My office is investigating several complaints from job seekers who were injured while on compulsory work placements.

One man had some of his fingers crushed, another seriously injured his back, and a third had to have four fingers amputated.

The common theme to these complaints is that all the trainees attended these programs at the risk of losing their unemployment payments for a period if they did not do so. However, while government policy compels their attendance, the complaints raise questions as to whether injured trainees will be able to gain adequate payments to cover the costs associated with their injuries, and the difficulty of determining who (if any one) is responsible for providing such coverage.

All the complainants to my office are now involved in civil litigation to try to get adequate compensation for their injuries.

The three job seekers were engaged in the New Work Opportunities (NWO) program, an initiative discontinued by the current government in favour of programs such as the work for the dole scheme.

However, I am concerned that similar questions arise about insurance coverage for job seekers required to engage in training programs such as work for the dole.

While many injured trainees will be able to gain some compensation for their injury, it is often less than what I believe the community may expect, particularly in such serious cases where a young man has had four fingers amputated. As well, the legal system can be extremely complex and time consuming if trainees have to take this course to try to gain compensation. As injured trainees are usually unemployed they often have limited finances to ensure appropriate legal representation.

There is no doubt that a number of the problems identified in our investigation were a direct result of the complex referral system for injured trainees in the New Work Opportunities and similar programs. However, the same issues will potentially arise wherever the government requires unemployed people to undertake activities run by contracted non-government organisations.

The current work for the dole scheme and the forthcoming program of referral of unemployed people to private employment providers are cases in point.

With this in mind, I am preparing a report under section 35(A) of the Ombudsman Act 1977 which I will send to DEETYA and Centrelink for their comment. The report aims to promote discussion about whether a more adequate form of accident protection needs to be devised, and if so, the minimal requirements of any such scheme. The report will cover issues which arise in relation to accident and insurance policies such as:

Risk of Injury

The risk of injury for trainees varies considerably with the type of program. The risk is likely to increase as the trainee becomes involved in more active tasks. In general these occur for participants involved in on-the-job training with host employers. These are often programs where the person has been referred to one organisation and then on to another (tertiary referral). Examples include work for the dole, and potentially the system of job placement by tenderers to DEETYA which will operate from May 1998.

The risk can also be related to the amount of supervision and occupational and safety training provided to trainees while engaged in the activity.

Identifying the relevant policy coverage

Participants who are injured in the course of training would need to determine the appropriate organisation against which to make a claim for the purposes of an accident and insurance coverage.

This could be:

Without appropriate advice participants may run the risk of not knowing that such policies exist or whom to approach to lodge a claim.

Variation/Adequacy of Coverage

Accident and insurance policies differ considerably in the range of injuries they cover and the amounts potentially payable and often provide inadequate coverage.

Workers Compensation Coverage

Depending on the type of program a trainee is engaged in and the state or territory where they live, some trainees may in fact be covered by workers compensation. This would essentially be a matter of luck, and it would allow some injured trainees to seek greater compensation through workers compensation than through accident insurance policies.

However, trainees would need legal advice and assistance to even know to pursue this option. It would also have significant implications for the host employer, eg a local council, which might find unexpected and unprovided for claims made by trainees on its workers compensation policy.

Legal Coverage

As trainees by their very nature are on low incomes they may find it difficult to engage a solicitor to run a case in negligence or under worker’s compensation against an insurer without first having sufficient evidence (medical and/or a report on the workplace) or knowledge of the jurisdiction.

Legal Aid will generally not be provided to pay for initial contingencies.

Complaint – George’s case

George suffered an injury while attending a New Work Opportunities placement as a machine operator. Some of his fingers were badly crushed when a machine malfunctioned. George lost parts of two fingers and required micro-surgery to repair the damage. He now has a permanent disability in one hand that will adversely affect his future job prospects.

George approached his host employer and requested a payment for the costs associated with the injury. The host employer advised that they were not responsible for payment and referred George to the training broker. The training broker’s insurer considered a claim under their accident and insurance policy.

Under the terms of the policy, George could only receive a payment if his injury resulted in a permanent disability as listed in the insurance product. The policy prescribed that in terms of injuries to fingers a permanent disability was considered to have occurred where amputation was involved. The insurer denied liability on this basis, noting in a letter to George that a medical report ‘indicates that you have a permanent disability, however, not an amputation of your finger’.

Out of sense of moral and ethical responsibility the training provider agreed to make some payments towards costs incurred by George, but not for some medical costs. The hospital which performed the surgery charged George for its services at a rate higher than the rate he could claim on Medicare, believing it would eventually be reimbursed because he was covered by worker’s compensation. Effectively, George was left $200 out of pocket (as he is not eligible for worker’s compensation), and has received no payment for the permanent loss of the use of his finger.

George approached the CES which advised that it could not assist, as the responsibility for providing insurance coverage rested with the training broker. He then approached my office and was advised that he should consult a solicitor.

George’s complaint highlights some of the critical issues involved in considering the adequacy of coverage for injured trainees, including:

Complaint – Jim’s Case

Jim (aged 26) was referred for on-the-job experience as part of the New Work Opportunities program.

As part of this training he was referred to a firm of engineers as host employers. Jim claims that he was required to work on weekends and was clocking up between 50-60 hours per week.

This was significantly in excess of the hours that should have been expected under the program arrangements.

After 3 weeks there he was given training on how to use a press. After a few days on the press he suffered a major injury to his left hand. He was rushed to hospital where he underwent 50 hours of micro-surgery over the next 3-4 days. Surgeons attempted to replace his 2 middle fingers. However, this was unsuccessful, resulting in the loss of 4 fingers amputated at the joint with the palm.

Jim was a reasonably gifted musician (piano and guitar) and still plays the guitar as best he can.

The loss of this ability has been the greatest loss for Jim as a result of his injury. Jim’s father approached the host employer, only to be advised that they were indemnified by the sponsor’s accident and insurance policy. A claim was lodged against this policy. The insurer has accepted that Jim’s injury is covered by the accident and injury policy, but advised that the maximum pay-out is limited to $55,000. However, Medicare will require $31,000 of this amount to cover the medical treatment provided by the hospital.

Dissatisfied with this offer Jim and his father then approached DEETYA and requested compensation for the injury. DEETYA denied it had any responsibility to pay in this case as it had been indemnified by the training broker. Jim and his father have now approached a solicitor who has agreed to act on the basis that he will be paid if he wins the case.

The solicitor has served notice on the three organisations involved (the host employer, the sponsoring agent and DEETYA) advising of potential claims in negligence.

In respect of the host employer the claim is based on their negligence in not providing a safe and supervised work place. If successful, the claim would include payments for pain and suffering, past and future medical treatment, and loss of earnings.

In respect of the broker the claims are based on it:

The claim will ask the court to determine that Jim was an employee of the sponsor for the purposes of the relevant worker’s compensation legislation. If successful the claim would include the same payments as were required to be paid by the host employer.

The accident and insurance policy purchased by the sponsor contained the following provisions:

The associated percentage for Jim’s injury is approximately 80%.

In respect of DEETYA the claim is based on the department holding out in its publicity that the participant would be entitled to adequate accident and injury insurance. A successful claim would involve DEETYA having to pay the difference between the money offered by way of the accident and insurance policy and what was determined to be an adequate insurance coverage.

All claims are based on the view that all parties were negligent in some way or other. A successful claim would provide for payments for pain and suffering and for potential loss of earnings.

The case has a long way to go and would involve negotiations between all parties, with the possibility of court proceedings. In the end, a decision has to be made as to the quantum of damages to be awarded, which parties were legally liable for the injuries, and if more than one party, what proportion they should contribute.

Complaint—Roger’s case

Roger was referred to an NWO placement which referred him to a local council to gain work experience. This required Roger to lay water pipes under an oval. During this activity Roger injured his back and required hospitalisation and surgery. He now receives newstart allowance.

He lodged a claim against the sponsor, who referred his claim to its insurer. The insurer agreed to make some payments under the accident and insurance policy for physiotherapy and his stay in hospital following surgery.

The policy provides only for the following maximum amounts:

In effect it provides very little benefit for Roger.

Since the injury, Roger has incurred medical expenses (nett of Medicare payments) of $2,697 for a surgeon and $826 for the anaesthetist. These will not be met by the policy because they are medical costs.

My office has contacted Roger’s solicitor who advises that he believes he will not be able to claim anything further under the accident and insurance policy. However, he has lodged an application in the local court on the basis that the host employer (the local council) was negligent. This may involve a lengthy legal battle.

Accident and injury insurance policies are different from public liability (negligence) policies. This is because while the injury has occurred in the ‘work-place’ it is not caused by the host employer. As such, these policies will not provide the same level of protection as a public liability policy.

While this is an accepted outcome in the way that insurance products are established (and organisations involved in training provision must purchase such products), these cases demonstrate the significant variations in the quality of the products that exist in the market place.

Media Contact

Media 02 6276 3759
Email – Media@ombudsman.gov.au()

Date of release: 30 January 1998

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      My office is investigating several complaints from job seekers who were injured while on compulsory work placements.

      One man had some of his fingers crushed, another seriously injured his back, and a third had to have four fingers amputated.

      The common theme to these complaints is that all the trainees attended these programs at the risk of losing their unemployment payments for a period if they did not do so. However, while government policy compels their attendance, the complaints raise questions as to whether injured trainees will be able to gain adequate payments to cover the costs associated with their injuries, and the difficulty of determining who (if any one) is responsible for providing such coverage.

      All the complainants to my office are now involved in civil litigation to try to get adequate compensation for their injuries.

      The three job seekers were engaged in the New Work Opportunities (NWO) program, an initiative discontinued by the current government in favour of programs such as the work for the dole scheme.

      However, I am concerned that similar questions arise about insurance coverage for job seekers required to engage in training programs such as work for the dole.

      While many injured trainees will be able to gain some compensation for their injury, it is often less than what I believe the community may expect, particularly in such serious cases where a young man has had four fingers amputated. As well, the legal system can be extremely complex and time consuming if trainees have to take this course to try to gain compensation. As injured trainees are usually unemployed they often have limited finances to ensure appropriate legal representation.

      There is no doubt that a number of the problems identified in our investigation were a direct result of the complex referral system for injured trainees in the New Work Opportunities and similar programs. However, the same issues will potentially arise wherever the government requires unemployed people to undertake activities run by contracted non-government organisations.

      The current work for the dole scheme and the forthcoming program of referral of unemployed people to private employment providers are cases in point.

      With this in mind, I am preparing a report under section 35(A) of the Ombudsman Act 1977 which I will send to DEETYA and Centrelink for their comment. The report aims to promote discussion about whether a more adequate form of accident protection needs to be devised, and if so, the minimal requirements of any such scheme. The report will cover issues which arise in relation to accident and insurance policies such as:

      Risk of Injury

      The risk of injury for trainees varies considerably with the type of program. The risk is likely to increase as the trainee becomes involved in more active tasks. In general these occur for participants involved in on-the-job training with host employers. These are often programs where the person has been referred to one organisation and then on to another (tertiary referral). Examples include work for the dole, and potentially the system of job placement by tenderers to DEETYA which will operate from May 1998.

      The risk can also be related to the amount of supervision and occupational and safety training provided to trainees while engaged in the activity.

      Identifying the relevant policy coverage

      Participants who are injured in the course of training would need to determine the appropriate organisation against which to make a claim for the purposes of an accident and insurance coverage.

      This could be:

      • DEETYA
      • the training broker, or
      • the training provider (host employer).

      Without appropriate advice participants may run the risk of not knowing that such policies exist or whom to approach to lodge a claim.

      Variation/Adequacy of Coverage

      Accident and insurance policies differ considerably in the range of injuries they cover and the amounts potentially payable and often provide inadequate coverage.

      Workers Compensation Coverage

      Depending on the type of program a trainee is engaged in and the state or territory where they live, some trainees may in fact be covered by workers compensation. This would essentially be a matter of luck, and it would allow some injured trainees to seek greater compensation through workers compensation than through accident insurance policies.

      However, trainees would need legal advice and assistance to even know to pursue this option. It would also have significant implications for the host employer, eg a local council, which might find unexpected and unprovided for claims made by trainees on its workers compensation policy.

      Legal Coverage

      As trainees by their very nature are on low incomes they may find it difficult to engage a solicitor to run a case in negligence or under worker’s compensation against an insurer without first having sufficient evidence (medical and/or a report on the workplace) or knowledge of the jurisdiction.

      Legal Aid will generally not be provided to pay for initial contingencies.

      Complaint – George’s case

      George suffered an injury while attending a New Work Opportunities placement as a machine operator. Some of his fingers were badly crushed when a machine malfunctioned. George lost parts of two fingers and required micro-surgery to repair the damage. He now has a permanent disability in one hand that will adversely affect his future job prospects.

      George approached his host employer and requested a payment for the costs associated with the injury. The host employer advised that they were not responsible for payment and referred George to the training broker. The training broker’s insurer considered a claim under their accident and insurance policy.

      Under the terms of the policy, George could only receive a payment if his injury resulted in a permanent disability as listed in the insurance product. The policy prescribed that in terms of injuries to fingers a permanent disability was considered to have occurred where amputation was involved. The insurer denied liability on this basis, noting in a letter to George that a medical report ‘indicates that you have a permanent disability, however, not an amputation of your finger’.

      Out of sense of moral and ethical responsibility the training provider agreed to make some payments towards costs incurred by George, but not for some medical costs. The hospital which performed the surgery charged George for its services at a rate higher than the rate he could claim on Medicare, believing it would eventually be reimbursed because he was covered by worker’s compensation. Effectively, George was left $200 out of pocket (as he is not eligible for worker’s compensation), and has received no payment for the permanent loss of the use of his finger.

      George approached the CES which advised that it could not assist, as the responsibility for providing insurance coverage rested with the training broker. He then approached my office and was advised that he should consult a solicitor.

      George’s complaint highlights some of the critical issues involved in considering the adequacy of coverage for injured trainees, including:

      • who is responsible to pay if injury occurs to a participant involved in a training program
      • what types of claims can an injured trainee make against the responsible party
      • the adequacy of the coverage offered by the claims
      • the issues faced by trainees in pursuing claims, and
      • the role and responsibility of government and DEETYA to coordinate such claims and to ensure adequate standards and protection.

      Complaint – Jim’s Case

      Jim (aged 26) was referred for on-the-job experience as part of the New Work Opportunities program.

      As part of this training he was referred to a firm of engineers as host employers. Jim claims that he was required to work on weekends and was clocking up between 50-60 hours per week.

      This was significantly in excess of the hours that should have been expected under the program arrangements.

      After 3 weeks there he was given training on how to use a press. After a few days on the press he suffered a major injury to his left hand. He was rushed to hospital where he underwent 50 hours of micro-surgery over the next 3-4 days. Surgeons attempted to replace his 2 middle fingers. However, this was unsuccessful, resulting in the loss of 4 fingers amputated at the joint with the palm.

      Jim was a reasonably gifted musician (piano and guitar) and still plays the guitar as best he can.

      The loss of this ability has been the greatest loss for Jim as a result of his injury. Jim’s father approached the host employer, only to be advised that they were indemnified by the sponsor’s accident and insurance policy. A claim was lodged against this policy. The insurer has accepted that Jim’s injury is covered by the accident and injury policy, but advised that the maximum pay-out is limited to $55,000. However, Medicare will require $31,000 of this amount to cover the medical treatment provided by the hospital.

      Dissatisfied with this offer Jim and his father then approached DEETYA and requested compensation for the injury. DEETYA denied it had any responsibility to pay in this case as it had been indemnified by the training broker. Jim and his father have now approached a solicitor who has agreed to act on the basis that he will be paid if he wins the case.

      The solicitor has served notice on the three organisations involved (the host employer, the sponsoring agent and DEETYA) advising of potential claims in negligence.

      In respect of the host employer the claim is based on their negligence in not providing a safe and supervised work place. If successful, the claim would include payments for pain and suffering, past and future medical treatment, and loss of earnings.

      In respect of the broker the claims are based on it:

      • not providing an adequate illness and accident insurance product as required under the DEETYA contract requirements
      • placing Jim in situation of unacceptable risk of injury.

      The claim will ask the court to determine that Jim was an employee of the sponsor for the purposes of the relevant worker’s compensation legislation. If successful the claim would include the same payments as were required to be paid by the host employer.

      The accident and insurance policy purchased by the sponsor contained the following provisions:

      • death coverage of $30,000
      • a table of injuries with an associated percentage for each injury.
      • a maximum payment for an injury is $70,000 (representing 100% under the table).

      The associated percentage for Jim’s injury is approximately 80%.

      In respect of DEETYA the claim is based on the department holding out in its publicity that the participant would be entitled to adequate accident and injury insurance. A successful claim would involve DEETYA having to pay the difference between the money offered by way of the accident and insurance policy and what was determined to be an adequate insurance coverage.

      All claims are based on the view that all parties were negligent in some way or other. A successful claim would provide for payments for pain and suffering and for potential loss of earnings.

      The case has a long way to go and would involve negotiations between all parties, with the possibility of court proceedings. In the end, a decision has to be made as to the quantum of damages to be awarded, which parties were legally liable for the injuries, and if more than one party, what proportion they should contribute.

      Complaint—Roger’s case

      Roger was referred to an NWO placement which referred him to a local council to gain work experience. This required Roger to lay water pipes under an oval. During this activity Roger injured his back and required hospitalisation and surgery. He now receives newstart allowance.

      He lodged a claim against the sponsor, who referred his claim to its insurer. The insurer agreed to make some payments under the accident and insurance policy for physiotherapy and his stay in hospital following surgery.

      The policy provides only for the following maximum amounts:

      • total permanent disablement payment of $50,000; and
      • non-medical expenses of $20,000

      In effect it provides very little benefit for Roger.

      Since the injury, Roger has incurred medical expenses (nett of Medicare payments) of $2,697 for a surgeon and $826 for the anaesthetist. These will not be met by the policy because they are medical costs.

      My office has contacted Roger’s solicitor who advises that he believes he will not be able to claim anything further under the accident and insurance policy. However, he has lodged an application in the local court on the basis that the host employer (the local council) was negligent. This may involve a lengthy legal battle.

      Accident and injury insurance policies are different from public liability (negligence) policies. This is because while the injury has occurred in the ‘work-place’ it is not caused by the host employer. As such, these policies will not provide the same level of protection as a public liability policy.

      While this is an accepted outcome in the way that insurance products are established (and organisations involved in training provision must purchase such products), these cases demonstrate the significant variations in the quality of the products that exist in the market place.

      Media Contact

      Media 02 6276 3759
      Email – Media@ombudsman.gov.au()

      Date of release: 30 January 1998