No-Fault Compensation for Treatment Injury in New Zealand

No-fault compensation for treatment injury in New Zealand

Dr Marie Bismark1

Introduction

Most patients place tremendous faith in the healthcare system. After all, the vast majority of healthcare professionals are compassionate, caring, well-educated people who take pride in what they do. Even after being informed of the risk of complications and other adverse events, few people think that they might leave hospital in worse shape than when they started.[1]

Yet, the international adverse event literature leaves us in little doubt that hospitals can be dangerous places, and that the risks of a patient suffering a serious, preventable adverse event are unacceptably high.[2-5] Over the last decade, awareness of the prevalence of preventable harm has driven patient safety to being a high priority for health systems around the world.[6]

Following an adverse event, patients and their families have a complex and varied set of needs, which can be broadly described as falling into four “categories of accountability”: communication, including the desire to find out what happened and why, an acknowledgement of responsibility, or apology; correction, such as a system change or review of a practitioner’s competence to ensure that others do not suffer similar harm in future; sanction; a desire to see erring practitioners punished, faced with professional disciplinary proceedings, or otherwise called to account; and restoration, including necessary treatment, rehabilitation, and financial compensation for financial, physical, and non-economic losses.[7]

Despite its stated objectives of compensation, corrective justice, and deterrence, tort law performs relatively poorly at achieving any of these four objectives.[8] Indeed, some patient safety experts believe that the medical negligence litigation, with its focus on individual culpability, engenders a punitive environment which discourages practitioners from identifying and sharing information about error, forgoing opportunities for learning from mistakes so improvements can be made.

1 Marie Bismark serves as a Director of the Accident Compensation Corporation. The views expressed in this paper are her own, and do not necessarily reflect the views of ACC. An alternative system, which holds the promise of supporting a just culture of openness and learning, can be found in New Zealand, a country where medical malpractice litigation is essentially barred, injured patients are entitled to no-fault compensation, treatment injury information is widely shared; disciplinary proceedings are rare, and poorly performing practitioners are supported to return to safe practice through a process of educative, rehabilitative competence reviews.

Differences in healthcare systems, social values, and political structures caution against applying New Zealand’s experiences to other countries without careful thought. Nevertheless, the New Zealand experience may be of interest to those concerned with finding new approaches to the problem of medical accidents.

ACC scheme

In 1974, New Zealand jettisoned a torts-based system for compensating personal injuries in favour of a no-fault compensation system, the Accident Compensation Corporation (ACC).[9] The ACC scheme is believed to be the only system in the world which provides universal, 24-hour, no-fault coverage for all physical injuries. Its development, over thirty years ago, was prompted by concerns about the uneven and inadequate scope of common law negligence action as a means of compensating personal injury, and scepticism about the deterrent value of civil actions.

As expressed Sir Own Woodhouse, the Chair of the 1967 Royal Commission of Inquiry:[10]

“A fragmented and capricious response to a social problem which cries out for co-ordinated and comprehensive treatment cannot be good enough … It is a situation which must be changed … Injury arising from accident demands an attack on three fronts. The most important is obviously prevention. Next in importance is the obligation to rehabilitate the injured. Thirdly, there is the duty to compensate them for their losses.”

ACC covers all New Zealanders, including New Zealanders who are overseas at the time of the injury, provided that they are “ordinarily resident” in New Zealand. Overseas visitors to New Zealand may also be covered if they meet ACC’s cover criteria. The system is taxpayer funded, and healthcare providers are not levied for the cost of treatment injuries.[11] Treatment injury

Under the ACC scheme, patients who suffer a treatment injury in New Zealand are eligible for treatment, rehabilitation, and compensation.[12] Treatment injury is defined as a personal injury that is:

(a) Suffered by a person receiving treatment from, or at the direction of, 1 or more registered health professionals; and

(b) Caused by treatment; and

(c) Not a necessary part, or ordinary consequence, of the treatment.

Treatment is broadly defined to include diagnosis, decisions on treatment (including a decision not to treat), a failure to provide treatment in a timely manner, failing to obtain informed consent, and the failure of any device, tool, or implant used as part of the treatment process. Indirect infections are also covered. So for example, if a patient contracted Hepatitis C through a blood transfusion, and then passed the infection to his or her partner, the partner would also be eligible for cover.

Consistent with a systems approach to adverse events, the definition of treatment injury also includes injuries resulting from failures in support systems, including policies, process, practices, and administrative systems that directly support treatment.

Thus, all adverse medical events, preventable and unpreventable, are potentially covered, obviating the need for a finding of fault on the part of a health professional.

Compensation

To obtain compensation, the patient or bereaved family files a claim with ACC’s Patient Safety and Treatment Injury branch (usually without the assistance of a lawyer). Claimants have to establish a causal link between an injury and treatment, but are not required to show any degree of fault, rarity, or severity.

Once a claim has been accepted, entitlements include:[13]

 Treatment: Treatment costs that are reimbursed include transport to treatment, consultations, procedures, surgery, therapy, and pharmaceuticals.  Rehabilitation: Rehabilitation consists of social and vocational rehabilitation aimed at restoring, as far as possible, a claimant’s health, independence, and participation in society.

 Weekly compensation: Claimants are eligible for weekly compensation, at a rate of 80% of their previous wage up to a set maximum.

 Lump sum compensation: Lump sum compensation is a one-off payment, made after a claimant’s condition has stabilised, to compensate a claimant for the non-economic loss of a permanent impairment resulting from injury.

 Death benefits: Following a fatal injury, family members may qualify for a funeral grant, childcare, and weekly compensation for surviving spouses, children, and other dependents.

Medical malpractice litigation essentially barred

In exchange for the benefits of the ACC scheme, injured patients have no right to sue for damages arising out of any treatment injury covered by the accident compensation legislation. This prohibition applies even where a person chooses not to lodge a claim or is not entitled to compensation. This exchange has been judicially recognised as a “social contract” between the state and New Zealanders.[14]

The statutory bar on damages does not prevent civil claims for exemplary damages in cases where “the defendant’s conduct in committing a civil wrong is so outrageous that an order for payment of compensation is not an adequate response.” However, such claims are extremely rare, and to date the only cases in which awards have been made against practitioners have involved intentional sexual misconduct.[15]

Some perceived advantages of the ACC system can be summarised as follows:

 Fairness: In a torts based system, many injured patients are not eligible for compensation and end up relying on their own resources or social welfare to meet their needs. Under the ACC scheme, all patients who suffer a treatment injury are eligible for the same type and level of benefits, regardless of the cause of their injury. Dispute and complaint levels in the scheme are relatively low, and judicial appeals are rare.  Timeliness: Under a common law system, it is not uncommon for a claim to take up to five years to be finalised. In addition to delaying rehabilitation and recovery, delays and complexity of the compensation process under common law can have harmful effects on a person’s physical and mental health, and personal relationships.[16] In contrast under the ACC scheme, treatment injury claims are, on average, decided within 14 working days. In restricting common law access to compensation, ACC ensures that fastest road to rehabilitation and full health recovery, while limiting any further detrimental effects on health.

 Periodic benefits: Research suggests that patients have demonstrably better outcomes when compensation is paid by way of periodic benefits rather than lump sums. While claimants are often satisfied with the lump sum they receive at the time of payment, satisfaction reduces considerably as the time since payment increases and claimants become more aware of the long-term ill- effects of their injury.[17] The New Zealand system ensures that entitlements are paid regularly, and adjusted according to the injured patient’s needs, for as long as he or she requires assistance.

 Cost savings: ACC eliminates almost all medical malpractice litigation from New Zealand, generating significant legal cost savings. Administrative expense levels are low relative to other schemes, and the scheme is also thought to reduce wastage of hospital resources on activities designed to limit liability. Compared with a fault-based scheme, a higher portion of scheme costs go directly into claimants’ benefits.

 Improved rehabilitation outcomes: The evidence suggests that tort law may be associated with poorer rehabilitation outcomes, delaying a person’s return to work. ACC, on the other hand, avoids strategic behaviour of injured persons to show “damage”. ACC’s no-fault coverage mans that an injured claimant has immediate access to treatment and rehabilitation, placing primary emphasis on recovery and entry back into the workforce.[18]

 Candour and openness: The no-fault system also lays the groundwork for collaboration and openness [11] and avoids the toxic effect of litigation on relationships between doctors and their patients. Six country surveys carried out by the Commonwealth Fund have found that, compared with the United States, Australia, Germany, the United Kingdom, and Canada, New Zealand “clearly outperforms the group of six countries with respect to engagement and patient preference and communication”.[19] In addition, the Commonwealth Fund’s surveys suggest that, among the six countries, New Zealand health professionals are the most likely to disclose a mistake.[20] A survey of New Zealand hospital policies and practices relating to open disclosure also found a higher level of open disclosure of adverse events than found in a similar survey of United States hospitals, and similarly suggested that New Zealand’s no-fault environment seems to permit greater openness. [21]

Patient Safety

Such openness is considered to be one important element of a safe healthcare system. Halligan suggests that “the fundamental components required to facilitate the delivery of quality care [are] a no blame, questioning, learning culture, excellent leadership, and an ethos where staff are valued and supported.”[22]

However, the true benefits of creating such a culture will only be reaped if the information on treatment injuries is effectively analysed, disseminated back to the health sector, and acted on to prevent further injuries.[23]

In order to help achieve these benefits, ACC established a Patient Safety Team in 2005, located within the Treatment Injury and Patient Safety Branch of ACC. The patient safety programme has the overall intention of reducing the numbers of personal injuries arising from treatment, using treatment injury claims data to support research, information sharing, and injury prevention activities.

ACC’s Patient Safety team is still relatively new, and further work is required to maximise its potential contribution to the safety of New Zealand healthcare. In particular, the relationship between ACC’s Patient Safety team, the health sector, patient organisations, and the newly founded Quality Improvement Committee, needs to be clarified and strengthened in order to ensure a co-ordinated and evidence-based approached to future patient safety initiatives. The current focus of the Patient Safety Team’s work is on maintaining a comprehensive national database of treatment injury claims, and sharing non- identifiable data with the health sector and health services researchers, in order to inform quality improvement activities and monitor trends in patient safety.

The Patient Safety team also provides a “safety net”, monitoring patient safety trends, and alerting the appropriate authority of any issues of significant concern.

Competence

ACC does not routinely report compensation decisions to professional bodies or employers. However, in the rare situations where ACC considers that a particular practitioner or practice may pose a risk of harm to the public, it may report information to the relevant authority responsible for patient safety. In the case of doctors, this body is the Medical Council of New Zealand.

The Medical Council then has the option of initiating a competence review, under the provisions of the Health Practitioners’ Competence Assurance Act. The principal purpose of this Act is “to protect the health and safety of members of the public by providing for mechanisms to ensure that health practitioners are competent and fit to practise”.

In undertaking a competence review, the Medical Council determines whether there are any deficiencies in the doctor’s practice, and if so, assists him or her to up-skill in those areas of deficiency.[24] The review is carried out by a three person committee, composed of two doctors and a public member. It takes place within the context of the doctor’s clinical team and usual work environment, ensuring that the impact of these systems factors can be considered in the Medical Council’s final orders.

Competence reviews are intended to be educational, not disciplinary. The principles of natural justice are upheld throughout: doctors are entitled to have a support person present, they have an opportunity to make submissions, and are invited to comment on the draft report. Despite some initial anxiety, most doctors find the review process to be a positive and supportive experience.

A competence review may recommend that a doctor undertake an educational programme to address any weakness in his or her practice. The findings of a competence review are not made public, unless they lead to restrictions, conditions or suspension of a doctor’s practice.

Professional discipline

Professional discipline plays a very small role in the New Zealand regulatory process, and is usually only used in relation to doctors who have been found guilty of criminal charges, or who have been accused of gross negligence or a flagrant breach of professional codes of conduct. Most other concerns about individual practitioners are resolved at a low level by the Health and Disability Commissioner, a statutory ombudsman with responsibility for promoting and protecting patients’ rights.[25]

A Health Practitioners Disciplinary Tribunal hears and determines disciplinary charges against all registered health practitioners. Charges can be brought by a prosecutor associated with the Health and Disability Commissioner’s office, or by a Professional Conduct Committee established by the Medical Council.

Reflecting the principal purpose of the Health Practitioners Competence Act, the overriding purpose of disciplinary proceedings is protection of public health and safety from incompetent and improper conduct by practitioners.

There is a single ground for discipline – that of “professional misconduct”. Whether or not there has been a breach of the appropriate standards is judged against the standards of the practitioner’s reasonably competent colleagues. The standard of proof is the civil standard of “balance of probabilities”.

If a disciplinary charge is proven, the Health Practitioners Disciplinary Tribunal may impose conditions, a fine, impose a suspension, or remove a doctor’s license to practice.

Only eleven disciplinary charges were laid against doctors in 2006 (out of 11,300 practising doctors), and one of those was subsequently withdrawn. In contrast, the United States’ annual rate of prejudicial actions per thousand doctors is just under six actions per thousand doctors per year.[27] The low rate of disciplinary proceedings in New Zealand is consistent with the notion that unsafe care is usually a property of health care systems, rather than “bad” individuals, and that the focus of the medico- legal system should be on meeting the needs of injured patients, addressing systems failures, and supporting doctors to provide safer care rather than punishing individuals.

Conclusions

Over 30 years ago, a Royal Commission of Inquiry in New Zealand discounted any significant deterrent effect of civil action, and proposed a system of “community responsibility” for personal injury in place of the common law’s focus on individual fault. Generations of New Zealanders have now grown up with a no-fault scheme in place, and the availability of ACC rehabilitation and compensation is taken for granted almost as an inevitable fact of life.

Removing the spectre of tort liability does not appear to have resulted in New Zealand public hospitals having higher rates of serious preventable adverse events than those in “tort” jurisdictions.[8] Indeed, evidence suggests that New Zealand hospitals are as safe as those overseas [2, 3] and those working within the healthcare system appear to be more willing to be open and honest when things do go wrong. New Zealand’s no- fault environment is one possible factor explaining why health professionals are most likely to discuss errors with their patients: “reduction in malpractice concerns could facilitate disclosure and discussion of mistakes.”[20]

Other elements of the New Zealand medico-legal system, such as the Medical Council’s process of competence reviews and the relative infrequency of disciplinary proceedings, also support an educative, non-punitive approach to medical accidents.

However, despite having established a medico-legal environment which supports openness and learning, New Zealand has not yet been able to demonstrate a uniform national reduction in adverse event rates. This may in part be due to an absence of agreed performance measures; a lack of understanding of the complex dynamics which result in patient harm; or a failure to implement solutions which are known to make a difference.[6] In practice, all three of these factors are likely to be contributing to the frustratingly slow rate of progress towards eliminating preventable errors.

It has become increasingly apparent that building a safe healthcare system is a deceptively complex endeavour. New Zealand’s no-fault scheme and educative competence review processes offer strong foundations for such a system, but our work is not yet done. References