MRG Paper 36
No Fault Compensation Review Group
Sub Group on Injury, Compensation and Eligibility
(Ken Mackinnon, Christina McKenzie, Kenneth Norrie, and Rob Hendry)
The subgroup has discussed the issues by email under 3 headings:
1. The scope of “personal injury”
There is an existing Scots law definition of “personal injury” found in section 22 of the
Prescription and Limitation (Scotland) Act 1973, which brings mental injury into the
definition. There has been an extensive case law on this section, the most recent Inner
House decision being A v Glasgow City Council [2010] CSIH 9.
In the New Zealand ACC system, personal injury is defined in ss 26 and 27 of the
Accident Compensation Act 2001 as death, physical injury and certain (very restricted)
mental injuries. Purely mental injury (defined in s 27 as “a clinically significant
behavioural, cognitive, or psychological dysfunction”) is NOT covered.
There was no objection in the sub-group to including within the scheme gradual
processes injuries, rather than its being limited to the consequences of a single trauma.
It was agreed that personal insult or feelings of ill treatment or loss of personal property
should be excluded and dealt with via a complaints process.
A second consideration is whether, for the purposes of a no-fault scheme, certain types
of injury that, for Prescription and Limitation Act reasons would be regarded as
“personal injury” ought to be excluded. Two areas that were suggested as potentially
problematic are emotional injuries and “wrongful birth/pregnancy”. The subgroup was
not in agreement about whether these should be excluded.
One view was that there is the opportunity to be inclusive, which would increase
openness about mistakes and the possibility of learning from them. Under this view,
maternity cases and psychological trauma resulting from avoidable harm within the
health services should be included in any no fault compensation scheme. It was
recognised that there are tricky areas such as the psychological trauma experienced by
parents when an infant is stillborn unexpectedly or dies soon after birth when there has
been substandard care or a defensive approach to not sharing information about
standards of professional care or systems failures by an organisation. This can leave the
parents so traumatised that they are unable to move through a normal grieving process.
An alternative view is that over-riding the filters in the existing law relating to mental
injury suffered by third parties would lead to an unaffordable extension of
compensation that would simply have to be contained by further restrictive definitions.
MRG Paper 36
It was noted that in New Zealand, covered injuries have to occur to the covered person
and not to, say, a relative.
Questions for the full Group:
Should the scope of covered personal injury include:
1. death
2. physical injury
3. mental injury to the patient (including pain syndromes)
4. mental injury to close relatives
5. drug addiction / dependency
6. unwanted pregnancy
7. gradual processes
8. a medical intervention that turns out to have been unnecessary
9. deterioration of an existing condition
10. infection picked up during treatment
With the possible exception of 10, it is assumed that the injury is caused by or a result of
treatment or failure to properly treat. Note, additionally:
11. the complication of injuries caused in part by existing conditions (see below)
12. the issue of whether to cover a non-treatment injury that is caused by an
accident in a place where treatment is given (eg, a patient slips on the hospital
linoleum)
It was noted too that under the existing “born alive” principle a fetus would have cover
for injuries suffered antenatally if it survived.
A further aspect of the scope of cover is whether a no fault scheme should extend
beyond the public health system to include all health providers.
2. What triggers an award of compensation?
It was suggested that there may not be a significant difference in practice between a
causation test in the NZ form and the idea of avoidability found in Scandanavian
schemes and set out in Peter Walsh’s earlier paper.
The NZ criteria were identified:
The key in NZ is causation: the injury needs to be caused by treatment, choice of
treatment, failure to treat, delay in treatment, mis-diagnosis / non-diagnosis, failure of
equipment or of systems, but NOT lack of resources.
An injury is not compensable if it is “a necessary part or ordinary consequence of the
treatment”. That is determined by looking at all circumstances including the patient’s
underlying health and the clinical knowledge at the time of treatment.
MRG Paper 36
Separately, an injury is not compensable if it is “wholly or substantially caused by the
patient’s underlying health condition”.
The fact that a procedure did not achieve the desired result is not of itself sufficient for
the granting of cover
Legal rules that have taken “causation’ away from a pure “but for” test mean that
causation (whether in delict/ tort or in ACC) is a disputed concept. On the other hand,
avoidability is not straightforward: avoidable by whose standards? in what conditions?
There is a further problem in so far as it may lead back to fault finding: you should have
done this better; it's your fault it went wrong. And there is a particular problem
concerning the role of hindsight.
Issues include:
1. Whether injuries caused by systemic failure or rationing should receive cover.
2. Whether there should be a threshold of seriousness of injury;
3. What time limit there should be for claims. It was noted that while a standard
limit of perhaps 1 or 3 years may apply, there could be exceptions where the
nature of injuries do not become apparent until many years after the index
event, esp in antenatal injuries (see Congenital Disabilities (Civil Liability) Act
1976 in England, Wales and Northern Ireland, and the Scottish Law Commission's
report , Liability for Antenatal Injury
3. What is compensation?
Compensation, broadly interpreted, can include other entitlements: treatment,
rehabilitation of various types (incl vocational retraining) as well as monetary payments.
Compensation may also include enabling access to faster rehabilitation treatment or
psychotherapy via the private sector if the NHS is unable to provide this in a timely
manner. (This is effectively the NZ approach where ACC purchases treatment/ rehab etc
from private providers. There is a reduction in transactional costs if ACC pays directly,
rather than the patient receiving monetary comp and then having to buy private care.)
In NZ, the overall heading is entitlements. These break down into treatment and
physical rehabilitation; vocational rehabilitation; social rehabilitation; weekly
compensation; lump sums and grants. ACC buys in the required services directly from
public and private providers. Lump sums are calibrated according to the degree of
incapacity after the injury has “settled” and is seen to be permanent (generally after
two years) – using a tariff. The sums are not huge. Weekly compensation (at 80% of
earnings) is designed to compensate for financial loss only and continues (in theory) for
as long as the injured party (IP) is unable to work. For weekly compensation, there has
to be (a) incapacity and (b) lost earnings. The missing 20% is seen as an incentive to the
IP to try to return to work. Compensation in its various guises thus tries to meet actual
MRG Paper 36
individualised needs. This avoids the speculative calculations of the torts systems – lump
sum or tariff.
The subgroup supported some sort of threshold (insurance “excess”) to exclude trivial
injuries. For a lump sum in NZ, there has to be a 10% whole person impairment before
any sum is granted. In Sweden there is a threshold that is a % of the compensation. An
alternative threshold would be one that related to the degree of physical incapacity.
There seem to be 3 options for monetary payment:
(a) a torts/delict type of lump sum that tries to calculate future consequential
losses;
(b) a tariff which is purely a backward looking compensation at a fixed rate for a
particular category of injury;
(c) the periodic payment (like social security but linked/ tailored to the patient's
individual lost earnings). This lasts for as long - or as short - a period as is needed
while/ if the patient recuperates enough to return to the workforce (which may
indeed be never). This is not well suited to compensating patients who were not
earners at time of injury. There may be issues in relation to integration (or
overlap) with the social security system (a UK govt matter). But the fact that
social security administers one system of periodic payments does not preclude a
second system administered by a different body.
There could be combinations of these.
There may be merit in paying a lump sum for short-term injuries, and then if there is
continuing incapacity, such as in the cases of injured infants or adults who may as a
result require life long care, moving to weekly/ intermittent payments. For long term
rehabilitation and compensation, the payment would cease or be reduced if the
recipient became able to move on to employment at a similar reward level to the one
they had been gaining at the time of the injury.
In the Swedish model, awards have to be in line with what might be gained via the civil
law routes as an incentive for the public to use the least costly route rather than the
courts route. In calculating whether a compensation system payment is equivalent in
monetary terms to a tort/delict award of damages, some account should be taken of the
fact that the lottery is reduced by having a guaranteed payment: "a bird in the hand ...."