Slater and Gordon - Insurance Commission of Western Australia

Level 2, Council House
27- 29 St Georges Terrace
Perth WA 6000
Slater
+Gordon
Ph: (08) 9223 4800
Fax: (08) 9223 4850
Lawyers
http://www.slatergordon.com .au
22 December 2014
Correspondence to:
Lawyer: Karina Hafford
Legal Assistant: Leanne Galloway
CTP Green Paper
The Insurance Commission of Western Australia
C/0 Commission Secretary
GPO Box U1908
Perth W A 6842
And by e-Mail: [email protected]
GPO Box2557
PERTH 6001
DX 60113 PERTH
Direct Ph: 08 9223 4824
Fax: 08 9223 4850
Email: [email protected]
Our Ref: M318892
Dear Sir/Madam
Options to add No-Fault Catastrophic Injury Cover to Western Australia's Compulsory Third
Party Insurance Scheme
Slater and Gordon welcomes the opportunity to provide comment on the Green Paper: Options to
add No-Fault Catastrophic Injury Cover to Western Australia's Compulsory Third Party Insurance
(CTP) Scheme .
About Slater and Gordon
Slater and Gordon is Australia's largest consumer law firm with our lawyers providing services from
over 70 locations across all Australian States and Territories, except the Northern Territory.
Slater and Gordon have extensive experience of motor vehicle accident compensation systems
across all Australian jurisdictions and in the UK. Our firm specializes in the area of personal
injuries and employs accredited personal injuries specialists.
Many of our clients are
catastrophically injured, extremely vulnerable and require multi-disciplinary support. Clients
experiencing complex non legal issues receive referral and support from social workers employed
by the firm, who have specific expertise working with people and families traumatised as a result of
a catastrophic accident.
Introduction
We welcome the initiative of the W .A. Government to extend CTP cover to catastrophically injured
motor vehicle accident victims on a no-fault basis and agree that it is fair and reasonable the
initiative should be funded through an increase in price of CTP insurance cover. We trust that this
vital initiative will not result in a reduction of benefits or long standing common law rights available
to road users innocently injured as a result of the negligent driving and/or unlawful driving of a
motor vehicle .
Some Australian schemes include features that if adopted with improvements by Western Australia
will enable the Government not only to achieve its main objective (cover for all who are
catastrophically injured on roads) but to do so without undermining existing strengths of the W.A.
scheme or removing long standing common rights and benefits. Indeed this process presents the
W .A Government with the opportunity to create the lead motor vehicle accident scheme in
Australia .
Slater & Gordon Ltd. ABN 93 097 297 400
Page 2
Our key contentions
Slater and Gordon support the submissions of the Law Society of W .A. and the Law Council of
Australia in response to the Insurance Commission of Western Australia (ICWA) Green paper:
Options to add No-Fault Catastrophic Injury Cover to Western Australia's Compulsory Third Party
Insurance (CTP) Scheme. We wish to add to the important points made in these submissions by
providing illustrative case examples to illustrate why Option 2 disadvantages the innocently injured
in a way that Option 3 does not. We understand that the Government does not intend to pursue
Option 1 ("do nothing" approach) in the Green Paper. Therefore our case examples address
Options 2 and 3.
We contend that Option 3 in the Insurance Commission of Western Australia (ICWA) Green paper
is the only fair option. It is no more costly than Option 2 yet preserves existing rights and benefits
and is arguably more sustainable.
Illustrative Examples
Option 2 also raises the issue of claimants who are seriously, but not catastrophically injured and
who will receive greater compensation (via a lump sum) than a catastrophic claimant with an
associated better outcome in terms of lifestyle, financial security and care needs.
Option 2 Example:
lan (aged 55) sustains serious injuries in a car accident when his vehicle is struck by
another driver. His injuries are serious, including a crushed pelvis, broken arm and
various soft tissue injuries. He does not meet the definition of a catastrophic claim.
However, the impact of his crushed pelvis is significant, resulting in the need for a carer
to attend upon him for 8 hours per day. He is unable to return to work. His treatment
needs are significant, including pain management for incurred nerve damage and
considerable pharmaceuticals. He resolves his claim for a lump sum which includes non­
pecuniary loss , loss of earning capacity, future care costs and future treatment costs. A
similar matter that we conducted for a client resulted in a lump sum payment of $1.8
million. After resolution of his claim , lan is able to pay off his mortgage (securing a stable
home environment which he is able to modify for his injuries), have choice of treatment
providers and of carers. Investment of the settlement monies means that lan secures an
income stream , to offset the impact of the Centrelink preclusion period and to provide
sufficient resources to plan for his financial security into the future.
Bill (aged 55) sustains catastrophic injuries in a car accident when his vehicle is struck by
another driver. His injuries include paraplegia. He is unable to return to work. His
treatment needs are significant. He resolves his claim for a lump sum which as a result
of the restrictions of Option 2 includes only non-pecuniary loss and loss of earning
capacity. Bill's non pecuniary loss is assessed at 70% of the most extreme case
($273,000); his economic loss (at $1 ,000 net per week) is assessed at approximately
$450,000 over the remaining 12 years of his working life. Bill receives a total settlement
of $723,000. Application of the Centrelink preclusion period means that Bill is required to
live off the settlement monies for a further 7.4 years after settlement. Bil l is not able to
pay off his home and loses a stable home environment. Bill receives his care and
treatment on an ongoing basis , but does not have choice with respect to the amount of or
service provider for his treatment or care. He also has no certainty as to level or duration
of care, and may be subject to ongoing medical reviews to justify his care and treatment
needs. Bill is required to engage in an ongoing relationship with a government
department with respect to personal matters of health and need for services for the rest of
his life.
Bill despite being more seriously injured than ian, receives less in (lump sum ) compensation, and
loses financial security and stability, and autonomy. There is a clear inequality in that under the
proposed Option 2, a person with lesser injuries receives more valua ble compensation.
Let us compare lan and Bill's situation again , this time on the assumption that Option 3 is applied:
Page 3
Option 3 Example
lan (aged 55) sustains serious injuries in a car accident when his vehicle is struck by
another driver. His injuries are serious, including a crushed pelvis, broken arm and
various soft tissue injuries. He does not meet the definition of a catastrophic claim.
However, the impact of his crushed pelvis is significant, resulting in the need for a carer
to attend upon him for 8 hours per day. He is unable to return to work. His treatment
needs are significant, including pain management for incurred nerve damage and
considerable pharmaceuticals. He resolves his claim for a lump sum which includes non­
pecuniary loss, loss of earning capacity, future care costs and future treatment costs. A
similar matter conducted by one of our members resulted in a lump sum payment of $1 .8
million. After resolution of his claim, lan is able to pay off his mortgage (securing a stable
home environment which he is able to modify for his injuries), have choice of treatment
and of carers . Investment of the settlement monies means that lan secures an income
stream , to offset the impact of the Centrelink preclusion period and to provide sufficient
resources to plan for his financial security into the future .
Bill (aged 55) sustains catastrophic injuries in a car accident when his vehicle is struck by
another driver. His injuries include paraplegia. He is unable to return to work. His
treatment needs are significant. Bill's non pecuniary loss is assessed at 70% of the most
extreme case ($273,000); his economic loss (at $1,000 net per week) is assessed at
approximately $450,000 over the remaining 12 years of his working life. After allowing
the deduction for contributory negligence, Bill receives with respect to these items the
sum of $723,000.
Under Option 3, Bill receives his future care and medical entitlements at 100%. Allowing
for ongoing care at $3,500 per week over his life expectancy of a further 30 years, Bill's
care is valued at $2.58 million . In addition, Bill received a lump sum for his treatment
expenses, equipment expenses and household modifications. In total, Bill receives a
lump sum settlement of $3.6 million.
After resolution of his claim for a lump sum, Bill is able to pay off his mortgage (securing a
stable home environment which he is able to modify for his inj uries), have choice of
treatment and of carers. Investment of the settlement monies means that Bill secures an
income stream , to offset the impact of the Centrelink preclusion period. The resolution of
his claim gives Bill closure and the ability to choose his treatment and care providers
empowers him.
Under Option 2 or Option 3, ian's compensation entitlements remain the same. However, Bill's
situation changes dramatically. Under Option 3, Bill is able to secure suitably modified
accommodation , an income stream upon which he can support himself and the ability to choose
carer and treatment provider. Option 3 ensures that both lan and Bill receive lump sum
compensation, which gives them financial security despite their injuries and inability to work, and
the ability to manage their condition, treatment and care requirements with autonomy, choice and
dignity.
Option 3 offers a further benefit in allowing those persons who are catastrophically inj ured but
partially at fault for the accident, to receive their future care and treatment at 100%, rather than
reducing it by the extent of any contributory negligence.
Slater and Gordon is able to provide additional case examples if you consider this would assist you
in your deliberations.
Conclusion
We are encouraged by recent statements by the Premier to the effect that of the options presented
by the Insurance Commission of Western Australia, the "do nothing" option is least preferred by the
Government.
We understand that there are an estimated 92 persons each year who are catastrophically injured
in motor vehicle accidents. Of those persons, 48 are eligible for compensation under the existing
scheme and 44 persons receive no compensation.
Page 4
Whilst Option 2 is a sign ificant step forward for injured at-fault road users, it has significant
disadvantages for the majority of those catastrophically injured Western Australians who would
lose long standing common law rights in relation to their injuries.
Option 3, would introduce no-fault catastrophic injury cover for those 44 people who currently
receive no compensation and is the fairest and most sustainable option . It would not only extend
cover to those who are currently not eligible for assistance, it would preserve the dignity, quality of
life and common law rights of a much larger number of innocently injured drivers.
We would welcome the opportunity to meet with you to discuss our perspectives on these issues
and to elaborate on the importance of Option 3 being adopted by the Government of Western
Australia.
Yours faithfully
Siri Siriwardene
General Manager- Personal Injury Western Australia
SLATER AND GORDON
Karina Hafford
Practice Group Leader
SLATER AND GORDON