitation is to help a claimant to, as appropriate, - 
maintain employment; or 
obtain employment; or 
regain or acquire vocational independence. 
Without limiting subsection (1), the provision of vocational rehabilitation includes the provision of activities for the purpose of maintaining or obtaining employment that is - 
suitable for the claimant; and 
appropriate for the claimant's levels of training and experience. ”
Subsection (2) concerns the level of vocational rehabilitation according to the profile of an individual claimant. It does not extend to new training or education as of right, but a case may be made for suitability and appropriateness. The appellant in this case claims that he is a person with good experience and qualification in some areas of building and engineering, but is unable to access regular work because of problems with his pace of work (hampered by his arm disability and pain) and his need for rest periods. In order to work at his own pace as a self-employed person, he needs to be able to offer a professional qualification. He submits that the engineering qualification that he seeks fits into the concept of s 85(2). He could thereby obtain employment, envisaged by s 80(1)(b). 
Section 86 sets out matters to be considered in deciding whether to provide vocational rehabilitation: 
“86 Matters to be considered in deciding whether to provide vocational rehabilitation 
In deciding whether to provide vocational rehabilitation, the Corporation must have regard to the matters in section 87. 
In deciding what vocational rehabilitation is appropriate for the claimant to achieve the purpose of vocational rehabilitation under section 80, - 
the Corporation must consider whether it is reasonably practicable to return the claimant to the same employment in which the claimant was engaged, and with the employer who was employing the claimant, when the claimant's incapacity commenced; and 
if it is not, the Corporation must consider the following matters: 
whether it is reasonably practicable to return the claimant to an employment of a different kind with that employer: 
whether it is reasonably practicable to return the claimant to the employment in which the claimant was engaged when the claimant's incapacity commenced, but with a different employer: 
whether it is reasonably practicable to return the claimant to a different employment with a different employer, in which the claimant is able to use his or her experience, education, or training: 
whether it is reasonably practicable to help the claimant use as many of his or her pre-injury skills as possible to obtain employment. ”
Section 86 makes no reference to vocational independence, which is part of the purposes of vocational rehabilitation under s 85. However it does have considerations in parallel with vocational independence assessment. 
Section 87 includes the requirement of practical suitability and cost effectiveness. It also has a normal limit of three years: 
“87 Further matters to be considered in deciding whether to provide vocational rehabilitation 
In deciding whether to provide vocational rehabilitation, the Corporation must have regard to 
whether the vocational rehabilitation is likely to achieve its purpose under the claimant's individual rehabilitation plan; and 
whether the vocational rehabilitation is likely to be cost-effective, having regard to the likelihood that costs of entitlements under this Act will be reduced as a result of the provision of vocational rehabilitation; and 
whether the vocational rehabilitation is appropriate in the circumstances. 
The Corporation must provide the vocational rehabilitation for the minimum period necessary to achieve its purpose, but must not provide any vocational rehabilitation for longer than 3 years (which need not be consecutive). ”
In its decision, the Corporation referred to s 87. That was logical enough when there was a reasonable likelihood of achieving vocational independence without further education or training. But that underlying assumption was later to change. Meanwhile the appellant applied to review the Corporation's decision to refuse funding. 
Vocational independence 
On 30 March 2011, the Corporation advised Mr Scragg that his vocational rehabilitation was complete and that he would be assessed for vocational independence. In April a vocational independence occupational assessment identified 21 job types for which Mr Scragg was competent. They covered a field of mechanical engineering or architectural draughting, teaching, and clerical or labouring occupations. 
Dr W E D Turner, specialist in occupational medicine, conducted a vocational independence medical assessment. In addressing Mr Scragg's work history, Dr Turner referred to his light work at a building depot in 2004 and wrote: 
“He then moved to an engineering company as a filing clerk, again light duties. There was some minor computer work and a lot of filing work and he stayed in this job for two years. He then got into CAD work but was made redundant after 6-8 months. He was then unemployed for a period of time but gained employment with McAlpine Hussman as a punch press programmer where he worked from September 2006/August 2008. He reported that about September/October 2007 he started falling asleep at his computer, which was the point he saw Dr Alan Farrell, pain specialist. Dr Farrell manipulated his medication but found this did not significantly change his daytime somnolence and subsequently he was diagnosed with sleep apnoea. ”
Mr Scragg had managed limited light work but had eventually fialed because of his sleep apnoea and daytime fatigue. Dr Turner noted that use of a CPAP machine had apparently cured the appellant's sleep apnoea but had failed to deal with his daytime somnolence. In his summary of injury effects, Dr Turner said: 
“Mark suffered a very significant injury in September 1999 with significant trauma to brachial plexus namely the nerve roots at the C5/6 level. Clearly he has gone on to develop a significant neuropathic pain disorder requiring ongoing Gabapentin and Tramadol together with copious Panadol medication. Vocationally after a 13 month absence from work he was able to return to employment for various employers but eventually ceased work in August 2008 when he started to fall asleep on the job. 
Vocationally Mark presents some barriers to returning to full-time work. Clearly he is unable to undertake any medium to heavy physical demand manual handling role but there is no contraindication to his participating in a sedentary to light physical demand manual handling task. Dr Ruttenberg has confirmed that he is medically sustainable for these types of employment as has his GP. On the other hand Mark sees himself as potentially unproductive and whilst he feels that he could return to the workforce he believed he would need to have an understanding employer who would be prepared to accept his requirement to have 3-4 power naps per week during working hours. He indicated that whilst he is CAD trained he is slow and even though he is right handed and the tablet is held in the right hand this is a two handed operation where the left hand is needed to use the keyboard; he is much slower as a consequence of the left brachial plexus injury. ”
Dr Turner advised the Corporation that Mr Scragg had the potential to be able to return to 30 or more hours per week given the right environmental circumstances that is to say a congenial employer and an ergonomic flexible work environment. Vocational independence depends on the ability to work for a reasonable employer, not only for a considerate and understanding employer. Mr Scragg had lost his last job because he could not stay awake. Dr Turner though that he was till capable of full time work in five work types. Mr Scragg's case manager was concerned that Dr Turner's assessment was ambiguous and requested further comment. Dr Turner wrote again on 5 July 2011: 
“My intention here was to recognise the fact that despite his significant ongoing pain issues requiring the need for membrane stabilisers such as Gabapentin and analgesia such as Panadol, he is nevertheless a very motivated person and does have the potential to be able to return to 30 or more hours per week in the right environmental circumstances. This would necessitate his having an understanding [hence congenial] employer and a flexible work environment where his employer would be prepared to accept his personal requirements i.e. in relation to his being slower and his view that he would need to have 3-4 power naps per week during work hours. While some employers would not be comfortable with this a congenial employer who is accepting of his limitations would allow this to occur and in this situation he would have no problems performing work as described at 30 or more hours per week in a safe and ergonomically friendly environment. ”
While there was yet no decision on vocational independence, the appellant's application for review of the funding decision was heard on 29 June 2011. The Reviewer Mrs J Maher considered a summary of Mr Scragg's training reported in his initial occupational assessment: 
As a foreman, he had supervised up to eight staff. 
While self employed he had completed all of his own paperwork, quotes, invoices and GST returns, 
Passed School Certificate and University Entrance and University Bursary in statistics and computing. 
completed a CAD (computer assisted design) course 
two papers left to complete a New Zealand Certificate in Engineering (mechanical engineering) that he would consider completing. 
completed the practical hours required for a journeyman fitter and turner. ”
Mr Scragg had done his CAD course with support from ACC as part of his vocational rehabilitation after initial occupational assessment in 2000. It had equipped him to take up employment for eight years or more until he had increasing problems with pain and fatigue. Mr Scragg described his objective of future proofing his employment skills. 
The ACC representative submitted that the job options that had been identified as occupationally and medically sustainable in the initial assessments were not contingent on any further training requirements and certainly not on the training that Mr Scragg requested. 
The Reviewer considered a submission for cost effectiveness on the basis that ACC would otherwise be liable for weekly compensation totalling $540,432, whereas after the course costs and three years support by way of weekly compensation that liability could be reduced to about $389,000 if the B Eng Tech resulted in profitable part time self-employment. 
The Reviewer decided that there was clear evidence that Mr Scragg was, at the time of the decision, able to enter the work force and had the required skills, experience and training to do so. In the circumstances, there was no need for further vocational rehabilitation. 
I note here that this appeal is heard nearly two years later and on the basis of new evidence. There was a sound basis for the Reviewer's decision in 2011 that the appellant would be able to enter the work force, at least at the level of vocational independence for 30 or more hours a week. That is a conclusion that needs to be reviewed in the light of new evidence. 
Dr Black's report 
Dr David Black, occupational & environmental medicine specialist, provided an opinion to Mr Scragg's GP. After recording Mr Scragg's account of his job as an engineering office administrator and CAD draftsman in the Bay of Plenty, Dr Black continued: 
“He then moved to McAlpine Hussman as a CNC punch programmer in 2006 and continued to use his skills till his job ended in 2008. The reason for the end of this work was Mark's inability to complete a full days work because of the effects of the necessary medication. Mark recalled that after the training period in this work, his productivity became an issue and although there were some attempts to work around this, he was also suffering from somnolence at his desk eventually resulting in a referral to the Sleep Clinic at Tauranga Hospital. This helped but did not solve the problem and did not result in restoration of his ability to undertake a full days work to the employer's satisfaction. When the employer, who had been supportive realised that there was going to be no ‘fix’ for Mark's problem, his employment was terminated and this was eventually tied back to the original injury and its ongoing effects. ”
Dr Black agreed with Dr Turner's opinion that Mr Scragg could possibly work for 30 hours per week for a congenial employer and in the right environment. Dr Black wrote wrote: 
“I agree with Dr Turner in that regard too, an employer who accepted those limitations would possibly, even probably, be able to create an environment which would enable Mark to return to work. However having said that, some of the employment opportunities such as a small business owner could not have such a ‘congenial employer’ as effectively the employer is the market which would impose requirements on Mark that he would, in my opinion, be very unlikely to be able to meet. Dr Turner goes on to say ‘while some employers would not be comfortable with this a congenial employer who is accepting of his limitations would allow this to occur and in this situation he would have no problems performing work as described at 30 or more hours per week in a safe and ergonomically friendly environment’
In my opinion, and with all due respect to my colleague, Dr Turner is perhaps going further than he should in suggesting that such a work environment could be achievable and in particular that it is compatible with the concept of vocational independence. 
In my opinion, vocational independence means that an employee would be able to obtain and maintain a commercially viable employment relationship on a competitive employment market meeting the reasonable expectations of a reasonable employer. ”
Dr Black went on to say that it would have to be accepted that Mr Scragg would probably not be as productive as a fit and able worker, and recommended that Mr Scragg should be encouraged to return to work in a sheltered environment, that is to say with a congenial employer and with flexible conditions. 
Perhaps Dr Black went beyond his medical expertise when pointing out that employability with a limited range of employers is not vocational independence, but he was correct and that view was eventually accepted by the Corporation. The Corporation made a decision in February 2012 finding Mr Scragg vocationally independent. It then revoked its vocational independence decision after reviewing the medical material including a letter from Dr David Bartle. 
A diagnosis of right carpal tunnel syndrome was made by Dr Bartle in March 2012. That is apparently not accident related, but it is a factor that cannot be taken out of the equation because it would probably not have been a cause of inability to work if it were not for the accident related disability. 
That is the background to Mr Scragg's situation by the time of the hearing of this appeal from the review decision of 17 July 2011 which confirmed the Corporation's decision of 29 October 2010 refusing funding for B Eng Tech training. 
The ground for making a decision concerning advanced technical training has changed over the two and a half years since the Corporation's decision and the two years since the Reviewer' decision. The most significant change in the circumstances affecting the decision is that the appellant has not been found to be vocational independent. No further treatment or vocational rehabilitation has been suggested to improve the appellant's ability to work for 30 or more hours a week. The medical reports do not indicate that his ability is likely to improve, but no specific medical enquiry has been addressed on that question. 
It is notable that, in all assessments and reports, Mr Scragg is described as a highly motivated person. It is clear that he wants to return to work and it is only fair to assume that he would diligently pursue an available course of training and would do his best to apply a resulting qualification to part time endeavours to produce a reasonable income reducing his reliance on weekly compensation. 
The Corporation's decision was made on a premise that the appellant would probably become vocationally independent. That has been very clearly shown to be unfounded. The decision should not stand and a proper course would have been for the Corporation to have revoked its decision, at least after receiving Dr Black's report, in order to invite the appellant to make a further case for his training for self-employment if he wished to do so. 
The appellant puts forward a clearly credible proposition for further training. But the Court cannot substitute its own decision for that made by the Corporation. The Corporation is still entitled to make a primary decision based on up to date information. The Court is not able to make a discretionary decision on a matter that involves a variety of factors that would ordinarily be weighed by the Corporation. The question in this appeal concerns only the reasonableness of the prevailing decision in light of the information now known. The determination is that the Corporation is not entitled to rest on that decision. 
The exercise of discretion now rests on a different basis. The cost effectiveness assessment has changed and may give rise to other questions such as the possibility of the appellant obtaining part time employment with his present qualifications, and a realistic assessment of his obtaining better part time employment after a three year supported course of study. There may have to be some enquiry into the availability of the kind of work that the appellant wants to do, the sufficiency of his proposed qualification and background of experience, and his physical ability to do the work. He should be given an opportunity for realistic input into an investigation, and should be entitled to a decision, with full reasons in the event of further refusal of his claim for advanced vocational rehabilitation. 
For the foregoing reasons, the appeal is allowed. The review decision is quashed and the respondent's decision is set aside. The appellant should request a further primary decision on vocational rehabilitation and provide any up to date information that may assist. 
The appellant will have costs of $2,500 and reasonable disbursements to be fixed by the Registrar. 

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