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This Act may be cited as the Medical Indemnity Act 2002.
This Act commences, or is taken to have commenced, on 1 January 2003.
Availability of medical services
An object of this Act is to contribute towards the availability of medical services in Australia by providing Commonwealth assistance to support access by medical practitioners to arrangements that indemnify them for claims arising in relation to their practice of their medical professions.
The Commonwealth provides that assistance under this Act by:
meeting part of the costs of large settlements or awards paid by organisations that indemnify medical practitioners (but only for claims notified on or after 1 January 2003); and
meeting the amounts by which settlements and awards exceed insurance contract limits, if those contract limits meet the Commonwealth’s threshold requirements; and
meeting the amounts payable in relation to certain claims (notified on or after 1 July 2004) against medical practitioners who are no longer in private medical practice; and
providing for a subsidy scheme to help certain medical practitioners meet the cost of their indemnity arrangements; and
meeting the cost associated with certain IBNR liabilities of organisations that indemnify medical practitioners to the extent to which those organisations had not made adequate provision for those liabilities as at 30 June 2002.
The acronym “IBNR” is used in this Act for “incurred but not reported”.
The Commonwealth provides further assistance in relation to members and former members of UMP under a Medical Indemnity Agreement referred to in the Medical Indemnity Agreement (Financial Assistance—Binding Commonwealth Obligations) Act 2002.
This Act also supports access by medical practitioners to arrangements that indemnify them for claims arising in relation to their practice of their medical professions by limiting when medical indemnity insurers can refuse to provide medical indemnity cover.
Another object of this Act (together with the medical indemnity payment legislation) is to allow the Commonwealth to recover the costs of providing the assistance referred to in paragraph (2)(ab) by requiring payments from medical indemnity insurers.
Availability of other health services
Another object of this Act is to contribute towards the availability of certain health services in Australia by providing Commonwealth assistance to support access by persons who practise allied health professions to arrangements that indemnify them for claims arising in relation to their practices.
The Commonwealth provides that assistance under this Act by:
meeting part of the costs of large settlements or awards paid by organisations that indemnify persons who practise allied health professions; and
meeting the amounts by which settlements and awards exceed insurance contract limits, if those contract limits meet the Commonwealth’s threshold requirements.
General
In this Act, unless the contrary intention appears:
Actuary means the Australian Government Actuary.
administrative action has the meaning given by subsection 76A(4).
AFCA has the same meaning as in the Corporations Act 2001.
affected medical practitioner has the meaning given by section 34ZQ.
allied health exceptional claims indemnity means an allied health exceptional claims indemnity paid or payable under Division 2D of Part 2.
Amounts payable under regulations made for the purposes of section 34ZZZD (allied health exceptional claims payments) are not covered by this definition.
allied health high cost claim indemnity means an allied health high cost claim indemnity paid or payable under Division 2C of Part 2.
Amounts payable under regulations made for the purposes of section 34ZZG (allied health high cost claims payments) are not covered by this definition.
allied health high cost claim threshold has the meaning given by section 34ZZA.
allied health profession means a profession that is:
a health profession within the meaning of the Health Practitioner Regulation National Law, other than the medical profession; or
specified in the rules.
allied health termination date means the date, if any, set by rules under section 34ZZM.
Chapter 5 body corporate means:
a body corporate that is a Chapter 5 body corporate within the meaning of the Corporations Act 2001; or
a body corporate to which a provisional liquidator has been appointed.
Chief Executive Medicare has the same meaning as in the Human Services (Medicare) Act 1973.
claim:
means a claim or demand of any kind (whether or not involving legal proceedings); and
includes proceedings of any kind including:
proceedings before an administrative tribunal or of an administrative nature; and
disciplinary proceedings (including disciplinary proceedings conducted by or on behalf of a professional body); and
an inquiry or investigation;
and claim against a person includes an inquiry into, or an investigation of, the person’s conduct.
Subsection (1A) extends the meaning of claim for the purposes of Division 2B of Part 2 (run‑off cover indemnity scheme).
conducted appropriately: a defence of a claim against a person is conducted appropriately if, and only if:
to the extent it is conducted on the person’s behalf by an insurer, or by a legal practitioner engaged by an insurer—the defence is conducted to a standard that is consistent with the insurer’s usual standard for the conduct of the defence of claims; and
to the extent it is conducted by the person, or by a legal practitioner engaged by the person—the defence is conducted prudently.
contribution year has the same meaning as in the Medical Indemnity (Run‑off Cover Support Payment) Act 2004.
defence, of a claim against a person, includes any settlement negotiations on behalf of the person.
eligible insurer has the meaning given in section 34ZZ.
eligible MDO has the meaning given in section 34ZZ.
eligible midwife has the same meaning as in the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010.
eligible related claims: see section 8A.
eligible run‑off claim has the meaning given by section 34ZB.
exceptional claims indemnity means an exceptional claims indemnity paid or payable under Division 2A of Part 2.
Amounts payable under regulations made for the purposes of section 34X (exceptional claims payments) are not covered by this definition.
exceptional claims termination date means the date, if any, set by rules under section 34G.
Federal Register of Legislation means the Federal Register of Legislation established under the Legislation Act 2003.
health care related vocation means a health care related vocation in relation to which there is at least one State or Territory under the law of which a person must be registered in order to practise.
Health Practitioner Regulation National Law means the Health Practitioner Regulation National Law set out in the Schedule to the Health Practitioner Regulation National Law Act 2009 (Qld).
health service means any service, care, treatment, advice or goods provided in respect of the physical or mental health of a person.
high cost claim indemnity means a high cost claim indemnity paid or payable under Division 2 of Part 2.
Amounts payable under regulations made for the purposes of section 34AA (high cost claims payments) are not covered by this definition.
high cost claim threshold has the meaning given by section 29.
IBNR exposure has the meaning given by section 8.
IBNR indemnity means an IBNR indemnity paid or payable under Division 1 of Part 2.
Amounts payable under regulations made for the purposes of section 27A (IBNR claims payments) are not covered by this definition.
incident means any incident (including any act, omission or circumstance) that occurs, or that is claimed to have occurred, in the course of, or in connection with, the provision of a health service.
incident‑occurring based cover has the meaning given by section 7.
indemnify has a meaning affected by subsection (2).
indemnity scheme payment means:
an IBNR indemnity; or
a high cost claim indemnity; or
an exceptional claims indemnity; or
a run‑off cover indemnity; or
an allied health high cost claim indemnity; or
an allied health exceptional claims indemnity.
insurance business has the same meaning as in the Insurance Act 1973.
insurer means a person who carries on insurance business.
insurer‑to‑insurer payment means a payment that:
is made by an MDO or insurer to an MDO or an insurer; and
is not made by the MDO or insurer on behalf of another person.
invoice includes:
any document issued by an MDO to a person (whether or not the person is already a member of the MDO) that contains a quote for the amount of subscription that is or would be payable by that person for membership of the MDO; and
any document issued by a medical indemnity insurer to a person (whether or not the medical indemnity insurer already provides medical indemnity cover to the person) that contains a quote for the amount of premium that is or would be payable by that person for provision of such cover.
late payment penalty:
in relation to an amount repayable under section 24—means a penalty payable under section 27; and
in relation to a debt owed under section 34T—means a penalty payable under section 34W; and
in relation to a debt owed under section 34ZJ—means a penalty payable under section 34ZM; and
in relation to a debt owed under section 34ZZZ—means a penalty payable under section 34ZZZC; and
in relation to a run‑off cover support payment—means a penalty payable under section 65.
legal practitioner means a person who is enrolled as a barrister, a solicitor, a barrister and solicitor, or a legal practitioner, of:
a federal court; or
a court of a State or Territory.
MDO has the meaning given by section 5.
medical indemnity cover: a contract of insurance provides medical indemnity cover for a person if:
the person is specified or referred to in the contract, whether by name or otherwise, as a person to whom the insurance cover provided by the contract extends; and
the insurance cover indemnifies the person (subject to the terms and conditions of the contract) in relation to claims that may be made against the person in relation to incidents that occur or occurred in the course of, or in connection with, the practice by the person of a medical profession.
A single contract of insurance may provide medical indemnity cover for more than one person.
medical indemnity insurer means:
a body corporate authorised under section 12 of the Insurance Act 1973 that; or
a Lloyd’s underwriter within the meaning of that Act who;
in carrying on insurance business in Australia, enters into contracts of insurance providing medical indemnity cover for other persons.
medical indemnity payment legislation means the Medical Indemnity (Run‑off Cover Support Payment) Act 2004.
medical practitioner means a person registered or licensed as a medical practitioner under a State or Territory law that provides for the registration or licensing of medical practitioners.
Subsection (6) gives this definition an extended meaning in Division 2B or 4 of Part 2.
medical profession includes a health care related vocation.
medicare program has the same meaning as in the Human Services (Medicare) Act 1973.
member of an MDO has the meaning given by section 6.
midwife insurer means an insurer that is an eligible insurer within the meaning of the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010.
midwife professional indemnity cover has the same meaning as in the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010.
participating MDO means UMP.
payment made in relation to a claim has (other than in Divisions 2A and 2D of Part 2) the meaning given by subsections (3) and (4).
practitioner’s contract limit, in relation to a person for whom a contract of insurance provides medical indemnity cover, means the maximum amount payable, in aggregate, by the insurer under the contract in relation to claims against the person.
If the contract provides medical indemnity cover for more than one person, there must be a separate contract limit for each of those persons.
For how this definition applies if the contract provides for deductibles, see section 8B.
For how this definition interacts with the high cost claim indemnity scheme and the allied health high cost claim indemnity scheme, see sections 34D and 34ZZJ.
private medical practice means practice as a medical practitioner, other than:
practice consisting of treatment of public patients in a public hospital; or
practice for which:
the Commonwealth, a State or a Territory; or
a local governing body; or
an authority established under a law of the Commonwealth, a State or a Territory;
indemnifies medical practitioners from liability relating to compensation claims (within the meaning of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003); or
practice conducted wholly outside both Australia and the external Territories; or
practice of a kind specified in the rules.
professional indemnity cover: a contract of insurance with a medical practitioner provides professional indemnity cover if it provides medical indemnity cover for the practitioner in relation to the practitioner’s private medical practice.
provable: an amount that an MDO or insurer is liable to pay is provable if:
it is provable in the winding up of the MDO or insurer if the winding up of the MDO or insurer has commenced; or
it would be provable in the winding up of the MDO or insurer if the MDO or insurer were to be wound up.
public hospital means a recognised hospital within the meaning of the Health Insurance Act 1973.
public patient has the same meaning as in the Health Insurance Act 1973.
qualifying allied health claim certificate means a certificate issued by the Chief Executive Medicare under section 34ZZK.
qualifying allied health liability, in relation to a claim, has the meaning given by section 34ZZS.
qualifying allied health payment: see subsection 34ZZB(4).
qualifying claim certificate means a certificate issued by the Chief Executive Medicare under section 34E.
qualifying liability, in relation to a claim, has the meaning given by section 34M.
qualifying payment: see subsection 30(2).
related body corporate has the same meaning as in the Corporations Act 2001.
relevant allied health threshold: see subsection 34ZZL(1).
relevant threshold: see subsection 34F(1).
risk surcharge has the meaning given by subsection 52C(1).
rules means the rules made under section 80.
run‑off cover credit has the meaning given by subsection 34ZS(2).
run‑off cover indemnity means a run‑off cover indemnity paid or payable under Division 2B of Part 2.
Amounts payable under regulations made for the purposes of section 34ZN (run‑off claims payments) are not covered by this definition.
run‑off cover support payment means a payment payable under Division 2 of Part 3.
Secretary means the Secretary of the Department.
subject to appeal: a judgment or order is subject to appeal until:
any applicable time limits for lodging an appeal (however described) against the judgment or order have expired; and
if there is such an appeal against the judgment or order—the appeal (and any subsequent appeals) have been finally disposed of.
total run‑off cover credit has the meaning given by section 34ZS.
UMP means United Medical Protection Limited.
Notifications by practitioners may constitute claims
A reference in Division 2B of Part 2 to a claim includes a reference to a notification by or on behalf of a person of an incident, or a series of related incidents, if:
at the time of the incident, or one or more of the incidents, the person was a medical practitioner; and
the notification is to a medical indemnity insurer or an MDO; and
at the time of the notification:
a contract of insurance with the insurer provided the person with medical indemnity cover; or
an arrangement with the MDO provided medical indemnity cover (within the meaning of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003) for the person;
and the cover would have indemnified the person in relation to any claim relating to the incident, or series of incidents, if the claim had been made at the time of the notification.
The notification is taken, for the purposes of Division 2B of Part 2, to be a claim against the person.
Indemnifying
To avoid doubt, a person may, for the purposes of this Act, indemnify someone else by either:
making a payment; or
agreeing to make a payment.
A person may indemnify someone else by making a payment even if the payment was not preceded by an agreement to pay.
Payments in relation to claims
For the purposes of this Act (other than Divisions 2A and 2D of Part 2):
a payment is made in relation to a claim against a person if and only if the payment is made to:
satisfy or settle the claim; or
meet legal and other expenses that are directly attributable to any negotiations, arbitration or proceedings in relation to the claim; and
a payment is made in relation to a claim by a person if and only if the payment is made to meet legal and other expenses that are directly attributable to any negotiations, arbitration or proceedings in relation to the claim.
A reference in this Act (other than Divisions 2A and 2D of Part 2) to a payment being made to satisfy or settle a claim against a person includes a reference to a payment that:
is made to reimburse the person for a payment the person has made to satisfy or settle the claim; or
is made to the person so that the person can make a payment to satisfy or settle the claim.
Changes in body corporate names
A reference in this Act to a body corporate by a particular name is a reference to the body corporate that had that name on 30 June 2002.
Medical practitioners
A reference in Division 2B or 4 of Part 2 to a medical practitioner includes a reference to a person who has been a medical practitioner.
An MDO is a body corporate that is an MDO under subsection (2) or (3) or rules made for the purposes of subsection (4).
Subject to rules made for the purposes of subsection (5), a body corporate is an MDO if:
the body corporate is incorporated by or under a law of the Commonwealth, a State or a Territory; and
the body corporate was in existence on 30 June 2002; and
the body corporate, in the ordinary course of its business as at 30 June 2002, indemnified persons in relation to claims in relation to incidents that occurred in the course of, or in connection with, the practice of a medical profession by the persons; and
did so only if the persons were one of the following:
members or former members of the body corporate;
the legal personal representatives of members or former members of the body corporate.
This is so even if the indemnity is one that is provided at the body corporate’s discretion.
Subject to rules made for the purposes of subsection (5), each of the bodies corporate listed in the following table is an MDO:
MDOs |
|---|
Medical Defence Association of South Australia Limited |
Medical Defence Association of Victoria Limited |
Medical Defence Association of Western Australia (Incorporated) |
Medical Indemnity Protection Society Limited |
Medical Protection Society of Tasmania Inc. |
Queensland Doctors Mutual Limited |
United Medical Protection Limited |
The rules may provide that a body corporate specified in the rules is an MDO.
The rules may provide that a body corporate specified in the rules is not an MDO for the purposes of this Act.
A person is a member of an MDO:
at all times when the person is a member of the MDO according to the MDO’s constitution; and
no matter how the person’s membership is described.
Without limiting paragraph (1)(a), a person does not cease to be a member of an MDO merely because some or all of the person’s rights and privileges as a member are suspended, have lapsed or have ceased.
Without limiting paragraph (1)(b), a person is a member of an MDO even if the person is described by the MDO’s constitution as:
an associate member; or
an honorary member; or
a non‑financial member; or
a retired member; or
a student member.
A person had incident‑occurring based cover for an incident with an MDO on 30 June 2002 if:
an arrangement between the MDO and the person, or between the MDO and someone else, existed on 30 June 2002; and
under the arrangement, the MDO:
would have been able to indemnify the person in relation to the incident if the person were to make a proper claim after 30 June 2002 in relation to the incident; and
would have been able, in the ordinary course of its business, to indemnify the person in relation to the incident even if the person had ceased to be a member of the MDO when the claim was made.
The person need not have been a member of the MDO on 30 June 2002 to have incident‑occurring based cover for the incident.
Subparagraph (b)(ii)—If the only cover the person had with the MDO was claims made cover, it would not be in the ordinary course of the MDO’s business to indemnify the person if the claim was made after the person had ceased to be a member of the MDO.
Subparagraph (1)(b)(i) is satisfied even if the MDO would be able to indemnify the person in relation to the incident only if the person were to make a claim during a limited period after 30 June 2002.
For the purposes of subparagraph 34ZB(1)(e)(ii), a person has incident‑occurring based cover if, under an arrangement between an MDO and the person, the MDO:
would be able to indemnify the person in relation to an incident if the person were to make a proper claim in relation to the incident; and
would be able, in the ordinary course of its business, to indemnify the person in relation to the incident even if the person had ceased to be a member of the MDO when the claim was made.
To avoid doubt, cover may be incident‑occurring based cover even if it is called:
claims incurred cover; or
extended reporting benefit cover (ERB cover); or
death, disability or retirement cover (DDR cover).
An MDO’s IBNR exposure at a particular time is the total amount, at that time, of the payments that the MDO is likely to have to make after that time in relation to all claims that relate to incidents that satisfy subsection (2).
An incident satisfies this subsection if:
the incident occurred on or before 30 June 2002; and
the incident occurred in the course of, or in connection with, the practice of a medical profession by a person; and
on 30 June 2002, the person had incident‑occurring based cover with the MDO for the incident; and
the MDO:
was not notified of the occurrence of the incident; and
was not notified of any claim against or by the person in relation to the incident;
before 1 July 2002.
A claim or claims are eligible related claims in relation to a claim for which an application for a high cost claim indemnity or allied health high cost claim indemnity is made if:
all the claims are made against the same person; and
all the claims are made in relation to the same incident or series of related incidents; and
either:
all the claims are part of the same class action or representative proceeding; or
the incident, or series of related incidents, occurred in connection with a pregnancy or the birth of a child or children; and
the application is the only application for a high cost claim indemnity or allied health high cost claim indemnity that has been made in relation to any of the claims; and
none of the claims are eligible related claims in relation to another claim for which an application for a high cost claim indemnity or allied health high cost claim indemnity has been made.
For the purposes of paragraphs (1)(d) and (e), disregard an application if it is withdrawn before payment is made in relation to the application.
This section applies if, under a contract of insurance that provides medical indemnity cover for a person (the practitioner), the insurer is entitled to count an amount (the deductible amount):
incurred by the insurer in relation to a claim against the practitioner; or
paid or payable by the practitioner or another person in relation to a claim against the practitioner;
towards the maximum amount payable, in aggregate, under the contract in relation to claims against the practitioner, even though the insurer has not paid, and is not liable to pay, the amount under the contract.
For the purpose of the definition of practitioner’s contract limit in subsection 4(1), the maximum amount payable, in aggregate, under the contract in relation to claims against the practitioner is as stated in the contract, even though the insurer (because of the deductible amount) may not actually be liable to pay the whole of that maximum amount.
For the purpose of the references in paragraphs 34L(1)(e) and (f) and 34ZZR(1)(e) and (f) to an amount that an insurer has paid or is liable to pay under a contract of insurance, the deductible amount is to be counted as if it were an amount that the insurer has paid or is liable to pay under the contract.
However, for the purpose of the references in paragraphs 34L(1)(e) and 34ZZR(1)(e) to an amount that an insurer would have been liable to pay under a contract of insurance, the deductible amount is not to be counted as if it were an amount that the insurer would have been liable to pay under the contract.
This Act extends to every external Territory.
This Division provides that an IBNR indemnity may be paid to an MDO or insurer that makes, or is liable to make, a payment in relation to a claim against or by a person in relation to an incident that is covered by the IBNR indemnity scheme. The incident will only be covered by the scheme if, amongst other things, the person had incident‑occurring based cover with the participating MDO for the incident on 30 June 2002.
This Division also provides for the regulations and rules to deal with other matters relating to incidents covered by the IBNR indemnity scheme.
The following table tells you where to find the provisions dealing with various issues:
Where to find the provisions on various issues | ||
|---|---|---|
Item | Issue | Provisions |
1 | which MDO is the participating MDO? | definition of participating MDO in subsection 4(1) |
2 | which incidents are covered by the scheme? | section 14 |
3 | what conditions must be satisfied for an MDO or insurer to get the IBNR indemnity? | sections 15 to 19 |
4 | what happens if the incidents occurred during the treatment of a public patient in a public hospital? | paragraph 19(a) and section 20 |
5 | how much is the IBNR indemnity? | section 21 |
6 | in what circumstances can a payment to an MDO or insurer lead to a repayment of the IBNR indemnity? | sections 24 to 27 |
6A | what regulations can deal with | section 27A |
7 | how do MDOs and insurers apply for the IBNR indemnity? | section 36 |
8 | when will the IBNR indemnity be paid? | section 37 |
9 | what information has to be provided to the Chief Executive Medicare about IBNR indemnity matters? | sections 27C and 38 |
10 | what records must MDOs and insurers keep? | sections 39 and 40 |
11 | how are overpayments of the IBNR indemnity, and indemnity repayments, recovered? | sections 41 and 42 |