Receiving a letter that says your workers compensation claim has been denied is stressful especially when you are injured out of work bills are mounting. But a denial is not the end of your claim. In NSW insurer decisions are challenged successfully every year and the law gives injured workers clear pathways to have a denial reviewed often at no cost to you.
This guide explains what a denial actually is why claims get knocked back the options available to you the practical steps to take. The most important message is simple: act early don’t treat the insurer’s first decision as final.
This is general information not legal advice about your own claim. Every matter turns on its own evidence deadlines circumstances.
First understand what you’ve received: the Section 78 notice
When an insurer disputes all or part of your claim it is generally required to give you a written notice setting out its decision. This is known as a Section 78 notice named after section 78 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW).
A properly issued Section 78 notice should tell you several things: a clear explanation of why liability has been disputed the factors behind the decision a list of the documents the insurer relied on with copies if you don’t already have them information about how you can seek a review. Importantly the insurer generally has 21 days to accept or decline your claim. It may provisionally accept the claim while it investigates further.
Two practical warnings:
The letter may not say “Section 78 notice.” Sometimes it simply reads “important information about your workers compensation claim.” Read any correspondence from the insurer carefully. If your weekly payments have stopped or treatment referrals are no longer being approved that is a strong sign a decision has been made against you.
Watch for “verbal declines.” There is a growing pattern of case managers telling workers over the phone that something a treatment surgery or payment won’t be covered without issuing a formal written notice. The insurer has a statutory obligation to put a liability dispute in writing. If you’ve only been told verbally ask for a written notice because you cannot properly challenge a decision you can’t see in full.
Why claims get denied
Understanding the reason for the denial is the starting point for challenging it. In practice the most common reasons include:
Capacity disputes one of the most frequent. The insurer often isn’t saying your injury didn’t happen. It’s arguing you can work more than you currently are which reduces your weekly payments.
Pre existing condition arguments. The insurer claims your symptoms are caused by prior degeneration or an earlier condition rather than your work.
Disputes over causation. Whether the injury actually arose out of or in the course of your employment.
Denied treatment or surgery. Sometimes refused “pending further information” meaning the decision can often be overturned once the right evidence is provided. Expensive surgery is also sometimes resisted because it can increase a worker’s WPI rating.
Psychological injury denials. Psychological injury claims can come down to one account against another frequently turn on the quality of the evidence assembled.
“Worker” status or timing. The insurer says you don’t meet the definition of a worker or that the claim was lodged outside the relevant time limit generally within six months of the injury though this can be extended in some circumstances.
Your options: three pathways to challenge a denial
If your claim is denied you generally have three avenues. They are not strictly sequential. The right starting point depends on the strength of the notice your circumstances.
1. Request an internal review by the insurer.
A Section 78 notice usually includes a review form. You can use it to set out why you believe the decision is wrong attach supporting information. The insurer typically must respond within 14 days. Be aware of a practical limitation that experienced lawyers often flag: an internal review gives the insurer a chance to fix a defective notice. It rarely overturns the original decision. Where the notice is weak it can sometimes be more effective to challenge it directly in the Commission rather than hand the insurer an opportunity to shore it up.
2. Contact the Independent Review Office (IRO).
The IRO is an independent statutory office that helps injured workers. Its Solutions team can step in contact the insurer on your behalf to resolve complaints late payments unpaid medical expenses or a claim that simply hasn’t been responded to. Crucially the IRO also administers the funding that pays for your lawyer (explained below).
3. Apply to the Personal Injury Commission (PIC).
The PIC is an independent tribunal that resolves workers compensation disputes between injured workers insurers. Your lawyer lodges an Application to Resolve a Dispute supported by your evidence. The insurer must then file its reply evidence generally within 28 days. The matter proceeds through the Commission’s dispute resolution process which can include conciliation arbitration binding determinations. The PIC’s decision is binding with limited rights of appeal.
The part most workers don’t realise: it can cost you nothing
This is the single most important thing to know the reason giving up is almost never the right move.
For most NSW workers the cost of challenging a denied claim 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 of funding that covers their professional fees disbursements. This includes the cost of obtaining your clinical notes medical reports independent medical examinations even a barrister where needed.
A few key points about how this works:
You cannot apply for funding yourself. You must instruct an IRO approved lawyer who applies on your behalf. Funding is generally available regardless of your financial circumstances. The IRO must be satisfied your challenge has some prospect of success before granting a Stage 3 (Commission proceedings) grant but there is a general presumption in favour of funding. For eligible workers this means you can challenge an unfair denial without paying your lawyer out of your own pocket.
This funding exists precisely to level the playing field between an injured worker an insurer’s resources. Not using it is leaving a powerful tool on the table.
Practical steps to take right now
If you’ve just been denied here’s a clear sequence to protect your position:
First keep every document read the notice closely. Identify exactly what is being disputed (liability capacity treatment or a payment figure) the reasons given. Second gather your evidence: your certificate of capacity treating doctor’s records the incident details witness information wage records referrals. The denial is best treated as a written evidence problem not something to resolve through hopeful phone calls. Third respond in writing not just verbally. Fourth most importantly speak to an IRO approved workers compensation lawyer early before deadlines pass or evidence gaps narrow your options.
Timing matters. While there is flexibility in some of the steps the longer a denial sits unchallenged the more an insurer’s narrative about your capacity causation earnings can harden the harder it can be to unwind later.
Frequently asked questions
Does a denied claim mean my case is over?
No. A Section 78 notice is the start of the dispute process not the end of your claim. Many denials are challenged successfully with better evidence the right review pathway.
How long do I have to challenge a denial?
Don’t assume you’ve missed a deadline. While there are timeframes attached to various steps the safest course is to get advice quickly. The value of acting early is about protecting your evidence not just meeting a date.
Will it cost me money to fight the decision?
For most eligible NSW workers no. IRO/ILARS funding covers an approved lawyer’s fees the cost of medical reports records. You generally won’t pay your lawyer directly for the funded dispute work.
The insurer told me over the phone but sent no letter. Is that a denial?
The insurer is required to put a liability dispute in writing. Ask for a written Section 78 notice get advice. A verbal decline alone is something you can push back on.
What if the denial is about my capacity to work rather than my injury?
Capacity disputes are among the most common denials. They reduce your weekly payments rather than rejecting the injury outright. They can be challenged through the same review pathways with the right medical vocational evidence.
Where Stephen Young Lawyers can help
A denied claim is frustrating but it is frequently a challengeable decision rather than a final one. The workers who do best are usually the ones who treat the denial as an evidence problem act early 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 what a Section 78 notice means for them what the strongest response is. For eligible workers legal costs the cost of medical reports can be covered through IRO/ILARS funding meaning you can challenge an unfair 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, evidence, insurer decision, and time limits. NSW workers compensation law is undergoing significant reform, and some rules — particularly for psychological injuries — are changing. Liability limited by a scheme approved under Professional Standards Legislation.