REPORT ON PROCEEDINGS BEFORE STANDING COMMITTEE ON LAW AND JUSTICE 2020 REVIEW OF THE WORKERS COMPENSATION SCHEME CORRECTED At Macquarie Room, Parliament House, Sydney, on Monday 24 August 2020 The Committee met at 9:30 PRESENT The Hon. Wes Fang (Chair) The Hon. Catherine Cusack The Hon. Anthony D'Adam The Hon. Greg Donnelly The Hon. Scott Farlow The Hon. Trevor Khan The Hon. Daniel Mookhey The Hon. Rod Roberts Mr David Shoebridge Monday, 24 August 2020 Legislative Council Page 1 The CHAIR: Welcome to the third hearing of the Standing Committee on Law and Justice 2020 Review of the Workers Compensation Scheme. Before I commence I acknowledge the Gadigal people, who are the traditional custodians of this land. I also pay respect to the Elders past, present and emerging, of the Eora nation and extend that respect to other Aboriginals present. Today we will hear from Ms Janet Dore, former independent reviewer of the State Insurance Regulatory Authority; representatives from Employers Mutual Limited [EML]; members of the icare board; members of the board of the NSW State Insurance Regulatory Authority; and Mr Mark Lennon, president of the Australian Labor Party New South Wales branch, appearing as a former member of the icare board. Before we commence I will make some brief comments about the procedures for today's hearing. While Parliament House is closed to public access, today's hearing is a public hearing and is being broadcast live via the Parliament's website. A transcript of today's hearing will be placed on the Committee's website when it becomes available. In accordance with the broadcasting guidelines, while members of the media may film or record Committee members and witnesses, people in the public gallery should not be the primary focus of any filming or photography. I also remind media representatives that they must take responsibility for what they publish about the Committee's proceedings. The guidelines for the broadcast of proceedings are available from the secretariat. It is important to remember that parliamentary privilege does not apply to what witnesses may say outside of their evidence at the hearing. I urge witnesses to be careful about any comments to the media or to others after they complete their evidence as such comments will not be protected by parliamentary privilege if another person decided to take an action for defamation. There may be some questions that a witness could only answer if they had more time or with certain documents to hand. In those circumstances, witnesses are advised that they can take the question on notice and provide answers within 21 days. Witnesses are advised that any messages should be delivered to Committee members through the Committee staff. To aid the audibility of this hearing I remind both Committee members and witnesses to speak into the microphones. Finally, could everyone please turn their mobile phones to silent for the duration of the hearing. I welcome our first witness, Ms Janet Dore. LAW AND JUSTICE COMMITTEE Monday, 24 August 2020 Legislative Council Page 2 JANET DORE, Former Independent Reviewer, State Insurance Regulatory Authority, before the Committee via videoconference, sworn and examined The CHAIR: Ms Dore, would you like to start by making a short opening statement? If so, please keep it to no more than a couple of minutes. Ms DORE: Thank you, Mr Chair. It was a privilege to be invited to review the NSW Workers Compensation Scheme on behalf of the State Insurance Regulatory Authority [SIRA]. I have had quite a bit of experience in insurance and personal injury schemes on the nib Health Funds board, the Transport Accident Commission [TAC] in Victoria and the Municipal Association of Victoria [MAV] WorkCare board currently. I have had a career in local government and partly in those insurance matters and I have taken the approach that I needed to listen, I needed to understand and I needed to focus on data. The context of the review certainly was in terms of the community expectations around the Hayne royal commission and the Australian Prudential Regulation Authority [APRA] review. I think it is true to say that there is heightened community interest in the use of money by public authorities. I had to bring myself up to speed pretty quickly with the New South Wales context, understanding the background to the introduction of the Nominal Insurer, icare. It has a unique structure and there was certainly the intent of Parliament that there should be less adversarial nature in the new scheme. With that, Mr Chair, I will answer questions. The CHAIR: Thank you very much, Ms Dore. I will open up to questions and Mr David Shoebridge would like to start. Mr DAVID SHOEBRIDGE: Ms Dore, first of all, thank you for what was an extraordinarily large body of work. Could I ask if you could describe the relationship you had with icare in the course of undertaking the review? What was your interaction with icare? Ms DORE: I received pretty good cooperation from icare. They gave me a full day's briefing to start off the review. They had senior officials from each part of the business and they were very open and clear about what they were intending to do and the kinds of expectations they had for their new system. Mr DAVID SHOEBRIDGE: When you say "new system", do you mean the automated system that was done under the contract with Guidewire and Capgemini? Ms DORE: Correct, the Nominal Insurer single platform. I think the acronym is NISP. Mr DAVID SHOEBRIDGE: We can just call it the single platform; is that the easiest way forward? Ms DORE: Yes, absolutely. Mr DAVID SHOEBRIDGE: How would you summarise the outcome of that project—the implementation and operation of the single platform? Ms DORE: Too ambitious, too costly and too quick, I think is the way I would summarise it. Mr DAVID SHOEBRIDGE: What about the underpinning assumptions in it: that injured workers can be largely dealt with through a computer assessment of the nature of their injury rather than interactions with case managers early on? What about that underlying assumption? Did you ever see any testing of that having been done by icare? Ms DORE: No, and I think that is what I mean about too quick. The reliance on an algorithm based on sound principles of getting people through the system as quickly as possible and to automate process is a good idea in principle but the fact is these schemes are about people and their individual circumstances. I don't think the testing was rigorous enough, although I did not have access to the department concerning investigation or testing of the implementation. I believe that there were sound principles behind it but the peculiarities of workers compensation, because of individual circumstances, means you cannot rely on algorithms totally and you have to put really good checks in there to flag. For instance, somebody with quite a minor injury but whose background may have been in poor socio-economic circumstances, lack of support, they can deteriorate even though it is a minor injury if they do not get case management intervention early. The Hon. DANIEL MOOKHEY: Thank you for your report. For what it is worth, it made excellent summer reading. I want to address one aspect in the context of our discussion about the automation process that you just described. My colleague Mr David Shoebridge in budget estimates put those concerns to the then chief executive officer of icare, Mr Nagle. The criticisms of your report for effectively the triage model, Mr Nagle says, "Janet did not understand the triage model". I want to you give an opportunity to reply. He said this back in February, to be fair. He made the point that perhaps some of your criticisms in your report arose from ignorance LAW AND JUSTICE COMMITTEE Monday, 24 August 2020 Legislative Council Page 3 that you may have had about how the model was meant to work. Would you reply and give your side of events in that respect? Ms DORE: Thank you for the question. I certainly understood the intent of the triage model to process the majority of applications for compensation through the system to let people manage their own recovery. And that might work in the majority of cases. But I go back to the fundamental point that in personal injury management early intervention through case management is a key principle. I think the triage model, consistently we saw that the model was putting cases into the wrong buckets for handling, if you like, so whether it was a severe or moderate injury. This was misaligning those things and I do not believe that case management was applied anywhere near thoroughly enough. The Hon. DANIEL MOOKHEY: In layman's term you observed that basically the algorithm was allocating injured workers to the wrong category and therefore their treatment path was incorrect because the algorithm was allocating a person with a minor injury to a serious injury or a person with a serious injury to a minor injury. Is that what you observed? Ms DORE: That is what EY observed, as well my own discussions and looking at the data that Sara had and icare had published. Mr DAVID SHOEBRIDGE: Ms Dore, you said that you were not aware of whether or not there had been any study or assessment by icare about the viability of the single platform in a workers compensation setting. Is that right? Ms DORE: Correct. Mr DAVID SHOEBRIDGE: Were you advised about a project called the WISE study or protocols? Ms DORE: I do not recall them, Mr Shoebridge, I am sorry.