The Professional Indemnity Review: what did it accomplish?

Charlotta Blomberg
Med J Aust 1998; 164 (8): 502-504.
Published online: 15 April 1996

The Professional Indemnity Review: what did it accomplish?

Charlotta Blomberg

In a previous article,* Richard Tjiong criticised the Professional Indemnity Review's specific recommendations for reform of professional indemnity insurance. But the Review covered many other issues, particularly to do with identifying, evaluating and reducing adverse outcomes of medical procedures. Charlotta Blomberg highlights some of the key findings (and failings) of the Review's Final Report.

MJA 1996; 164: 502

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Introduction - New research into health outcomes - Preventing adverse outcomes - Litigation crisis? - Compensation schemes - Drawing together medicine and law - In conclusion ... - References - Authors' details

- - ©MJA1997



The Review of Professional Indemnity Arrangements for Health Care Professionals (chaired by Fiona Tito) was established against a background of increasing litigation, or fear of litigation, among health care professionals (see Box). Its purpose was to report to the then Minister for Health, Housing and Community Services on:
  • the arrangements for patients injured through health care negligence or misadventure;
  • the means of funding these arrangements;
  • any problems with these arrangements; and
  • proposed solutions and recommendations on the feasibility, appropriateness and estimated costs and benefits of these proposals.11

The last duty remains largely unfulfilled in the Final Report. Despite 168 detailed recommendations for changes of varying degrees, there is little discussion of feasibility, appropriateness or, more importantly, estimated costs and benefits.  

New research into health outcomes

The Review embarked upon a 41/2-year investigation of the health care system and produced 19 publications (listed in Appendix C of the Report) in addition to the Final Report. The Review looked at the incidence and nature of health care injuries, compensation and structured settlements for personal injuries, facilities for the disabled, professional indemnity arrangements, "defensive" medicine and informed consent, birthing issues and information guidelines for patients and providers.

At the start of the Review there was no information on the nature and extent of adverse outcomes, no readily available information on the number and types of health-related compensation claims and little publicly available information on the business operations of the medical defence organisations. The Report argues that lack of information on the issues under review required several individual studies to obtain the information required for decision making. Therefore, a major part of the Review was information gathering.

It commissioned the Quality in Australian Health Care Study, which investigated the nature and extent of injuries suffered by patients in Australian hospitals. The preliminary results of this study were released in June 1995 and provoked considerable media attention. After peer review, the results were recently published in the MJA.12 With this study and others, the Review produced the first detailed analysis of the system of compensation for personal injury resulting from health care in Australia.

The Final Report attempts to tie this considerable research work together with far-reaching recommendations which, if implemented in full, would radically alter the delivery and funding of health care in Australia.  

Preventing adverse outcomes

The Quality in Australian Health Care Study defined an adverse event as "an unintended injury to a patient which resulted in a temporary or permanent disability, prolonged length of stay or death, and which was caused by health care management not by the patient's underlying disease".11 Under this broad definition the study found that hospital-based care produced over 400 000 adverse outcomes, with an estimated 230 000 of these being preventable. As a result, a considerable part of the Final Report concentrates on proposals aimed at preventing adverse outcomes.

The solutions proposed involve the development of clinical practice guidelines based on evidence gained through the Cochrane Collaboration (which focuses on evidence derived from randomised controlled trials, conducted around the world and collectively analysed at the Cochrane Centre, Oxford University, UK). Medical services will be assessed on their efficacy and cost effectiveness. The Review recommends review of current services under the Medicare Benefits Schedule to establish their efficaciousness and cost-effectiveness. Commonwealth funding for those that fail these tests should cease (see Report recommendations 16, 19, 23, 28, 29 and 33).11

The emphasis on the development of clinical practice guidelines appears to stem from one of the findings of the Quality in Australian Health Care Study that system errors account for 16% of all adverse outcomes, with 53% of these due to the absence of or failure to use a policy, protocol or plan.12 However, the Study also concluded that "half of all AEs [adverse events] are deemed to have low or no preventability" and that this should be remembered "to avoid an inappropriate presumption of culpability when things go wrong".12

The Review does not address the difficulties associated with implementing a guidelines-based system of health care. The cost or cost-effectiveness of implementing these recommendations is not discussed, and no mention is made of what is involved (such as time and resources) in evidence-based reviews. There appears to be an underlying assumption that, if evidence-based guidelines are developed and followed, adverse outcomes will, in the main, be prevented. This "cookbook" approach to medicine has been criticised elsewhere.13 Without further debate of the issues, the Final Report fails to convince that strict adherence to evidence-based practice guidelines will achieve perfect outcomes.  

Litigation crisis?

In the Final Report, the issues of professional indemnity, negligence actions and adverse outcomes were described as surrounded by myths and assertions supported by little hard data. Much of the information relating to the "litigation crisis" was anecdotal: "evidence for a so-called claims crisis is scant", said the Report, concluding that a crisis mentality has been fostered by some medical defence organisations to deflect attention from their own "irresponsible financial management".11 Although an increase in the rate of incident reporting was noted, the Final Report held that this did not appear to be reflected in an increase in claims filed in courts. It did acknowledge that there is often a considerable time lag between the reporting of an incident and the filing of a claim in court, which may imply recognition that the crisis may yet eventuate.

The Review has rightly identified a lack of readily available information on common law negligence cases. A database of common law personal injury cases would be a valuable tool for monitoring the nature and frequency of legal claims, patterns of claims, the frequency of settlement and the amounts of awards and settlements. Such a project would require Commonwealth-State cooperation, as common law matters fall outside the Commonwealth's jurisdiction.

The Report cites the register currently operating in South Australia and the National Practitioner Data Bank in the United States as models, but does not estimate the amount or nominate the source for funding of such a project. It does recommend that such a register would provide "a positive quality link between the tort system and the [practitioner] registration system" (Report, pages 154-155).11 This proposal must be studied further. It could mean registration would be subject to the frequency or value of claims incurred each year. It could mean a type of peer review that may establish that common law negligence is not to be equated with medical negligence. Unfortunately, the Report is not clear on what is meant.  

Compensation schemes

In relation to compensation for those who have suffered personal injury as a result of health care, the Review recommended against the introduction of a "no-fault" scheme of compensation. Such a scheme would remove the need to prove negligence (fault) to receive compensation; proof of injury would suffice. It was rejected on grounds of inequity. The public interest is served by those who cause injury paying compensation. A no-fault scheme would mean that the full burden of assistance for injured persons would fall on the community as a whole through increased taxes and an overall reduction in resources available to those suffering injury as a result of health care.11 While recognising that there is inequity between the allocation of resources for those with compensable injuries and those with non-compensable injuries, the Report suggests that the overall public interest would be better served by the retention of the current system.

The Review did investigate means of compensation other than the current lump sum awards. In many cases these, although seemingly generous, have proved to be inadequate when taken over the lifetime of a severely disabled person. Structured or serial payments in the place of lump-sum awards were offered as a solution. This is an alternative worthy of further consideration as it may provide security of assistance for those with severe permanent disabilities and solve the problem of awards being dissipated, eventually leaving the injured party relying on the public system.  

Drawing together medicine and law

The Review has made useful recommendations in relation to the medicolegal system. Incorporating the study of legal issues into the training for health care professionals (Report recommendation 8), introducing a system of peer support for health professionals involved in negligence litigation (recommendation 89) and accrediting specialist health negligence lawyers (recommendation 94) are all worthy of further investigation.

Greater positive and cooperative interaction between law and medicine is a desirable goal. Both professions would benefit from greater understanding and appreciation of each other's workings. Often people injured during medical procedures say that their main reason for pursuing legal actions is to find out what went wrong.14 This suggests that many potential actions may be prevented through appropriate advice at an early stage. A key factor in this process is access to expert opinions.

The Review recommends a college-based system of encouraging high quality health professionals to provide expert opinions in medicolegal cases (Report recommendation 98). This type of system, along with appropriate legal training for medical experts, has been under review by the Australian Medical Association since last year. The existence of a pool of peer-recognised medicolegal experts available to give advice to plaintiffs, defendants and even the court itself may well have a positive effect on reducing litigation and delays inherent in the current system. Judges are keenly aware of the delays and costs attaching to civil actions and actively consider means to speed up their progress. The public interest is not served by lengthy delays and costly litigation.  

In conclusion . . . it's inconclusive

The Final Report of the Review has not lived up to its high expectations. It has identified and investigated issues and proposed recommendations which raise more questions than they answer. There is little real assessment of the financial effect of the recommendations or the impact on current medical practice. The focus is on providing information for more effective decision-making. The legacy of the Review will be even more extensive consultations and reviews to develop practical solutions to the problems it has identified.  


  1. Tjiong R. The American litigation crisis is already here. Australian Medicine, 5 June 1995: 4.
  2. Bailie RS, Douglas RM. The future role and operation of Australian general practice survey results. Canberra: National Centre for Epidemiology and Population Health, 1995.
  3. Komesaroff PA, Keaney MA, Niselle P, Dunn IM. Is there a medical litigation crisis? MJA 1996; 164: 178-182.
  4. Keaney MA. Is litigation increasing? MJA 1996; 164: 178-179.
  5. Rogers v Whitaker (1992) 175 CLR 479.
  6. Lowns v Woods, by his next friend the Protective Commissioner & Ors Court of Appeal (NSW), unreported, 5 February 1996.
  7. O'Shea v Sullivan & Macquarie Pathology Services Pty Ltd (1994) Aust Tort Reports 81-273.
  8. Talbot & Anor v Lusby (1995) unreported, Supreme Court of Queensland, 14 July 1995.
  9. Litigation fears increase health bill. Australian Doctor, 1 September 1995: 48.
  10. Breen v Williams (1994) 35 NSWLR 522.
  11. Review of Professional Indemnity Arrangements for Health Care Professionals [Tito F, chairman]. Final Report. Compensation and professional indemnity in health care. Canberra: Commonwealth Department of Human Services and Health, 1995.
  12. Wilson RM, Runciman WB, Gibberd RW, et al. The Quality in Australian Health Care Study. MJA 1995; 163: 458-471.
  13. Arnold P. The Tito Report -- medical practice re-invented. Australian Medicine, 19 February 1996: 6.
  14. Vincent C, Young M, Phillips A, et al. Why do people sue doctors? A study of patients and relatives taking legal action. Lancet 1994; 343: 1609-1613.

* See: Tjiong RTT. The Professional Indemnity Review. A lost opportunity for reform. MJA 1996; 164: 371-374.


Authors' details

Australian Medical Association, Canberra, ACT.
Charlotta Blomberg, BA(Hons), LLB, Legal Advisor.

Reprints: Ms Charlotta Blomberg, AMA, 42 Macquarie Street, Barton, ACT 2600.

©MJA 1997

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  • Charlotta Blomberg



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