See statements by the Minister for Revenue and Assistance Treasurer, Helen Coonan, on the launch of a “promotional” booklet on reform of liability insurance law in Australia. Media Release C010/04, February 27, 2004.
2.
In New South Wales, for example, this is through Treasury Managed Fund.
3.
In the Australian Capital Territory (ACT), for example, the ACT Insurance Authority (ACTIA) goes out to the market for cover for all government risks.
4.
In the United States, such policies are known as “occurrence” policies.
5.
Australian Health Ministers' Advisory Council Medical Indemnity Jurisdictional Working Party, National Standards for the Medical Defence Industry: A Background Paper (April 2001): At 3.
6.
“Contribution” is used by discretionary mutuals rather than “premiums” to distinguish them further from commercial insurance companies. Recent legislative changes in Australia now require all organizations that offer medical indemnity cover to be authorized insurers.
7.
TitoF., Why Premium Costs Have Increased for Professional Indemnity in Health Care, background paper for National Medical Indemnity Summit (April 2002).
8.
VallentineJ., Medico-legal Issues in General Practice (The MDU: Australia, 1986): 36.
9.
Review of Professional Indemnity Arrangements for Health Care Professionals, Compensation and Professional Indemnity in Health Care – An Interim Report, Commonwealth Department of Human Services and Health, AGPS Canberra (The Tito Review) (February 1994) [hereinafter cited as PIR Interim Report]: At 212–13.
10.
See id. at 162.
11.
See id. at 208.
12.
While the terms of such policies vary, an insurer may refuse to pay a claim made in one year, if it should have been notified at an earlier stage or the doctor should have otherwise known a claim was likely to be made in a different premium year but does not notify the insurer at that time. This is most likely to happen when a doctor moves between different insurers.
13.
In the United States, these doctors are called “family practitioners.”
14.
Review of Professional Indemnity Arrangements for Health Care Professionals, Compensation and Professional Indemnity in Health Care – Final Report, AGPS Canberra (November 1995) [hereinafter cited as PIR Final Report]: At xv. The Review was chaired by the author, Fiona Tito. The full report can be found on the Internet at <http://www.safetyandquality.org/articles/Publications/ftitopir.pdf> (last visited June 3, 2005). Page references in this article are to the printed edition, rather than the electronic version, paragraph references are the same.
15.
See id. at 255 (paragraph 9.179).
16.
See id. at 255 (paragraph 9.182).
17.
See id. at 255–56 (paragraph 9.178–87).
18.
VidenieksM.ToblerH., “Insurer's Life-saving Injection,”The Australian, November 15, 2003: At C13.
19.
See Sunday Program (June 23, 2002), available at <http://sunday.ninemsn.com.au/suncay/cover-stories/transcript1086.asp>. The program transcript also quotes from a letter sent by Dr. Tjiong and UMP to members of one Victorian MDO that made a call the year before, offering them cheaper cover and assuring them that UMP had no plans to make a call on their members.
20.
These assurances are referred to in the Second Reading Speech by the Minister Craig Knowles on the introduction of the Health Care Liability Bill 2001. See NSW Legislative Assembly, Hansard, June 19, 2001, at 14777.
21.
CresswellA., “United Asks Members for Extra Year's Fees,”Australian Doctor, December 1, 2001: At 1–2.
22.
Most MDOs at that stage “insured” part of their discretionary liability on the international re-insurance market on a claims-made basis. While acting as “re-insurance,” it is not really accurate to describe it as such, since the primary cover was not insurance.
23.
United Medical Protection, Annual Review2000–2001, at 32.
24.
Medical Defence Association of Victoria, Cover from the Bush to the City-Annual Report 2001, at 6.
25.
Medical Defence Association of Western Australia, Annual Report 2001, at 22.
26.
CresswellA., “Hope for Cuts in MDO Premiums,”Australian Doctor, February 25, 2000: At 1–2.
27.
UMP claimed that the impact on premiums of implementation of the recommendations of that report would be dramatic. See id. at 2.
28.
Health Care Liability Act 2001 (NSW) § 9 (then $2,603 per week)
29.
Id. at § 13(1). Non-economic loss must exceed 15% of the most extreme case; § 13(3) includes a “phased in” arrangement for awards where damages would be between 15% and 33% of the maximum.
30.
Id. at § 13(2) ($350,000 at commencement).
31.
Id. at § 17.
32.
Id. at part 4.
33.
Id. at § 21–22. These sections were operationalized through the Insurance Regulation Order.
34.
The frequency of claims lodged in the NSW Supreme Court rose dramatically from around ten per month to forty-four per month between when the Government announced its intention to legislate in February 2001 and when the legislation commenced in July 2001.
35.
The incidence of lodgments of claims dropped to three per month immediately after that time Australian Health Ministers' Advisory Council Legal Process Reform Group. Responding to the Medical Indemnity Crisis: An Integrated Reform Package, at 8 (paragraph 3.22). This trend has continued. For example, UMP's Annual Review 2003–2004 states that “With the impact of tort law reform the number of new civil cases against members declined significantly in NSW. … Instructions were received to act in 80 new actions during 2003–2004, by comparison with 182 in the previous twelve months.” Id. at 8.
36.
Urgent Issues Group of the Australian Accounting Standards Board, Minutes UIG Meeting No. 10, September 6, 2001: At 3
37.
Urgent Issues Group of the Australian Accounting Standards Board, Issue Summary 01/11 (Update #2, 5/3/02) Professional Indemnity Claims Liability in Medical Defence Organisations (Appendix).
38.
LombeD., UMP, “Saving Australia's Largest Medical Indemnity Insurer,”Australian and New Zealand Institute of Insurance and Finance Journal27, no. 2 (2004): 17.
39.
MellishM., “Howard Says it's Our Fault,”Australian Financial Review, May 3, 2002, at 9.
40.
See, e.g., DevineM., “Lawyers Delivered this Mess,”The Sydney Morning Herald, May 2, 2002, at 13; DevineM., “Charge the Lawyers a Levy and See How They Run,”The Sydney Morning Herald, May 2, 2002, at 12.
41.
CoombesB., “Attack the Root Cause,”Gold Coast Bulletin, May 9, 2002, at 50; GilbyL., “Litigious Patients Under Fire,”Courier Mail, July 1, 2002, at 2.
42.
Lipovac v. Hamilton Holdings PL, Black, Gavranic and ACT [1997] ACTSC 3 – $7,583,768.55; Radovanovic v. Cutter & ACT [2004] ACTSC 9 – $8,930,660.00; Diamond v. Simpson (No. 1) [2003] NSWCA 67 – $10,998,692.00.
43.
ProbynA., “Big Compo Cases Fuel Cost Rises,”Herald Sun Melbourne, April 6, 2002, at 27; MellishM., “Pointing the Finger of Blame,”Australian Financial Review, March 21, 2002, at 61.
44.
See, e.g., GleesonP., “Lawyers Shoot for Our Medicos' Hip,”Gold Coast Bulletin, June 29, 2002, at 5; LamontL., “Litigation by Ungrateful Patients Not to Blame,”Sydney Morning Herald, May 2, 2002, at 6; GlennR., “NSW – Doctors/lawyers Go Head to Head in Medical Indemnity Bout,”Australian Associated Press General News, October 10, 2003; see also CarterM., “Medical Indemnity: Rescue or Farce?”Health Issues73 (2002): 13–18; CashmanP., “Tort Reform and the Medical Indemnity Crisis,”University of New South Wales Law Journal25, no. 3 (2002): 888–894; LuntzH., “Medical Indemnity and Tort Law Reform,”Journal of Law and Medicine10 (2003): 385.
HIH Royal Commission. The Failure of HIH Insurance – Volume 1: A Corporate Collapse and its Lessons (April 2003), available at <http://www.hihroyalcom.gov.au/finalreport/index.htm> (last visited June 3, 2005). For discussion of the recommendations about the regulation of general insurers and what the Royal Commissioner the Honorable Justice Owen considers should be changed, please see <http://www.hihroyalcom.gov.au/finalreport/Chapter%208.HTML> (last visited June 3, 2005).
47.
The Report of the Royal Commission, see id., detailed the complex reasons for the HIH collapse.
48.
The Australian Health Minister's Advisory Council process, which had been established in January 2002 overlapped with the Ministerial Meeting of State, Territory and Commonwealth Insurance Ministers which met first in March 2002. At a later point, the Prime Minister's Office became directly involved in the medical indemnity issues. None of this was undertaken in a coordinated or even collaborative manner. The author has personal knowledge of these events drawn from her involvement as Principal Consultant to the Health Minister's process.
49.
PIR Final Report, supra note 14, at paragraphs 2.54–2.103.
50.
A key outcome that has flowed from this is the establishment of the Medical Indemnity National Collection, which is held now by the Australian Institute of Health and Welfare. The first report of that data for January to June 2003 for the public sector was released in December 2004.
51.
Trowbridge Consulting, Public Liability Insurance – Analysis for Meeting of Ministers 27 March 2002, available at <http://www.nt.gov.au/ntt/PublicLiability.htm> (last visited June 3, 2005) at 42.
52.
Justice Ipp was assisted by Professor Peter Cane, Professor of Law, ANU; Dr. Donald Sheldon, Chairman of the Council of Practising Specialists; and Councillor Ian McIntosh, mayor of Bathurst.
53.
The Ipp Report itself draws attention to the dearth of data and the consequences for their consideration of reform options. Review of the Law of Negligence Final Report, September 2002 (chaired by Justice David Ipp). Copies of the second report (which includes the first report) are available through <http://revofneg.treasury.gov.au/content/reports.asp> (last visited June 3, 2005) [hereinafter cited as the Ipp Report].
54.
For discussion of the narrow focus required by the Ipp Review's Terms of Reference, it is interesting to read the reflections of Professor Cane in CaneP., “Reforming Tort Law in Australia: A Personal Perspective,”Melbourne University Law Review27 (2003): 649
55.
Ipp Report, supra note 53, at ix.
56.
AHMAC Legal Process Reform Group, Responding to the Medical Indemnity Crisis: An Integrated Reform Package (August 2002), available through <http://www.health.act.gov.au/c/health?a=da&did=10011741&pid=1054039339> at 8. (chaired by Professor Marcia Neave) (last visited June 3, 2005) [hereinafter cited as the Neave Report].
57.
Id. at 12.
58.
Ipp Report, supra note 53.
59.
Neave Report, supra note 56.
60.
109 ALR 625 (1992).
61.
See, e.g., Medical Indemnity Act 2002 and Medical Indemnity Regulations 2003; Medical Indemnity Agreement (Financial Assistance – Binding Commonwealth Obligations) Act 2002, Medical Indemnity (UMP Support Payment) Act 2002; Medical Indemnity (Enhanced UMP Indemnity) Contribution Act 2002; Medical Indemnity (Run-off Cover Support Payment) Act 2004 and accompanying regulations.
62.
Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 and accompanying regulations.
63.
Proposals were developed by the Royal Australian College of Surgeons and the Committee of Presidents of Medical Colleges, in cooperation with a number of consumer organizations.
64.
There was a federal election to be held within the next twelve months and the ongoing environment of crisis was clearly not a desirable political situation.
65.
Membership of the Panel was Tony Abbott MHR, Minister for Health and Ageing; Senator Helen Coonan, Assistant Treasurer and Minister for Revenue; Dr. Bill Glasson, Federal President of the Australian Medical Association; Dr Andrew Pesce, Chairman of the AMA's medical indemnity taskforce; Associate Professor Don Sheldon, Chairman of the Council of Procedural Specialists; Nancy Milne, partner, Clayton Utz; Dr. Susan Page, President of the Rural Doctors' Association of NSW; and John Phillips, former Deputy Governor of the Reserve Bank of Australia.
Australian Institute of Health and Welfare, First Medical Indemnity National Data Collections Report – Public Sector – January to June 2003, AIHW Cat. No. HSE 34 (December 2004), available at <http://www.aihw.gov.au/publications/index.cfm/title/10092> (last visited February 6, 2005).
72.
Insurance Statistics Australia has produced a couple of reports on medical indemnity claims from four of the Australian MDOs. While this data is interesting, little of it is given in actual numbers of claims; it focuses on trends, which makes it difficult to use effectively for policy purposes. The amount of data published is also much less than is available than the AIHW's public sector collection.
73.
Different states and territories have enacted different provisions. Some of the key pieces of legislation are the Civil Liability Act 2002 (NSW), Wrongs and Other Acts (Law of Negligence) Act 2003 (Victoria); Civil Liability Act 2003 (Queensland); Civil Liability Act 2002 (Western Australia); Law Reform (Ipp Recommendations) Act 2004 (South Australia); Civil Liability Act 2002 (Tasmania); Civil Law (Wrongs) Act 2002 (Australian Capital Territory); Personal Injuries (Liabilities and Damages) Act 2003 (Northern Territory). In different states and territories, amendments have also been made to other Acts to implement the raft of changes. For a more complete list, see Reform of Liability Insurance Law in Australia (February 2004).
74.
United Medical Protection, Annual Review 2000–2001, at 19 (number of claims), 15 (claims spike).
75.
Medical Injury Compensation Reform Act of 1975. This legislation imposed a cap on non-economic loss and a range of other procedural limitations (including a shortened statute of limitations). For a useful summary of the provisions, see <http://www.micra.org/AboutMICRA.htm> (last visited February 15, 2005).
76.
See, e.g., the submission of Richard E. Andersen, Chairman of the Doctors Company, for the Physician Insurers Association of America, to the Subcommittee on Health, The House Committee on Energy and Commerce, US House of Representatives (July 17, 2002).
77.
Australian Competition and Consumer Commission, Second Insurance Industry Market Pricing Review (September 2002), at 80–85.
78.
Parliament of Victoria Hansard, Assembly, September 12, 2002, Mr. Bracks, at 140 (Second Reading Speech for the Wrongs and Other Acts (Public Liability Insurance Reform) Bill 2002).
Minister for Revenue and Assistance Treasurer, “Australian Insurance Reforms ‘World Class’” (Media Release C010/04) (February 27, 2004).
81.
See, e.g., PIR Interim Report, supra note 9 (Chapter 3, especially section D, at 40–52, and Appendix D, at 313–320).
82.
Ipp Report, supra note 53, at 208–11 (paragraph 13.105 especially).
83.
Ministerial Meeting on Insurance Issues, Hobart, Long Term Care for the Catastrophically InjuredJoint Communique (February 27, 2004).
84.
Medical Indemnity Policy Review Panel, Affordable, Secure and Fair – Report to the Prime Minister (December 10, 2003) at 6, 10.
85.
The PIR's Final Report identified an industry wide IBNR shortfall of between $100 million and $250 million in 1995. This was documented in both the Final Report (paragraph 9.179) and the more detailed Report on Medical Professional Indemnity Arrangements prepared for the PIR by John Walsh and Jane Skinner, Coopers & Lybrand Actuarial and Superannuation Services, in March 1994.
