State of New South Wales (Hunter New England Local Health District) v Walton

Case •

[2025] NSWPICMP 714

•

16 September 2025
DETERMINATION OF APPEAL PANEL
CITATION: State of New South Wales (Hunter New England Local Health District) v Walton [2025] NSWPICMP 714
APPELLANT: State of New South Wales (Hunter New England Local Health District)
RESPONDENT: Ellen Walton
APPEAL PANEL
MEMBER: John Isaksen
MEDICAL ASSESSOR: James Bodel
MEDICAL ASSESSOR: Alan Home
DATE OF DECISION: 16 September 2025

CATCHWORDS: 

WORKERS COMPENSATION - Workplace Injury Management and Workers Compensation Act 1998; review of Medical Assessment Certificate (MAC); appellant employer alleged demonstrable error and assessment based on incorrect criteria by Medical Assessor (MA) by failing to apply a deduction for a pre-existing condition in the assessment of whole person impairment (WPI) of thoracic spine and failing to provide adequate reasons for that omission; reference to Cole v Wenaline Pty Ltd, and Neader v The Trustee for Vestito Unit Trust t/as TS 14 Plus Australia Pty Ltd; Held – MA failed to provide adequate reasons for not making a deduction for a pre-existing condition and there was ambiguity in the reasons which were provided; MAC revoked.

BACKGROUND TO THE APPLICATION TO APPEAL

  1. On 24 June 2025 the State of New South Wales (Hunter New England Local Health District) lodged an Application to Appeal Against the Decision of a Medical Assessor. The medical dispute was assessed by Dr Tim Anderson, a Medical Assessor, who issued a Medical Assessment Certificate (MAC) on 27 May 2025.

  2. The appellant relies on the following grounds of appeal under s 327(3) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act):

    ·        the assessment was made on the basis of incorrect criteria, and

    ·        the MAC contains a demonstrable error.

  3. The delegate is satisfied that, on the face of the application, at least one ground of appeal has been made out. The Appeal Panel has conducted a review of the original medical assessment but limited to the ground(s) of appeal on which the appeal is made.

  4. Rule 128 of the Personal Injury Commission Rules 2021 (the PIC Rules) and Procedural Direction PIC7 - Appeals, reviews, reconsiderations and correction of obvious errors in medical disputes set out the practice and procedure in relation to the medical appeal process under s 328 of the 1998 Act. An Appeal Panel determines its own procedures in accordance with r 128(1) of the PIC Rules.

  5. The assessment of permanent impairment is conducted in accordance with the SIRA NSW Workers Compensation Guidelines for the Evaluation of Permanent Impairment, 4th ed
    1 March 2021 (the Guidelines) and the American Medical Association Guides to the Evaluation of Permanent Impairment, 5th ed (AMA 5).

RELEVANT FACTUAL BACKGROUND

  1. The respondent worker, Ellen Walton, sustained an injury to her left knee and thoracic spine on 10 June 2022 while employed as an endorsed enrolled nurse with the appellant at Tamworth Base Hospital. Ms Walton states that she slipped on a pool of urine from a patient and her left knee struck a table on the side of a bed and she also twisted her body when she grabbed the base of the bed to hold herself up.

  2. Ms Walton underwent a left knee arthroscopic meniscectomy and ACL reconstruction performed by Dr Sharp on 1 March 2023 and has had some residual scarring to her left knee as a result of that surgery.

  3. A CT scan of the thoracolumbar spine was performed on 11 July 2022. The findings in regard to the thoracic spine were reported as follows:

    “There is a mild thoracolumbar scoliosis. There is slight accentuation of the thoracic kyphosis based on a chronic anterior wedge fracture at T8 (25%). Marginal osteophytes are noted and there is mild disc space height loss from T2 to T10. There was no osseous lesion.

    There was no thoracic disc herniation causing spinal or neural impingement. There is mild facet OA at the T7/8 level.”

  4. Ms Walton was referred to Dr Siu, neurosurgeon, for treatment for her ongoing thoracic back pain in August 2023. Dr Siu writes in a report dated 17 August 2023 following his initial consultation that Ms Walton’s persistent thoracic back pain is quite possibly related to an aggravation of her underlying T7/8 facet joint arthritis due to the twisting injury at work in June 2022. Dr Siu recommended bilateral T7/8 facet joint injections.

  5. Dr Siu writes in the referral for those injections: “A CT scan from last year suggests bilateral T7/8 facet joint arthropathy as the underlying pain generator”.

  6. Ms Walton underwent those injections at Tamara Private Hospital on 12 January 2024, but she states that those injections aggravated her injury.

  7. Ms Walton made a claim for a lump sum payment for 17% whole person impairment (WPI) based upon an assessment made by Dr Machart, orthopaedic surgeon, dated 9 August 2024. The assessment of WPI is comprised of 10% WPI for the left lower extremity (knee), 1% WPI for scarring to the left knee, and 7% WPI for the thoracic spine. Dr Machart made no deduction in his assessment of the left lower extremity or thoracic spine for any pre-existing condition or abnormality. Dr Machart writes in regard to the thoracic spine:

    “There was injury to the thoracic spine. The indicators are that there is wedging diagnosed as a fracture. The age of the fracture was not entirely clear. The summary of the documentation suggested mild wedging at multiple levels. On the balance of probabilities a wedge facture may have occurred at the time of the injury.”

  8. Dr Bosanquet, orthopaedic surgeon, provided a report at the request of the appellant dated
    6 November 2024 in response to the claim for the lump sum benefit made by Ms Walton.
    Dr Bosanquet made an assessment of 9% WPI which comprised of 4% WPI for the left lower extremity (knee) and 5% WPI for the thoracic spine.

  9. Dr Bosanquet made an assessment of 7% WPI for the thoracic spine but made a one third deduction for pre-existing degenerative changes, which led to an assessment of 5% WPI for the thoracic spine. Dr Bosanquet diagnosed Ms Walton as having sustained a T8 fracture “with chronic changes in the thoracic spine”, and he opined that the injury to the thoracic spine was an aggravation of pre-existing degenerative changes.

  10. Ms Walton states in a statement dated 14 March 2025 that she did not have any issues or symptoms in her back prior to the injury on 10 June 2022. However, the Reply includes a questionnaire form completed by Dr Law for QBE Insurance on 21 October 2020 which refers to “Thoracic and upper lumbar muscular strain and vertebra dysfunction” which occurred from “handling heavy patients at orthopaedic wards & mental health”.

  11. There is also a short report from Ellen Faulkner, physiotherapist, dated 5 November 2020 which reports that Ms Walton has regained full strength and mobility throughout her thoracic region, has only occasional episodes of a brief, dull ache, and considers that it would be appropriate for Ms Walton to resume her usual duties following a review by Dr Law.

PRELIMINARY REVIEW

  1. The Appeal Panel conducted a preliminary review of the original medical assessment in the absence of the parties and in accordance with the Procedural Direction PIC7.

  2. As a result of that preliminary review, the Appeal Panel determined that it was not necessary for the worker to undergo a further medical examination because though the Appeal Panel found there was a demonstrable error in the MAC, there was sufficient material available to make a determination.

EVIDENCE

Documentary evidence

  1. The Appeal Panel has before it all the documents that were sent to the Medical Assessor for the original medical assessment and has taken them into account in making this determination.

Medical Assessment Certificate

  1. The Medical Assessor did not record any previous accident or injury to the thoracic spine.

  2. The Medical Assessor summarised his reading of the CT scan of the thoraco-lumbar spine as: “Mild wedge fracture at T8. Gas degenerative changes in the facet joints”.

  3. The Medical Assessor assessed Ms Walton as having 15% WPI which comprised of 7% WPI for the left lower extremity (after a one-tenth deduction for pre-existing degenerative changes in the left knee), 1% WPI for scarring, and 7% WPI for the thoracic spine.

  4. The Medical Assessor writes: “Although degenerative changes of the back were identified, there is no pre-existing complaint of lower back dysfunction and therefore, no further deduction is applied”.

  5. However, when the Medical Assessor refers to the assessment made by Dr Bosanquet, he writes that the one-third deduction made by Dr Bosanquet “is a bit too much” and that a “one-tenth deduction would be more appropriate”.

SUBMISSIONS

  1. Both parties made written submissions. They are not repeated in full, but have been considered by the Appeal Panel.

  2. The appellant raises two grounds of appeal. Firstly, the appellant submits that the Medical Assessor failed to apply a deduction to the assessment of the thoracic spine pursuant to
    s 323 of the 1998 Act in circumstances where he ought to have done so.

  3. The appellant submits that the principles pertaining to a deduction pursuant to s 323 of the 1998 Act are well established from the decisions of Cole v Wenaline Pty Ltd [2010] NSWSC 78 (Cole) and Vitaz v Westform (NSW) Pty Ltd [2011] NSWSC 254 (Vitaz), being that a deduction in an assessment is to be made if a pre-existing condition is a contributing factor causing permanent impairment, even if the pre-existing condition was asymptomatic prior to the work injury.

  4. The appellant refers to the questionnaire form completed by Dr Law in October 2020 and the report from Ms Faulkner, physiotherapist, dated 5 November 2020 regarding symptoms that Ms Walton was experiencing in the thoracic spine, and submits that the Medical Assessor failed to engage with that evidence which occurs about one and a half years prior to the work injury. The appellant submits that the Medical Assessor ought to have applied a deduction of at least one-tenth because Ms Walton had experienced thoracic vertebrae dysfunction which had caused her some incapacity for work prior to the injury of 10 June 2022.

  5. The appellant also submits that the response by the Medical Assessor to the opinion of
    Dr Bosanquet that a one-third deduction “is a bit too much” and that a “one-tenth deduction would be more appropriate”, is at odds with his opinion elsewhere in the MAC that “no further deduction is applied”, and is also at odds with the available evidence.

  6. Secondly, the appellant submits that the Medical Assessor has failed to provide adequate and/or conflicting reasons as to why he did not apply a deduction to the assessment of the thoracic spine pursuant to s 323 of the 1998 Act.

  7. The appellant submits that in circumstances where the available evidence indicates a pre-existing, symptomatic condition of the thoracic spine, it is incumbent upon the Medical Assessor to explain his conclusion to not apply a deduction to his assessment of the thoracic spine.

  8. The appellant submits that the MAC should be revoked, and a new MAC be issued with the application of a one-tenth deduction to the thoracic spine, which will result in the assessment of 14% WPI for the thoracic spine, left lower extremity (knee) and scarring.   

  9. Ms Walton submits that the Medical Assessor has undertaken a thorough assessment based on the history provided to him, his physical examination and the material before him, and that the Medical Assessor has provided reasons and clinical evidence to support his findings which were matters falling within the scope of his clinical judgement.

  10. Ms Walton submits that the Medical Assessor was aware of the CT scan of the thoracic spine dated 11 July 2022 and provides adequate reasoning when he writes: “Although degenerative changes of the back were identified, there is no pre-existing complaint of lower back dysfunction and therefore, no further deduction is applied”.

  11. In regard to the evidence of prior problems experienced with the thoracic spine in late 2020, Ms Walton submits that in accordance with Chapter 1.6 (b) of the Guidelines it must be established that the impairment which she suffers from is greater as a result of the prior diagnosis and that there is evidence indicating, based on reasonable probability, that the prior factor caused or contributed to the impairment.

  12. Ms Walton submits that it can be inferred that the diagnosed injury in 2020 was not severe because more serious treatment methods, such as referral to a specialist, were not required at that time. Furthermore, Ms Walton was able to maintain physically laborious employment prior to her workplace injury, which supports her claim that there was no serious injury or ongoing impairment or symptoms to the thoracic spine prior to the incident on 10 June 2022.

  13. Ms Walton also submits that the severity of the injury to the thoracic spine sustained on
    10 June 2022, being a fracture at the T8 level, should not be overlooked.

  14. Ms Walton submits that even if weight is given to the material from late 2020 and the degenerative changes identified on the CT scan in July 2022, it cannot be conclusively determined that either contributed to her current impairment of her thoracic spine and therefore no deduction should be applied pursuant to s 323.

  15. Ms Walton submits that the appeal be dismissed, and the MAC confirmed.

FINDINGS AND REASONS

  1. The procedures on appeal are contained in s 328 of the 1998 Act. The appeal is to be by way of review of the original medical assessment but the review is limited to the grounds of appeal on which the appeal is made.

  2. In Campbelltown City Council v Vegan [2006] NSWCA 284 the Court of Appeal held that the Appeal Panel is obliged to give reasons. Where there are disputes of fact it may be necessary to refer to evidence or other material on which findings are based, but the extent to which this is necessary will vary from case to case. Where more than one conclusion is open, it will be necessary to explain why one conclusion is preferred. On the other hand, the reasons need not be extensive or provide a detailed explanation of the criteria applied by the medical professionals in reaching a professional judgement.

  3. The Appeal Panel concludes that there has been a failure by the Medical Assessor to provide adequate reasons when considering whether there should be a deduction for a
    pre-existing condition having regard to the identification of degenerative changes at the T7/8 level in a CT scan just one month after the work injury, and that this amounts to demonstrable error. It is not enough for the Medical Assessor to simply refer to those degenerative changes and then dismiss them as having no relevance to the assessment of impairment of the thoracic spine.

  4. The Appeal Panel also concludes that the MAC contains a demonstrable error in the ambiguity which exists between the Medical Assessor’s statement that a “one-tenth deduction would be more appropriate” and the decision not to make any deduction for the impairment of the thoracic spine at all.

  5. The appellant does not dispute that Ms Walton fits the category of DRE II for the thoracic spine (5%) with a further 2% for the activities of daily living. The issue which is now necessary for the Appeal Panel to consider and determine is the application of s 323 of the 1998 Act to the assessment of impairment of the thoracic spine.

  6. Section 323 of the 1998 Act relevantly provides:

    “(1)    In assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury (whether or not it is an injury for which compensation has been paid or is payable under Division 4 of Part 3 of the 1987 Act) or that is due to any pre-existing condition or abnormality.

    (2)     If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence.

    (3)     The reference in subsection (2) to medical evidence is a reference to medical evidence accepted or preferred by the medical assessor in connection with the medical assessment of the matter.”

  7. The application of s 323 was addressed by Schmidt J in Cole at [29-30]:

    “…The section is directed to a situation where there is a pre-existing injury, pre-existing condition or abnormality. For a deduction to be made from what has been assessed to have been the level of impairment which resulted from the later injury in question, a conclusion as required, on the evidence, that the pre-existing injury, pre-existing condition or abnormality caused or contributed to that impairment.

    Section 323 does not permit that assessment to be made the basis of an assumption or hypothesis, that once a particular injury has occurred, it will always, ‘irrespective of outcome’, contribute to the impairment flowing from any subsequent injury. The assessment must have regard to the evidence as to the actual consequences of the earlier injury, pre-existing condition or abnormality. The extent that the later impairment was due to the early injury, pre-existing condition or abnormality must be determined. The only exception is that provided for in s 323 (2), where the required deduction ‘will be difficult or costly to determine (because, for example of the absence of medical evidence)’. In that case, an assumption is provided for, namely that the deduction ‘is 10% of the impairment’. Even then, that assumption is displaced if it is at odds with the available evidence.”

  8. More recently, Schmidt AJ confirmed that approach in Neader v The Trustee for Vestito Unit Trust t/as TS 14 Plus Australia Pty Ltd [2025] NSWSC 866 (Neader), when referring to the potential deduction provided for by s 323 due to a pre-existing arthritic condition affecting the worker’s knee at [27]:

    “The deduction required by s 323 did not depend on the mere existence of a pre-existing condition. It required a consideration of any evidence to establish that the arthritic condition contributed to Ms Neader’s level of impairment after the knee replacement. If it did make a contribution to that impairment, an assessment had to be made as to the extent of its contribution, so that a deduction could be arrived at. If it did not there could be no deduction.”

  9. The evidence regarding a pre-existing condition that could affect the assessment of impairment of the thoracic spine appears to be restricted to the questionnaire from completed by Dr Law in October 2020, the report from Ms Faulkner dated 5 November 2020, and the CT scan of the thoracic spine dated 11 July 2022 which identified degenerative changes in that part of the spine.

  10. The Appeal Panel does not consider that the material regarding the treatment which Ms Walton underwent for her thoracic spine in late 2020 contributes to the impairment of her thoracic spine. That material is limited to a short and discrete period of no more than two months and some 19 months before she sustained the work injury.

  11. Furthermore, Ms Walton was able to work for those 19 months as an enrolled nurse, which is a job that does involve arduous work which can place undue strain upon the spine.

  12. However, the Appeal Panel considers that the degenerative changes reported on in the CT scan taken just one month after the work injury contribute to the impairment of the thoracic spine. The report from the CT scan identifies degenerative changes at the site of the injury, namely mild T7/8 facet OA, and not merely widespread degenerative changes throughout the thoracic spine.

  13. The Appeal Panel concludes that the degenerative changes found at T7/8 would be the source of some pain and restriction of movement in that part of the spine, and this contributes to the impairment of the thoracic spine.

  14. This conclusion is reinforced by the treating specialist, Dr Siu, who considers that facet joint arthropathy seen on the CT scan at T7/8 is a possible cause of the underlying pain complained of by Ms Walton.

  1. Although the Appeal Panel concludes that the degenerative changes at and around T8 contribute to the impairment, it is otherwise too difficult and costly to determine any further the contribution of those degenerative changes to the assessment of impairment, and therefore the one-tenth deduction provided for by s 323 (2) of the 1998 Act should be applied. Such a deduction is not at odds with the available evidence.

  2. A one-tenth deduction as provided for by s 323(2) takes the assessment of the thoracic spine to 6.3%, which rounds out to 6% WPI. When that is added to 7% WPI for the left lower extremity (knee) and 1% WPI for scarring, the total is 14% WPI.

  3. For these reasons, the Appeal Panel has determined that the MAC issued on 27 May 2025 should be revoked, and a new MAC should be issued.  The new certificate is attached to this statement of reasons.

WORKERS COMPENSATION DIVISION

APPEAL PANEL

MEDICAL ASSESSMENT CERTIFICATE

Injuries received after 1 January 2002

Matter number:

W2932/25

Applicant:

Ellen Walton

Respondent:

State of New South Wales (Hunter New England Local Health District)

This Certificate is issued pursuant to s 328(5) of the Workplace Injury Management and Workers Compensation Act1998.

The Appeal Panel revokes the Medical Assessment Certificate of Medical Assessor Tim Anderson and issues this new Medical Assessment Certificate as to the matters set out in the Table below:

Table - whole person impairment (WPI)

Body Part or system

Date of Injury

Chapter, page and paragraph number in NSW workers compensation guidelines

Chapter, page, paragraph, figure and table numbers in AMA 5 Guides

% WPI

Proportion of permanent impairment due to pre-existing injury, abnormality or condition

Sub-total/s % WPI (after any deductions in column 6)

1.Thoracic spine

10/6/22

Ch 4 P 24

P 389

T 15-04

7%

1/10th

6%

2.Left lower extremity (knee)

10/6/22

Ch 3 P 13

P 537

T17-10

P546

T17-33

`8%

1/10th

7%

3.Scarring

10/6/22

P74  T 14.1

1%

0

1%

4.

5.

6.

Total % WPI (the Combined Table values of all sub-totals)  

14%
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Cases Citing This Decision

0

Cases Cited

4

Statutory Material Cited

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Cole v Wenaline Pty Ltd [2010] NSWSC 78
Southern Cross Airports Corporation Pty Ltd v Chief Commissioner of State Revenue [2011] NSWSC 254
Campbelltown City Council v Vegan [2006] NSWCA 284