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Lawyers fight personal injuries claims legislation

News

Cite as: (2003) 77(7) LIJ, p.21

The state government’s package of reforms designed to reel in medical indemnity and public liability insurance premiums has been criticised by lawyers and praised by doctors.

Small personal injury claims will be subject to general damages thresholds under plans by the state government to tackle rising medical indemnity and public liability insurance premiums.

The Wrongs and Limitation of Actions Acts (Insurance Reform) Bill 2003, introduced into Parliament on 21 May, also proposes to cut the statute of limitations for making personal injury claims from six years to three years and introduce proportionate liability on claims for pure economic loss.

At the time of writing, the Bill had passed through the Legislative Assembly without amendment.

Legal groups, including the Law Institute, have criticised the package for its introduction of thresholds and the lack of consultation by government of the legal profession.

Institute president Bill O’Shea said the legislation was flawed because of anomalies in the American Medical Association guidelines on degrees of impairment on which the thresholds are based.

“We also believe that thresholds discriminate unfairly against people who are injured and a 5 per cent threshold will mean that a lot of seriously injured people, albeit those who ultimately recover, will not have an entitlement to damages for pain and suffering, and that is unfair,” he said.

“There’s been blind faith by the government that this package will result in lower premiums and still there is no guarantee from the insurance industry that this will be the case.

“In our view, there should have been an undertaking obtained by the government that if they implemented the reforms in the way that they have, then the insurance industry would guarantee a reduction.”

Victorian Bar Council chairman Jack Rush QC said the government’s attempt to look after doctors would result in “tobacco companies, asbestos manufacturers and their ilk” avoiding the common law.

Speaking at the release of the reform package on 20 May, Premier Steve Bracks said the reforms would protect people’s right to sue for loss of wages or medical expenses in all personal injury claims and general damages for pain and suffering in cases where an injury was assessed at greater than 5 per cent impairment.

He said exemptions would be made to the 5 per cent threshold in cases involving the loss of a foetus at any time during pregnancy, loss of a breast and sexual abuse.

“The introduction of a threshold for general damages in personal injury claims will reduce the number and total cost of claims, particularly smaller claims,” he said.

Among the other major reforms contained in the package are:

  • the introduction of a 10 per cent threshold in relation to psychiatric impairment;
  • the introduction of proportionate liability for claims for pure economic loss (not compensation for death or personal injury);
  • the period for making claims for minors under 18 will be six years from the date of discoverability; and
  • the reforms will apply to all people sustaining injury from 21 May 2003.

The Australian Medical Association (AMA) and Insurance Council of Australia welcomed the package as a workable solution to the medical indemnity and public liability insurance crises.

AMA Victoria president Dr Mukesh Haikerwal said the package was a response to “a very loud and clear message sent to the state government from patients and doctors throughout the state.

“The right of the public to access health services is of paramount importance to doctors and we feel that the package does go some way to protect this,” he said.

However, the government came under fire from some of its traditional supporters.

Slater & Gordon senior partner Peter Gordon told The Age that the government was using an insurance industry con to weaken the legal rights of injured people.

“This is the greatest sell-out by a Labor government of its own constituency, of its own people, that any of us have ever seen,” he said.

Mr Gordon’s comments came a day after a lightning campaign by four plaintiff law firms – Slater & Gordon, Maurice Blackburn Cashman, Holding Redlich and Ryan Carlisle Thomas – to pressure the government into changing the reform package.

The four firms took out a double-page advertisement in The Age on 19 May that read: “Mr Bracks, who gave you the right to take away our rights?”.

The ad quoted Mr Bracks from December 1997 saying: “Common law is a fundamental right dating back to the Magna Carta. The hypocrisy of members opposing common law rights is astounding”.

Victorian Trades Hall Council secretary Leigh Hubbard condemned “the removal of fundamental rights, particularly at the behest of an insurance industry which has improving profit outlooks”.

He said union members have had a bitter experience of restrictions on compensation claims under reforms of the WorkCover scheme introduced by the Jeff Kennett-led state government in the mid 1990s.

“We have had members who have had significant back surgery and yet because of a 10 per cent impairment threshold using the American Medical Association guidelines have not been able to get compensation.

“These are the very guides the government now proposes to use for public and medical liability compensation claims.”

He called on unions to inform members of the proposed changes and get them to lobby members of Parliament over the following weeks.

A copy of the Bill can be viewed at http://www.dms.dpc.vic.gov.au.

Jason Silverii

The State Government’s insurance reforms package

• A 5 per cent threshold will be introduced in relation to claims for general damages.
• A 10 per cent threshold will be introduced in relation to psychiatric impairment.
• There will be exemptions to the thresholds in the cases of loss of a foetus during pregnancy, loss of a breast or sexual abuse.
• The statute of limitations will be amended to change the period for making personal injury claims from six to three years for adults from the date of discoverability.
• The introduction of proportionate liability for claims for pure economic loss (not compensation for death or personal injury).
• The period for making claims for minors under 18 will be six years from the date of discoverability.
• Claims will be barred 12 years after the event which caused the injury.
• The courts will retain judicial discretion to extend these limits in the interests of justice.
• The state government will make it mandatory for medical professionals working in the private system to report medical errors.
• The limiting of recovery of damages for gratuitous attendant care services.

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