A: STATE GOVERNMENT INITIATIVES

1. Tort law changes enacted in 2002

In 2002, Victoria enacted initial changes to legislation designed to address problems in the affordability and availability of public liability and medical indemnity cover. These include amendments to the Wrongs Act 1958 to:

• establish a cap on general damages for personal injury awards to a maximum of $371,380 indexed to CPI. ["General damages" includes damages for pain and suffering, loss of amenities of life such as the inability to engage in significant pastimes, and loss of enjoyment of life];
• establish a cap on compensation for loss of earnings awards of three times average weekly earnings;
• change the rate used to calculate lump sum payments for future economic loss and care costs. This is known as the 'discount rate', which has been changed from three to five per cent;
• protect volunteers and "Good Samaritans' from the risk of being sued; and
• ensure that saying sorry, or waiving payment of a fee for service, does not represent an admission of liability. This is to encourage the making of apologies when adverse events (events caused by medical management rather than the patient's underlying condition) occur.

2. Tort law changes enacted in 2003

In 2003, the Victorian Parliament enacted the Wrongs and Limitation of Actions Acts (Insurance Reform) Act and also the Wrongs and Other Acts (Law of Negligence) Act.

These amendments seeks to address a number of concerns expressed in the community about the impact of current laws on the affordability and availability of insurance that applies to liability for damages arising from personal injury claims, including medical indemnity cover.

Key changes are outlined in general terms below.

Threshold for general damages

The Wrongs Act 1958 establishes a threshold so that a court cannot generally award damages for "non economic loss" such as pain and suffering in a personal injury case unless the injury involves-

• a whole of person impairment of more than 5%, assessed by reference to criteria set out in the 4th Edition of the American Medical Association's Guides to the Evaluation of Permanent Impairment; or
• loss of a foetus; or
• loss of a breast;   or
• psychological or psychiatric injury arising from the loss of a child due to an injury to the mother or the foetus or the child before, during or immediately after the birth of the child;
• hearing loss of more than 5%; or
• permanent psychiatric impairment of more than 10%.

The amendments do not apply to cases involving intentionally caused harm or sexual assault.

Limitations on the time in which when proceedings can be brought

The Limitation of Actions Act 1958 restricts the time in which a person can bring legal proceedings where the essence of the complaint is that the defendant has caused physical injury to another (including medical negligence). Extensive changes were made to this Act in 2003.  

  These changes were designed to balance protecting the interests of injured persons with the need for defendants and insurers to have some degree of certainty about when claims can be brought. These new laws will generally bring forward the time in which legal claims are to be resolved.

Damages for gratuitous and attendant care

The Wrongs Act 1958 restricts access to damages for gratuitous attendant care. This relates to care provided free of charge to an injured person (often nursing or domestic services provided by relatives). Damages to compensate the injured person for the time spent by their carer will only be available where the need for this care is clearly the result of the injury, and the care is required for at least six hours a week, for at least six months.

The maximum amount awardable is limited to payment for no more than forty hours a week at an hourly rate that does not exceed one-fortieth of average weekly earnings in Victoria. This provision aims to set a reasonable boundary around the level of compensation that is payable.

The Law of Negligence

The Wrongs Act 1958 has been amended to include provisions that apply in any proceedings based on negligence:

• to specify the standard of care to be observed by professionals, including medical practitioners;
• relating to the concepts of "standard of care" and "causation";
• that restrict liability for mental harm to recognised psychiatric illness; and
• that regulate the damages that can be awarded for loss of capacity to provide care for others.

The Wrongs Act 1958 and the Limitation of Actions Act 1958 (as amended) are available at www.parliament.vic.gov.au

The information provided here about these laws is intended for general information only, and does not constitute legal advice.

If you have a concern about medical or other treatment that you have received, then you may wish to approach your health service provider and discuss your concerns.

If you cannot resolve your concerns with your provider, you may wish to contact the Office of the Health Services Commissioner.   This service is free.

Telephone: (03) 8601 5200     Toll Free: 1800 136 066

or go to   http://www.health.vic.gov.au/hsc/

If you require information about how the law applies to your own circumstances, professional legal advice should be considered.  

If you want to know how to get legal help:  

• the Law Institute of Victoria can refer you to an accredited specialist lawyer who can provide advice-   9607 9550 or http://www.liv.asn.au/public/
• contact   Victoria Legal Aid   -03 9269 0234 , or go to http://www.legalaid.vic.gov.au/ and click on "how to get legal help"
• contact a Community Legal Centre.   The Federation of Community Legal Centres can advise you as to the location of centres-   9602 4929

3. State Government public hospital insurance program

State Government public hospital insurance covers the corporate liability of the public hospital arising from negligent medical treatment as well as the individual liability of persons for whom the hospital is legally liable eg full-time and part-time employed doctors (including that private practice work which is specifically covered by the insurance), and contracted visiting medical officers treating public patients. Sum insured limits apply, which are reviewed for adequacy by Victorian Managed Insurance Authority as part of their role as risk advisers to the Government.

The State insurance program has indemnified all insurable losses arising from claims reported by public hospitals notwithstanding the claims volatility of medical malpractice risks. The largest claims (both individual and annual aggregate) have been settled well below the current sum insured limits and with a substantial safety margin in reserve.

Moreover, the Government is committed to further reduce the frequency and level of adverse medical outcomes through improved clinical risk management initiatives, and together with tort law reforms, the risk of uninsured losses occurring in the future should be further mitigated.

The Government considers that, from a total risk perspective, the State insurance arrangements meet its obligations to indemnify liabilities arising from medical treatment services in public hospitals. Although the risk of a current or future claim exceeding the sum insured limits is considered to be extremely remote, the Government has guaranteed to indemnify any such uninsured liability.

The Government has also guaranteed that run-off coverage applies to those doctors who are entitled to medical indemnity protection under the State insurance program for claims reported to VMIA after they cease practising in public hospitals.

The guarantees provided for public hospital medical indemnity risks complement previous assurances given by the Government in relation to the State insurance scheme for rural procedural general practitioners for their public and private work at designated rural public hospitals and bush nursing hospitals in Victoria.

4. State Government scheme for rural procedural general practitioners

Since 1 July 1996, the Victorian Government has provided procedural rural general practitioners (not specialists) in designated Victorian Public and Bush Nursing Hospitals a cost-effective insurance option to their private medical indemnity arrangements. The scheme was designed to provide a financially viable and legally secure alternative insurance arrangement for general practitioners in rural Victoria whose medical indemnity cover had been subjected to substantial price increases, particularly in the areas of obstetrics and anaesthetics. The availability of these alternative arrangements has helped facilitate the continuation of the range of medical services in rural Victoria.

Under the scheme rural general practitioners may insure all care (including obstetric, anaesthetic and procedural work) to public and private patients of designated public hospitals and bush nursing hospitals for an annual premium that is currently less than $5,000. This option includes coverage for that component of private medical practice usually covered by the 'base level' Medical Defence Organisation subscription, that is, non-procedural consultative work conducted in private rooms.

Alternatively, at a slightly reduced premium, rural general practitioners may obtain coverage for obstetric, anaesthetic and procedural care to public and private patients of designated hospitals, excluding private hospitals other than designated bush nursing hospitals. All other private work is excluded.

Further information about the rural general practitioners' scheme can be obtained from the Victorian Managed Insurance Authority on telephone number (03) 86015900