How best do we compensate for accidental medical injuries?

In his recently published book, The righteous mind, American psychologist Jonathan Haidt makes the observation that “morality is an emotional issue, not a rational one; and in a contest between what we think is reasonable and what we feel in our hearts, emotion always wins”.1

Therefore, recent proposals for national disability and injury insurance schemes seem an exciting prospect for many policymakers because most people are emotionally challenged by the suffering of people with disabilities, and see the potential of such schemes to improve these people’s lives and ease the burden on their carers.2

Recently, the Western Australian Government launched a new project embodying the key hallmarks of the planned National Disability Insurance Scheme (NDIS). The first of its kind in Australia, the My Way project is purported to “improve the choice, flexibility and control that people with a disability have over their supports and services”.3 New South Wales and Victoria have recently joined South Australia, Tasmania and the Australian Capital Territory in agreeing to fund and participate in trials of the national scheme from July 2013, although negotiations will continue as to whether the federal government or the states will provide the extra $10.5 billion a year required for the schemes when they become fully operational in 2018.4,5

In this issue of the Journal, Weisbrot and Breen argue that a no-fault compensation scheme for medical error is also long overdue.6 Their article continues a long tradition of argument, both within and outside the medical profession, seeking an alternative approach to medical accident compensation. One reason for this debate is that the existing tort system and alternative no-fault medical accident compensation schemes have different goals.

The tort system is intended to grant comprehensive compensation to patients who can prove that an adverse outcome arose through a breach of duty by either a practitioner or a health care organisation, and that this breach caused their injuries and disabilities — but such patients who make a claim are few. Conversely, the role of a no-fault scheme is to provide compensation and rehabilitation to the largest number of eligible patients and to reduce the conflict and distress for all involved. Therefore, the former gives weight to deterrence and corrective justice, while the latter seeks to improve communication and transparency within the health care system, and to minimise legal costs.

Certainly, while the existing tort system can lead to the practice of “defensive medicine”, it has been efficient at adjudicating and providing compensation for patients’ claims that have merit and rejecting those that do not.7 It also effectively focuses various specialties, their colleges and their liability insurers on specific risk-management strategies that might prevent avoidable injuries and reduce insurance premiums.

In contrast, creating a sound no-fault support scheme appears potentially more complicated. Concern exists that the overall cost of long-term care might rise under a no-fault liability system if the experiences of New Zealand and Sweden are a valid comparison.8 In Sweden alone, compensation payments for malpractice have doubled in the past decade, and in the past 5 years written complaints over treatment have increased by 80%, with 700 new complaints lodged in the first 3 months of 2011.9 This is illustrative of the potential additional costs that arise from the inherent increase in eligibility for benefits that occurs when fault is no longer a necessary criterion for compensation. Surprisingly, despite increased eligibility, the findings of a study in New Zealand showed that only 2.9% to 4.8% of patients who suffered an injury and were eligible for compensation under the national no-fault compensation program made a claim by mid 2004.10 However, in 2005, New Zealand broadened eligibility to include all personal injuries sustained while receiving treatment from health professionals, termed “treatment injury”, and this has since led to a much greater rate of use.11

In New Zealand, medical board investigations also increased in response to patients receiving compensation through the Accident Compensation Corporation.12 Given this experience, there remains the strong likelihood that, after many so-called accidents, culpability will still be apportioned based on investigations by the Australian Health Practitioner Regulation Agency or the Medical Board of Australia, leading to increasing costs for medical indemnity insurers and the usual anxiety for the practitioners involved. Additionally, the predicted savings in legal expenses under a no-fault scheme might not eventuate if patients are still entitled to sue for non-pecuniary damages, including pain and suffering and loss of future earning capacity.

As a consequence of these increasing costs, over time most schemes have imposed limitations on eligibility and benefits. Unless benefits are purely confined to catastrophic injuries (as proposed under the National Injury Insurance Scheme [NIIS]), the end result is that the compensation per patient eventually falls short of being commensurate with the injury suffered. Thus, switching to no-fault liability reallocates compensation from patients injured through negligence to claimants who have been injured despite perfectly sound medical care.

The public policy challenges of changing to no-fault liability cannot be overestimated. The proposed Australian NIIS for catastrophic accidental injury would include injuries arising from medical treatment, but formulating a definition of “medical accident” would be considerably complicated for policymakers. The present tort system could be improved through compulsory mediation in all states and territories.

Despite the efforts of the Productivity Commission in Australia,6 there is remaining uncertainty as to the ultimate cost of such an accidental injury compensation scheme, how this will work with existing state-based accident compensation schemes, and to what extent doctors will be required to fund the no-fault component of medical accident compensation (in addition to fault-based claims) through their medical indemnity insurance premiums.

Any new measures to support medical injury compensation will need to be carefully costed and planned and to provide at least the same benefits as the existing tort system or those of the proposed NDIS. Australian doctors, in accordance with our Hippocratic principles, will be very likely to support an improved system of care for people injured through medical treatment, provided that we can be reassured of greater justice and equity at reasonable cost to both the profession and the community.

Medical indemnity insurers equally look forward to continued dialogue with the federal government and the Productivity Commission, and hope to overcome current uncertainty and ensure that any expectation on the medical profession to contribute to the funding of the NIIS will not increase medical indemnity costs. Otherwise, Australians will pay more for medical treatment.

Ethics and law p 296