MEDICAL INDEMNITY AGREEMENT (FINANCIAL ASSISTANCE--BINDING COMMONWEALTH OBLIGATIONS) BILL 2002
Mr CADMAN (Mitchell) (7.11 p.m.) —I am delighted to see that there is some doubt in the Australian Labor Party about whether its own amendments are worth backing, and I would have to say that I share those views. The whole problem that has been created with medical insurance really started with the problems identified in HIH.
I guess there was an indication prior to the demise of HIH that some difficulties did exist with the medical defence organisations and the organisation UMP-AMIL, which really is an organisation created by the membership of doctors and by their paying a subscription to cover their insurance. The government became aware of some of these issues back in November 2000.
But the whole of this argument about medical insurance, medical indemnity and what doctors do to protect themselves against claims of negligence, hurt, unjust actions or inappropriate treatment has been muddied to a great extent by the style of the insurance that they have adopted. It is not a regular insurance process. Certain statements were made throughout this year, particularly when claims were made that the government should come in and lend support—and the government ultimately came in and gave support to UMP to the tune of $30 million to $35 million. The chairman of UMP at that stage said that the company was basically sound and there were no problems with it. I thought they were pretty irresponsible statements for the chairman of UMP to make because, within a couple of weeks of making them, he declared that that organisation was facing the liquidator. I think the management of UMP and the whole process of indemnity and insurance for doctors did need attention, and I am concerned that we get it right for ongoing coverage. The Prime Minister's statement—I have a copy of it here—which was made on 31 May 2002 covered or sought to cover the whole ground of what was going on and to give some comfort to those seeking medical indemnity and coverage from the insurance market.
The government gave guarantees that any problems created by the failure of UMP would be picked up by the government. That was not a completely comprehensive statement because in fact there were prospects that were quickly identified by doctors and specialists of those claims which may not be identified for another 25 years, and the long process of coverage which seemed to be dealt with by the Prime Minister's statement meant that there had to be an extension to the process to make sure that no doctor was left stranded.
I was particularly focused in this area because of a message from an acquaintance, Dr Michael Fearnside, who is a specialist at Westmead. Dr Fearnside pointed out to me in an email at that time that there were only nine neurosurgeons working in the whole of Western Sydney and they were servicing a population the same size as the rest of Sydney, approximately 50 per cent, but on the eastern side of Sydney there were 30 neurosurgeons servicing the community. So there were a smaller number serving the west and they were exposed by the huge premiums, looking at something like $70,000 to $100,000 a year before they opened their doors, having to find that amount of money and then facing the risk or uncertainty that sometime in the future, if one of their delicate operations were tested in the court and seen as possible negligence or some practice that was not appropriate, then they were liable to a claim against their work.
All of this I think was completely unreasonable and was brought about by a number of factors. The Prime Minister was perfectly right when he said that nobody was completely to blame. There were a number of reasons. I think the lawyers have blame to carry. I think the insurance companies and UMP have blame to carry. I think the medical profession themselves, by not taking proper care of their own insurance, have blame to carry. So the Prime Minister's words at that point, when he issued on behalf of the government the assurances that doctors were going to be properly looked after by the Commonwealth so that the failure of UMP would not bring on doctors unnecessary hardship, were a fair statement.
The government has a scheme which covered a number of factors. The Prime Minister drew attention to coverage of claims in the period 29 April to 31 December 2002; the continuance of meeting claims notified before 29 April 2002 and properly payable in the period 1 July 2002 to 30 September; and working with the states to provide a framework and mechanisms that would give insurers greater certainty, including substantial tort law reform to contain the cost of claims, to reduce the need for litigation and to encourage structured settlements rather than lump sums. As a result of a ministerial meeting on public liability, there were a range of measures to deal with the more serious high-cost claims, improve claims cost management and have better clinical risk assessment.
I believe the government acted very appropriately and in a timely fashion, except, I believe, for these high-risk characters, who carried an absolutely unbelievable risk factor. Talking to men and women who have spent a lifetime in service to the community, whether they be obstetricians or neurosurgeons, who carry a high risk and are seen as easy targets for claims, I can see that these professionals are extremely worried about their futures, and rightly so. I do not know what person in our community could be expected to accept the risk that sometime within a 25-year period they could have a claim running into many millions of dollars against the work that they perform. I know that we in this House take some risks at election time, but none of the risks that we take amount to anything like the risks confronting neurosurgeons and obstetricians in particular when they were faced with the collapse of UMP.
It was with the help of Dr Fearnside that I realised the urgency of what was being done and the situation applying to the people of Western Sydney. I will quote from Dr Fearnside's email to me, sent on Sunday, 4 August when he was really stressed by the whole situation. He said:
I am well aware the Federal Government was caught very badly unprepared by this issue and has been playing catch up ever since. I hope it has.
Those were Dr Fearnside's thoughts at that time. He concluded his email by saying:
I will simply be going out of business next January if this is not solved. And I see no sign nor do I hear any whispers of a fair solution. And I am getting really desperate and very angry about it.
And rightly so. Here is a man who is the head of this profession, secretary of the neurological surgeons of Australia, and a brilliant individual. We face a chance of him not being able to practise at Westmead Hospital. Every one of those nine neurosurgeons in Western Sydney is priceless for young people and young families, particularly for those people who may have been caught up in motor accidents and look to the skill of a neurosurgeon to repair the damage to their bodies created by motor accidents. So the government has done a great deal to get things back into a proper order.
I will read from a letter to me from the Minister for Revenue and Assistant Treasurer, the Hon. Senator Helen Coonan. She refers to the Prime Minister's announcement in May of the government's response to the medical indemnity insurance market's difficulties, including the proposal to fund the `currently unfunded incurred but not reported claims':
Under this scheme, the Commonwealth will assume liability for all unreported incidents under `claims incurred' policies, where there is not adequate provisioning for these liabilities. It will then recoup this liability tbrough a levy on members of the relevant medical defence organisation (MDO). All MDOs will be required to participate, but only to the extent of their unfunded liabilities.
It is perfectly reasonable. The minister also refers to the forum of Commonwealth, state and territory governments, representatives of the medical and legal professions, consumer representatives and other interested parties held in April, where:
Health Ministers reaffirmed their commitment to structured settlements for damages awards to be paid on an annual basis as an alternative to lump sum payments.
This was one of the steps originally identified back in May by the Prime Minister, and here we have the minister responsible writing within the last few days and saying, `The state ministers and I have dealt with this issue, and we are committed to the future, as set out by the Prime Minister, for structured settlements.' In her letter, the minister goes on to say:
Models to help catastrophically injured people with their long-term care costs are to be developed, as are appropriate legal and administrative initiatives, including tort law reform, aimed at encouraging an early resolution of claims outside the court system.
These areas for action are all being dealt with currently and put in place by the health ministers. The minister continues:
In addition, all participants at the Forum agreed to continue their commitment to quality, safety and risk management in health care, and to develop nationally consistent legislative proposals to ensure that a doctor's expression of regret is not construed as an admission of liability.
What could be more reasonable than that? Doctors are there to support and encourage; we would call it their bedside manner. What could be more traumatic for a family than to be confronted in the emergency ward with an accident involving a younger member of their family or to be faced with a drug overdose? If the doctor says that he regrets what has occurred, no liability should ever be incurred for that expression of sympathy and compassion by a professional trained to give support to people in need. The ministers have finally drawn a ring around some of the extraordinary claims and settlements that have blown the cost of medical indemnity insurance way off the planet. Senator Coonan also says in her letter:
Finally, Ministers have agreed in principle that a national database of medical negligence claims is to be established.
This will provide consistency for the legal profession and for judges. They can refer to the database and chalk up where they believe a particular case stands on the scale of negligence or hurt to the individual.
I am encouraged by what the government has done. I note with interest, however, that the AMA in Victoria are critical of the Victorian tort law reform. They issued a statement on 14 October which says, in relation to expressions of regret:
AMA Victoria notes the provision in the Wrongs and Other Acts (Public Liability Insurance Reform) Bill ... to ensure that an expression of regret does not constitute an admission of liability. The AMA's position ... is that such an apology should be inadmissible as evidence.
So in Victoria, they are not sure that the problem has been solved. Part of the difficulty with this issue is that so much of the responsibility lies with the states, and the minister has been trying to draw a consistent attitude from the states. For reasons that are easily understood, the AMA in Victoria are not satisfied with the Victorian government's response.
Within the last couple of days, members of the House have received a copy of Review of the law of negligence: final report. In the short time I have had in which to read it, I have found it fascinating. In trying to limit the extent of negligence claims, the definitions used in the report seem to be completely reasonable. As the review panel states in the report:
Here, and throughout our reports, we use the term `negligence' to mean `failure to exercise reasonable care and skill'. We use the term `personal injury' to include (a) any disease, (b) any impairment of a person's physical or mental condition, and (c) pre-natal injury.
So we have the report that we have been waiting on, which will provide guidance for the future in its definition of negligence. It is interesting to read through the recommendations, because they cover a wide area relating to the medical profession and the provisions of this bill. The report provides the first significant coverage for the decisions that have been made, with a projection to the end of this year and somewhere into the future. The report covers what people's expectations should be and provides procedural advice to put all its recommendations into practice. Its recommendations cover standard of care, duties to inform, suspending limitation of period and long-stop periods where minors and incapacitated persons are involved, survival of actions and their continuance, causation, contributory negligence, assumption of risk and duties of protection.
The report is a terrific contribution towards enabling reasonable legislative reforms and solutions to what is a vexing problem. It is bad enough to be a patient, but when patients cannot have access to the highly skilled professionals that they sorely need, it is a serious problem that this society, this government, this parliament and the state parliaments need to address. I commend the bill to the House. I reject the amendments; they are whitewash and unnecessary comment.
Author: Alan Cadman MP
Source: House Hansard - 16/10/02
Release Date: 24 Oct 2002