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 Redemptions

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Matt R.



Number of posts : 11
Registration date : 2007-06-03

PostSubject: Redemptions   Mon Jun 04, 2007 11:40 am

Sue,
I note with interest that you chose to question something I had written and authorised to be published on the VOID website directly with VOID yet curiously did not address the issue with myself.
You drew attention to a WorkCover media release that you suggest confounds what I had stated but it only serves to reinforce the failings of WorkCover to understand the very issue that gave rise to the blowout in the financial liability. You also know that the data I refer to is sound having obtained it from WorkCover through an FOI request. To explain my views, I include this table that shows the number of injured Workers on the scheme for given tenures in the years 2000 and 2006. I will directly address these numbers.
FY
0-3m
4-6m
7-12m
13-24m
25-36m
36m+
Total

2000
341
810
968
629
941
1202
4891

2006
266
788
1087
647
960
2765
6513




WorkCover suggest that it is because more workers choose to remain on the scheme longer that the liability has deteriorated to its current position. For ease of understanding and using WorkCoverís own data one could draw a metaphor to WorkCoverís claim by suggesting that since 2000 McDonalds were selling more cheeseburgers because more people are choosing to buy them. On the face of it that is a sound claim as there has certainly been an increase in burgers sold from 4891 to 6513 for the given period. If however you draw down into the data, you will note that although there are certainly more cheeseburgers being sold (6513), it is not simply because more people are buying them but only because those in the 36 month plus group, lets say pensioners have increased their purchases. If the broad claim that more people were buying cheeseburgers was sound, we would see an increase in every group which of course we donít. A learned reviewer would then look at this group to find out why the 36m+ group are buying more cheeseburgers and one might consider the offer they are met with, maybe two for one for pensioners or a free coffee with every cheeseburger. In WorkCoverís case the offer they are met with is a token redemption that Lawyers, Financial Advisors and Medical Experts are advising claimants to outright reject.



In these figures the only group that has increased in number represents the permanently incapacitated Workers that simply refuse to accept the token redemptions that are offered contrary to the Legislative obligations that fall to WorkCover. The only logical reason that only the 36 month plus group can grow so significantly is that the permanently injured workers have been left with no option but to remain on benefits because WorkCover simply refuse to comply with the objective redemption obligations under section 42/43 of the Act.



WorkCover management have obviously stumbled across the term Ďcompensation neurosisí, a phenomenon whereby a percentage of valid claimants to insurance develop or even feign symptoms in the hope that the compensation insurer might offer a larger lump sum payment. In support of their claims, WorkCover often cite a review written by researchers funded to research the phenomenon by a company that developed software to manage against it. (Englemen, Englemen & Patrick, riZx Inc. quoting Hartford Insurance Group, 2001.) This is akin to citing research that appeared to suggest that cigarette smoking was not harmful to ones health as shown by research conducted on behalf of big tobacco.



Whilst I accept that there may be some foundation to the phenomenon, I believe it would be marginal given the hoops those trapped on WorkCover are forced to jump through as a matter of course and that the benefit is only 80 percent of that earned prior to their injury. If however we were to assume a massive 20 percent of all long term claimants were so afflicted, it would still only represent some 40 cases per annum. If all 40 were to succeed in their ruse, based on average ages and average income and redemptions paid in accordance with the intention of the legislation, namely of sufficient value to enable the claimant to replace the benefit being redeemed, it would cost WorkCover some $10 Million dollars per annum.



However, in its attempt to counter the possible affect of this theoretical neurosis to save the $10 Million, WorkCover refuse to offer reasonable redemptions to those who are on the scheme beyond 2 years as the Act requires. In doing so WorkCover expose themselves to 200 long term injured workers remaining on the scheme annually representing the ever increasing liability of some $220 Million per annum. This false economy is also evident in the suspicion and disdain with which WorkCover treats injured Workers reflected in the 3500 actions annually before the Workers Compensation Tribunal yet WorkCover only pays out on 4000 claims for income maintenance annually.



I respect that WorkCover commit enormous resources to applying a positive spin to the challenges it faces but after 5 years there must come a time when the truth rises to the top and with a looming Billion Dollar liability I believe that time is now.



I would be interested to know what of the changes proposed by your Board you believe will have any affect on the current liability or what will abate the financial deterioration over the next 4 years? My reading of the proposals would suggest even if every change were to be accepted, it would simply compartmentalise the current liability at a point 3 years after the changes were made law and until then the liability will continue to grow by some $220 million per annum. I would suggest that the rate of attrition of the size of the compartmented group would not allow any of the cost savings proposed by the board to flow to business for over a decade.
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