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Thursday, 5 April 2001
Page: 26615

Mr ANDREN (4:54 PM) —It is good to rehabilitate this speech after the question time break. Prior to question time, I was telling the House the story of Mrs Margaret Grimley, a former employee of ADI in Lithgow, who, through her solicitor, has claimed that Comcare have hassled her, despite her admission that she has performed tasks like wheeling a wheelbarrow. They have used evidence, she claims, to make her life pretty miserable. Her solicitors tell me in a letter that it has been made generally known around the town that she is under investigation by the national fraud squad. She claims to have been humiliated in the local community by the Comcare process as a result of the conduct of these investigations.

She says she has fully cooperated with all investigations and interviews and she feels that for some reason she has been singled out for oppressive treatment that bears no relationship to her injury related incapacity. According to her legal representative, Comcare has refused to consider any attempts to resolve or settle the matter but rather has taken a persecutory approach to her case. They have also detailed for me what they consider to be gross failings in Comcare's administration and the level of customer service it has displayed in handling the case.

In a letter dated 12 December 2000, received just prior to Christmas by Mrs Grimley's solicitors, Comcare rejected the claim but provided them with an opportunity to provide further medical evidence in support of her claim. The letter said that if such material was not received by 25 January 2001, the determination would be rejected on the evidence available. On 15 January, the solicitors wrote to Comcare seeking an extension to enable a medical report to be obtained during the holiday period that was current from a highly regarded specialist. The extension was needed because the earliest available appointment was 28 February 2001.

By letter dated 25 January, Comcare wrote to Mrs Grimley's solicitors confirming its decision of 12 December and made no reference whatsoever to the earlier request for an extension. On 9 February, the solicitors again wrote to Comcare pointing out that it had failed to take into account their earlier correspondence and requested an extension of time. On 5 February 2001, apparently in response to the solicitor's original January 15 request, Comcare responded denying the extension claim on the basis that extension requests must themselves enclose medical evidence. Comcare has since claimed that the solicitor's 15 January letter was not received prior to the date of the determination, which was 10 days after that.

While I understand Comcare have now agreed to an extension, the events caused Mrs Grimley and her solicitors a lot of heartache. Higgins and Higgins wrote to me in the following terms:

Irrespective of these matters and the breach of any professional courtesy in a response thereto ... Comcare expressed no interest or apology to ourselves or our client for their inappropriate, rude and indiscriminately oppressive handling of our client in relation to this matter.

... Comcare is meant to represent the Australian government and people and act impartially and fairly in its dealings and not in the manner described such as would warrant serious censure were it a private insurer.

I am fully aware that this is an isolated example but, given the level of dissatisfaction, I think it is the type of case where at the very least Comcare's management needs to provide an explanation. I have not yet raised this with the minister, as the solicitor at this point has been happy to conduct inquiries on behalf of the client, but I sought his and the client's permission to mention it during this debate.

If, as Comcare's 1996-97 annual report states, its mission `is to take a leading role in the reduction of human and financial costs of workplace injury in Commonwealth employment by working with customer agencies to prevent injuries and return injured employees to work', then I suggest cases like my constituent's are the ones that government needs to be looking at to see what has to be done to improve the agency's level of service. I trust those in Comcare listening to this debate have heard these criticisms and will provide an explanation in due course. I acknowledge the story detailed so far is from the client and her solicitor, but the allegations are worrying.

In the context of this bill, that case caused me to have a look at what might have caused the problem. Since 1990, the number of employees insured by Comcare and the total number of employer customers have decreased substantially. According to the agency's annual reports, in 1990 there were some 269,000 employees insured by the scheme. By 2000, this number had dropped by 150,000 to 142,996 employees. Over the same period, the number of compensation claims made against Comcare has reduced significantly.

In 1990 some 20,000 claims were lodged. Since 1996, when the current government came to power, claims have reduced from some 15,000 per annum to just 6,000—a massive decrease. Over the same period, total premiums have reduced from some $215 million in 1990 to just $91.4 million in 2000. After rising through the 1990s to a high of $205 million in 1994, total workers compensation costs were $183 million in 2000.

Interestingly, the one area within the overall reduction where costs seem to have ballooned is the provision of legal services. In this regard I note that in 1994-95 Comcare decided to tender for a panel of legal service providers following the untying of legal services from the Attorney-General's Department. According to that year's annual report, it was thought that the formation of the panel and outsourcing would allow the application of nationally consistent policies and principles, establishment of measurable performance indicators and provision of value added legal services. The outsourcing arrangements were implemented in 1994-96 using the Australian Government Solicitor, Barker Gosling, Blake Dawson and Waldron, Deacons Graham and James, Hunt and Hunt, Norman Waterhouse, Phillips Fox and Sparke Helmore. Deacons and Hunt and Hunt were subsequently dropped from the list.

In 1998, Comcare commissioned a review into the cost effectiveness of those arrangements. It concluded that there was strong qualitative evidence that the legal panel arrangements were producing positive results in terms of advice to claims managers and outcomes in the AAT process and that the quality and applicability of legal advice had improved. That year's annual report also concluded that in 1998 fees paid to Comcare's legal panel for work in relation to the AAT reduced by approximately 18 per cent over the 1997-98 year. This represented a reduction in real terms of nine per cent per case handled. That puts a pretty positive glow on things, to say the least. However, according to Comcare's own annual reports, in 1994, prior to outsourcing of legal services, legal costs including AAT and third party recovery costs, but excluding costs associated with common law claims, stood at just $2.87 million, or 1.4 per cent of the total costs of the scheme. In 1995 these costs had risen to $4.27 million, or 2.08 per cent of costs. In 1996 they were $6.9 million, or 3.4 per cent of total costs. In 1997 they ballooned to $12.15 million, or 6.16 per cent of costs. So even with the small reduction in 1998, they represented 6.4 per cent of all costs. That points to a six-fold increase in legal costs, excluding common law claims, over a four-year period. When the agency's costs relating to common law claims are included, they show a ballooning from some $10.64 million in 1993 to $17.8 million in 1998. That is a jump from 5.6 per cent to close to 9½ per cent of total costs over that period.

My point in raising these details is to seek from the minister an explanation of just why, since the outsourcing of legal services, legal costs have increased so substantially when the total number of claims has reduced so markedly. Surely, if claims have reduced to one-third of what they were in 1994, we should be seeing a decline in legal costs at some point in time. It seems strange that, while the overall cost of the scheme is reducing, legal costs appear to be going the other way.

My other point in raising the issue is to seek from the minister details about just what improvements outsourcing of Comcare's legal services have delivered. What reviews of the outsourcing arrangements have been conducted? On what criteria have those arrangements been assessed? How is the outsourcing of this work to corporate firms contributing to the achievement of Comcare's worthy motto and mission statement? From the admittedly anecdotal feedback I have had from my electorate, rather than working with people to get them working Comcare appears to be becoming more and more adversarial in its approach to some compensation claims at least. I wonder whether the shift to private legal firms has played a role in that trend.

The bill in most other areas appears well targeted, and reasonable in nearly all instances. It is logical and uncontentious. However, I will look with interest at those aspects relating to the tightening of the definition of injury and disease, and study the non-government amendments both here and in the Senate. I would appreciate that explanation of the apparent escalation in outsourcing costs—perhaps an indication, if it could be made available, of the pre and post outsourcing average costs per case would help. I thank you for the opportunity to contribute to this debate.