DETERMINATION OF APPEAL PANEL	
	
CITATION:	Li v Villawood Relaxation Centre [2025] NSWPICMP 131	
		
APPELLANT:	Jason Li	
		
RESPONDENT:	Villawood Relaxation Centre	
		
Appeal Panel		
		
MEMBER:	Parnel McAdam	
		
MEDICAL ASSESSOR:	Doron Sher	
		
MEDICAL ASSESSOR:	Margaret Gibson	
		
DATE OF DECISION:	28 February 2025	
		
CATCHWORDS: 	wORKERS cOMPENSATION - Workplace Injury Management and Workers Compensation Act 1998; worker assaulted in employment suffering injury to lumbar spine; evidence of age related degenerative change and previous injury to lumbar spine; extent of previous injury unclear; inconsistent histories given of extent of injury; insufficient evidence to form a conclusion for the proportion of impairment due to previous injury; section 323(2) operates in those circumstances; deduction of one tenth made; Held – Medical Assessment Certificate revoked.  	

BACKGROUND TO THE APPLICATION TO APPEAL
1.	On 21 November 2024 Jason Li, the appellant, lodged an Application to Appeal Against the Decision of a Medical Assessor. The medical dispute was assessed by David Gorman, a Medical Assessor, who issued a Medical Assessment Certificate (MAC) on 3 November 2024. 
2.	The appellant relies on the following grounds of appeal under s 327(3) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act): 
•	the assessment was made on the basis of incorrect criteria, and
•	the MAC contains a demonstrable error.
3.	The delegate is satisfied that, on the face of the application, at least one ground of appeal has been made out. The Appeal Panel has conducted a review of the original medical assessment but limited to the ground(s) of appeal on which the appeal is made. 
4.	Rule 128 of the Personal Injury Commission Rules 2021 (the PIC Rules) and Procedural Direction PIC7 - Appeals, reviews, reconsiderations and correction of obvious errors in medical disputes set out the practice and procedure in relation to the medical appeal process under s 328 of the 1998 Act. An Appeal Panel determines its own procedures in accordance with r 128(1) of the PIC Rules.
5.	The assessment of permanent impairment is conducted in accordance with the SIRA NSW Workers Compensation Guidelines for the Evaluation of Permanent Impairment, 4th ed 
1 March 2021 (the Guidelines) and the American Medical Association Guides to the Evaluation of Permanent Impairment, 5th ed (AMA 5). 
RELEVANT FACTUAL BACKGROUND
6.	Mr Li was assaulted by a co-worker on 11 May 2019 in the course of his employment. A minor argument over the allocation of a shift resulted in Mr Li being subject of a significant assault, resulting in injuries to his face, a fractured rib, and for the purposes of this dispute, a significant lumbar spine injury. 
7.	In May 2022, Mr Li underwent surgery in the form of L5/S1 decompression and fusion, and required a further operation shortly after. 
8.	Mr Li made a claim for lump sum compensation. A dispute ensued about the degree of permanent impairment and he brought proceedings in the Commission. The matter was referred for assessment of permanent impairment, undertaken by Dr Gorman, who issued a MAC on 3 November 2024. That assessment was 25% whole person impairment, reduced by 1/4 pursuant to s 323 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act), to which 1% was added for scarring. The resultant figure for total whole person impairment was 20%. 
9.	Mr Li appeals against that assessment, limited to the Medical Assessor’s application of s 323 of the 1998 Act. 
PRELIMINARY REVIEW
10.	The Appeal Panel conducted a preliminary review of the original medical assessment in the absence of the parties and in accordance with the Procedural Direction PIC7.
11.	As a result of that preliminary review, the Appeal Panel determined that it was not necessary for the worker to undergo a further medical examination because there was sufficient information available within the material before the Appeal Panel as well as the MAC to determine the appeal.  

EVIDENCE
Documentary evidence
12.	The Appeal Panel has before it all the documents that were sent to the Medical Assessor for the original medical assessment and has taken them into account in making this determination.  
13.	The parts of the medical certificate given by the Medical Assessor that are relevant to the appeal are set out, where relevant, in the body of this decision. 
SUBMISSIONS 
14.	Both parties made written submissions. They are not repeated in full, but have been considered by the Appeal Panel. 
15.	In summary, the appellant submits that the deduction made by the Medical Assessor of 1/4 is excessive and not based on the available evidence, representing a demonstrable error. The appellant identifies the basis for the deduction, as opined by the Medical Assessor, being a previous lumbar spine injury. The appellant sets out the relevant record of that previous injury, as contained in the various material available to the Medical Assessor, and submits that there is no accurate detail to determine that the back injury of 2000 or 2001 caused Mr Li to be incapacitated until 2016. 
16.	The appellant submits that there are conflicting statements about the effects of the injury of 2001, which could be due to memory. In those circumstances, it is not appropriate to place an overreliance on recollection when making a deduction. It is also noted there are no medical records available in respect of the injury of 2001. The appellant submits that in those circumstances, the appropriate step would be to make a deduction of 1/10, pursuant to s 323(2) of the 1998 Act.  
17.	The respondent, in their submissions in reply, sets out the process by which an appeal against a MAC is made. This includes what the meaning of demonstrable error is, within the context of s 327(3) of the 1998 Act. The respondent refers to various decisions concerning the construction of s 323 of the 1998 Act. The respondent submits that the evidence supports the conclusion that the appellant suffered a prior back injury, for which he brought a prior claim. 
18.	The respondent refers to the history given by the appellant of an absence from work for many years and an injury significant enough to warrant a financial settlement. Dr Gorman has provided a balanced consideration of the evidence, and has weighed the opinions of Dr Gothelf and Dr Gehr, as well as his own observations of that material. The respondent submits that the MAC should be confirmed. 
FINDINGS AND REASONS 
19.	The procedures on appeal are contained in s 328 of the 1998 Act. The appeal is to be by way of review of the original medical assessment but the review is limited to the grounds of appeal on which the appeal is made. In Queanbeyan Racing Club Ltd v Burton [2021] NSWCA 304 (Burton), the Court of Appeal confirmed that the Appeal Panel is not limited to the ground held by the President to have been made out pursuant to s 327(3), but cannot look for errors which are not part of the grounds of appeal (per Basten JA at [26]). 
20.	In Campbelltown City Council v Vegan [2006] NSWCA 284 the Court of Appeal held that the Appeal Panel is obliged to give reasons. Where there are disputes of fact it may be necessary to refer to evidence or other material on which findings are based, but the extent to which this is necessary will vary from case to case. Where more than one conclusion is open, it will be necessary to explain why one conclusion is preferred. On the other hand, the reasons need not be extensive or provide a detailed explanation of the criteria applied by the medical professionals in reaching a professional judgement.
21.	The issue in dispute on appeal is singular – the appellant challenges the deduction made by the Medical Assessor pursuant to s 323 of the 1998 Act. The section provides a statutory basis for the making of a deduction for previous injury or pre-existing condition or abnormality: 
“(1) In assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury (whether or not it is an injury for which compensation has been paid or is payable under Division 4 of Part 3 of the 1987 Act) or that is due to any pre-existing condition or abnormality.
(2)  If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence.
Note—
So if the degree of permanent impairment is assessed as 30% and subsection (2) operates to require a 10% reduction in that impairment to be assumed, the degree of permanent impairment is reduced from 30% to 27% (a reduction of 10%).
(3)  The reference in subsection (2) to medical evidence is a reference to medical evidence accepted or preferred by the medical assessor in connection with the medical assessment of the matter.
(4)  The Workers Compensation Guidelines may make provision for or with respect to the determination of the deduction required by this section.”
22.	Section 323 has been the subject of significant judicial scrutiny. The parties have referred to a number of authorities on the point. The most commonly cited authority is Cole v Wenaline [2010] NSWSC 70 (Cole) in which Schmidt J established a three-step test for consideration when applying s 323 of the 1998 Act. Cole was followed by Elcheikh v Diamond Formwork (NSW) Pty Ltd (in Liq) [2013] NSWSC 365 (Elcheikh), in which the three-step test was affirmed and elaborated upon. In summary, the first step is to determine the extent of impairment following the work injury. The second is to determine whether a proportion of that impairment is due to a previous injury, or pre-existing condition or abnormality. The final step is to determine the extent or proportion of that contribution.
23.	The respondent referred to Campbell J’s construction in Ryder v Sundance Bakehouse [2015] NSWSC 526, with reference to [45] of that decision: 
“What s 323 requires is an inquiry into whether there are other causes, (previous injury, or pre-existing abnormality), of an impairment caused by a work injury. A proportion of the impairment would be due to the pre-existing abnormality (even if that proportion cannot be precisely identified without difficulty or expense) only if it can be said that the pre-existing abnormality made a difference to the outcome in terms of the degree of impairment resulting from the work injury. …. To put it another way, the Panel must be satisfied that but for the pre-existing abnormality, the degree of impairment resulting from the work injury would not have been as great.”
24.	To that the Appeal Panel would also add [54] of that decision: 
“Section 323 as I have already said, requires there to be a deduction for any proportion of the impairment that is due to any pre-existing condition. This is an essential element of the section; indeed it is the pith of it. It is not enough to simply identify that there is a pre-existing condition and that there has been a subsequent impairment and therefore make a deduction under this section because of the existence of the pre-existing condition. Such reasoning fails to consider a necessary condition of the operation of the section; that a proportion of the permanent impairment is due to the pre-existing condition.” 
25.	The respondent also referred to Vitaz v Westform (NSW) Pty Limited [2011] NSWCA 254, in which it was made clear that a deduction can be made for an asymptomatic condition: 
“The resulting principle is that if a pre-existing condition is a contributing factor causing permanent impairment, a deduction is required even though the pre-existing condition had been asymptomatic prior to the injury.” (at [43])
26.	The Medical Assessor’s reasons for making a deduction appear throughout the MAC. On page 2, he identifies the previous back injury which has been the subject of submissions made on appeal: 
“He had a back injury in 2001. This was covered by Workers Compensation and occurred while working at a furniture factory. It was a significant injury and he was off work until 2016. He received a financial settlement around 2004…
He came to Australia from China in 2000. He worked in a furniture shop for 6 months but had an injury in 2001 – he did not work until 2016 when he started at the Villawood brothel where the injury occurred.”
27.	The Medical Assessor’s ultimate conclusion in respect of s 323 of the 1998 Act appears on page 6 of the MAC: 
“11. DEDUCTION (IF ANY) FOR THE PROPORTION OF THE IMPAIRMENT THAT IS DUE TO PREVIOUS INJURY OR PRE-EXISTING CONDITION OR ABNORMALITY
a. In my opinion the worker suffers from the following relevant previous injuries, preexisting conditions or abnormalities:
(i) He had a previous lumbar spinal injury in 2001. He was off work for many years. Scans showed degenerative change in the lumbar spine.
b. The previous injury, pre-existing condition or abnormality directly contributes to the following matters that were taken into account when assessing the whole person impairment that results from the injury, being the matters taken into account in 10a, and in the following ways:
(i) Lumbar spine injury previously in 2001 with age related degenerative change.
c. Whilst the extent of the deduction is difficult or costly to determine the available evidence is that the deductible proportion is large and a deduction of one tenth is at odds with the available evidence. In my opinion the deductible proportion is one quarter for the following reasons:
(i) The previous lumbar spinal injury was significant and meant that he was off work from 2001 to 2016. He received a Workers Compensation payout of $15,000 for this injury in 2004 as per his statement. He did have age related degeneration particularly at the L5/S1 level. However, he did return to work without restriction.”
28.	There are a number of aspects of the medical and factual evidence of this case that must be considered, as well as a close analysis of the Medical Assessor’s reasons for making the deduction and the extent of the deduction, within the context of the requirements of s 323. 
29.	It is first to be observed that the Medical Assessor identified two previous injuries, pre-existing conditions or abnormalities that have contributed to the appellant’s permanent impairment – the previous lumbar spine injury, and age-related degenerative changes. Although not necessary to determine, it would be appropriate to classify the former as a “previous injury” and the latter as a “pre-existing condition or abnormality”. In identifying these two factors, the Medical Assessor has appropriately complied with the second step in Cole and Elchiekh, that is determining that a proportion of impairment is due to a pre-existing injury or condition or abnormality. 
30.	This of course follows the first step, determining the extent of the current degree of impairment (25%). For abundant clarity, it is noted that that aspect of the MAC has not been challenged and the Appeal Panel accepts that it is correct, consistent with Coca-Cola Europacific Partners API Pty Ltd v Pombinho [2024] NSWCA 191 (that is that the “starting point” of 25% is correct). 
31.	The third step in the application of s 323 requires consideration of the extent to which those identified factors, being the previous lumbar spine injury and the age-related degenerative changes, have contributed to the current degree of permanent impairment. In considering that issue, the appellant has addressed submissions to Mr Li’s previous back injury. There is a degree of uncertainty about that issue, the extent of the injury, and outcomes from it. 
32.	In Mr Li’s statement dated 1 March 2024, he refers to working in a furniture shop, where he “had a left side injury and stopped working from 2001 to 2016”. Mr Li outlines his medical history, referring to a work injury in 2001 in which he injury his “left foot, left hand, and left shoulder”. No reference is made to the lumbar spine. 
33.	In contrast with this statement, in an earlier statement provided dated 5 July 2019, Mr Li provides a different history: 
“When I arrived in Australia in 2000 I started work in a factory which makes cupboards. This was located at Campsie. I cannot recall the name of the Factory but I worked there for around 6 months. I sustained a lower back injury while working for this employer while delivering furniture. 
I was off work for many years on workcover with this injury and eventually received a financial settlement for $15,000 in around 2004. I applied for Centrelink Benefits after this.” 
34.	It is noted that this statement was prepared by an investigator presumably engaged by the respondent. A claims history is also provided – it records a date of injury of 28 June 2001 and a bodily location of “Back – Unspecified”. No further detail is provided. 
35.	Dr Gehr, who provided a report for the appellant, states that “Mr Li is not suffering from a pre-existing condition or abnormality relevant to his lumbar spine”. He takes no history of the previous injury in 2001 (and whether it was to the back or left side of the body). He makes no deduction. 
36.	Dr Reddy, neurosurgeon who treated Mr Li, notes in a report dated 14 November 2019 that “due to language issues despite an interpreter it was difficult to get a very clear history”.
37.	Dr Sheh, a pain physician who treated Mr Li takes a history of an injury in 2001. He records: 
“In 2001, he had a Work Cover claim for lower back and left leg pain, precipitated by a fall; he tripped when moving furniture. The pain resolved less than 12 months. Previous use of ‘normal pain killers’, it was in fact Panadeine Forte up to one tablet TDS.”
38.	Dr Gothelf, who provides a report for the respondent dated 28 March 2023, also take a history of an injury whilst Mr Li worked in a furniture shop: 
“Jason first worked for a furniture shop when he first moved to Australia. He did this job for six months.  He had the left sided injury during this position. He was injured in 2001 and then he didn’t work until 2016.” 
39.	He also records: 
“Jason admitted to having a work injury in 2001. He injured his left foot, left hand and left shoulder. He stated that he was doing a delivery of a coffee table and he was carrying the table and fell. He had no surgery. The injuries recovered and he had no residual pain.”
40.	In a further report dated 10 October 2023, in which Dr Gothelf assesses impairment, he takes a further history: 
“The history of lower back pain was more extensive than what Mr Li mentioned. His statement dated 5 July 2019 provided further history of a workplace injury in 2000. In his statement. Mr Li indicated that he worked for a factory in 2000 making cupboards for around 6 months. He sustained a lower back injury while working for this employer delivering furniture. He was off work for many years on WorkCover with this injury and received a financial settlement for $15,000 in around 2004. He returned to work in 2016. I consider that his previous lower back pain was more significant the impression I had from the history.”
41.	The other factor considered relevant by the Medical Assessor in making a deduction was “age related degenerative change”. There is evidence to support this in the material before the Appeal Panel, including the radiological evidence. An X-ray of the appellant’s lumbar spine taken on 15 May 2019 records degenerative arthrosis present at L4/5 and L5/S1 facet joints. A CT scan dated 30 August 2019 reports moderate degenerative central canal stenosis with mild bilateral foraminal narrowing at L4/51 and mild degenerative central canal stenosis with moderate to severe bilateral foraminal narrowing at L5/S1. An MRI dated 11 November 2019 records moderate degenerative spondylosis with patchy marrow oedema in the endplates on the left side compatible with Modic type 1 change. 
42.	The above radiological evidence supports the existence of degenerative change in the appellant’s spine that had been present prior to the work injury where Mr Li was assaulted. This is clear. 
43.	What is less clear, based on the inconsistent histories recorded in various medical reports and the conflicting statements of Mr Li, is precisely what occurred in 2001, whilst Mr Li was employed in the furniture shop, and the extent of that accident. The Appeal Panel accepts that Mr Li was injured, and on the balance of probabilities is satisfied that the injury included the lumbar spine. That is as far as the evidence goes. Mr Li may have received a payout of $15,000. It is not clear what that payout was for. It is not clear why Mr Li ceased work for a period of 15 years. It cannot be, without conclusive evidence, attributed to a back injury, particularly where there is evidence of an injury to other body parts. The claims history recorded by SIRA of an injury to the back is not sufficient in the context of those competing histories. 
44.	It is noted that other than the 2019 statement of Mr Li, a statement obtained by an investigator for the respondent, he has consistently maintained and given a history of injury to his left side whilst in previous employment.  
45.	Consistent with the second step outline in Cole and Elchiekh, the Appeal Panel are satisfied that Mr Li had a previous injury to his lumbar spine and age-related degenerative change present, being a pre-existing condition or abnormality, when he was injured in the employ of the respondent. 
46.	That brings into play the third step in correctly applying s 323, being the extent of the contribution of any previous injury or pre-existing condition or abnormality. There is a degree of discretion that can be reached there, and the Appeal Panel acknowledges that in general terms, it is not appropriate to interfere with the discretionary aspects of an assessment of impairment. 
47.	However, there also exists specific statutory considerations in s 323 that become relevant in the present factual circumstances, where the evidence available is inconclusive and at times inconsistent. 
48.	Section 323(1) provides for a deduction to be made and is in broad terms. Section 323(2) provides for a fallback mechanism due to the complexity of the medical causation question posed by s 323. That subsection operates in respect of the third step in Cole and Elchiekh, determining the extent of any deduction. A fallback or default position can be applied:
“If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence.”
49.	There are some critical aspects of the statutory language employed here that must be considered. First is the requirement that a deduction be “difficult or costly to determine”. This can be on a variety of bases, but a particular example given is “the absence of medical evidence”. The second is the assumption, for the purpose of avoiding disputation, that the deduction will be 10% (or 1/10th) of the impairment. The third is the application of that assumption, unless it is “at odds with the available evidence”. 
50.	Section 323(3) also assists in the interpretation of subs (2), defining “medical evidence” as being “medical evidence accepted or preferred by the medical assessor in connection with the medical assessment of the matter”. 
51.	The issue in the present case, in respect of the previous injury identified being to the lumbar spine, is that there is an absence of medical evidence of that injury. There is a history given by Mr Li, which has been conflicting. There is a SIRA notation of a previous claim. There are the competing medicolegal opinions of Dr Gehr (who made no deduction) and Dr Gothelf (who made a 1/3 deduction). Those opinions are “medical evidence” in a broad sense, but are not particularly reliable given the conflicting histories and lack of contemporaneous materials available to support them. 
52.	The above analysis underlies and underpins the Appeal Panel’s conclusion, as submitted by the appellant, that the MAC contains a demonstrable error. The Medical Assessor has failed to properly analyse the “medical evidence” available to him of the previous injury identified. That evidence exists only in the opinion of Dr Gothelf, and that opinion is based on unreliable information. 
53.	This conclusion applies to the third step in Cole and Elchiekh only. For abundant clarity, the Appeal Panel are satisfied that Mr Li had a previous injury to the lumbar spine and had a pre-existing condition, being degenerative changes, prior to his work related injury. The extent of the contribution of those injuries/conditions is difficult or costly to determine because of the absence of medical evidence of the previous injury. On that basis, the assumption provided in s 323(2) is appropriate, and that assumption is not at odds with the available evidence, which is conflicting and unclear. Accordingly, the appropriate deduction in the circumstances is 1/10th. 
54.	For these reasons, the Appeal Panel has determined that the MAC issued on 3 November 2024 should be revoked, and a new MAC should be issued.  The new certificate is attached to this statement of reasons.

WORKERS COMPENSATION DIVISION
APPEAL PANEL
MEDICAL ASSESSMENT CERTIFICATE
Injuries received after 1 January 2002

Matter number:	W22872/24	
Applicant:	Jason Li	
Respondent:	VILLAWOOD RELAXATION CENTRE	

This Certificate is issued pursuant to s 328(5) of the Workplace Injury Management and Workers Compensation Act 1998.
The Appeal Panel revokes the Medical Assessment Certificate of Medical Assessor David Gorman and issues this new Medical Assessment Certificate as to the matters set out in the Table below:
Table - whole person impairment (WPI) 
Body Part or system	Date of Injury	Chapter, page and paragraph number in NSW workers compensation guidelines 	Chapter, page, paragraph, figure and table numbers in AMA 5 Guides
	% WPI 	Proportion of permanent impairment due to pre-existing injury, abnormality or condition	Sub-total/s % WPI (after any deductions in column 6)	
1. Lumbar spine	11/5/19	Paragraphs 4.37, 4.35, Table 4.2	Table 15-3	25%	1/10
	23%	
2. Skin	11/5/19	TEMSKI table 14.1	N/a	1%	Nil
	1%	

Total % WPI (the Combined Table values of all sub-totals)                          
	
24%