2002

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

MEDICAL INDEMNITY BILL 2002

SUPPLEMENTARY EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Health and Ageing, 
Senator the Hon. Kay Patterson)

MEDICAL INDEMNITY BILL 2002

SUPPLEMENTARY EXPLANATORY MEMORANDUM

OUTLINE

This set of amendments addresses a technical problem with the provisions of the Bill which include a reference to a person being a member of a medical defence organisation (MDO) at a time when an incident forming part of the incurred but not reported (IBNR) liability of the MDO occurred.  

Following introduction of the Bill it became apparent that at least one MDO has a liability in relation to IBNR claims against persons who are now members of the MDO but who were not members of the MDO when the incident occurred.  This circumstance has arisen because the persons were members of other MDOs, the membership or business of which was subsequently transferred to the MDO which now has the liability.

The amendments to affected clauses generally have the effect of replacing the requirement that a person was a member of the MDO when the incident occurred with the requirement that the person has incident-occurring based cover with the MDO for the incident.  

The amendments also change the definition of incident-occurring based cover to include cover provided under an arrangement between the MDO and a person other than the person who is covered.  This deals with the case where:

•	there was an arrangement between a person and another MDO which has transferred its business to the MDO providing the cover
•	the person has not become a member of the MDO providing the cover, and 
•	the cover is effectively provided under an arrangement between the two MDOs.

FINANCIAL IMPACT STATEMENT

These amendments have no financial impact.

NOTES ON ITEMS 

Item 1

This item amends clause 7, which defines incident-occurring based cover with an MDO on 30 June 2002, to include cover provided to a person under an arrangement between an MDO and someone else as well as cover provided under an arrangement between an MDO and a person.

Item 2

This item amends clause 8, which defines the IBNR exposure of an MDO at a particular time, to provide that the IBNR exposure is the amount that the MDO is likely to have to pay in respect of claims relating to:

•	incidents occurring before 30 June 2002
•	in the course of the practice of a medical profession 

•	by a person covered on 30 June 2002 by incident-occurring based cover with the MDO for the incident
•	which had not been notified to the MDO at 30 June 2002.  

Item 3 

This item amends clause 10, setting out where in the Division particular provisions may be found, to replace the reference to incidents occurring when a person was a member of a participating MDO with a reference to incidents covered by incident-occurring based cover.

Item 4

This item amends clause 14, which defines which incidents are covered by the IBNR indemnity scheme.  It provides that an incident is covered by the scheme if:

•	it took place before 30 June 2002 
•	in the course of the practice of a medical profession 
•	by a person who had incident-occurring based cover in relation to the incident with a participating MDO on 30 June 2002, and 
•	was not notified to the MDO before 30 June 2002.

Item 5

This item amends paragraph 16 (1) (c) to replace the condition of payability of an IBNR indemnity that the practitioner was a member of a participating MDO when the incident covered by the scheme occurred with the requirement that the practitioner had incident-occurring based cover on 30 June 2002 for the incident with a participating MDO.

Item 6

This item amends paragraph 17 (1) (c) to replace the condition of payability of an IBNR indemnity that the practitioner was a member of a participating MDO when the incident covered by the scheme occurred, with the requirement that the practitioner had incident-occurring based cover on 30 June 2002 for the incident with a participating MDO.