MOTOR VEHICLE ACCIDENTS (LIFETIME SUPPORT SCHEME) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 30 April 2013.)

The Hon. A. BRESSINGTON (19:48): I rise tonight to speak to the Motor Vehicle Accidents (Lifetime Support Scheme) Bill. The proposed no-fault system has certainly seen a barrage of comments from both those who support the change and those who are vehemently against the change.

Catastrophic injuries require significant funds to support the ongoing medical and remedial treatments a person requires in addition to the changes to a house or facility to support the needs of the person. Currently, our compulsory third-party system only provides for compensation for motor vehicle accidents which occur when the fault of at least one party can be proven. What is perhaps not clearly brought out in any of the CTP discussions is that catastrophically injured people who cannot prove fault do have support available to them. They are supported by public hospitals, disability services, the PBS scheme, Medicare, Centrelink and other agencies. That is not to say that there are not inadequacies in all those current systems. However, this shows that a somewhat one-sided approach has been taken towards the impetus for this change.

This bill aims to restructure the current zero to 60 point scale, and to remove compensation for certain injuries which fall below the threshold, and redistribute that money to those who are catastrophically injured. There are between 12 and 15 catastrophically injured people each year. Of those 12 to 15 people who are catastrophically injured, it is estimated that 40 per cent fall outside the current compulsory third-party fault scheme. That means between four and six people each year are not covered by this scheme, so effectively we are changing the whole system, disenfranchising anywhere between 4,000 and 6,000 people with legitimate claims, to supposedly provide care to around four to six people. Morry Bailes of Tindall Gask Bentley and of the Law Society stated:

Our state should be big enough to look after the needs of catastrophic claimants separately without robbing the rights of other injured people. The government is effectively proposing to create another WorkCover, which is now a $1 billion liability and nothing less than a disaster.

In a joint statement by the Law Society and the Australian Lawyers Alliance, the government was accused of trying to 'cripple the South Australian economy with a system similar to WorkCover'.

When I first saw this bill, my first words were, 'This drips of WorkCover.' I have to say that the debate we had in this place in 2008 broke my heart—to think that a government and an opposition could be so heartless as to impose such penalties on the sick and vulnerable people of this state. Here we are again, with the bill before us that has the fingerprints of WorkCover all over it. It is another example, I sadly have to say, of this government making a choice between a corporation and the wellbeing of the citizens of this state. As with WorkCover, the corporation wins.

Whilst there is most certainly merit in looking after those who are unfortunate enough to find themselves in serious and debilitating motor vehicle accidents, it would seem that the proposed system is robbing up to 75 per cent of claimants to help approximately six injured people a year. I am aware that the government has taken advice on several issues and reduced the compensation threshold for one head of damage. However, their changes have not gone far enough to ensure that the proposed system is fair, just and equitable.

In a joint media release of 30 November 2012, the Law Society and the Australian Lawyers Alliance stated that the shake-up of the state's compulsory third-party scheme is completely unjustified and that there is absolutely no reason to attack a sustainable scheme and slash compensation for thousands of road accident victims. The release went on to say that there was an overall drop in compulsory third-party claims in the 2011-12 period. Plaintiff lawyers' costs increased by 0.2 per cent and defendant lawyers' costs increased by 0.5 per cent.

This point is further emphasised when one considers that the Motor Accident Commission chose to run several large matters to trial rather than to settle out of court, therefore inflating the recorded legal costs for the respective years. This is contrary to the government's statement that there has been a 50 per cent increase in legal fees in recent years, which has of course formed part of the rationale in overhauling the system.

The member for Bragg made the points about the success of the Motor Accident Commission's performance in her speech in the other place. She pointed out that:

...this is an entity which appears to be run very well. It is one which, you would have to say in reading its annual report, you would struggle to see why the government announced that there would be a review of the Motor Accident Commission and the CTP fund operation in this state at all, because certainly on its own records—for example, in its 2010 report, it had an annual profit of $238.5 million with net assets of $165.4 million. By 2011, it was $131 million, with net assets of $238.5 million. In 2012, the net assets were up to $397 million.

The claims were continuing, they were being processed. The net asset of this entity continued to accumulate, it was continuing to make a profit even in what we see as the instability of the global investment market which seems to have challenged just about every other government or semi-government entity in the state, let alone the private investors, and yet this is an entity that has continued to do very well and financially has ensured that that remains stable.

What is extraordinary is that I noticed that in the 2010 report, under section 5 of the Motor Accident Commission Act, a direction, dated 19 May 2010, was given to the board by its minister (the Treasurer) directing an increase of CTP premiums for premium class 1 be set at $476 per annum from 1 July 2010 and premiums for all other classes of motor vehicles to be set by applying the class relativities used in the calculation of the 2009-10 in force premium relativities. The 2011 report reports another increase and in the 2012 report I was stunned to read, and I quote:

'However, the rising medical, care and legal costs to the CTP scheme are a major concern, somewhat neutralising the benefit of the reduction in road casualties. These rising claim costs together with unstable investment markets necessitated a further increase of 4.7% to the Class 1 CTP premium, effective from 1 July 2012.'

So, in an environment in which the MAC are reporting to the parliament that they are having an increasing capital base and they are retaining their role, of course, in the significant claims, they have still seen fit to significantly increase the CTP premiums, of course under ministerial direction.

There are plenty of people in the legal profession saying that this is nothing more than a cash grab, that the South Australian government wants to be able to access the money that MAC has, as other states do and as they had done in the past. It is very clear that the rationale for this change is flawed in places and faulty in others, that what we have been told about this reform is not correct.

There has been some suggestion that there is a high rate of fraud by claimants within the compensation system and that the system is set up to reward those who remain within the system for a longer period of time. As par for the course, medical experts need to assess the party, determine the total either permanent impairment or residual disability, and report on that accordingly. Once a medical expert has said that the injuries have stabilised, negotiations are entered into and compensation is based on the medical evidence.

It is therefore very difficult, if not impossible, for a claimant to remain in the system without being caught. Even if they do, the compensation will be determined by medical evidence and not the length of time that the person remains in the system—which is as it should be. Similarly, most claimants find the system traumatic and desperately want to get out quickly. For those reasons I do not regard that changing the system is necessary to prevent people from unnecessarily staying in the system too long or with a view to defraud.

This same excuse was used to justify WorkCover reform in 2008 when, in actual fact, the truth was that numbers showed that scammers of the system totalled less than 1 per cent of claims. So, as I said, we are seeing a restamp of WorkCover under the guise of compulsory third-party reform.

As the Hon. Mr Lucas mentioned yesterday, there is significant concern about the regulations and the ISV scale which is currently being considered by the legal profession. I am advised that the medical profession has also been consulted. The feedback that I have received about this scale, that the scale is even more severe than the initial ISV scale, is extremely disturbing.

Sadly, although not too surprisingly, the final table has yet to be presented to parliament. We are therefore basing our debate on a draft version of the injury scale value table (the ISV) which is more than likely to be irrelevant to this entire debate. We simply cannot, in good conscience, base our decision to uproot a system which is working very well based solely on the word of the Labor Party, without clear and quantifiable information, which includes the ISV table as it is intended to be placed in the regulations. It is disheartening although, again, not surprising, that the table is not available now for this place to scrutinise.

Again we are being asked to pass legislation which affects up to 75 per cent of people involved in motor vehicle accidents annually when we cannot accurately gauge its impact because the most important piece of information is missing. For example, what good would the government's cuts be to the threshold for economic loss if the ISV scale was significantly altered? It is not impossible to imagine a situation where what currently looks like an 11 on the draft ISV turns out to be an eight on the final ISV and is therefore not compensable.

We have seen in this place tonight the Hon. Rob Lucas move a motion to disallow regulations to the Work Health and Safety Act. I remember, again last year, that debate and, on talkback radio, the minister saying that Mr Lucas, Mr Brokenshire and I were doing nothing but fearmongering about the effects that that piece of legislation was going to have on the housing industry.

Once again, we see the tactics of a Labor government. The ministers, who are no better in my mind than cheap vacuum cleaner salesmen, come in here and push the benefits of the machine they want. They leave out the cost, ignore the cost, deny the cost, and then, 12 or 18 months later, we are back in this place having the same debate over and over again because they refuse to see that they have been flawed in their drafting of the legislation and in not asking the questions needed of their bureaucracy when they dive into these issues.

I would like to place a question on notice and ask the government to confirm when the expected release date of the ISV scale is and why this bill is even being debated without that information being available to us. How can we make an informed decision about this legislation when that is the key to it?

The ISV scale, whilst it builds in some discretion by having a lower and upper value, is too prescriptive and does not allow for discretion to be used in circumstances that are appropriate. For example, a chef who loses their taste, smell or both would be awarded an ISV of six at the lower end or nine at the upper end. Naturally, a chef would be awarded a higher ISV than the average person who cooks at home for fun or for the family but does not have the added commercial or economic factors involved, which a chef would.

For the chef, who has worked hard to develop his or her craft and reputation and has an upwardly mobile career with a view to working in a top restaurant or owning their own restaurant, the highest award available to them would be a nine on the ISV scale. Currently, the chef with a bright future would be awarded damages for future economic loss and a loss of chance. However, under this bill, the chef would only just reach the threshold for future economic loss, and therefore the injury would be minimally compensated despite having a high probability of having lost their livelihood altogether due to the injury.

The Hon. K.L. Vincent: Shame.

The Hon. A. BRESSINGTON: Absolute shame; I agree with the Hon. Kelly Vincent. Another question which has been repeatedly raised but, to my knowledge, has not been answered relates to the ISV score: when multiple injuries occur, is an accumulative score acceptable, or is the score of the most severe injury taken to be the total injury score?

It is the suspicion of some in the legal profession that the cumulative score will not be allowed, which means that a person will be assessed on one injury rather than a multitude of injuries they may have incurred from the accident that could be equally disabling. For example, if someone has to suffer five disc prolapses which have a range of 5 to 15 on the ISV, significant psychological trauma, injury to cervical and thoracic spine which results in four years of painful recovery, rest, physiotherapy and other treatments, would their injuries be cumulative, or is it the ISV determined by the highest-rated injury?

There is significant concern within the legal profession that the latter is true. If that is intended to be the case, then we have an unfair and unjust proposed system before us. Additionally, it is also very unclear whether psychological problems are going to be considered whole-person injury and therefore be compensable.

Psychological injuries are extremely common in motor vehicle accidents. Often people suffer from post-traumatic shock disorder, adjustment disorder, flashbacks, intrusive thoughts of the accident, insomnia, fear of driving, agoraphobia, hypervigilance, depression, anxiety, nightmares and mood swings, just to name a few, and we have not even touched on acquired brain injury yet.

This psychological injury affects the quality of life a person experiences personally, affects their family, and affects their social capacity, often limiting people to staying in their own home. This can have a dramatic and debilitating effect on the injured person as well as their family. Currently, during a claim, a person will be sent to see several independent specialists for an opinion and medico-legal report on their injuries and treatment options.

The medico-legal report is used to assist both the lawyer and the insurer in better understanding the extent of an injury and the impact, if any, to an individual in the work or home environment, and creates a basis for calculating the claim. Ultimately, when providing an expert report, the independent expert has an overriding duty to assist the court on matters relevant to the expert's area of expertise.

As one would expect, the report given by the insurer's independent specialist is significantly in favour of the insurer. One may well argue that the reverse is also true—again, a familiar and disturbing theme that we see time and time again to do with the WorkCover system.

This bill proposes to do away with the current system and replace it with a medical accreditation scheme—again, WorkCover—or, as I understand it, a list of approved medical practitioners. When an assessment is needed, the person will be assigned a practitioner and sent off for an examination. It is intended to operate like a taxicab rank system; that is, when an independent assessment is required, the next practitioner on the list will be assigned the patient. Where a patient disputes the report of a doctor, they can request another assessment be done by a different practitioner.

I hold grave concerns that only those doctors who have a history of writing favourable reports for the insurers will be recruited to write medico-legal reports; that is, only those doctors who frequently understand the extent of the patient's injuries and the long-term affects of those injuries will have will be the ones engaged to examine future patients.

That, of course, raises the issue of medical independence as a doctor would be engaged by the very insurance company who is a party to the dispute. Whilst under the current system, the insurer does typically pay for independent reports. There is a higher rate of independence and autonomy as the doctor typically liaises with the solicitor, and it is their solicitor who arranges with Allianz to have the doctor's fees reimbursed. The substance of the report is, therefore, not directly linked to reimbursement of fees. However, independence cannot be guaranteed for those doctors who are placed on the taxicab rank-style list and want to remain there. My concern is, therefore, that you may never get a clear, accurate picture of the type of injuries received, which will ultimately affect the amount of compensation allocated to them.

In 2010, I asked a question about the fly-in fly-out WorkCover doctor, Dr Doron Samuell, as I had been informed that he used standover tactics, intimidation, field consultations without permission, and that he was otherwise behaving in a threatening matter towards injured workers. It would seem that by creating a medical accreditation scheme, we are opening up the way to multiply doctors who behave like Dr Samuell and are notoriously biased toward the insurer when it comes to writing their reports. Since I asked that question, I might add, I have had a number of other complaints about this same doctor, and one from a medical practitioner, who is also one of those taxicab rank-type professionals, who said that Dr Doron Samuell should be investigated for professional misconduct.

The bill further allows for the maximum number of examinations or assets that may be in a particular case to be determined by regulation. Given that each case is significantly different, any limitation on examinations or assessments would be arbitrary and not best suited to the needs of the injured people who must be assessed on a case-by-case basis. It is about time this Labor government learned that one size just simply does not fit all. The instigation of medical panels has raised some community concern, and it has been stated that the medical panels do not have the confidence of the legal profession or the public.

WorkCover panels have been discredited, and many insured parties have reported compounding issues of insecurity, fear of the system, depression, suicide and being treated with contempt at the hands of a medical panel. It is altogether probable that these medical panels would work in a similar vein to the WorkCover panels, and would further traumatise already vulnerable people. This bill makes it increasingly difficult for an injured person to hire a legal practitioner. As has been previously noted, there has not been a significant cost in legal representation in the 2011-12 period. However, part of the impetus of this bill is to cut down on legal costs.

Allianz, the current insurer, has made it its policy only to award legal costs at the Magistrates Court scale for almost one year. As juvenile cases by law require the opinion of counsel, attendance and other legal costs inevitably increase. As a result, many small practices are simply refusing to act for juveniles as they cannot recover enough money for their legal costs without consuming most of the end payout the client receives. Whilst there is provision for a magistrate to award above the scale, there is no guarantee that this direction will be exercised in juvenile cases, or that any award will be sufficient to compensate for the additional work. This potentially could develop into an access to justice issue for juveniles as legal practitioners will not want to represent them.

Effectively this bill creates a system that makes it non-financially viable to engage lawyers. Whilst that may be idyllic in many ways, or some may think so, I have no doubt that lawyers are necessary to act as a buffer between the injured party and the case manager, as the case manager is focused on minimising the claim and not acting in the best interests of the injured person. I have heard reports of case managers being rude, antagonistic and unprofessional toward clients. This is not too far fetched as we have heard in the case of Dr Doron Samuell.

By excluding legal practitioners it means that the injured person may well lose their only advocate. My concern is that many people will opt out of the system because it becomes too hard or too traumatic for them, which means that they are not afforded justice, or the care, support or services that they so desperately need and deserve. In hindsight of the WorkCover debate in 2008, the cynic in me thinks that this is, perhaps, the desired outcome.

It is unreasonable to expect victims to know about the intricate details of complex insurance policies. Most claimants have never lodged a compulsory third-party claim before and consequently are completely unaware of the system and how it works; whereas Allianz claims managers have some legal training and work with motor vehicle accident matters on a daily basis and are thereby aware of their obligations. The normal legally unsophisticated layperson, so to speak, would be unaware of their legal rights or obligations under the law.

The proposed limitation in relation to legal fees will put the victims at a significantly unfair disadvantage when it comes to negotiating a proper settlement for their injuries. Victims may be more inclined to accept the first settlement offer by Allianz, even if it is inadequate, rather than seeking independent legal advice about the appropriateness of the offer. Again, it reeks of WorkCover.

Where necessary, an occupational therapist will be engaged to assess the workplace and/or residence of the injured person to determine what aids, appliances and/or services they require. In the making of a report, the occupational therapist would recommend certain aids and appliances, and home care such as cleaning, ironing, food preparation, mowing lawns, etc., to assist the person to function better in the home or workplace in light of their injuries.

Currently, the report would be sent to the solicitor, who would then liaise and sometimes pressure Allianz to provide these recommended aids. That said, not all aids would be provided; sometimes only one or two of the recommended aids would be funded and therefore implemented. Under the proposed system, it is hoped that people will no longer engage legal practitioners but will liaise with the claims consultant managers assigned to their matter by the insurer.

This poses particular concern in light of having appliances and aids funded. As noted, it can be difficult for a legal practitioner to argue and secure funding for aids and appliances for a client; however, we have a system that is geared to remove the legal practitioner from the picture, and it remains to be seen whether or not the system will provide the much needed assistance.

I have been in contact with a woman from Victoria who has had endless difficulty in securing recommended aids—and I understand that Victoria is part of the model we are using here in South Australia. She was assessed as requiring a specialised bed, a gopher, a therapeutic chair and a walking frame to be provided to assist her, as she is now permanently disabled. She requires 24-hour assistance and cannot walk unassisted or even shower unassisted. She is in severe pain, and the anguish caused by her insurer is indescribable. Six months on, in breach of the assessment requirements, the insurer still has not provided her with the equipment she needs.

Under this similar system, she was awarded $327 in compensation. She can no longer work, she can no longer earn a living and, because of the assessment done through their compulsory third-party scheme, it is questionable now whether she is even eligible for a disability pension. Essentially, removing the legal practitioner and having direct contact between the insurer and the injured party sounds noble in principle, but when you have an emotionally fragile person who is in pain from their injuries, and suffering a psychological injury to boot, the last thing they want to be doing is arguing with a highly informed, trained, corporate entity whose job it is to ensure that the lowest amount of money possible is paid out.

Even if the system worked well, a conflict of interest would always remain and the insurer will want to spend as little money as possible, and those claims managers who are working to assist the injured are paid by the insurer to keep their costs down. The bill provides for reasonable and necessary needs to be met, though in my opinion you could argue that many reasonable and/or necessary needs are currently not being met. On that premise, why would it be any easier for an injured person to have these needs met when they do not have the legal representation they need? This simply does not add up for the injured person.

Another area that has received significant complaint is that of the reduction in past economic loss, future economic loss, non-economic loss, loss of gratuitous services, home help, future medical and loss of consortium. A whole person impairment threshold has been introduced. A whole person impairment threshold is unable to consider the intricacies of MVA injuries, as it takes no account of pain and suffering, continuing disability or loss of enjoyment of life due to injury. It cannot calculate the actual impact of an injury and the effects it has on someone's capacity to engage in their chosen field, sport or hobby.

The thresholds for these heads of damage are extremely high. For example, under non-economic loss—also known as pain and suffering—a serious whiplash injury causing pain and discomfort and possibly requiring years of rehabilitation may only be six points on the scale and therefore noncompensable. If the injury occurred in 2012, the compensation for pain and suffering would be around $9,030. Effectively, someone who may suffer pain for the rest of their lives may not receive any compensation for this at all. They will receive the basic medical and a portion of their past economic loss but no compensation for their current, and potentially ongoing, pain.

Similarly, home help and future care have the 10 per cent whole person impairment threshold which means that many people will be required to pay out-of-pocket for the services they require at home without recompense. Only very significant accidents require services for six hours per week for a period of six months and, even then, in most instances a representative of the insurance company is trying to negotiate a lower assistance rate. The Australian Lawyers Alliance stated that if future care and home help is not available for 10 per cent of the whole of person impairment or less, then this has no regard for the clear effects of injuries.

There are many examples of activities people would not be able to carry out in an unrestricted fashion—for example, driving a car, house painting, shopping, yard maintenance and gardening—with injuries of less than 10 per cent of the whole of person impairment. Whilst there are some improvements in the bill, there are clearly many areas that are of great concern to those who are intimately aware of our current compulsory third-party scheme. Regardless of the need or desire to save money, we cannot forget that these changes affect people's lives very significantly. We have already had a WorkCover debacle. Let us not further traumatise the people of this state by replicating the system that does not work.

Just in closing, I want to read onto the record a letter that I received today from the Managing Director of Johnston Withers, Mr Anthony Kerin:

I refer to previous communications. I understand the Bill may be before the Upper House this week.

Last week I have observed an amended ISV Chart which to my mind makes it even more difficult for those injured and particularly those suffering soft tissue injuries to the neck in rear end collisions to recover damages. This should be considered before you vote on the Bill.

It is the clear intention of the legislation to disenfranchise those who suffer those injuries.

The government has also changed the wording in some of the items which will make it very difficult for people to recover damages and even if they do they will be so minimal it will not be worth the effort.

The Economic and Finance Committee, as I understand it, is yet to meet which is a great pity. All of these issues could have been explored. One has to ask why have we introduced an Injury Severity Value Scale which will be far more draconian than that that exists in Queensland upon which it is based. Queensland has no thresholds. Queensland allows where there are a number of injuries to recover greater than the highest valued injury which exists in this scale, none of which exists in this Scheme.

That is, the scheme we are debating.

It makes the narrative test more significant and imperative that it exists within it.

It would be useful if an upper house parliamentary committee could examine the legislation and consider why we are taking away the rights of thousands of claimants a year.

A number in the community would see the hundred dollar cost of living pressures saving to be little more than thirty pieces of silver for the rights that are being exchanged for that benefit. A number of organisations and individuals in the media have already accepted their share of that thirty pieces of silver. It remains to be seen what the rest of the South Australian community now does.

I urge you to consider this legislation in far more detail than has occurred to date.

Kindest regards,

Johnston Withers.

I always seek legal opinion in bills as important as this, and I do not do it just for the sake of saying that I have done it. I do it because these are the experts who know whether or not something will work in the best interests of our citizens. In doing that, I therefore move:

Leave out all words after 'That' and insert:

the bill be withdrawn and referred to the Legislative Review Committee for its report and recommendations.

We will vote here tonight on whether we can continue this debate, because I understand that the Liberal Party has not had an opportunity to take this particular motion to its party room, and I know that other Independents and crossbenchers would probably like time to consider it. I urge every member in this place—

Members interjecting:

The Hon. A. BRESSINGTON: No, but we will seek leave to adjourn. I urge all members here to consider the facts that have been put on the record tonight and yesterday by the Hon. Kelly Vincent, and I commend her for the speech she gave yesterday. We have to put more time and thought into this than we did with the WorkCover legislation. With that, I commend the bill and my motion to the house.

Debate adjourned on motion of Hon. J.A. Darley.

At 20:29 the council adjourned until Thursday 2 May 2013 at 14:15.