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Receipt of damages from third party bars worker’s compensation claim

  • Newsletter Article
  • Published 16.05.2023

Conway v Campbelltown Catholic Club Limited (NSWPICPD 2023)

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Key Takeaways

If a worker receives damages from a third party in respect of a compensable injury then they are not entitled to receive compensation.

In this case, Acting Deputy President Parker found that the Member who heard the worker’s claim for lump sum compensation was correct to apply s151Z(1)(c) of the Workers Compensation Act 1987 (1987 Act) in answer to the worker’s claim.

The worker had received damages from a third party (other than the employer) following settlement of a medical negligence claim so that he was not entitled to receive compensation for the permanent impairment claim.

Brief Facts

The worker alleged that he had sustained multiple hernias in the course of his employment as a result of lifting bags of rubbish and placing them in a dumpster.

The worker underwent surgery to repair bilateral inguinal hernias as well as an umbilical hernia performed by Dr Fedorine. Following this, the worker experienced severe complications such that an orchidectomy was performed to remove his right testicle.

Unfortunately, this did not resolve all of the complications and the worker underwent further medical procedures later testing positive to methicillin resistant staphylococcus aureus (golden staph).

The worker then underwent two further procedures for corrective surgery performed by another surgeon.

The worker brought proceedings against Dr Fedorine claiming damages for medical negligence that were eventually resolved with the parties entering a Deed of Release.

The Deed referred to the claim that was the subject of the proceedings and the worker’s allegations of injury, loss and damage being a direct result of the surgical repairs of the hernia.

Notably, the Deed provided that payment of the settlement sum was not only in respect of the claim as pleaded but also for ‘any hypothetical claims that the appellant may have had against the surgeon but had not brought’.

The worker submitted that the matter was governed by s151A and that the Deed only related to the medical treatment and not the workplace injury. The Member rejected this submission as s151A only applies where the damages are recovered from the employer liable to pay compensation.

The respondent employer submitted that s151Z(1)(c) was the governing provision and that on a proper construction of the Deed, the damages were paid for every single injury and disability as pleaded or not pleaded that arose from the conduct of the surgeon.

The Member accepted this submission finding that the worker had recovered damages from a person other than the employer…for the injuries caused by the negligence of the surgeon, including the scarring caused by the surgery that was included in the permanent impairment assessment upon which the worker relied.


On appeal, the worker again sought to distinguish between the injury that occurred at work and the injury caused by the negligence of the surgeon.

Generally, the courts have made clear that any medical treatment that an injured person receives following an accident is regarded as a natural consequence of that accident including negligent medical treatment that exacerbates the injury for which compensation is payable unless it can be shown that the treatment was so inexcusably bad as to break the chain of causation.

ADP Parker observed that the worker’s claim for 21% whole person impairment ‘was the result of the original injury enlarged by the surgical treatment.’ The total condition included what resulted from the surgery so as to be attributed to the original injury and it was for this ‘total condition’ that the worker was paid under the Deed.

ADP Parker concluded that the worker had received monetary compensation pursuant to the Deed entered with the doctor and that the money paid was ‘damages in respect of the injury’. As such, the worker had first recovered damages from Dr Fedorine and so he was not entitled to recover compensation from the employer.

There was noted to be no challenge to the Member’s finding that the assessment of whole person impairment that resulted from the original injury (excluding the scarring due to surgery) was less than 10% so that the worker failed to satisfy the threshold required to recover any lump sum entitlement.


While the decision may be distinguishable on its own particular facts in terms of the permanent impairment being partly attributed to the scarring caused by the surgery, a different result may have followed if the claim was for weekly payments due to incapacity for work flowing solely as a result of the work injury.

The potential ramifications may need to be considered where a worker receives damages for medical negligence where the court has allowed credit for compensation paid against the damages payable to the worker but there is no recovery to the workers compensation insurer1. In those cases, the worker will invariably have an ongoing entitlement to compensation.

Insurers should obtain full details of any claims brought by injured workers against third parties in relation to the work injury and medical treatment and the basis for any settlement of those claims to determine whether there is an ongoing entitlement to compensation.

1. Hood Constructions Pty Ltd v Nicholas 9 NSWLR 60