- Parliamentary Business
- Senators & Members
- News & Events
- About Parliament
- Visit Parliament
MEDICAL INDEMNITY LEGISLATION AMENDMENT BILL 2005
- Parl No.
- Question No.
McLucas, Sen Jan
- System Id
Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Table Of ContentsDownload Current Hansard View/Save XML
Previous Fragment Next Fragment
- Start of Business
- BANKRUPTCY AND FAMILY LAW LEGISLATION AMENDMENT BILL 2005
- NEW INTERNATIONAL TAX ARRANGEMENTS (MANAGED FUNDS AND OTHER MEASURES) BILL 2004
- MEDICAL INDEMNITY LEGISLATION AMENDMENT BILL 2005
- FARM HOUSEHOLD SUPPORT AMENDMENT BILL 2005
- FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (FURTHER 2004 ELECTION COMMITMENTS AND OTHER MEASURES) BILL 2005
- MATTERS OF PUBLIC INTEREST
- MINISTERIAL ARRANGEMENTS
- QUESTIONS WITHOUT NOTICE
- DISTINGUISHED VISITORS
QUESTIONS WITHOUT NOTICE
Workplace Relations: Building Industry
(Santoro, Sen Santo, Abetz, Sen Eric)
Economy: Foreign Debt
(Marshall, Sen Gavin, Minchin, Sen Nick)
National Security: Terrorism
(Brandis, Sen George, Ellison, Sen Chris)
Workplace Relations: Workers’ Entitlements
(Wong, Sen Penny, Abetz, Sen Eric)
Crime: People Trafficking
(Greig, Sen Brian, Ellison, Sen Chris)
(Lundy, Sen Kate, Coonan, Sen Helen)
Education and Training: Funding
(Lees, Sen Meg, Vanstone, Sen Amanda)
Telecommunications: Competition Reforms
(Moore, Sen Claire, Coonan, Sen Helen)
Family Services: Child Care
(Fifield, Sen Mitchell, Patterson, Sen Kay)
(Conroy, Sen Stephen, Coonan, Sen Helen)
Indigenous Affairs: Aboriginal and Torres Strait Islander Commission Artworks
(Ridgeway, Sen Aden, Vanstone, Sen Amanda)
- Workplace Relations: Building Industry
- QUESTIONS WITHOUT NOTICE: ADDITIONAL ANSWERS
- QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS
- PARLIAMENTARY SERVICE AMENDMENT BILL 2005
- 'BLACKOUT VIOLENCE' CAMPAIGN
- ENVIRONMENT: SYNTHETIC GREENHOUSE GASES
- AGRICULTURAL AND VETERINARY CHEMICALS LEGISLATION AMENDMENT (LEVY AND FEES) BILL 2005
- HIGHER EDUCATION LEGISLATION AMENDMENT (2005 MEASURES NO. 1) BILL 2005
- TAX LAWS AMENDMENT (2004 MEASURES NO. 7) BILL 2005
- FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (FURTHER 2004 ELECTION COMMITMENTS AND OTHER MEASURES) BILL 2005
- NATIONAL HEALTH AMENDMENT (PROSTHESES) BILL 2005
- BROADCASTING SERVICES AMENDMENT (ANTI-SIPHONING) BILL 2004
- QUESTIONS ON NOTICE
Wednesday, 9 March 2005
Senator McLUCAS (10:29 AM) —The Medical Indemnity Legislation Amendment Bill 2005 amends legislation implemented to address the crisis facing the medical indemnity sector in 2002-03 and seeks to correct anomalies arising from the legislation’s interaction with industry practice. Labor will not oppose this bill. However, the amendments highlight once again the ad hoc nature in which the medical indemnity reforms have been conducted. There is little concern for the long-term sustainability of medical indemnity or for the financial support that the Commonwealth is continuing to provide.
These amendments are part of the government’s ongoing attempt to address medical indemnity ‘reform’ since the collapse of UMP/AMIL in 2002. I remind the Senate that the crisis arose in 2001 when Australia’s main medical defence organisation, UMP/AMIL, failed to fund $460 million of incurred but not reported claims. In December 2001, UMP increased its premiums by an average of 52 per cent. However, for obstetricians and neurosurgeons the increase was as high as 123 per cent. In February 2002, AMIL faced pressure from APRA to raise additional capital to meet minimum capital requirements, and APRA gave AMIL until 30 June 2002 to raise over $30 million to meet those requirements. The government intervened on 28 March 2002 and provided a short-term guarantee of up to $35 million to enable AMIL to meet its minimum capital requirements. In April 2002, UMP unsuccessfully sought further assistance from the government to enable its directors to get personal liability insurance. On 29 April 2002, UMP/AMIL filed for a provisional liquidator, which was appointed on 3 May that year. Its main objective was to determine the company’s solvency and ability to continue trading.
While the crisis unfolded the Prime Minister made a commitment to ensure that, in the event of a provisional liquidation, members were covered while a long-term solution was developed. On 29 April 2002, the Minister for Revenue and Assistant Treasurer announced that the government would guarantee claims arising from any procedures from 29 April to 30 June 2002 by doctors covered by UMP, would legislate this guarantee and would assist in determining the long-term viability of UMP. The AMA was dissatisfied with the government’s guarantees, and as a result the government faced closures of wards and the postponement of surgery as specialists sought greater certainty. Letters from both the Assistant Treasurer and the then minister for health and action by the Royal College of General Practitioners and the AMA then led to acceptance of this guarantee. The guarantee was finally approved by the courts in June 2002. This included approval of the extension of the guarantee from 30 June 2002 to 31 December of that year. In addition, the government also agreed to assume responsibility for the IBNR claims where the incident giving rise to the claim occurred before 30 June 2003.
To recoup these funds the government imposed a levy on members of medical defence organisations. The mechanics of the levy were strongly criticised by doctors, and in response the government announced a number of changes to the scheme which exempted doctors employed by public hospitals, all doctors aged over 65 and doctors who retired early due to disability or permanent injury. With the high cost of medical indemnity plaguing the sector, the government also implemented a medical indemnity premium subsidy scheme to subsidise premiums for obstetricians, procedural GPs, neurosurgeons and GP registrars undertaking procedural training. This was extended in 2004 to recognise indemnity costs relative to incomes.
In addition to the IBNR levy and the MIPSS, the government implemented the High Cost Claims Scheme to further reduce pressures on the medical defence organisations. Under this scheme, 50 per cent of insurance payouts over $500,000 are reimbursed to medical indemnity providers. In May 2004, measures related to run-off cover were also implemented to provide run-off insurance cover to medical practitioners who had retired or left practice due to disability or maternity leave and to the legal representatives of deceased medical practitioners. This filled the gap which arose when the government committed to ‘claims made’ cover only. In the event that a claim was made against a retired doctor, he or she would not be insured under the new arrangements. The amendments in this bill also relate to the Exceptional Claims Scheme, previously known as the blue sky scheme. This scheme applies when a doctor sustains a claim above $20 million—that is, a claim above an amount for which a doctor has insurance—and means that the Commonwealth will step in and pay the difference between the $20 million and whatever the claim is.
The former Labor government commissioned a report into medical indemnity issues, and the report from this inquiry, which was conducted by Ms Fiona Tito, has become referred to as the Tito report. When the Howard government came to office in 1996, the Tito report would have been sitting on the desk of the incoming Minister for Health and Family Services, Dr Michael Wooldridge. The Tito report explicitly warned of a potential crisis in medical indemnity unless the government acted and changed policy settings. Dr Wooldridge is now infamous for his inaction. At a conference at the University of Melbourne in 2003, Dr Wooldridge, who was minister for health for nearly six years after receiving this report, said:
... I was accused of doing far too little on medical indemnity. That’s completely unfair. I did absolutely nothing whatsoever.
Federal Labor believes that there needs to be a multipronged approach to ensuring there is a sustainable long-term resolution to the medical indemnity crisis. One of these elements, often taken for granted and even forgotten, is increasing the quality of care and avoiding, insofar as it is possible, adverse medical incidents. Medical treatments will never be perfect and will always be subject to the errors that all human beings make. However, in our hospitals in particular, the number of preventable deaths is relatively high and a number of those would be associated with events which would equal negligence. To the extent that those preventible deaths occur, we need to improve the quality of the environment.
Recent data, from 1999, shows that 16.6 per cent of the 14,000 hospital admissions in New South Wales and South Australia resulted in disability or longer hospital stays. These adverse events were due to ‘a wide range of human and system based failures’. Half of these adverse events were considered preventable. Similar data from the UK and the USA shows that adverse events are at 10 per cent and 3.7 per cent respectively as a percentage of total admissions. A parallel is often made with the airline industry. If one applied the UK rate of the misprescribing of antibiotics for respiratory infection to an equivalent error rate in flying planes, there would be a 1,000-fold increase in the risk of dying in a plane crash.
The second policy area involves open disclosure. This requires changing the practice patterns of providers, such as hospitals or medical practitioners, so that they disclose errors. For parties who in the first instance might be seeking something as simple as an expression of regret or a factual statement about what has happened to their loved one, it enables that to occur and may reduce the risk of litigation.
The third area that requires further examination is the question of long-term care costs for the catastrophically injured. Currently, for those who are injured in medical negligence events, those costs are borne by the insurance system. Those who are injured in other circumstances end up with an inappropriate style of care; it is certainly not the sort of care that should be supported. An examination of better models of care for the catastrophically injured would provide medical indemnity insurers with greater long-term stability and would also improve the outcomes for people involved in these kinds of claims.
In February 2005, the AMA expressed its support for a long-term care scheme as an alternative to the current fault based adversarial system, which results in lump sum payments but often does not result in the best care for the catastrophically injured or the people who care for them. State governments control two of the most important levers in this debate. Firstly, state governments control the tort law environment and, secondly, they effectively indemnify doctors for their work in public hospitals. In recent years, state Labor governments have acted by making major reforms to the laws of negligence on civil and medical liability. Recent evidence suggests that these reforms are having a substantial impact on the number of claims against doctors for negligence. That is only one part of resolving the medical indemnity problem, however, and the Minister for Health and Ageing, Mr Abbott, has failed to effectively engage the state governments and work with them to develop options to resolve this issue.
Another important issue is the collection of data about medical negligence claims and the tort law experience in this new policy and legal environment. In Victoria, the Bracks government now has probably the most comprehensive set of data on medical indemnity claims of most, if not all, governments in Australia as a result of working with the Medical Indemnity Protection Society. This is exactly the type of database that the federal government needs to work towards establishing in cooperation with the state governments and medical defence organisations.
In November 2004, news stories confirmed that UMP had reduced its premiums. News of this caused outrage amongst other medical indemnity providers, who are subject to the same level of assistance which UMP have benefited from since its bailout. Some UMP members will enjoy premium reductions of up to 30 per cent next year. At least two other medical indemnity funds have written to the Prime Minister expressing their concern, quite rightly, over these events. This highlights the competitive neutrality issue which arises when the Commonwealth intervenes to the extent it has with UMP.
The Treasury is currently conducting a review of competitive neutrality in the medical indemnity sector. Some medical indemnity providers have expressed concerns about competitive neutrality in the medical indemnity market arising from the government’s assistance provided to the industry in recent years. The inquiry will examine the competitive advantages in the medical indemnity industry arising from measures undertaken by the Australian government specifically to assist medical indemnity providers since 29 April 2002. I understand that it will analyse each form of government assistance and their interactions in assessing implications for competitive neutrality in the medical indemnity market and any resulting competitive advantages, including, but not limited to, such possible advantages as savings on reinsurance or capital servicing costs.
Labor believes it is crucial that, in determining the competitive neutrality issues arising from the government’s assistance, policy responses should be developed to address any identified competitive advantage. In addition, the overall policy should aim to deliver—as well as the identified policy aims of ensuring a viable, affordable, fair and competitive medical indemnity market—sustainability for the medical indemnity sector and the taxpayer, as well as fair and transparent outcomes for consumers. Labor looks forward to examining closely the outcomes of the report, which is due by 15 March.
As I said earlier, Labor will not oppose this bill. But I have laid out that chronology and Labor’s concerns, which have been well made and well expressed over some three years now, especially by our shadow ministers, since the crisis began a long time ago and came to a head in April 2002.