Vehicle Testing New Zealand v Accident Compensation Corporation
[2016] NZHC 117
•9 February 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-001626 [2016] NZHC 117
UNDER the Accident Compensation Act 2001 IN THE MATTER OF
an appeal against the decision of the District Court, pursuant to section 162 of the Accident Compensation Act 2001 ("the Act")
BETWEEN
VEHICLE TESTING NEW ZEALAND Appellant
AND
ACCIDENT COMPENSATION CORPORATION
Respondent
Hearing: 18 November 2015 Counsel:
A D Sharp for the Appellant
P J Radich QC and G M Richards for the RespondentJudgment:
9 February 2016
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 9 February 2016 at 4.30 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Counsel: P J Radich QC, Wellington
A D Sharp, Auckland
G M Richards, Wellington
Solicitors: Vlatkovich and McGowan, Auckland
Accident Compensation Corporation, Wellington
VEHICLE TESTING NZ v ACCIDENT COMPENSATION CORPORATION [2016] NZHC 117 [9 February
2016]
Introduction
[1] ACC employer levies are calculated by reference to the claims experience of the employer. In broad terms, a lower than average claims experience will lead to a discount from the standard industry based levy. A higher than average claims experience will lead to a loading on that standard levy.
[2] The claims used to calculate an employer’s experience rate are defined as “qualifying claims”. A “qualifying claim” is a claim for a work-related personal injury suffered during an “experience period”, which has been accepted by the Corporation.
[3] In 2011, the appellant (VTNZ) sought a review of its ACC levy pursuant to s 236 of the Accident Compensation Act 2001 (the Act). It challenged some of the qualifying claims used to calculate that levy on the grounds that the injury the subject of the qualifying claim was not a work-related personal injury. Because the Corporation did not schedule a hearing within the required time frame, a decision on the application for review was deemed to have been made in favour of VTNZ.
[4] By decision dated 19 December 2014, Judge Powell found challenges to the qualifying claims of the sort raised by VTNZ fell outside the right of review in s 236.1 Judge Powell further found that the deemed decision made following VTNZ’s request for a review was not a decision that certain claims were not “qualifying claims” within the meaning of the Act.
[5] VTNZ appeals from the District Court decision.2 Leave to appeal was granted on the following two questions:3
[a] If under Section 236 of the Accident Compensation Act 2001 (“the Act”) an employer seeks a review of an Experience Rating Assessment issued by the Corporation (ACC) pursuant to the Accident Compensation (Experience Rating) Regulations 2011, is the employer at law entitled to challenge on review whether a qualifying claim used by ACC in determining that Experience Rating Assessment is a work-related personal injury which is suffered in the Experience Period?
1 Vehicle Testing New Zealand v Accident Compensation Corporation [2014] NZACC 339.
2 The appeal is brought pursuant to s 162 of the Act.
3 Vehicle Testing New Zealand v Accident Compensation Corporation [2015] NZACC 154 at [8].
[b] If question [a] is answered in the affirmative, does the failure then in this matter to set a date for review of the matter within three months of ACC receiving the application for review, entitle the appellant to a decision in its favour pursuant to section 146 of the Act?
Legislative scheme
[6] Under pt 6 of the Act, employers are required to pay ACC levies to fund a “work account” which is one of a number of accounts maintained and operated as part of the ACC scheme.4
[7] The levies payable for the relevant period are paid at a rate prescribed in the Accident Compensation (Experience Rating) Regulations 2011 (Regulations). Those Regulations establish a system whereby a prescribed standard levy may be adjusted up or down depending on the work-related personal injury experience of the employer.5
[8] To determine an employer’s experience rating, the Corporation must calculate the number of “qualifying claims” in an “experience period” for which weekly compensation has been paid for an employer’s current or former employees.6 The Corporation must calculate the total number of weekly compensation days in a claims activity period in relation to the qualifying claims,7 and also the number of claims with medical costs paid in excess of $500.
[9] A qualifying claim is defined in the Regulations as follows:
Qualifying claim—
(a) means a claim that—
(i) is made under section 48 for a work-related personal injury suffered in the experience period (except for a work-related personal injury described in paragraph (b)); and
(ii) is accepted by the Corporation; and
(b) does not include a claim made for a work-related personal injury suffered in the experience period that is—
4 Act ss 167 and 168.
5 Accident Compensation (Experience Rating) Regulations 2011, reg 3.
6 Regulation 4(3).
7 Regulation 4(4).
(i) mental injury suffered by a person in the circumstances described in section 21; or
(ii) personal injury caused by work-related gradual process, disease, or infection that involves exposure to asbestos; or
(iii) personal injury caused by work-related gradual process, disease, or infection that results in hearing loss.
[10] An “experience period” is defined in reg 6 to mean the three tax years
immediately before the levy year before the applicable levy year.
[11] All of these inputs are used to calculate the two primary adjustments made to the standard levy under the Regulations, namely, an “industry sized modification”8 and an “experience rating modification”.9 Those modifications result in a loading on, or discount from, the standard levy.
[12] The calculations, including the experience rating adjustment (discount or loading), the qualifying claims, number of compensation days and paid medical costs over $500, used to determine the experience rating, are described in levy invoices sent by ACC to the levy payer.
[13] Section 236 is found in pt 6 of the Act which deals with management of the scheme. Pursuant to s 236(1) any person dissatisfied with a decision of the Corporation in respect of any levy may seek a review of that decision within three months after notification of the decision. Subsection (4) provides that a review brought under subs (1) must be dealt with by the Corporation under pt 5.
[14] Part 5 contains sections dealing with reviews and appeals. Section 134 is found in pt 5, and provides as follows:
134 Who may apply for review
(1) A claimant may apply to the Corporation for a review of—
(a) any of its decisions on the claim:
(b) any delay in processing the claim for entitlement that the claimant believes is an unreasonable delay:
8 Regulations 13 and 14
9 Regulations 15 and 16
(c) any of its decisions under the Code on a complaint by the claimant.
(1A) However, a decision of the Corporation regarding the exercise of discretion under section 68(3) is not reviewable under Part 5.
(2) An employer may apply to the Corporation for a review of its decision that a claimant's injury is a work-related personal injury suffered during employment with that employer.
(3) An employer may not apply to the Corporation for a review of a decision about the entitlements that have been or are to be provided to a claimant who has cover for a work-related personal injury.
(4) Repealed.
(5) A levy payer may apply to the Corporation for a review of a determination under section 209(1) or a decision referred to in section 236(1).
[15] Relevant to this appeal is s 134(5) which allows a levy payer to challenge a decision in s 236(1), and s 134(2) which allows an employer to bring a review in relation to a “decision that a claimant’s injury is a work-related personal injury suffered during employment with that employer”.
[16] Section 135(2)(f)(ii) of the Act provides that an employer seeking to review a decision under s 134(2) must do so within three months of the ACC giving notice of its decision on the claim. That time limit may be extended in certain extenuating circumstances, none of which relate to the position of an employer.
[17] Under s 146 of the Act, the Corporation must schedule a hearing for a review within three months of receiving a review application. If it does not, the reviewer is deemed to have made a decision in the applicant’s favour.
[18] The current experience rating scheme was introduced in a 2010 amendment to the Act. The Accident Rehabilitation and Compensation Insurance Act 1992 (the
1992 Act) and the Accident Rehabilitation and Compensation Insurance (Experience Rating) Regulations 1993 (the 1993 Regulations) contained a similar experience rating scheme. There is a line of authority under the earlier scheme, commencing with Judge Ongley’s decision in Lane Walker Rudkin, to the effect that a review of a levy decision may include a challenge to a decision that the injury is a
work-related injury.10 In Lane Walker Rudkin Judge Ongley held that an employer is not bound by the Corporation’s original decision as to cover and is not prevented from questioning that decision. The Judge held that that result could only follow by operation of statute or estoppel and neither applied in that case.
[19] The experience rating scheme was not carried through into the Injury Prevention, Rehabilitation, and Compensation Act 2001.11 Up until 2010 there was no analogous experience rating scheme under the Accident Compensation legislation.
Background
[20] On 29 August 2011, ACC issued VTNZ with an estimated invoice for the
1 April 2011 to 30 March 2012 period (August invoice). The relevant experience period covered was from 2007 to 2010. The calculation set out in the August invoice showed a loading of plus 31.39 per cent on the standard rate. The invoice listed the
62 qualifying claims used in the experience rating calculations.
[21] On 20 September 2011, VTNZ (through its agent, Wellnz Ltd) applied for a review of the experience rating assessment reflected in the August invoice. A report enclosed with the letter identified 24 of the 62 qualifying claims as requiring further investigation. A list of each of the 24 claims then followed. Of the 24 claims, 16 were said to require further investigation on various grounds, including that the claimed injury did not appear to be work-related, and the costs paid in some cases appeared out of proportion to the nature of the injury sustained. A further eight claims were identified as having no information available at all.
[22] The Corporation did not set down a review hearing within the required three month period and therefore, pursuant to s 146 of the Act, a decision on the review is
10 Lane Walker Rudkin Ltd v Accident Rehabilitation & Compensation Insurance Corporation (1997) 1 BACR 472 (DC). See also Alstom NZ Ltd v Accident Rehabilitation and Compensation Insurance Corp [2000] NZAR 337 (DC); and Ministry of Education v Accident Compensation Corporation DC Auckland A144-01, 25 February 2002.
11 The 1992 Act was repealed in 1998 by the Accident Insurance Act 1998 which also contained the experience rating scheme.
deemed to have been made in favour of VTNZ. The scope of that deemed decision is at issue in the second question of law in this appeal.
[23] The Corporation subsequently undertook a review of the 24 claims and removed two of the qualifying claims in the 2009/2010 period. That resulted in a reduction in the days of weekly compensation, but it did not result in a change to the overall experience rating adjustment. A revised invoice was issued on 12 March
2012 (March invoice).
[24] VTNZ sought a further review of the March invoice. It specifically sought the reassessment of the levies excluding the 24 claims which it said were non-work related claims.
[25] The application for review was dismissed by the reviewer (Mr Woodhouse) in a decision dated 3 October 2012. VTNZ appealed to the District Court.
District Court decision
[26] The two issues before Judge Powell were identified at [10] of the decision as follows:
[a] Whether VTNZ can challenge whether qualifying claims are work related personal injuries as part of a challenge to the levies payable? And
[b] What is the effect of the deemed decision?
[27] On the first issue, Judge Powell found that many of the components of the
1992 and current scheme were similar but not identical and the provisions of the current Act had to be considered on its own terms.12
[28] The Judge declined to follow the Lane Walker Rudkin line of authority. Judge Ongley’s decision was distinguished on the basis that it was never argued that there was notification of the original decision to accept the claim as a work injury-
related claim against which there was a right of review under the review provisions then applying.13
[29] Furthermore, the Judge found that there was no “decision” within the meaning of s 236 to classify a claim as a qualifying claim for the purposes of determining premiums or levies. That decision was made at the time a claim was accepted.14
[30] The Judge found that there would be significant issues with consistency if s 236 was interpreted to allow a challenge to the status of a work-related personal injury through a challenge to a levy under s 236. He noted that if the employer was successful in challenging that status again, it would not necessarily affect the entitlements paid to the claimant, but it would nonetheless give rise to issues with the
administration of that claim.15
[31] The Judge therefore concluded on the first issue that VTNZ could not challenge whether the qualifying claims were work-related personal injuries as part of a challenge to levies payable under pt 6 of the Act.16
[32] In respect of the second issue, the Judge found that, as it was not open to VTNZ to challenge whether qualifying claims were work-related personal injuries as part of the challenge to levies, any such outcome could not be a consequence of a deemed decision. In any event, the Judge found that the deemed decision was for the further investigation of the 24 claims, and not their removal, and the Corporation had undertaken a further investigation as it was required to do.17
[33] The appeal from Mr Woodhouse’s decision was therefore dismissed. Leave
to appeal to this Court was granted on the two questions of law set out above.
13 At [34]-[36].
14 At [37].
15 At [38].
16 At [40].
Question 1 – challenge to a “qualifying claim” under a s 236 review
[34] Section 236 provides:
236 Challenges to levies
(1) Any person who is dissatisfied with any decision of the Corporation in respect of any levy paid or payable or claimed to be payable under this Part by that person may seek a review by the Corporation of that decision within 3 months after the person is notified of the decision.
(2) However, no right of review exists under this Act in respect of the calculation for the purposes of the Income Tax Act 2007 of the taxable income of any person or in respect of the levy payable under section 213(2)(c).
(3) The entitlements that have been given or are to be given to any person under this Act may not be challenged in any review under subsection (1).
(4) A review brought under subsection (1) must be dealt with by the Corporation under Part 5, and that Part (including the provisions relating to appeals) applies with any necessary modifications.
(emphasis added)
[35] Despite the wide definition of “decision” under the Act,18 the plain meaning of the words in s 236 (1) is that review is only available for a decision “in respect of any levy”. Section 236 provides an avenue whereby errors in the calculation of levies, including relevant inputs into those calculations, may be challenged on review.
[36] The challenges which VTNZ make in this case are not challenges to a decision in respect of any levy. Rather, they are challenges to the decision of the Corporation to accept a claim as one of work-related personal injury. By way of example, Mr Sharp referred me to claims used to calculate the levy where the diagnosis of the injury appeared to be “pain”. Mr Sharp submits that it is well settled law in this area that “pain” does not constitute a personal injury under the ACC
scheme, and therefore claims for “pain” are not claims for work-related personal
18 “Decision” is defined to include all or any of the decisions by the Corporation including: a decision about whether or not a claimant has cover; a decision about the classification of the personal injury suffered; a decision about entitlements; and a decision relating to the levy payable by a particular levy payer.
injury. Irrespective of the correctness of that position, the decision to accept a claim for pain as one for work-related personal injury is not a decision made by the Corporation in the course of fixing a levy. I consider that VTNZ’s challenge falls outside the scope of review provided for in s 236(1) for that reason.
[37] I do not agree with Mr Sharp’s submission that the VTNZ challenges are directed at the definition of “qualifying claim”. That definition simply refers to a claim made under s 48 for work-related personal injury which has been accepted by the Corporation. A s 236(1) review right may exist if a claim which was not made under s 48, or which was not in fact accepted by the Corporation, was used as a “qualifying claim” in the calculations. But there is nothing in the definition of “qualifying claim” which invites a challenge to the original basis upon which the Corporation accepted the claim as one of work-related personal injury.
[38] The review rights for the challenges raised by VTNZ are specified in s 134(2) of the Act. That section provides that an employer may apply to the Corporation for a review of its decision that a claimant’s injury is a work-related personal injury suffered during employment with that employer. The review right provided for in subs (2) is distinct from the review right afforded to levy payers to bring a review of “a decision referred to in section s 236(1)” as provided for in subs (5). A narrow interpretation of s 236(1) preserves the clear distinction drawn in s 134 between the different type of decisions subject to review, and the different rights of review which attach to each decision.
[39] VTNZ’s interpretation of s 236(1) does not sit comfortably with the statutory time frames for review. Pursuant to s 135(2)(f)(ii), an employer must bring a review of any decision on a claim for work-related personal injury within three months of the Corporation giving notice of its decision on the claim. Section 135(3) allows that time frame to be extended in certain circumstances, but none relate to circumstances affecting the employer. The three month time frame allows a review of the facts in issue to be made when they are relatively fresh. That is particularly important in the assessment of the nature and cause of any injury because rehabilitation over time may make it more difficult to assess at a later date.
[40] If the substantive decision on whether or not a claim is a work-related injury could be re-opened on a challenge to a levy, then an employer would effectively have two (or possibly more) rights of review in respect of the same decision. Claims which had not been challenged within the three month time limit prescribed by s 135(2) could nevertheless be challenged years later under s 236(1). Such a result would undermine the efficacy and purpose of the statutory time frames provided in s 135. Parliament cannot have intended such a consequence.
[41] I do not consider this more limited interpretation of s 236 infringes rights of access to judicial decision making as Mr Sharp submits. The employer receives notice of a decision on a work-related personal injury claim. If the employer wishes to dispute the basis of the claim, then it must do so within the three month time period of receiving that notice as prescribed under s 135(2)(f)(ii). Those rights provide adequate access to rights of review. There is no need to interpret s 236 to allow for subsequent review rights. If the employer does not avail itself of the rights in s 134(2) within the three month time period then it risks such a claim being used in the calculation of its levy.
[42] The approach I have taken is different to that established in the Lane Walker Rudkin line of authority. I do not consider that difference can be fully explained by differences in the statutory regimes. Whilst the 2011 Regulations are more formulaic than their earlier counterparts, the rights of review under s 89 of the 1992 Act are substantially the same as those provided for in s 236. I do not consider the different facts in each case justify a different approach either. Ultimately, I simply take a different view to that expressed in Lane Walker Rudkin, and the cases that followed it.
[43] Mr Sharp submits that Parliament is presumed to know the law that it is amending and if it had intended to curtail the Lane Walker Rudkin rights of review in respect of a levy, it would have done so expressly. From 2001 to 2010 there was no experience rating scheme which was comparable to either the 1992 or current scheme. Given that passage of time, I consider it unsafe to presume that Parliament intended an employer to have subsequent rights of review when it amended the Act in 2010. It is preferable to ascertain Parliament’s intent from construing the meaning
of s 236 in its legislative context. That exercise suggests that Parliament did not intend a review under s 236 to extend to a review of a decision to accept a claim as a work-related personal injury claim.
Conclusion on question 1
[44] In a review brought pursuant to s 236 of the Act, I consider an employer is not entitled to challenge whether a qualifying claim is a work-related personal injury suffered during the experience period. The answer to question one is “no”.
Question 2 – nature of the deemed review
[45] The answer to question 1 also disposes of question 2. A deemed decision on review requiring the removal of qualifying claims on the grounds that they are not claims for work-related personal injury cannot arise if the scope of the review provided for in s 236 does not allow such a challenge to be made.
[46] If I am wrong on question 1, I nevertheless uphold Judge Powell’s decision that the scope of the deemed decision did not extend to removing the challenged qualifying claims. That is because VTNZ’s request for review as set out in the
20 September 2011 letter and the enclosed report was for a further investigation of the disputed claims on the grounds that some of them did not appear to meet the criteria for cover as a work-related injury and the allocated costs were incorrect.
[47] The 20 September 2011 letter was in the following terms:
There appears to be several claims that do not meet the criteria for cover as a work related injury and the allocated costs are incorrect. As a result of this review we ask that ACC revise the ER assessment.
At this stage we also ask that ACC provide a copy of each work injury decision letter and ACC45 for every claim used to make up the ER assessment plus a breakdown of the days of weekly compensation related to the 24 claims identified above and any other information that ACC may refer to during the review.
[48] The enclosed report identified the 16 claims which “require further investigation”. VTNZ did not request the removal of the qualifying claims from the
levy calculations. The deemed decision therefore required the further investigation of the identified claims, and not the removal of the claims from the levy calculation. The Corporation acted in accordance with that decision by revising the claims, removing two of them, and issuing a revised March invoice as a result. That is all that the deemed decision on the application for the review required it to do.
[49] VTNZ is not therefore entitled to removal of the 24 claims pursuant to the deemed decision made in its favour under s 146 of the Act. Even if wrong on question 1 therefore, I would nevertheless answer question 2 “no”.
Result
[50] The answer to both questions is “no”. The appeal is dismissed.
[51] The respondent is entitled to costs on a 2B basis plus disbursements.
Edwards J
1
0
0