Cunningham v Kurri Kurri Community Services [2026] NSWPICMP 224: pre-existing deductions in psychiatric WPI appeals

Answer first: what Cunningham means for injured workers

Cunningham is useful because it separates a genuine medical assessment from an unsupported deduction. In a psychiatric WPI claim, a section 323 deduction can reduce the final percentage and may affect whether a worker reaches the threshold for lump sum compensation. The decision does not say every worker with earlier symptoms should receive the full assessed percentage. It says the deduction must be reasoned, evidence-based, and connected to the correct legal test.

For a worker, the practical point is simple: if the MAC mentions earlier anxiety, depression, trauma, treatment, or personal stressors, check whether the assessor explained how those matters caused a measurable pre-existing impairment at the assessment date. A short reference to past symptoms is not the same as a clear section 323 analysis.

What happened?

In Cunningham v Kurri Kurri Community Services Ltd [2026] NSWPICMP 224, the worker appealed a psychiatric whole person impairment assessment. The appeal argued the Medical Assessor used incorrect criteria and made demonstrable error, including a section 323 deduction tied to a pre-existing condition.

The Medical Appeal Panel revoked the Medical Assessment Certificate. That outcome matters because a MAC is often treated by insurers as the end point of the medical dispute. Cunningham shows that the certificate can still be disturbed where the appeal identifies a reviewable error in the reasoning, rather than merely disagreeing with the percentage.

Why the case matters

Workers often lose real value when deductions are applied without a clear legal and medical basis. This case confirms that a deduction can be overturned where the reasoning is wrong, and that psychiatric WPI outcomes are not untouchable just because a certificate was issued.

What the Appeal Panel focused on

• Whether the assessment used the correct criteria.
• Whether there was demonstrable error in the deduction approach under section 323 of the 1998 Act.
• Whether the deduction was properly justified, rather than applied as a broad assumption.
• Outcome: the Medical Assessment Certificate (MAC) was revoked.

Evidence to check before accepting a section 323 deduction

A psychiatric deduction should be tested against the evidence, not against labels alone. Before deciding whether to appeal, review the MAC and the supporting records for:

• the exact diagnosis or diagnoses assessed for permanent impairment;
• what the assessor says existed before the work injury or workplace aggravation;
• whether prior treatment records show ongoing impairment, or only past symptoms that had resolved or were controlled;
• the worker's pre-injury work function, treatment frequency, medication use, and day-to-day capacity;
• the injury timeline, including when symptoms worsened, when treatment changed, and when work capacity was affected; and
• whether the deduction is explained in percentages and reasons, rather than asserted as a broad discretionary allowance.

Appeal process and timing caution

Medical assessment appeals are not a second chance to run the same argument from the beginning. The appeal normally needs to identify an available ground, such as demonstrable error, use of incorrect criteria, or another recognised review basis. That is why the first review should focus on the assessor's reasoning, the source documents, and whether the deduction follows from the evidence.

Timing also matters. If you receive a MAC with a psychiatric WPI deduction, keep the envelope or email, save the full certificate and reasons, and get advice quickly. Time limits and procedural steps can affect whether the issue can be challenged, so do not wait until settlement negotiations expose the financial effect of the deduction.

Where this fits with Section 66 lump sum claims

Section 66 lump sum compensation depends on the assessed level of permanent impairment and the applicable statutory thresholds. A psychiatric WPI deduction can therefore change the practical value of a claim, particularly where the worker is close to a threshold. Cunningham is a reminder to check whether the final percentage reflects a lawful impairment assessment, not just the insurer's preferred reading of earlier medical history.

It is also important not to overread the decision. A well-explained deduction may still stand where the evidence supports it. The useful lesson is that workers should ask for a structured review: what impairment is work-related, what impairment is said to be pre-existing, what records support that split, and whether the reasoning is clear enough to justify the percentage deducted.

Plain-English takeaway

If your psychiatric WPI result includes a pre-existing deduction that does not seem properly explained, do not assume it is final. Get the report reviewed quickly and map an appeal strategy to the exact error, not just the percentage outcome.

The strongest first step is to compare the MAC against the medical file and the worker's real functional history. If the deduction is based on assumption, missing records, or a misunderstanding of the legal test, that may become the centre of the appeal. If the deduction is supported, the strategy may instead shift to settlement advice, future treatment planning, or checking other parts of the claim.

Frequently asked questions

Full decision source

Read the decision on AustLII: Cunningham v Kurri Kurri Community Services Ltd [2026] NSWPICMP 224.