You’ve been told you need surgery, your treating doctor agrees then the insurer refuses to approve it. For an injured worker in pain waiting to recover, a surgery denial is one of the most distressing things that can happen in a workers compensation claim.
The good news is that a refusal is not the final word. In NSW, the insurer doesn’t get to decide whether your surgery goes ahead based on cost or convenience. The law sets a specific test. A denial that doesn’t meet it can be challenged, often at no cost to you. This guide explains why surgery gets denied, what the law actually requires plus the practical steps to take.
This is general information, not legal advice about your own claim. Every matter turns on its own medical evidence, the insurer’s stated reasons plus your circumstances.
The law: surgery must be “reasonably necessary”
Your right to have treatment paid for comes from section 60 of the Workers Compensation Act 1987 (NSW). It makes the employer (through its insurer) liable to pay for medical and related treatment including surgery where that treatment is “reasonably necessary” as a result of your work injury.
The exact wording matters here because insurers plus workers often misunderstand it. The test is reasonably necessary, not “reasonable and necessary” or “absolutely necessary.” Those would be much harder tests to meet. As the case law has made clear, treatment can be reasonably necessary even where an alternative might achieve a similar outcome. It can also be reasonably necessary even where it manages rather than cures your condition.
In deciding whether surgery is reasonably necessary, an insurer is expected to weigh a recognised set of factors (drawn from the leading case, Diab v NRMA): the appropriateness of the particular treatment, the availability of alternative treatment, the cost, the actual or potential effectiveness of the treatment plus whether it is accepted by medical experts as appropriate and likely to be effective.
The practical takeaway is important. A bare referral from your doctor that simply says “patient needs surgery” often isn’t enough. The request is far stronger when your surgeon explains in writing how the surgery relates to the work injury plus why it is justified against those factors.
Why surgery gets denied
Understanding the reason behind a denial is the first step to overturning it. The most common reasons include:
Causation disputes. The insurer argues your need for surgery comes from pre existing degeneration, age or an earlier injury rather than the work incident. This is one of the most frequent grounds. It shifts the fight to whether your work caused or aggravated the condition.
An IME contradicting your treating doctor. Insurers frequently rely on an Independent Medical Examiner (IME), a doctor they appoint, whose opinion overrides your own surgeon’s recommendation. If that IME misunderstands your history, ignores key imaging or overstates your recovery, the denial is often vulnerable to a targeted challenge.
The “it only maintains, doesn’t cure” argument. Insurers sometimes refuse surgery on the basis that it merely maintains your condition. This is often too simplistic. Treatment that prevents deterioration, keeps pain manageable or supports your capacity to work can still be reasonably necessary.
Cost plus WPI concerns. Major surgery like a spinal fusion or joint replacement is expensive. It can also increase a worker’s whole person impairment (WPI) rating, something insurers sometimes have an interest in limiting. While cost is a legitimate factor, it does not override a properly supported clinical need.
Insufficient supporting evidence. Sometimes the denial is really a “not yet.” The insurer says it can’t approve the surgery pending further information. These are often the easiest to resolve because supplying the right evidence answers the objection.
A note on approval plus timing
Two procedural points are worth knowing.
First, most non urgent treatment including surgery needs the insurer’s prior approval before you go ahead. If you proceed without approval, the insurer is generally not liable to pay, with limited exceptions including treatment provided within 48 hours of the injury plus certain exempt services. So a denial usually needs to be resolved before surgery, not after.
Second, the insurer generally has 21 days to respond to a treatment request. If it disputes the surgery, it is required to give you that decision in writing, commonly a Section 78 notice. Watch for verbal declines where a case manager tells you over the phone that surgery won’t be covered without issuing a proper written notice. You’re entitled to a written decision. You can’t properly challenge a denial you can’t see in full. If your weekly payments stop or referrals dry up, that’s often a sign a decision has been made.
There is also a specific rule for secondary surgery. This is surgery that is directly consequential on an earlier approved surgery plus affects the same body part. It generally must be approved by the insurer within two years after the earlier surgery was approved so timing can be critical if a follow up procedure is on the horizon.
Your options when surgery is refused
If your surgery has been denied, you generally have several avenues. They aren’t strictly sequential. The best starting point depends on the strength of the denial.
Strengthen the medical evidence plus ask for reconsideration. Often the most effective first move is to have your surgeon respond directly to the insurer’s actual stated reason for refusal, not just resend the referral. A short, specific letter that addresses causation plus the reasonably necessary factors frequently carries more weight than a generic certificate. It can resolve a pending further information denial outright.
Request an internal review. A Section 78 notice usually includes a review form. You can set out why the decision is wrong plus attach supporting material. Be aware though that internal reviews rarely overturn the original decision. They can give the insurer a chance to patch up a weak notice.
Apply to the Personal Injury Commission (PIC). This is the independent tribunal that resolves these disputes. For a surgery dispute, the question of whether the treatment is reasonably necessary can be referred for assessment by an independent medical assessor whose determination on the medical question carries significant weight. Many surgery denials are ultimately resolved this way.
The key point: challenging it can cost you nothing
For most NSW workers, the cost of challenging a denied surgery is covered through IRO funding via the ILARS scheme (the Independent Legal Assistance and Review Service).
In practice, this means an IRO approved lawyer can apply for a grant that covers their professional fees plus the disbursements needed to fight the denial. This includes obtaining your clinical notes, surgical reports plus supporting medico legal evidence as well as briefing a barrister where required. You can’t apply for this funding yourself. You instruct an approved lawyer who applies on your behalf. It is generally available regardless of your financial circumstances. The IRO must be satisfied the challenge has some prospect of success but there is a general presumption in favour of funding.
This is the reason it rarely makes sense to simply accept a surgery denial. The system is set up to let you challenge it without paying out of pocket.
What to do right now
If your surgery has just been refused, a clear sequence protects your position.
Get the denial in writing plus read it closely to identify the exact reason such as causation, an IME opinion or insufficient information. Ask your treating surgeon to respond in writing to that specific reason, explaining how the surgery relates to your work injury plus why it is justified. Keep copies of everything including the referral, imaging, the insurer’s letters plus any IME report. Speak to an IRO approved workers compensation lawyer early before you feel pressured to either go without the surgery or pay for it yourself.
A quick note on paying privately. If you have private health cover or can fund the surgery upfront, you can sometimes proceed plus seek reimbursement if the dispute is later resolved in your favour. This carries risk. It shouldn’t be done without advice. For some workers facing a long wait in pain, it is worth understanding as an option.
Frequently asked questions
Can the insurer refuse surgery just because it’s expensive?
Cost is one factor an insurer can weigh but it doesn’t override a clinical need that is properly supported. The test is whether the surgery is reasonably necessary as a result of your injury, not whether it’s cheap.
My doctor says I need the surgery. Isn’t that enough?
Not always on its own. A bare referral is often insufficient. The request is much stronger when your surgeon explains in writing how the surgery relates to the work injury plus addresses the reasonably necessary factors.
The insurer is relying on its own doctor’s report. Can I challenge that?
Yes. IME opinions can be challenged, especially where the examiner has misunderstood your history, overlooked imaging or overstated your recovery. A targeted rebuttal from your treating specialist is often key.
Can I just pay for the surgery plus claim it back?
Sometimes, if you can fund it privately plus the dispute is later resolved in your favour. Surgery generally needs prior insurer approval to be payable so proceeding without approval carries real risk. Get advice first.
Will it cost me money to fight the denial?
For most eligible NSW workers, no. IRO or ILARS funding covers an approved lawyer’s fees plus the cost of medical evidence so you can challenge the denial at no cost to you.
Where Stephen Young Lawyers can help
A surgery denial is frightening when you’re in pain waiting to recover but it is frequently a challengeable decision, not a final one. The workers who do best treat the denial as an evidence problem, get their surgeon to answer the insurer’s actual objection plus use the funding the system makes available to them.
As an Accredited Specialist personal injury firm based in Sydney CBD with a multilingual team, we help injured workers understand exactly why their surgery was refused plus how to build the strongest response. For eligible workers, legal costs plus the cost of medical reports can be covered through IRO or ILARS funding. This means you can challenge an unfair surgery denial at no cost to you.
or call +61 2 9635 0889.
This article provides general information only and is current as at June 2026. It is not legal advice and should not be relied on as a substitute for advice tailored to your own injury, medical evidence, insurer decision, and time limits. NSW workers compensation law is undergoing significant reform, and some rules are changing. Liability limited by a scheme approved under Professional Standards Legislation.