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Medical Indemnity (Prudential Supervision and Product Standards) Bill 2003

Part 1 Introductory

Division 1 Preliminary

1   Short title

                   This Act may be cited as the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 .

2   Commencement

                   This Act commences, or is taken to have commenced, on 1 July 2003.

3   Objects

                   The objects of this Act are:

                     (a)  to ensure that health care professionals have access to medical indemnity cover that is provided by properly regulated insurers; and

                     (b)  to specify minimum standards for medical indemnity cover that is provided to health care professionals.



 

Division 2 Interpretation

4   Definitions

General

             (1)  In this Act:

APRA means the Australian Prudential Regulation Authority.

arrangement includes a contract of insurance.

ASIC means the Australian Securities and Investments Commission.

breach the minimum cover rules has the meaning given by subsection (8).

claim :

                     (a)  means a claim or demand of any kind (whether or not involving legal proceedings); and

                     (b)  includes proceedings of any kind including:

                              (i)  proceedings before an administrative tribunal or of an administrative nature; and

                             (ii)  disciplinary proceedings (including disciplinary proceedings conducted by or on behalf of a professional body); and

                            (iii)  an inquiry or investigation;

and claim against a person includes an inquiry into, or an investigation of, the person’s conduct.

claims-made based cover has the meaning given by subsections 6(2) and (3).

claims period , in relation to a regulated insurance contract, has the meaning given by subsection 21(3).

client , in relation to a regulated insurance contract, has the meaning given by subsection 21(2).

come into effect , in relation to an arrangement, has the meaning given by subsection (4).

compensation claim means a claim for compensation or damages that is made against a health care professional in relation to a health care incident.

complying offer has the meaning given by section 24.

compulsory new contract offer , in relation to a new regulated insurance contract, means an offer under section 22.

compulsory offer period , in relation to an offer made under section 23, means the period referred to in paragraph 24(2)(b) in relation to the offer.

constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies.

enter into , in relation to certain arrangements, has a meaning affected by section 7.

entity means:

                     (a)  a body corporate; or

                     (b)  a partnership; or

                     (c)  any other unincorporated association or body of persons; or

                     (d)  a trust.

general insurer has the same meaning as in the Insurance Act 1973 .

health care means any care, treatment, advice, service or goods provided in respect of the physical or mental health of a person.

health care incident , in relation to a health care professional, means an incident that occurs in the course of, or in connection with, the provision of health care by the health care professional.

health care professional :

                     (a)  means an individual who provides health care (whether for reward or not and whether as an employee, as part of a business or on some other basis); and

                     (b)  includes:

                              (i)  a medical practitioner; and

                             (ii)  a registered health professional.

incident includes:

                     (a)  any act, omission or circumstance; and

                     (b)  an incident that is claimed to have occurred.

incident-occurring based cover has the meaning given by subsection 6(4).

indemnify has a meaning affected by subsection (2).

medical practitioner means an individual registered or licensed as a medical practitioner under a State or Territory law that provides for the registration or licensing of medical practitioners.

minimum cover amount has the meaning given by section 16.

new regulated insurance contract means a regulated insurance contract to which section 22 applies.

otherwise uncovered prior incidents for a health care professional has the meaning given by subsection 21(4).

payable , in relation to a compensation claim, has the meaning given by subsection (7).

provide a financial service has the meaning given by section 766A of the Corporations Act 2001 .

provide medical indemnity cover has the meaning given by section 5.

prudential standard means a standard determined by APRA under section 32 of the Insurance Act 1973 .

registered health professional : an individual is a registered health professional if:

                     (a)  the individual practises a health care related vocation; and

                     (b)  the individual must be registered under a State or Territory law to practise that vocation.

regulated insurance contract has the meaning given by subsection 21(1).

relevant constitutional connection has the meaning given by subsection (6).

renew has the meaning given by subsection (5).

without medical indemnity cover has the meaning given by subsection (3).

Indemnify

             (2)  To avoid doubt, a person may, for the purposes of this Act, indemnify someone else by either:

                     (a)  making a payment; or

                     (b)  agreeing to make a payment.

Note:          A person may indemnify someone else by making a payment even if the payment was not preceded by an agreement to pay.

Without medical indemnity cover for a health care incident

             (3)  For the purposes of this Act, a health care professional is without medical indemnity cover for a health care incident if:

                     (a)  the health care incident occurs during a particular period; and

                     (b)  there is no arrangement under which the health care professional will, or may, be indemnified for compensation claims made against the health care professional in relation to health care incidents occurring during that period.

When arrangement comes into effect

             (4)  For the purposes of this Act, an arrangement under which a person provides medical indemnity cover for a health care professional comes into effect on the first day on which, under the arrangement, a claim against the person providing the cover may be made.

Renewal of arrangement

             (5)  For the purposes of this Act, an arrangement is renewed if:

                     (a)  the arrangement is renewed; or

                     (b)  the period of the arrangement is extended;

whether this happens:

                     (c)  because of action taken, or not taken, by a party or parties to the arrangement; or

                     (d)  automatically; or

                     (e)  by force of law.

Note:          For example, if renewable insurance cover is provided under a contract of insurance (the original contract ), a further contract of insurance may exist between the parties to the original contract by force of subsection 58(3) of the Insurance Contracts Act 1984 .

Relevant constitutional connection

             (6)  For the purposes of this Act, an arrangement has a relevant constitutional connection if:

                     (a)  the arrangement provides for insurance with respect to which the Commonwealth Parliament has power to make laws under paragraph 51(xiv) of the Constitution; or

                     (b)  the arrangement is entered into in the course of trade and commerce:

                              (i)  with other countries; or

                             (ii)  among the States; or

                            (iii)  between a State and a Territory; or

                     (c)  the arrangement is entered into in, or is governed by the laws of, a Territory.

Amount payable in relation to compensation claim

             (7)  For the purposes of this Act, the amount that is payable in relation to a compensation claim includes an amount that would be paid to meet legal and other expenses that are directly attributable to any negotiations, arbitration or proceedings in relation to the compensation claim.

Breaching the minimum cover rules

             (8)  For the purposes of this Act, a regulated insurance contract breaches the minimum cover rules if subsection 17(2), 18(3) or 19(3) applies to the regulated insurance contract.

Claim against health care professional during particular period

             (9)  A reference in this Act, in relation to:

                     (a)  a contract of insurance under which the insurer provides medical indemnity cover for a health care professional; or

                     (b)  an offer by an insurer to provide medical indemnity cover for a health care professional;

to a compensation claim against the health care professional being made, or having to be made, during a particular period is a reference to any one or more of the following happening, or having to happen, during that period:

                     (c)  the compensation claim being made against the health care professional;

                     (d)  the compensation claim being notified to the insurer;

                     (e)  the health care incident to which the compensation claim relates being notified to the insurer;

                      (f)  a claim being made against the insurer in relation to the compensation claim;

                     (g)  an event prescribed by the regulations.

References to health care professional

           (10)  A reference in this Act to a health care professional includes a reference to an individual who has been a health care professional at any time.

References to medical practitioner

           (11)  A reference in this Act to a medical practitioner includes a reference to an individual who has been a medical practitioner at any time.

References to registered health professional

           (12)  A reference in this Act to a registered health professional includes a reference to an individual who has been a registered health professional at any time.

5   Providing medical indemnity cover

             (1)  A person provides medical indemnity cover for a health care professional if, under an arrangement, the person must or may indemnify the health care professional in relation to claims that may be made against the health care professional in relation to health care incidents.

             (2)  The arrangement:

                     (a)  may be one under which the indemnity is provided at the person’s discretion; and

                     (b)  may be, but need not be, an arrangement between the person and the health care professional; and

                     (c)  may be:

                              (i)  one under which the health care professional is indemnified directly; or

                             (ii)  one under which the health care professional is indemnified indirectly through an entity or entities interposed between the person and the health care professional.

6   Claims-made based cover and incident-occurring based cover

             (1)  This section tells you what is meant by claims-made based cover and incident-occurring based cover when those terms are used in this Act. There are some kinds of medical indemnity cover that fall outside both those terms.

             (2)  For the purposes of this Act, the cover provided for by a contract of insurance is claims-made based cover if:

                     (a)  under the contract, the insurer provides medical indemnity cover for a health care professional in relation to a compensation claim against the health care professional in relation to a health care incident only if:

                              (i)  the incident occurs during a period specified in the contract (the incidents period ); and

                             (ii)  the compensation claim is made against the health care professional during a period specified in the contract (the claims period ); and

                     (b)  the incidents period is not a period that has ended before the claims period begins; and

                     (c)  the claims period is fixed.

Note 1:       Subparagraph (a)(ii)—subsection 4(9) operates on the reference in this subparagraph to the claim being made during a period.

Note 2:       Pure ERB cover (which has a defined incidents period that ends before the claims period begins) does not qualify because of paragraph (b). DDR cover (which does not have a fixed claims period) does not qualify because of paragraph (c).

             (3)  To avoid doubt, the claims period for the contract is taken to be fixed even if the claims period is capable of being extended:

                     (a)  by agreement between the parties to the contract; or

                     (b)  by renewal of the contract.

             (4)  For the purposes of this Act, the cover provided for by a contract of insurance is incident-occurring based cover if:

                     (a)  under the contract, the insurer provides medical indemnity cover for a health care professional in relation to a compensation claim in relation to a health care incident only if the incident occurs during a period specified in the contract; and

                     (b)  under the contract, the insurer provides that medical indemnity cover:

                              (i)  regardless of when the compensation claim is made against the health care professional; and

                             (ii)  whether or not the health care professional has died, become permanently disabled or retired.

Note:          ERB cover (which has a fixed claims period) does not qualify because of subparagraph (b)(i) and DDR cover does not qualify because of subparagraph (b)(ii).

7   When certain DDR arrangements are taken to be entered into

             (1)  For the purposes of this Act, if:

                     (a)  under an arrangement, a person (the cover provider ) will or may provide medical indemnity cover of a particular kind for a health care professional; and

                     (b)  the cover provider will or may provide that cover only if:

                              (i)  a particular period has expired; and

                             (ii)  the health care professional dies, becomes permanently disabled or retires; and

                     (c)  the arrangement is not a contract of insurance;

the cover provider is taken to enter into the arrangement, to the extent to which it relates to that cover, at the earliest time at which:

                     (d)  there are no conditions that need to be satisfied for the cover to be provided for the health care professional; or

                     (e)  the only conditions that need to be satisfied for the cover to be provided for the health care professional are conditions that relate to:

                              (i)  payments being made to the cover provider for the cover; or

                             (ii)  the making of a claim against the cover provider under the arrangement.

             (2)  Without limiting subparagraph (1)(b)(i), the period referred to in that subparagraph may be specified as a minimum period during which the health care professional is a member of a particular body.



 

Division 3 Application of Act

8   Application of Act

             (1)  This Act does not apply to State insurance (whether or not extending beyond the limits of the State concerned).

             (2)  This Act does not apply to:

                     (a)  an arrangement under which medical indemnity cover is provided by:

                              (i)  the Commonwealth, a public authority of the Commonwealth or an instrumentality or agency of the Crown in right of the Commonwealth; or

                             (ii)  a State, a public authority of a State or an instrumentality or agency of the Crown in right of a State; or

                            (iii)  a Territory, a public authority of a Territory or an instrumentality or agency of the Crown in right of a Territory; or

                     (b)  an arrangement under which medical indemnity cover is provided by a person to a health care professional who is an employee of the person; or

                     (c)  an arrangement under which medical indemnity cover is provided by an employer in relation to health care provided to the employer’s employees:

                              (i)  by an employee of the employer; or

                             (ii)  under a contract between the employer and the person providing the care; or

                     (d)  an arrangement under which medical indemnity cover is provided by a body corporate prescribed by the regulations; or

                     (e)  an arrangement of a kind prescribed by the regulations.

9   Act extends to external Territories

                   This Act extends to every external Territory.