CMI Recoveries Policy: Approach to Third Party Recoveries

CMI have always had a Recoveries Policy, but after significant industry consultation our Recoveries Policy has been updated. Key updates to the Recoveries Policy where the third party holds a policy with CMI include the dispute resolution pathway, independent review process and a minimum $50k threshold before the Recoveries policy is initiated.

CMI is the specialised insurer for the workers compensation scheme for the NSW coal industry. One of CMI’s main objectives is to ensure the NSW coal industry workers compensation scheme is fair, equitable and sustainable. It is important that the CMI scheme doesn’t carry liabilities (and related costs) that are properly owned elsewhere.

The Recoveries Policy deals with instances where a workers compensation injury has been caused by the negligence of a third party. Where a third party’s negligence has caused an injury that CMI indemnify, CMI can seek the repayment of workers compensation payments, which may require the third party to call on other lines of insurance. The Recoveries Policy relates to all third-party recoveries, including motor vehicle accidents, but special provisions have been introduced where the third party also holds a policy with CMI.

The Recoveries Policy relates to how CMI identify claims that are appropriate to seek recovery of workers compensation payments from another party where that party’s negligence has caused or contributed to an injury. As part of the Recoveries Policy, where CMI identify potential recovery against a party that also holds a policy with CMI, CMI will advise both the employer and third party of our intention before progressing the matter. This will allow parties to discuss any issues necessary and avoid litigation where possible.

Negligence, in the legal sense, requires that a party owe a person a duty of care, that the duty of care is breached, and that damage flows from the party’s breach. It’s not enough that a person sustains an injury and there is involvement from another party for CMI to recover against a third party; there must be negligence or ‘fault’ from the party.

The Recoveries Policy became operational on 27 February 2023.

No, the recovery of workers compensation payments from other parties is a common practice in other insurance schemes. In fact, the State Insurance Regulatory Authority expects insurers to screen all claims for recovery potential and to recover payments from other liable parties to ensure that workers compensation schemes are sustainable.

When considering whether CMI will pursue recovery, we will consider the available evidence in relation to the negligence of the party’s involved in the incident to determine the strength of the case and the anticipated costs in pursuing recovery.

Before CMI begin proceedings to pursue recovery, CMI will discuss our intention to pursue recovery with both the employer and third party if the third party also holds a policy with CMI.

CMI will let both the employer and third party (if they hold a policy with CMI) know the basis of our intention to seek recovery.

If you believe CMI should be pursuing recovery on your behalf and are not, please contact your Account Manager or Case Manager outlining the reasons why you assert a third party has been negligent. The matter will be escalated to CMI’s Head of Operations for review.

You can advise CMI that you disagree with our intention to pursue recovery when we discuss our intention to seek recovery with you. We will put the recovery in abeyance during that time, although you must advise us in writing within 14 days why you disagree with the decision to pursue recovery. At that point, the matter will be escalated.

CMI have introduced an Independent Review Process. A party can refer a matter to the Independent Review Process to consider whether it is reasonable for CMI to pursue recovery.

The Independent Review Process involves an independent reviewer reviewing the case to determine whether it is reasonable for CMI to pursue recovery.

Any claim that CMI have formed an intention to seek recovery from a third party that also holds a policy with CMI can be referred to the Independent Review Process.

The party that refers the matter to the Independent Review Process will fund the review. If the review is successful, CMI will fund the cost of the review. For example, if the employer refers the matter to the Independent Review Process and is successful, CMI will fund the review; if the employer is unsuccessful, the employer will fund the cost of the review.

The Independent Review Process will commence from 27 February 2023. During the first 12 months of operation, CMI will refer all matters through the Independent Review Process to stress test the Independent Review Process and identify areas of improvement. CMI will fund the cost of the reviews that CMI refer to the Independent Review Process.

The reviewer will consider whether it is reasonable for CMI to pursue recovery. It will be necessary to consider the relative strengths and weaknesses of the case, and the commercial viability for CMI to pursue recovery.

The reviewer will not consider any contractual indemnities, commercial relationships of other parties, or the commercial viability of the third party when considering whether it is reasonable for CMI to pursue recovery.