2002-2003

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

MEDICAL INDEMNITY AMENDMENT BILL 2003

MEDICAL INDEMNITY (IBNR INDEMNITY) CONTRIBUTION AMENDMENT BILL 2003

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Health and Ageing, 
the Honourable Tony Abbott MP)

MEDICAL INDEMNITY AMENDMENT BILL 2003 AND MEDICAL INDEMNITY (IBNR INDEMNITY) CONTRIBUTION AMENDMENT BILL 2003

Introduction

These Bills give effect to two new aspects of the Government’s medical indemnity package.  The package was announced during 2003 by the Prime Minister and portfolio Ministers.

The Bills provide for:

•	Changes to the Commonwealth’s Incurred But Not Reported Liabilities (IBNR) Contribution arrangements including reducing IBNR contributions to be paid for the 2003-04 financial year and part of the 2004-05 financial year and associated amendments to administrative arrangements to allowing for these changes; and

•	Implementing administrative arrangements to give effect to the Commonwealth’s Exceptional Claims Scheme.
 
OUTLINE

MEDICAL INDEMNITY AMENDMENT BILL 2003 

Schedule 1 – Medical indemnity contribution

Part 1 – Amendments

This Part provides for amendments to the Medical Indemnity Act 2002 with respect to the administration of the medical indemnity contributions.  These amendments will provide for the proper administration of medical indemnity contributions including those which have already been paid, or are in the process of being paid, which may be affected by changes to the rate of contribution for the medical indemnity contributions.

Part 2 – Transitional provisions etc.

This Part provides for transitional provisions to be made with respect to amendments to the Medical Indemnity Act 2002 which may save existing regulations, preserve the effect of certain applications made by medical professionals under the Act and provide that the Governor-General may be able to make transitional regulations.

Schedule 2  - Exceptional claims indemnity scheme

This schedule introduces a new Division 2A to the Medical Indemnity Act 2002 which provides for the arrangements to implement the Exceptional Claims Scheme to assume liability for 100 per cent of any damages payable against a practitioner that exceeds the practitioner’s contract limit.

Division 2A provides for the Commonwealth to make payments under this Scheme. 

Subdivision A provides a guide to the exceptional claims indemnity provisions.
Subdivision B provides for the Health Insurance Commission to issue a qualifying claims certificate in relation to a claim.
Subdivision C provides for when an exceptional claims indemnity is payable. 
Subdivision D provides for payments that would have reduced the amount paid out under the contract of insurance.
Subdivision E provides for an Exceptional Claims Protocol for making payments in relation to claims for which a qualifying certificate has been issued.
Subdivision F provides for miscellaneous matters related to the administration of the Scheme.

MEDICAL INDEMNITY (IBNR INDEMNITY) CONTRIBUTION AMENDMENT BILL 2003

This Bill makes amendments to the Medical Indemnity (IBNR Indemnity) Contribution Act 2002 which imposes the IBNR indemnity contribution as a tax.

FINANCIAL IMPACT

The Commonwealth will expense the assumption of Exceptional Claims Scheme liabilities in the Additional Estimates outcome for 2003-04.  The rate at which this expense will be met as cash payments is unknown, as the timing of the applications for and payments under the Scheme will be over a number of years.

The Commonwealth will expense the cost of refunds of IBNR contributions already paid in the Additional Estimates outcome for 2003-04 at the cost of $2.7 million, as currently estimated.

The amendments to the IBNR indemnity contribution will result in the Commonwealth collecting less revenue under this measure.  

MEDICAL INDEMNITY AMENDMENT BILL 2003 

NOTES ON CLAUSES

Clause 1 Short title

This clause sets out the short title of the Bill.

Clause 2 Commencement

This clause sets out the commencement arrangements for provisions of this Act.  Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Clause 3 Schedule(s)

This clause provides that each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1—Medical indemnity contribution

Part 1—Amendments

Part 1 amends Part 3 of the Medical Indemnity Act 2002, which provides for contributions towards the cost of providing indemnities.

Item 1 amends paragraph 52(2)(a) of the Act to provide that if the person dies in or before that contribution year the person will be exempt from paying an IBNR indemnity contribution.

Item 2 amends paragraph 52(2)(e) of the Act to provide that a person who has had a lump sum payment refunded under section 67 of the Act or under section 33 of the Financial Management and Accountability Act 1997 then that person will not be able to be exempt from paying an IBNR indemnity contribution.

Item 3 inserts a new subsection (4A) into section 52 of the Act to provide for regulations made for the purposes of section 52 may provide that a person is exempt from IBNR indemnity contribution in circumstances that are similar to those specified in subsection 52(2).  This clause commences on Royal Assent.

Item 4 amends paragraph 59(2)(b) of the Act to provide that a person who has had a lump sum payment refunded under section 67 of the Act or under section 33 of the Financial Management and Accountability Act 1997 then that person will not be able to be exempt from paying a UMP indemnity contribution.

Item 5 inserts a new subsection (3A) into section 59 of the Act to provide for regulations made for the purposes of subsection 59 may provide that a person is exempt from IBNR indemnity contribution in circumstances that are similar to those specified in subsection 59(2).  This clause commences on Royal Assent.

Item 6 amends section 61 of the Act to insert after the words “a medical indemnity contribution” the words “that a person is liable to pay”. This item commences on Royal Assent.

Item 7 amends paragraph (b) in the cell at table item 1, column headed “ becomes due and payable on…” in section 61 of the Act to provide that the payment day for an indemnity contribution may be on such later day as is specified in the regulations as the payment day for the contribution year either generally for all people or for the class of people that includes the person, as the case may be. This item commences on Royal Assent.

Item 8 amends subsection 62(1) of the Act to insert before the words “under this section” the words “for the person”. This item commences on Royal Assent.

Item 9 amends subsection 62(3) of the Act to omit the words “if the HIC” and substitute the words “(the current application) if”.

Item 10 amends paragraph 62(3)(a) to insert before the words “is satisfied” the words “the HIC”.

Item 11 amends paragraph 62(3)(b) repealing the current paragraph and substituting it with provisions which the HIC needs to take into account when it is considering a person’s current application to defer a medical indemnity contribution. The new subparagraph (b) will provide at the time the HIC approves the current application either: (i) the HIC has not approved an application by the person to defer the payment day for that kind of medical indemnity contribution for an earlier contribution year under this section; or (ii) each application by the person to defer the payment day for that kind of medical indemnity contribution for an earlier contribution year under this section that has been approved by the HIC has subsequently been revoked or is in respect of a contribution from which the person is exempt.

Item 12 amends subsection 62(4) of the Act to insert after the words “the contribution” the words “that the person is liable to pay”.  This clause commences on Royal Assent.

Item 13 amends paragraph (b) of subsection 62(4) in the table of item 1 column headed “becomes due and payable on …”  of the Act to provide that the date for paying a deferred IBNR indemnity contribution can be such later day as is specified in the regulations either generally for all people or for the class of people that includes the person, as the case may be. This item commences on Royal Assent.

Item 14 amends paragraph 62(5)(c) of the Act to omit the words “subsection (7)” and then substitute the words “whichever of subsections (7) and (8) applies”.

Item 15 repeals the current subsection 62(7) of the Act and substitutes it with a new subsection 7 and a new subsection 8.  The effect of these new provisions is to make due and payable immediately a deferred payment of either a IBNR or a UMP indemnity contribution from and earlier contribution year, where a person subsequently becomes exempt from paying either contribution due to turning a certain age or dying.

Item 16 amends paragraph 63(1)(b) of the Act to omit the words “$1,000 or more” and substitute the words “more than $1,000”.

Item 17 amends subsection 64(1) of the Act to repeal the current subsection and replace it with provisions which will allow a person to elect to pay a lump sum payment to discharge an IBNR indemnity contribution for a contribution year that starts on or after 1 July 2005 or which will allow a person to elect to pay a lump sum payment to discharge a UMP indemnity contribution for a contribution year that starts on or after 1 July 2003.

Item 18 amends subsection 64(5) of the Act to insert the word “day” after “for the person”.  This item commences on Royal Assent.

Item 19 amends subsection 67(1) of the Act to provide that person who is entitled to a refund of an overpaid amount of a medical indemnity contribution will not be able to receive one under this subsection if the amount has been previously repaid to the person in accordance with an authorisation under section 33 of the Financial Management and Accountability Act 1997.

Item 20 amends subsection 67(3) of the Act to provide that where a person overpays a lump sum payable under section 64 the overpaid amount must be refunded to the person unless the amount has been previously repaid to the person in accordance with an authorisation under section 33 of the Financial Management and Accountability Act 1997.

Item 21 repeals the current section 72 of the Act and substitutes provisions which require a person who is exempt from a medical contribution and who ceases to be exempt from the contribution because: the person’s circumstances change before the start of, or during, a contribution year; or the person fails to satisfy a condition on which the exemption from the contribution depends must notify the HIC of that change in circumstances or that failure, as the case may be. The note to the amended subsection explains that failure to notify is an offence (see section 74).  This item commences on Royal Assent.

Item 22 amends subsection 74(1) of the Act to omit the words “change in circumstances” and substitute them with the word “matter”. This item commences on Royal Assent.

Item 23 amends subsection 74(2) of the Act to omit the words “those circumstances” and substitute the words “that matter”.  This item commences on Royal Assent.

Part 2  - Transitional provisions etc

Item 24 provides for saving existing regulations which were in force immediately before the commencement of this item for the purposes of paragraph (b) of table item 1 of section 61 of the Medical Indemnity Act 2002; or paragraph (b) of table item 1 of subsection 62(4) of the Medical Indemnity Act 2002.  They will have effect as if they were made immediately after that time for the purposes of that paragraph of that Act as substituted by item 7 or 13 of this Schedule, as the case requires.  This item commences on Royal Assent.

Item 25 provides for transitional provisions for deferrals of payment for an IBNR indemnity contribution.  This item applies to an application under section 62 of the Medical Indemnity Act 2002 to defer the payment day for IBNR indemnity contribution for the contribution year that started on 1 July 2003 that was purportedly made before the commencement of this item; and would have been valid but for the amendment made by item 1 of Schedule 1 to the Medical Indemnity (IBNR Indemnity) Contribution Amendment Act 2003.  This item further provides for the HIC to deal with this application after commencement as though it were valid, including notice provisions for applications which may otherwise have been affected by amendments to the original provisions of the Act.

Item 26 provides that the Governor-General may make regulations prescribing matters of a transitional nature (including prescribing any saving or application provisions) arising out of the amendments made by this Schedule or the Medical Indemnity (IBNR Indemnity) Contribution Amendment Act 2003.  This item commences on Royal Assent.

SCHEDULE 2 EXCEPTIONAL CLAIMS SCHEME

Items of the Amending Schedule

Item (1) adds a new object of the Bill to meet the amounts by which settlements and awards exceed insurance contract limits, where those contract limits meet the Commonwealth’s threshold requirements. 

Definitions

Item (2) adds a definition of exceptional claims indemnity.

Item (3) adds a definition of Exceptional Claims Protocol.

Item (4) adds a definition of high cost claim indemnity. 

Item (5) adds a definition of IBNR indemnity.

Item (6) repeals the current definition of indemnity scheme payment and replaces it with a definition using the above terms in items (4) and (5), and adds exceptional claims indemnity. 

Item (7) defines a late payment penalty in relation to an overpayment in the event of a third party recovery received by a person after the exceptional claims indemnity is paid.

Item (8) defines a legal practitioner as a person who is enrolled as a barrister, a barrister and solicitor or a legal practitioner, of:
(a)	a federal court; or
(b)	a court of a State or Territory.

Item (9) inserts a definition of medical indemnity cover and provides that a contract of insurance provides medical indemnity cover for a person if:
(a)	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
(b)	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.

The note explains that a single contract of insurance may provide medical indemnity cover for more than one person.

A contract for a corporate body would not be included in the definition.

Item (10) is a technical amendment required because the general meaning of ‘payment’ in the Act will not apply to the exceptional claims indemnity scheme provisions.

Item (11) defines qualifying certificate as a certificate issued by the HIC under section 34E.

Item (12) defines the term ‘subject to appeal’ and provides that a judgment or order is subject to appeal until:
(a)	any applicable time limits for lodging an appeal (however described) against the judgment or order have expired; and
(b)	if there is such an appeal against the judgment or order—the appeal (and any subsequent appeals) have been finally disposed of.

Item (13) amends subsections 4(3) and (4) so that the general meaning of ‘payment’ in the Act will not apply to the exceptional claims indemnity scheme provisions.

Item (14) repeals the note to subsection 30(2) which is redundant because ‘subject to appeal’ is now defined in section 4.

Item (15) repeals subsection 30(4) because ‘subject to appeal’ is now defined in section 4.

Item (16) inserts a new Division 2A after current Division 2 of Part 2.  
This new division provides the framework for the exceptional claims indemnity scheme.   The new Division contains the following new section numbers and titles.

Division 2A 

Subdivision A – Introduction

34A Guide to the exceptional claims indemnity provisions

Subsection (1) provides that an exceptional claims indemnity may be paid in relation to a liability of a person if:
Paragraph (a) the liability relates to a claim against the person in relation to an incident that occurs in the course of, or in connection with, the practice by the person of a medical profession, being a claim that has been certified as a qualifying claim; and

Paragraph (b) the liability exceeds the amount payable under an insurance contract that has a contract limit satisfying the relevant threshold.

Subsection (2) also provides for the determination of an Exceptional Claims Protocol that can deal with other matters relating to claims that have been certified as qualifying claims.

Subsection (3) provides a table outlining where to find the provisions dealing with various issues.

34B Definitions

This section defines practitioner’s contract limit qualifying liability, and termination date, for the purposes of Division 2A.

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.

The notes explain that, if the contract provides medical indemnity cover for more than one person, there must be a separate contract limit for each of those persons, and refers to sections for the treatment of deductibles and the high cost claim indemnity scheme. 

Qualifying liability, in relation to a claim, has the meaning given by section 34M.

Termination date means the date, if any, set by regulations under section 34G.

Section 34C Treatment of deductibles

This new section sets out that deductibles under a contract of insurance that provides medical indemnity cover can be counted towards the practitioner’s contract limit even if they are paid by the practitioner rather than the insurer, if that is what the contract provides.  But these amounts are not counted in calculating the amount of the claim that exceeds the contract limit that is payable by the Commonwealth, as they are amounts that the practitioner has agreed to pay.

Subsection (1) provides that 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):
Paragraph (a) incurred by the insurer in relation to a claim against the practitioner; or

Paragraph (b) 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.

Subsection (2) provides that for the purpose of the definition of practitioner’s contract limit in section 34B, 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.

Subsection (3) provides that for the purpose of the references in paragraphs 34L(1)(e) and (f) (two of the criteria for payment of indemnity) 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.

Subsection (4) provides that, however, for the purpose of the reference in paragraph 34L(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.

34D Interaction with the High cost claim indemnity scheme

A person may seek assistance from the Commonwealth to pay a claim under both the Exceptional claims scheme and the High cost claim scheme.   This new section provides that for the purposes of the definition of practitioner’s contract limit in section 34B, and of paragraphs 34L(1)(e) and (f), an amount that an insurer has paid or is liable to pay, or would have been liable to pay, under a contract of insurance is not to be reduced on account of a high cost claim indemnity paid or payable, or that would have been payable, to the insurer.

This means that a practitioner’s contract limit can been reached for the purposes of the exceptional claims indemnity scheme even if the Commonwealth has contributed to the insurer’s liability through payments under the high cost claim indemnity scheme.

For example, if a practitioner’s contract limit is $20 million and the high cost claim indemnity threshold is set by regulation at $500,000, the payments under the contract would be:
•	insurer pays first $500,000 
•	remainder up to the contract limit is $19.5 million
•	insurer and Commonwealth both pay 50% of 19.5 million ($9.75 million) 
•	total paid under the contract is $20 million.

If the contract limit is $25 million and high cost claim indemnity threshold is $500,000, the payments under the contract would be:
•	insurer pays first $500,000
•	remainder up to the contract limit is $24.5 million
•	insurer and commonwealth both pay 50% of $24.5 million ($14.75 million)
•	total paid under the contract is $25 million.

Subdivision B – Certification of qualifying claims 
 
Criteria for certification

34E When may the HIC certify a claim as a qualifying claim?

A person may be entitled to a payment from the Commonwealth where a qualifying claims certificate has been issued prior to the final amount of the claim being known.

Subsection (1) Provides that the HIC may issue a certificate that a claim is a qualifying claim, if the HIC is satisfied that the claim meets the qualifying criteria set out in the subsection.  The qualifying certificate must be in force for an exceptional claims indemnity to be payable under section 34L.  A qualifying certificate can be issued if:

Paragraph (a) the claim is a claim for compensation of damages that is or was made by a person against another person (the practitioner); 

Paragraph (b) the claim relates to:
(i)	an incident that occurs or occurred; or
(ii)	a series of related incidents that occur or occurred;
in the course of, or in connection with, the practice by the practitioner of a medical profession; and

Paragraph (c) either:
(i)	the incident occurs or occurred; or
(ii)	one or more of the incidents in the series occurs or occurred;
in Australia or an external Territory; and

Paragraph (d) the incident or all the incidents did not occur in the course of treating a public patient in a public hospital; and 
(The State and Territory Governments generally provide an indemnity in respect of such incidents).

Paragraph (e) there is a contract of insurance in relation to which the following requirements are satisfied:
(i)	the contract provides medical indemnity cover for the practitioner in relation to the claim, or would, but for the practitioner’s contract limit, provide such cover for the practitioner in relation to the claim;
(ii)	the practitioner’s contract limit equals or exceeds the relevant threshold (see section 34F);
(iii)	the insurer is a general insurer, within the meaning of the Insurance Act 1973;
(iv) 	the insurer entered into the contract in the ordinary course of the insurer’s business; and

	Paragraph (f)	 the insurer was first notified of the claim, or of facts that might give
	rise to the claim, on or after 1 January 2003; and

Paragraph (g) if a termination date for the exceptional claims indemnity scheme is set (see section 34G), the incident, or one or more of the incidents, to which the claim relates occurred before the termination date; and

Paragraph (h) the claim is not a claim of a class specified in regulations made for the purposes of this paragraph; and

Paragraph (i) the contract of insurance is not a contract of a class specified in regulations made for the purposes of this paragraph; and

Paragraph (j) a person has applied for a certificate in accordance with section 34H. 

A claim or part of a claim which is not covered by the contract will not be a qualifying claim.  A limit to the amount of claim which is covered by the contract will limit the amount of the qualifying claim in the same way that it is limited in the contract.  

For example if there is a limit within the contract of $1 million for a type of claim and the insurer has paid out $1 million for that type of claim, no further payments will be made under the Exceptional Claims Scheme for that type of claim.

For example if the contract limit has been reached and the next claim is for $2 million, and the contract requires the practitioner to pay the first $50,000 of each claim, the Scheme will pay the $2 million claim less the practitioner’s contribution of $50,000. 

Notes 1 and 2 outline that sections 34N and 34O deal with some incidents in a series occurring in the course of public hospital treatment, or after the termination date.

Subsection (2) provides that the certificate comes into force when it is issued and remains in force until it is revoked.  These actions are undertaken by the Health Insurance Commission.

Matters to be identified or specified in certificate

Subsection (3) provides that the certificate must:

Paragraph (a)	identify:
(i)	the practitioner; and
(ii)	the claim; and
(iii)	the contract of insurance in relation to which paragraph (1)(e) is satisfied; and

Paragraph (b)	specify the relevant threshold.

The certificate may also contain other material.

AAT review of decision to refuse

Subsection (4) provides that an application may be made to the Administrative Appeals Tribunal for review of a decision of the HIC to refuse to issue a qualifying claim certificate. The note explains that Section 27A of the Administrative Appeals Tribunal Act 1975 requires notification of a decision that is reviewable.

HIC to give applicant copy of certificate

Subsection (5) provides that if the HIC decides to issue a qualifying claim certificate, the HIC must, within 28 days of making its decision, give the applicant a copy of the certificate. However, a failure to comply does not affect the validity of the decision.

34F What is the relevant threshold?

Subsection (1) Provides that for the purposes of paragraph 34E(1)(e), the relevant threshold which the practitioner’s contract limit must equal or exceed is:

Paragraph (a) if the insurer was first notified of the claim, or of facts that might give rise to the claim, on or after 1 January 2003 and before 1 July 2003—$15 million; or

Paragraph (b) if the insurer is or was first notified of the claim, or of facts that might give rise to the claim, on or after 1 July 2003—$20 million, or such other amount as is specified in the regulations as the threshold.

Threshold specified in regulations only applies to contracts entered into after the regulations take effect

Subsection (2) provides that a regulation specifying an amount as the threshold (or changing the amount previously so specified) only applies in relation to contracts of insurance entered into after the regulation takes effect.

When regulations reducing the threshold take effect

Subsection (3) provides that a regulation reducing the threshold (which could be the threshold originally applicable under subsection (1), or that threshold as already changed by regulations) takes effect on the date specified in the regulations, which must be the date on which the regulations are notified in the Gazette or a later day.

When regulations increasing the threshold take effect

Subsection (4) provides that a regulation increasing the threshold (which could be the threshold originally applicable under subsection (1), or that threshold as already changed by regulations), takes effect on the date specified in the regulations, which must be at least 3 calendar months after the date on which the regulations are notified in the Gazette.

Powers to make regulations are required to allow the threshold to reflect changing levels of contract limits provided for medical indemnity insurance.

34G Setting a termination date

Subsection (1) provides that the regulations may set a termination date for the exceptional claims indemnity scheme. The note indicates that the scheme does not cover incidents that occur after the termination date.

A power to make regulations is required to allow a termination date to be set for the scheme. 

Subsection (2) provides that the termination date cannot be earlier than 1 January 2006, and cannot be before the date on which the regulations are notified in the Gazette.

Where a claim relates to a series of incidents, the treatment of the incidents is discussed in section 34O.

34H Application for a qualifying claim certificate

Subsection (1) provides that an application for the issue of a qualifying claim certificate in relation to a claim may be made by the person against whom the claim is or was made, or by a person acting on that person’s behalf.

The person against whom the claim is made is the medical practitioner or health practitioner. 

Subsection (2) provides that the application must:

Paragraph (a) be made in writing using a form approved by the HIC; and

Paragraph (b) be accompanied by the documents and other information required by the form approved by the HIC.

34I Time by which an application must be decided

Subsection (1) provides that, subject to subsection (2), the HIC is to decide an application for the issue of a qualifying claim certificate on or before the 21st day after the day on which the application is received by the HIC.

Subsection (2) provides that, if the HIC requests a person to give information under section 38 in relation to the application, the HIC does not have to decide the application until the 21st day after the day on which the person gives the information to the HIC.

However, a failure to comply does not affect the validity of the decision.

34J Obligation to notify the HIC if information is incorrect or incomplete

Subsection (1) provides that, if:

Paragraph (a) a qualifying claim certificate is in force in relation to a claim; and

Paragraph (b) a person becomes aware that the information provided to the HIC in connection with the application for the certificate was incorrect or incomplete, or is no longer correct or complete; and

Paragraph (c) the person is:
(i)	the person who applied for the certificate; or
(ii)	another person who has applied for a payment of exceptional claims indemnity, or for a payment under the Exceptional Claims Protocol, in relation to the claim;

the person must notify the HIC of the respect in which the information was incorrect or incomplete, or is no longer correct or complete.
The note explains that failure to notify is an offence (see section 46).
	
Subsection (2) provides that the notification must:

Paragraph (a) be made in writing; and

Paragraph (b) be given to the HIC within 28 days after the person becomes aware as mentioned in subsection (1).

34K Revocation and variation of qualifying claim certificates

Revocation

Subsection (1) provides that the HIC may revoke a qualifying claim certificate if the HIC is no longer satisfied as mentioned in subsection 34E(1) in relation to the claim.

Subsection (2) provides that, to avoid doubt, in considering whether it is still satisfied as mentioned in subsection 34E(1) in relation to the claim, the HIC may have regard to matters that have occurred since the decision to issue the qualifying claim certificate was made, including for example:

Paragraph (a) the making of regulations for the purpose of paragraph 34E(1)(h) or (i); or

Paragraph (b) changes to the terms and conditions of the contract of insurance identified in the certificate.

Variation

Subsection	(3) provides that, if the HIC is satisfied that a matter is not correctly identified or specified in a qualifying claim certificate, the HIC may vary the certificate so that it correctly identifies or specifies the matter.

Effect of revocation

Subsection (4) provides that, if:

Paragraph (a) the HIC revokes a qualifying claim certificate; and

Paragraph (b) an amount of exceptional claims indemnity has already been paid in relation to the claim;

the amount is an amount overpaid to which section 41 applies.

Effect of variation

Subsection (5) provides that, if:

Paragraph (a) the HIC varies a qualifying claim certificate; and

Paragraph (b) an amount of exceptional claims indemnity has already been paid in relation to the claim, and that amount exceeds the amount that would have been paid if the amount of indemnity had been determined having regard to the certificate as varied;

the amount of the excess is an amount overpaid to which section 41 applies.

AAT review of decision to revoke or vary

Subsection (6) An application may be made to the Administrative Appeals Tribunal for review of a decision of the HIC to revoke or vary a qualifying claim certificate. 
The note explains that Section 27A of the Administrative Appeals Tribunal Act 1975 requires notification of a decision that is reviewable.

HIC to give applicant copy of varied certificate

Subsection (7) If the HIC decides to vary a qualifying claim certificate, the HIC must, within 28 days of making its decision, give the applicant a copy of the varied certificate. However, a failure to comply does not affect the validity of the decision.

Subdivision C—Exceptional claims indemnity

34L When is an exceptional claims indemnity payable?

Criteria for payment of indemnity

Subsection (1) provides that the HIC may determine that an exceptional claims indemnity is payable in relation to a liability of a person (the practitioner) if:

Paragraph (a) a claim for compensation or damages (the current claim) is, or was, made against the practitioner by another person; and

Paragraph (b) a qualifying claim certificate is in force in relation to the current claim; and

Paragraph (c) the liability is a qualifying liability of the practitioner in relation to the current claim (see section 34M); and

Paragraph (d) because of the practitioner’s contract limit in relation to the contract of insurance identified in the qualifying claim certificate, the contract does not cover, or does not fully cover, the liability; and

Paragraph (e) the amount that, if the practitioner’s contract limit had been high enough to cover the whole of the liability, the insurer would (subject to the other terms and conditions of the contract) have been liable to pay under the contract of insurance in relation to the liability exceeds the actual amount (if any) that the insurer has paid or is liable to pay under the contract in relation to the liability; and

Paragraph (f)	the aggregate of:
(i)	amount (if any) the insurer has paid, or is liable to pay, in relation to the liability under the contract of insurance; and
(ii)	the other amounts (if any) already paid by the insurer under the contract in relation to the current claim; and
(iii)	the amounts (if any) already paid by the insurer under the contract in relation to other claims against the practitioner;
equals or exceeds the relevant threshold identified in the qualifying claim certificate; and

Paragraph (g) a person has applied for the indemnity in accordance with section 37A.

Notes 1-2 and 4-6 explain interactions with other sections.
Note 3 explains that, for the purpose of subparagraphs (f)(i) and (ii), payments and liabilities to pay must meet the ordinary course of business requirement set out in subsection (3).

Who the indemnity is payable to

Subsection (2) provides that the indemnity is to be paid to the person who applies for it.
The note points out that, for who can apply, see section 37A.

Ordinary course of business test for insurance payments

Subsection (3) provides that an amount that an insurer has paid, or is liable to pay, under the contract does not count for the purpose of subparagraph (1)(f)(i) or (ii) unless it is an amount that the insurer paid, or is liable to pay, in the ordinary course of the insurer’s business.

What if the insurer is an externally-administered body corporate?

Subsection (4) provides that if an insurer is an externally‑administered body corporate:

Paragraph (a) a reference in paragraphs (1)(e) and (f) to an amount that the insurer is liable to pay under a contract of insurance is a reference to an amount that the insurer is liable to pay under the contract and that is a provable amount; and

Paragraph (b) a reference in subsection (3) to an amount that an insurer is liable to pay in the ordinary course of the insurer’s business is a reference to an amount that the insurer is liable to pay, and would be able to pay in the ordinary course of the insurer’s business if it were not an externally‑administered body corporate.

AAT review of decision to refuse, or to pay a particular amount of indemnity

Subsection (5) provides that an application may be made to the Administrative Appeals Tribunal for review of a decision of the HIC to refuse an application for exceptional claims indemnity, or to pay a particular amount of exceptional claims indemnity.

The note explains that Section 27A of the Administrative Appeals Tribunal Act 1975 requires notification of a decision that is reviewable.

34M Qualifying liabilities

Subsection (1) provides that a person (the practitioner) has a qualifying liability in relation to a claim made against the person if:

Paragraph (a) one of the following applies:
(i)	the liability is under a judgment or order of a court in relation to the claim, being a judgment or order that is not stayed and is not subject to appeal;
(ii)	the liability is under a settlement of the claim that takes the form of a written agreement between the parties to the claim;
(iii)	the liability is some other kind of liability of the practitioner (for example, a liability to legal costs) that relates to the claim; and

Paragraph (b) the defence of the claim against the practitioner was conducted appropriately (see subsection (2)) up to the time when:
(i)	if the liability is under a judgment or order of a court—the date on which the judgment or order became a judgment or order that is not stayed and is not subject to appeal; or
(ii)	if the liability is under a settlement of the claim—the date on which the settlement agreement was entered into; or
(iii)	if the liability is some other kind of liability—the date on which the liability was incurred; and

Paragraph (c) if the liability is under a settlement of the claim, or is under a consent order made by a court—a legal practitioner has given a statutory declaration certifying that the amount of the liability is reasonable.

Subsection (2) provides that, for the purposes of paragraph (1)(b), the defence of the claim is conducted appropriately if, and only if:

Paragraph (a) to the extent it is conducted on the practitioner’s behalf by an insurer, or by a legal practitioner engaged by the 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

Paragraph (b) to the extent it is conducted by the practitioner, or by a legal practitioner engaged by the practitioner—the defence is conducted prudently. 

Subsection (3) provides that, in this section: defence of the claim includes any settlement negotiations on behalf of the practitioner.

34N Treatment of a claim that partly relates to a public patient in a public hospital

This new section provides that, if:

Paragraph (a) a claim against a person relates to a series of incidents; and

Paragraph(b) some, but not all, of the incidents occurred in the course of the provision of treatment to a public patient in a public hospital;

then, for the purposes of applying paragraph 34L(1)(e) and subparagraphs 34L(1)(f)(i) and (ii) in relation to the claim, an amount that an insurer has paid or is liable to pay, or would have been liable to pay, in relation to the claim, is to be reduced by the extent (if any) to which the amount relates or would relate to, or is or would be reasonably attributable to, the incident or incidents that occurred in the course of the provision of treatment to a public patient in a public hospital.

34O Treatment of a claim that relates to a series of incidents some of which occurred after the termination date

This new section provides that, if:

Paragraph (a) a claim against a person relates to a series of incidents; and

Paragraph (b) some, but not all, of the incidents occurred after the termination date;

then, for the purposes of applying paragraph 34L(1)(e) and subparagraphs 34L(1)(f)(i) and (ii) in relation to the claim, an amount that an insurer has paid or is liable to pay, or would have been liable to pay, in relation to the claim, is to be reduced by the extent (if any) to which the amount relates or would relate to, or is or would be reasonably attributable to, the incident or incidents that occurred after the termination date.

34P The amount of exceptional claims indemnity that is payable

This new section provides that the amount of exceptional claims indemnity that is payable in relation to a particular qualifying liability is the amount of the excess referred to in paragraph 34L(1)(e).

The note explains that it is only liabilities that exceed the practitioner’s contract limit that will be covered by an exceptional claims indemnity (even if the relevant threshold is less than that limit).

34Q How exceptional claims indemnity is to be applied

Subsection (1) provides that this new section applies if an exceptional claims indemnity is paid to a person (the recipient) in relation to a liability of a person (the practitioner).

The note explains that the recipient will either be the practitioner himself or herself, or a person acting on behalf of the practitioner.

HIC to give recipient of payment a notice identifying the liability to be discharged

Subsection (2) provides that the HIC must give the recipient a written notice (the payment notice) identifying the liability in relation to which the indemnity is paid, and advising the recipient how this section requires the indemnity to be dealt with.

Recipient’s obligation if the amount of the indemnity equals or is less than the liability

Subsection (3) provides that if the amount of the indemnity equals or is less than the undischarged amount of the liability identified in the payment notice, the recipient must apply the whole of the indemnity towards the discharge of the liability.

Recipient’s obligation if the amount of the indemnity exceeds the liability

Subsection (4) provides that if the amount of the indemnity is greater than the undischarged amount of the liability identified in the payment notice, the recipient must:

Paragraph (a) apply so much of the indemnity as equals the undischarged amount of the liability towards the discharge of the liability; and
	
Paragraph(b) if the recipient is not the practitioner—deal with the balance of the indemnity in accordance with the directions of the practitioner.

This subsection applies to the situation where the indemnity payment may include costs in excess of the amount owed to the plaintiff, such as legal costs that are not already paid under the Exceptional Claims Protocol.

Time by which recipient must comply with obligation

Subsection(5) provides that the recipient must comply with whichever of subsections (3) and (4) applies:

Paragraph(a) by the time specified in a written direction (whether contained in the payment notice or otherwise) given to the recipient by the HIC; or

Paragraph(b) if no such direction is given to the recipient—as soon as practicable after the indemnity is received by the recipient.
To avoid doubt, the HIC may vary a notice under paragraph (a) to specify a different time.

Debt to Commonwealth if recipient does not comply with obligation on time

Subsection (6) provides that if the recipient does not comply with whichever of subsections (3) and (4) applies by the time required by subsection (5), the amount of the indemnity is a debt due to the Commonwealth.

Subsection (7) provides that the debt may be recovered:

Paragraph (a) by action by the HIC against the recipient in a court of competent jurisdiction; or

Paragraph (b) under section 42.

Subsection (8) provides that if the amount of the indemnity is recoverable, or has been recovered, under subsection (7), no amount is recoverable under section 34T or section 41 in relation to the same payment of exceptional claims indemnity.

34R Who is liable to repay an overpayment of exceptional claims indemnity?

Subsection (1) provides that this new section applies if, in relation to an exceptional claims indemnity that has been paid, there is an amount overpaid as described in subsection 34T(2) or 42(2).

Subsection (2) provides that the liable person, in relation to the amount overpaid, is:

Paragraph (a) if the indemnity has not been dealt with in accordance with whichever of subsections 34Q(3) and (4) applies—the recipient referred to in subsection 34Q(1); or

Paragraph (b) if the indemnity has been dealt with in accordance with whichever of those subsections applies—the practitioner referred to in subsection 34Q(1). 

The note explains that the recipient and the practitioner will be the same person if the indemnity was paid to the practitioner.

Subsection (3) provides that if:

Paragraph (a) the recipient and the practitioner referred to in subsection 34Q(1) are not the same person; and

Paragraph (b) when the overpayment is recovered as a debt, the liable person is the recipient;

the fact the recipient may later deal with the remainder of the indemnity in accordance with subsection 34Q(3) or (4) does not mean that the overpayment should instead have been recovered from the practitioner.

Subdivision D–Payments that would have reduced the amount paid out under the contract of insurance

34S Amounts paid before payment of exceptional claims indemnity

Subsection (1) provides that if:	

Paragraph (a) an amount (the insurance payment) has been paid under a contract of insurance that provides medical indemnity cover for a person (the practitioner) in relation to a liability of the practitioner; and

Paragraph (b) another amount (not being an amount referred to in subsection (2)) has been paid to the practitioner, the insurer or another person in relation to the incident or incidents to which the liability relates; and

Paragraph (c) the other amount was not taken into account in working out the amount of the insurance payment; and

Paragraph (d) if the other amount had been taken into account in working out the amount of the insurance payment, a lesser amount would have been paid under the contract of insurance in relation to the liability;

then, for the purpose of calculating the amount of exceptional claims indemnity (if any) that is payable in relation to a liability of the practitioner, the lesser amount is taken to have been the amount of the insurance payment.

Subsection (2) provides that this section does not apply to any of the following:

Paragraph (a) an amount paid to an insurer by another insurer under a right of contribution;

Paragraph (b) a payment of high cost claim indemnity;

Paragraph (c) an amount of a kind specified in the regulations for the purposes of this paragraph.

34T Amounts paid after payment of exceptional claims indemnity

Subsection (1) provides that this new section applies if:

Paragraph (a) an amount (the actual indemnity amount) of exceptional claims indemnity has been paid in relation to a qualifying liability that relates to a claim made against a person (the practitioner); and

Paragraph (b) another amount (not being an amount referred to in subsection (5)) is paid to the practitioner, an insurer or another person in relation to the incident or incidents to which the claim relates, or in relation to one or more other incidents; and

Paragraph (c) the other amount was not taken into account in calculating the actual indemnity amount; and

Paragraph (d) if the other amount had been so taken into account, a lesser amount (the reduced indemnity amount, which could be zero) of exceptional claims indemnity would have been paid in relation to the liability.

Subsection (2) provides that the amount overpaid is the amount by which the actual indemnity amount exceeds the reduced indemnity amount.

Subsection (3) provides that if the HIC has given the liable person (see subsection 34R(2)) a notice under section 34V(1) in relation to the actual overpaid, the amount is a debt owed to the Commonwealth by the liable person.  

Note 1 explains that, if the indemnity is or was not dealt with in accordance with whichever of subsections 34Q(3) and (4) applies by the time required by subsection 34Q(5), the whole amount of the indemnity is a debt owed by the recipient, and no amount is recoverable under this section (see subsections 34Q(6) to (8)).  

Note 2 explains that if:
(a)	the recipient and the practitioner referred to in subsection 34Q(1) are not the same person; and
(b)	the practitioner becomes the liable person;
(c)	then (subject to subsection 34R(3)), the recipient ceases to be the liable person, and the amount overpaid must instead be recovered from the practitioner.

Subsection (4) provides that the amount overpaid may be recovered:

Paragraph (a) by action by the HIC against the liable person in a court of competent jurisdiction; or

Paragraph (b) under section 42.

Subsection (5) provides that this new section does not apply to any of the following:

Paragraph (a) an amount paid to an insurer by another insurer under a right of contribution;

Paragraph (b) a payment of high cost claim indemnity;

Paragraph (c) an amount of a kind specified in the regulations for the purposes of this paragraph.

34U Obligation to notify HIC that amount has been paid

Subsection (1) provides that if:

Paragraph (a) an amount of exceptional claims indemnity has been paid in relation to a qualifying liability that relates to a claim made against a person (the practitioner); and 

Paragraph (b) the person (the applicant) who applied for the exceptional claims indemnity becomes aware that another amount has been paid to the practitioner, an insurer or another person in relation to the incident or incidents to which the claim relates, or in relation to one or more other incidents; and 

Paragraph (c) because of the payment of the other amount, there is an amount overpaid as described in subsection 34T(2);

the applicant must notify the HIC that the other amount has been paid.

The note provides that failure to notify is an offence (see section 46).

Subsection (2) provides that the notification must:

Paragraph (a) be in writing; and 

Paragraph (b) be given to the HIC within 28 days after the applicant becomes aware that the other amount has been paid.

34V HIC to notify of amount of debt due

Subsection (1) provides that if:

Paragraph (a) an amount of exceptional claims indemnity has been paid in relation to a qualifying liability that relates to a claim made against a person (the practitioner); and

Paragraph (b) another amount is paid to the practitioner, an insurer or another person in relation to the incident or incidents to which the claim relates, or in relation to one or more other incidents; and

Paragraph (c) because of the payment of the other amount, there is an amount overpaid as described in subsection 34T(2);

the HIC may give the liable person (see subsection  34R(2)) a written notice that specifies:

Paragraph (d) the amount overpaid, and that it is a debt owed to the Commonwealth under subsection 34T(3); and

Paragraph (e) the day before which the amount must be paid to the Commonwealth; and

Paragraph (f) the effect of section 34W.

The day specified under paragraph (e) must be at least 28 days after the day on which the notice is given.

Subsection (2) provides that the debt becomes due and payable on the day specified under paragraph (1)(e).

34W Penalty imposed if an amount is repaid late

Subsection (1) provides that if:

Paragraph (a) a person owes a debt to the Commonwealth under subsection 34T(3); and

Paragraph (b) the debt remains wholly or partly unpaid after it becomes due and payable;

the person is liable to pay a late payment penalty under this section.

Subsection (2) provides that the late payment penalty is calculated:

Paragraph (a) at the rate specified in the regulations for the purposes of this paragraph; and

Paragraph (b) on the unpaid amount; and

Paragraph (c) for the period:
		(i)	starting when the amount becomes due and payable; and
(ii)	ending when the amount, and the penalty payable under this section in relation to the amount, have been paid in full.

A regulation is required to set a rate at which late payment penalty is calculated.

Subsection (3) provides that the HIC may remit the whole or a part of an amount of late payment penalty if the HIC considers that there are good reasons for doing so.

Subsection (4) provides that an application may be made to the Administrative Appeals Tribunal for review of a decision of the HIC not to remit, or to remit only part of, an amount of late payment penalty. 

The note explains that section 27A of the Administrative Appeals Tribunal Act 1975 requires notification of a decision that is reviewable.

Subsection (5) provides that if:

Paragraph (a) the recipient and the practitioner referred to in subsection 34Q(1) are not the same person; and

Paragraph (b) the practitioner becomes the liable person; and

Paragraph (c) the recipient has or had a liability under this section to pay late payment penalty;

the recipient’s liability to the late payment penalty is not affected by the fact that the recipient is no longer the person who owes the debt to the Commonwealth under subsection 34T(3), except that the period referred to in paragraph (2)(c) ends when the practitioner becomes the liable person.

Subdivision E—The Exceptional Claims Protocol

34X Minister may determine a protocol dealing with various matters

A power for the Minister to determine a protocol is required so that the HIC can pay ongoing costs for managing and defending the claim and the Minister can set out the conditions for those payments.

Subsection (1) provides that the Minister may, by writing, determine a protocol (the Exceptional Claims Protocol) for making payments to insurers of claim handling fees, and payments on account of legal, administrative or other costs incurred by insurers (whether on their own behalf or otherwise), in respect of claims in relation to which qualifying claim certificates have been issued.

Subsection (2) provides that without limiting subsection (1), the Exceptional Claims Protocol may:

Paragraph (a) make provision for:
(i)	the conditions that must be satisfied for an amount to be payable to an insurer; and
(ii)	the amount that is payable; and
(iii)	the conditions which must be complied with by an insurer to which an amount is paid; and
(iv)	other matters related to the making of payments, and the recovery of overpayments; and

	Paragraph (b) provide that this Division applies with specified modifications in relation to a liability that relates to costs in relation to which an amount has been paid under the Protocol.

Subsection (3) provides that paragraph (2)(b) does not allow the Protocol to modify a provision that creates an offence, or that imposes an obligation which, if contravened, constitutes an offence.

Subsection (4) provides that the Exceptional Claims Protocol may also provide for other matters of a kind specified in regulations made for the purposes of this subsection.

The power to make a regulation is required to enable the Protocol to respond to changes in types of insurance products and claims that may be provided to practitioners as these changes arise.

Subsection (5) provides that the instrument determining the Exceptional Claims Protocol, and any instruments amending or revoking the Protocol, are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.

34Y HIC may request information

Subsection (1) provides that if the HIC believes that a person is capable of giving information that is relevant to determining:

Paragraph (a) whether an insurer is entitled to a payment under the Exceptional Claims Protocol; or

Paragraph (b) the amount that is payable to an insurer under the Exceptional Claims Protocol;

the HIC may request the person to give the HIC the information.

The note explains that failure to comply with the request is an offence (see section 45).

Subsection (2) provides that without limiting subsection (1), any of the following persons may be requested to given information under that subsection:

	Paragraph (a) an MDO;

Paragraph (b) an insurer;

Paragraph (c) a member, or former member of an MDO;

Paragraph (d) a person who practices, or used to practice, a medical profession;

Paragraph (e) a person who is acting, or has acted, on behalf of a person covered by paragraph (d);

Paragraph (f) a legal personal representative of a person covered by paragraph (c), (d) or (e).

Subsection (3) provides that without limiting subsection (1), if the information sought by the HIC is information relating to a matter in relation to which a person is required by section 39 to keep a record, the HIC may request the person to give the information by giving the HIC the record, or a copy of the record.

Subsection (4) provides that the request:

	Paragraph (a) must be made in writing; and

Paragraph (b) must state what information must be given to the HIC; and

Paragraph (c) may require the information to be verified by statutory declaration; and

Paragraph (d) must specify a day on or before which the information must be given; and

Paragraph (e) must contain a statement to the effect that a failure to comply with the request is an offence.

The day specified under paragraph (d) must be at least 28 days after the day on which the request was made.

This section is not intended to override legal professional privilege.

Subdivision F—Miscellaneous

34Z Modifications and exclusions

Subsection (1) provides that the regulations may provide that this Division applies with specified modifications in relation to:

	Paragraph (a) a specified class of claims; or

	Paragraph (b) a specified class of contracts of insurance; or

Paragraph (c) a specified class of situations in which a liability is, whether wholly or partly, covered by more than one contract of insurance.  

The note clarifies the capacity for regulations to exclude classes of claims and refers to paragraphs 34E(1)(h) and (i). 

Subsection (2) provides that the regulations may provide that this Division does not apply, or applies with specified modifications, in relation to a specified class of liabilities or payments.

The power for these regulations to be made is required to allow the Exceptional Claims Scheme to reflect the rapidly changing market for medical indemnity insurance.  

The regulations will allow the Scheme to respond to the industry’s provision of new types of insurance products to cover new types of claims, and to respond to contracts and claims that are affected in an unintentional manner by the legislation. 

Subsection (3) provides that without limiting subsection (2), the regulations may specify modifications regarding how this Division applies in relation to a liability under an order of a court requiring an amount to be paid pending the outcome of an appeal, including modifications:

Paragraph (a) to count the liability as a qualifying liability (even though subparagraph 34M(1)(a)(i) may not be satisfied in relation to the order); and

Paragraph (b) to deal with what happens if, as a result of the appeal or another appeal, the amount paid later becomes wholly or partly repayable; and

Paragraph (c) to deal with what happens if the amount paid is later applied towards a liability that is confirmed as a result of the appeal or another appeal.

The power for these regulations is required to allow a payment where the practitioner is required to make payments in advance of finalisation of the entire claim.   

Subsection (4) provides that this section does not allow the regulations to modify a provision that creates an offence, or that imposes an obligation which, if contravened, constitutes an offence.

Item 17 Subsection 35(1)

This item adds the exceptional claims indemnity scheme to the provision outlining the coverage of Division 3 of Part 2.

Item 18 Subsection 35(2) (table)

This item repeals the table indicating where to find provisions on various issues and substitutes a new table.

Item 19 Subsection 36(1)

This item limits subsection 36(1) to applications for IBNR or high cost claim indemnity. 

The note indicates that the heading is altered by omitting “indemnity scheme payment” and substituting “IBNR indemnity or high cost claim indemnity”.

Item 20 Subsection 37(1)

This item limits subsection 37(1) to payment dates for IBNR or high cost claim indemnity. 

The note indicates that the heading to section 37 is altered by omitting “indemnity scheme payment” and substituting “IBNR indemnity or high cost claim indemnity”.

Item 21 Subsection 37(1)

This item omits “the payment”, then substitutes “the indemnity”.

Item 22 Paragraph 37(2)(a)

This item limits paragraph 37(2)(a) to applications for IBNR or high cost claim indemnity. 

Item 23 Paragraph 37(2)(c)

This item omits “the payment”, then substitutes “the indemnity”.

Item 24 Paragraph 37(2)(d)

This item limits paragraph 37(2)(d) to IBNR or high cost claim indemnity.

Item 25 Subsection 37(2)

This item limits the closing words of subsection 37(2) to IBNR or high cost claim indemnity.

Item 26 After section 37

This item inserts new provisions in Subdivision B of Division 3 of Part 2.

37A Application for exceptional claims indemnity

Subsection (1) provides that an application for an exceptional claims indemnity in relation to a qualifying liability that relates to a claim may be made by the person against whom the claim is or was made, or by a person acting on that person’s behalf.

Subsection (2) provides that the application must:

Paragraph (a) be made in writing using a form approved by the HIC; and

Paragraph (b) be accompanied by the documents and other information required by the form approved by the HIC.

Subsection (3) provides that subject to subsections (4) and (5), the application cannot be made more than 28 days after:

Paragraph (a) if the liability is under a judgment or order of a court—the date on which the judgment or order became or becomes a judgment or order that is not stayed and is not subject to appeal; or

Paragraph (b) if the liability is under a settlement of the claim—the date on which the settlement agreement was entered into; or

Paragraph (c) if the liability is some other kind of liability—the date on which the liability was incurred.

Subsection (4) provides that if the date that would otherwise be applicable under subsection (3) is before the commencement of Division 2A, the application can be made after that date but cannot be made more than 28 days after the commencement of that Division.

Subsection (5) provides that the HIC may accept a late application if the HIC considers that there are good reasons for doing so.

Subsection (6) provides that an application may be made to the Administrative Appeals Tribunal for review of a decision of the HIC not to accept a late application. 

The note explains that section 27A of the Administrative Appeals Tribunal Act 1975 requires notification of a decision that is reviewable.

37B Payment date for exceptional claims indemnity

Time by which application must be decided

Subsection (1) provides that subject to subsections (2) and (3), the HIC is to decide an application for an exceptional claims indemnity on or before the end of the 21st day after the day on which the application is received by the HIC.

Subsection (2) provides that if the HIC requests a person to give information under section38 in relation to an application for an exceptional claims indemnity, the HIC does not have to decide the application until the 21st day after the day on which the person gives the information to the HIC.

Subsection (3) provides that if the HIC has received, but not yet decided:

Paragraph (a) an application for the issue of a qualifying claim certificate in relation to a claim; and

Paragraph (b) an application for an exceptional claims indemnity in relation to the same claim;

the HIC does not have to decide the application for payment of an exceptional claims indemnity until the HIC has decided the application for the issue of a qualifying claim certificate.

Time by which payment must be made

Subsection (4) provides that if the HIC decides to grant an application for an exceptional claims indemnity, the HIC must pay the indemnity to the applicant as soon as practicable after making that decision.

Where practical the HIC will pay an exceptional claims indemnity on the date that the practitioner is required to discharge their liability.

Item 27 Paragraphs 38(1)(a) and (b)

This item omits “to an MDO or insurer” from paragraphs 38(1)(a) and (b) so that they apply to payments to anyone.

Item 28 After paragraph 38(1)(b)

This item inserts new paragraphs in subsection 38(1) so that the HIC may request information if it reasonably believes that a person is capable of giving information that is relevant to determining:

Paragraph (c) whether a qualifying claim certificate should be issued, varied or revoked; or

Paragraph (d) the Commonwealth’s possible future liability to make indemnity scheme payments, or a particular kind of indemnity scheme payment;

Item 29 After paragraph 38(2)(c)

This item inserts new paragraphs in subsection 38(2) to make it clear that the people who may be requested to give information include:

	Paragraph (ca) a person who practices, or used to practice, a medical profession;

Paragraph (cb) a person who is acting, or has acted, on behalf of a person covered by paragraph (ca).
This section is not intended to override legal professional privilege.

Item 30 Paragraph 38(2)(d)

This item is consequential on the amendments made by item 29. 

Item 31 Subsection 38(3)

This item repeals subsection 38(3), then substitutes new provisions:

Subsection (3) provides that without limiting subsection (1), if the information sought by the HIC is information relating to a matter in relation to which a person is required by section 39 or 40 to keep a record, the HIC may request the person to give the information by giving the HIC the record, or a copy of the record.

Subsection (3A) provides that without limiting paragraph (1)(d), the HIC may request an MDO or insurer to give information under that paragraph on a periodic basis.

Item 32 Subsection 39(1)

This item repeals subsection 39(1) (including the subsection heading and the note) and replaces it with a new provision.

Records to be kept by person who applies for payment

Subsection (1) provides that a person who applies for an indemnity scheme payment, or a payment under the Exceptional Claims Protocol, must keep records relevant to the following matters:

	Paragraph (a)	the payability of the payment;

	Paragraph (b)	the amount of the payment payable;

Paragraph (c)	any amount paid to the person that results in a person being liable to pay an amount under section 24 or 34T;

	Paragraph (d)	any other matter determined by the HIC.

The note explains that failure to keep the records is an offence (see section 47).  The note for the subsection indicates that the heading is replaced.

Item 33 Saving provision—determinations under paragraph 39(1)(d)

This item provides that a determination in force under paragraph 39(1)(d) of the Medical Indemnity Act 2002 as in force before the commencement of item 32 of this Schedule has effect after that commencement as if it were made under paragraph 39(1)(d) of that Act as amended by that item.

Item 34 After subsection 39(1)

This item inserts a new subsection 39(1A).

Records to be kept by person who applies for a qualifying claim certificate

Subsection (1A) provides that a person who applies for the issue of a qualifying claim certificate in relation to a claim must keep records that are relevant to the following:

Paragraph (a) matters related to whether the criteria specified in subsection 34E(1) are satisfied in relation to the claim;

Paragraph (b) any other matter determined by the HIC. 

The note explains that failure to keep the records is an offence (see section 47).

Item 35 Paragraph 39(2)(b)

This item repeals the paragraph 39(2)(b), then substitutes a new provision.

Paragraph (b)	whichever of the following days applies:
(i)	if the record is required to be kept because the person applied for an IBNR indemnity or a high cost claim indemnity—the day on which this Act commenced;
(ii)	if the record is required to be kept because the person applied for an exceptional claims indemnity or a qualifying claim certificate—the day on which Division 2A commenced;
(iii)	if the record is required to be kept because the person applied for a payment under the Exceptional Claims Protocol—the day on which the Protocol took effect.

Item 36 Subsection 39(3)

This item is consequential on the amendment made by item 31.

Item 37 Subsection 41(1)

This item amends subsection 41(1) so that it applies to overpayments made to anyone, not just to an MDO or insurer.

Item 38 Paragraphs 41(1)(a) and (b)

This item amends paragraphs 41(1)(a) and (b) so they apply to anyone, not just to an MDO or insurer.

Item 39 Subsection 41(3)

This item repeals subsection 41(3), then substitutes a new provision.

Subsection (3) provides that the amount overpaid is a debt due to the Commonwealth by the liable person. For this purpose the liable person is:

Paragraph (a) if the indemnity scheme payment was an IBNR indemnity or a high cost claim indemnity—the MDO or insurer to which the payment was made; or

Paragraph (b) if the indemnity scheme payment was an exceptional claims indemnity—the person who is the liable person under subsection 34R(2).

The notes explain that: 
Paragraph (b)—if the exceptional claims indemnity is or was not dealt with in accordance with whichever of subsections 34Q(3) and (4) applies by the time required by subsection 34Q(5), the whole amount of the indemnity is a debt owed by the recipient, and no amount is recoverable under this section (see subsections 34Q(6) to (8)).

Note 2:	Paragraph (b)—if: 
(a)	the recipient and the practitioner referred to in subsection 34QA(1) are not the same person; and 
(b) the practitioner becomes the liable person;  
(c)	then (subject to subsection 34QB(3)), the recipient ceases to be the liable person, and the amount overpaid must instead be recovered from the practitioner.

Items 40 and 41 Paragraphs 41(4)(a) and (b)

This item amends paragraphs 41(4)(a) and (b) so they refer to the liable person rather than an MDO or insurer.  

Item 42 Subsection 42(1)

This item amends subsection 42(1) so that it refers to the liable person rather than an MDO or insurer. 

Item 43 Subsection 42(1)

This item amends subsection 42(1) so that it extends to debts under subsection 34QA(6)and 34S(3).

Item 44 Subsections 42(2), (3), (8), (9), (10) and (11)

This item amends subsections 42(2), (3), (8), (9), (10) and (11) so they refer to the liable person rather than an MDO or insurer. 

Item 45 After paragraph 45(1)(b)

Inserts:

Subsection (3A) If:

Paragraph (a)	the repayment or overpayment debt relates to an exceptional claims indemnity; and

Paragraph (b)	the recipient and the practitioner referred to in subsection 34Q(1) are not the same person; and

Paragraph (c)	the practitioner becomes the liable person; and

Paragraph (d)	the direction was given to the recipient;
the direction ceases to have effect when the practitioner becomes the liable person.

This item amends the list of provisions in subsection 45(1) under which a request for information may be given to include a reference to subsection 34X(1). Under subsection 45(2) it is an offence to fail to comply with a request for information under one of the listed provisions.

Item 46 Subsections 42(8), (9), (10) and (11)

This item omits “the MDO or insurer” (wherever occurring), then substitutes “the liable person”.

Item 47 After paragraph 45(1)(b)

This item inserts:
	(ba)	subsection 34Y(1); or

Item 48 Subsection 46(1)

This item amends subsection 46(1) so it extends to sections 34J and 34T. Failing to notify the HIC within the period specified in a provision mentioned in s 46(1) is an offence under subsection 46(2).

Item 49 At the end of subsection 46(3)

This item adds a new sentence at the end of subsection 46(3) providing that strict liability does not apply to the physical element described in paragraph 34J(1)(b) or 34T(1)(b).

Item 50 After paragraph 48(b)

This item amends section 48 so that the Consolidated Revenue Fund is appropriated for the purposes of paying:

	Paragraph (ba) exceptional claims indemnities; and

Paragraph (bb) amounts payable under the Exceptional Claims Protocol.

MEDICAL INDEMNITY (IBNR INDEMNITY) CONTRIBUTION AMENDMENT BILL 2003

NOTES ON CLAUSES

Clause 1 Short title

This clause sets out the short title of the Bill.

Clause 2 Commencement

This clause provides that the Bill will be taken to commence on 1 July 2003.

Clause 3 Schedule(s)

This clause specifies that each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1 – Medical Indemnity (IBNR Indemnity) Contribution Act 2002

Item 1 repeals subsection 5(3) of the Act and substitutes new provisions with respect to the imposition day. The imposition day for a contribution year for a participating MDO is for the contribution year that starts on 1 July 2003: 1 March 2004; or such other day as is specified in the regulations as the imposition day for the contribution year; and for a later contribution year: 1 August in the contribution year; or such other day as is specified in the regulations as the imposition day for the contribution year.

Item 2 inserts two new subsections (1A) and (1B) before subsection 6(1) of the Act which provide for the amount of the IBNR contribution to be changed. The amount of the IBNR indemnity contribution imposed on a participating member of a participating MDO for the contribution year for the MDO that starts on 1 July 2003 is the lesser of: the applicable percentage of the member’s annual subscription for the base year; and $1,000. 

The amount of the IBNR indemnity contribution imposed on a participating member of a participating MDO for the contribution year for the MDO that starts on 1 July 2004 is the amount worked out by adding: half of the applicable percentage of the member’s annual subscription for the base year; and the lesser of: $500; and half of the applicable percentage of the member’s annual subscription for the base year.

Item 3 amends subsection 6(1) by after the words “the MDO” inserting “that starts on or after 1 July 2005”.