VMIA advice to the Victorian Competition & Efficiency Commission Inquiry into Aspects of the Wrongs Act 1958 (Vic)

Transcription

1 VMIA advice to the Victorian Competition & Efficiency Commission Inquiry into Aspects of the Wrongs Act 1958 (Vic) 15 November 2013

2 Contents 1.1. Introduction Executive Summary Victorian Competition & Efficiency Commission Inquiry into aspects of the Wrongs Act Scope for the VMIA Actuarial Work Constraints relating to use of Claims Data The VMIA s Medical Indemnity Insurance Premium Data Modelling Claim Summary Scenario 1: Caps for Damages for Non-Economic Loss (General Damages) Scenario 2: Impairment thresholds to access damages for non-economic loss Scenario 3: changes to discount rates which apply to lump sum damages for future economic loss Scenario 4: the impact of restoring the common law rights to Sullivan v Gordon damages Disclaimer 2013 VMIA. The information provided in this document is intended for general use only. It is not a definitive guide to the law, does not constitute formal advice, and does not take into consideration the particular circumstances and needs of your organisation. Every effort has been made to ensure the accuracy and completeness of this document at the date of publication. VMIA cannot be held responsible and extends no warranties as to the suitability of the information in this document for any particular purpose and for actions taken by third parties. This document is protected by VMIA copyright. Page 2 of 13

3 1.1. Introduction The Victorian Competition & Efficiency Commission (VCEC) has been directed by the Hon. Michael O Brien MP, Treasurer of Victoria, to conduct an inquiry into aspects of the Wrongs Act 1958 (Vic) (the Wrongs Act). The Wrongs Act is the principal statute governing claims for damages for economic and non-economic loss (general damages) arising from personal injury and death in Victoria in cases other than workplace injuries or transport accidents. The Victorian Managed Insurance Authority (VMIA) welcomes the opportunity to provide input into the VCEC review. The VMIA is the government insurer and manager of claims for Victorian Government departments, statutory authorities and agencies, including hospitals. VCEC requested the VMIA provide input into its review of the Wrongs Act. VCEC identified four scenarios for the VMIA to model to determine the potential impact on premiums charged by the VMIA to its clients. These scenarios do not represent actual recommendations which have been made by VCEC. In undertaking the modelling of the scenarios, the VMIA s medical indemnity claims data was used. The input provided by the VMIA represents the best efforts to model the impacts on the medical indemnity premium of the VCEC scenarios Executive Summary The forecast impacts on the medical indemnity premium for each of the four scenarios described by VCEC are set out below. The VMIA s medical indemnity premium was $146.1 million for the financial year 2013/ Increasing the cap for damages for non-economic loss would impact medical indemnity premiums by: $539,000: +2% $600,000: +4% $750,000: +10% 2. Reducing the impairment thresholds to access damages for non-economic loss and/or introducing a narrative test in addition to impairment thresholds potentially would have the following effects: an impact on medical indemnity premiums in the vicinity of +3% to +5%; increased claims management and administration costs at the VMIA and those government departments who manage under deductible public liability claims; an increased burden on Courts time (and an associated increase in legal costs as a result) in determining disputes under a narrative test, for what would in all likelihood be relatively small claims. 3. All claims that involve a future loss, such as for care, medical expenses or future employment, will be impacted by a change to the discount rate. This impact would result in an increase or a decrease in the medical indemnity premium. Changing the discount rates which apply to lump sum damages is predicted to impact the medical indemnity premium as set out below: 2% discount rates: + 34% 3% discount rates: + 19% 4% discount rates: + 8% 6% discount rate: - 6% Page 3 of 13

4 4. The impact of restoring the common law rights to Sullivan v Gordon damages for loss of capacity to care for others could have an impact on the medical indemnity premium in the vicinity of +5% to +10%. The increases modelled are potentially very significant. Except for the scenario of increasing the discount rate to 6% on the basis of the modelling, all the VCEC scenarios would result in an increase in the expected costs of medical indemnity insurance for the State of Victoria Victorian Competition & Efficiency Commission Inquiry into aspects of the Wrongs Act 1958 The purpose of VCEC s review, as set out in the Terms of Reference, is to identify and make recommendations to address any anomalies, inequities or inconsistencies in the Wrongs Act relating to personal injury damages. The Terms of Reference specifically exclude VCEC from revisiting or compromising the underlying objectives of tort law reforms. These objectives were to limit some common law rights to compensation with the aim of reducing the price of, and increasing the availability of, public and professional liability insurance. VCEC has been directed to make recommendations relating to personal injury damages, including: the limits placed on available damages for personal injury or death, for both economic and non-economic loss, by the Wrongs Act; the impairment thresholds for personal injury imposed by the Wrongs Act in relation to damages for non-economic loss; discount rates applicable to lump sum damages awarded for future economic loss; and limitations on damages for gratuitous attendant care. In recommending options for amendments to the Wrongs Act, the Terms of Reference state that VCEC is to have regard to: whether any such options would have an unduly adverse impact on the price and/or availability of public liability or professional indemnity insurance in Victoria; the risk faced by potential defendants of unmeritorious litigation; the possible impact on decision making and administrative bodies, including courts and the Medical Panel; and consistency with other legislative regimes prescribing compensation for personal injury, including the Victorian Accident Compensation Act 1985 (Vic) (the Accident Compensation Act) and the Transport Accident Act 1986 (Vic) (the Transport Accident Act) and interstate regimes, having regard to the different objectives of these regimes Scope for the VMIA Actuarial Work An important part of VCEC s inquiry involves understanding the likely quantitative impacts of any changes to the Wrongs Act on the insurance market in Victoria. VCEC identified four scenarios for consideration and to model the potential impact on the VMIA medical indemnity premium. These scenarios are set out below. 1. Caps for damages for non-economic loss: aligning the cap to $539,000 in accordance with the Accident Compensation Act; increasing the cap to $600,000; or increasing the cap to $750,000. Page 4 of 13

5 2. Changing the impairment thresholds that currently apply in order to access damages for non-economic loss: lower impairment thresholds to be greater than or equal to five percent (physical injury) and ten percent (psychiatric injury) whole person impairment or introduce exceptions to the thresholds such as a greater than or equal to five percent impairment threshold for spinal injuries, where the impact on liabilities insured by the VMIA can be ascertained; introduce a narrative test in addition to impairment thresholds; replace impairment thresholds with monetary thresholds. 3. Modelling the impact of changes to discount rates which apply to lump sum damages for future economic loss by applying discount rates of 2%, 3%, 4% and 6%. 4. The impact of restoring the common law rights to access Sullivan v Gordon damages for loss of capacity to care for others on the cost and availability of insurance provided by the VMIA Constraints relating to use of Claims Data The assessment of the likely quantitative premium impacts of the scenarios modelled has been limited to the potential impact on the total premium for the medical indemnity portfolio. The scenarios have been modelled using this claims experience only for the following reasons: The VMIA s medical indemnity insurance coverage does not include a policy deductible (excess), which means that the VMIA has access to quantum data for all medical indemnity claims outcomes from the ground up. This data contains a relatively large number of claims when contrasted with (for example) general public liability claims. The VMIA s data on general liability claims (non-medical indemnity) has not been utilised in the modelling of the VCEC scenarios due to the factors outlined below: This data does not include all public liability claims exposures, as clients can and do elect to retain potentially large policy deductibles for public and product liability insurance. This can result in some clients effectively self-insuring for many liability exposures, particularly involving less significant injuries. There is not sufficient under deductible claims data across the public sector to enable modelling to occur. The VMIA s public and product liability insurance extends beyond personal injury claims, to include claims for property damage. These claims would need to be removed from any consideration of the impact of scenarios modelled by the VMIA at the request of VCEC. Accordingly it is not possible for the VMIA to comment specifically on the potential cost impact other than for the medical indemnity premium pool The VMIA s Medical Indemnity Insurance Premium The VMIA premium for the Department of Health for medical indemnity insurance was $131,187 million for the financial year 2012/13 and $146.1 million for the financial year 2013/14. In excess of 87% of the medical indemnity premium represents the expected costs of claims. Therefore, assuming all other variables remain constant, changes in the cost or the frequency of claims will impact on the premium necessary to meet claims exposures. Page 5 of 13

6 1.7. Data Modelling The attempt to model the scenarios has been undertaken with data that includes four financial years of settlement information for medical indemnity claims, representing the period 2009/10 to 2012/13 inclusive (excluding data reflecting pre-tort reform claims that actually resolved within this four year period). In undertaking the modelling, the data has been: satisfactorily reconciled the information to that obtained for the VMIA s claims valuation; aggregated where payments are made to multiple payees; appended information such as date of birth from existing the VMIA data files Claims Summary The claims summary is detailed in Table 1. Table 1: Claim Summary Percentage of Total Payments Number of Claims Total Costs $m Past Eco, medical, care, interest Legal Costs (plaintiff and defendant) General Damages Future Economic Loss Future Medical and Hospital Future Care Total * 9.8% 14.4% 22.5% 7.9% 11.1% 34.4% 100.0% * Total costs represents settlements made in the period 2009/10 to 2012/13 regardless of when the incident occurred. The cost of future care was identified as the largest component in medical indemnity claims. The High Court case of Griffiths v Kerkemeyer (1977) 139 CLR 161 established that claimants needing domestic, medical or nursing services, which are provided gratuitously as a result of their injuries, may recover damages for such services. Griffiths v Kerkemeyer damages are determined by reference to the cost of providing such services commercially, despite the services being provided gratuitously. Damages for gratuitous attendant care have been modified by s. 28IA of the Wrongs Act, which provides that no damages may be awarded unless a court is satisfied that there was a reasonable need for the services to be provided, which has arisen solely as a result of the injury and such services would not have been provided to the claimant but for the injury. Care provided to a claimant prior to the resolution of their claim, and care required into the future as a result of the injury sustained is identified and valued at a commercial rate. Future care predominantly comprises of attendant and nursing care, which may be required on a full time basis Scenario 1: Caps for Damages for Non-Economic Loss (General Damages) Damages for non-economic loss (also known as general damages) are paid as compensation for pain and suffering, loss of amenities of life and loss of enjoyment of life. In July 2003 the cap on non-economic loss under s. 28G of the Wrongs Act was $371,380. The cap on damages that can be awarded for non-economic loss is indexed annually at CPI. It is analogous to the cap on common law damages under the Transport Accident Act. In July 2013 the cap on non-economic loss damages under the Wrongs Act was approximately $498,000. The cap under the Accident Compensation Act is currently approximately $539,000. Page 6 of 13

7 The likely impact on the medical indemnity premium of increases in the cap on damages for non-economic loss was modelled for the amounts set out below: $539,000. $600,000. $750,000. The expected impact on medical indemnity claims and the resulting impacts on premium costs of increasing the cap are detailed in Table 2. Table 2: Impact on Medical Indemnity Premium of Changing General Damages Cap General Damages Cap $539k cap $600k cap $750k cap Expected impact on claims costs +2% +5% +11% Resulting impact on premium +2% +4% +10% Impact on premiums Depending on the extent of the increase, increasing the cap on damages that can be awarded for non-economic loss would increase the total VMIA medical indemnity premium by between 2% and 10%. Key Assumptions In modelling the data it was assumed that any increase in the cap for damages that can be awarded for non-economic loss would have a proportionate increase in awards of such damages for all medical indemnity claims. By way of example, an increase in the cap on non-economic loss damages to $600,000 is approximately a 21% increase in the cap. The VMIA has assumed that this increase would apply to non-economic loss damages received across all claims Scenario 2: Impairment thresholds to access damages for noneconomic loss Part of tort law reform was the introduction of limitations in the form of establishing thresholds on liability for damages arising from smaller claims. An objective of this reform was to reduce the high transaction costs involved in resolving small personal injury claims. VCEC requested changes in impairment thresholds to access damages for non-economic loss be modelled as set out below: (a) (b) (c) lower thresholds, to be greater than or equal to five percent and ten percent or introduce exceptions to the thresholds such as a greater than or equal to five percent impairment threshold for spinal injuries, where the impact on liabilities insured by the VMIA can be ascertained; introduce a narrative test in addition to impairment thresholds; replace impairment thresholds with monetary thresholds. Thresholds for Damages for Non-Economic Loss Section 28LE of the Wrongs Act currently sets a threshold for damages recoverable for noneconomic loss as follows: Page 7 of 13

8 Physical injuries: a whole person impairment of greater than 5%. Psychiatric injuries: an impairment of greater than 10%. In addition to the above thresholds, some injuries are deemed to be significant without requiring an assessment. These are the loss of a foetus, (injury arising from the loss of a child due to an injury to the mother or foetus or child before, during or immediately after birth) and the loss of a breast (Wrongs Act s. 28LF(1)(c)(ca) and (d)). Unless a respondent agrees to waive the requirement, a determination of whether an injury is significant requires an assessment of the degree of impairment by an approved medical practitioner. A respondent can accept the assessment or refer a claimant to the Medical Panel for a determination Modelling of Changes to Impairment Thresholds Modelling is unable to precisely forecast all of the circumstances envisaged in VCEC scenario 2, as they involve attempting to model an indeterminate number of claims that currently do not receive an allowance for non-economic loss damages. To gain an understanding of the possible magnitude of the impact on premiums, data in the three lowest claims size bands has been examined (claims resolving under $20,000, between $20,000 and $50,000 and between $50,000 and $100,000) to determine the percentage that receive non-economic loss damages. Of the claims in the three lowest claims size bands, Table 3 sets out the claims that receive non-economic loss damages. Table 3: Percentage of claims receiving general damages by band Total payments $m Claim Size Band Claims that receive non-economic loss damages Claims that do not receive noneconomic loss damages Claims that receive non-economic loss damages Claims that do not receive noneconomic loss damages $m <$20k % 0.3% 20-50k % 0.2% k % 0.1% Legal Costs The legal costs incurred (plaintiff and defendant combined) for the three lowest claims size bands, set out in Table 4. Table 4: Legal Costs as a Percentage of Claim Payments Claim Size Band Legal costs as % total $20k 69% 20-50k 54% k 44% Page 8 of 13

9 For claims in the lowest size band (claims that resolve under $20,000) 69% of the claims payments are for legal costs. Whilst this percentage decreases to 54% and 44% in the next two claim size bands, it is still a very significant proportion of claim payments. A reduction in the thresholds or an introduction of a narrative test would result in a higher frequency of low quantum claims, and a very significant portion of payments made in resolution of these additional claims being paid in legal costs. (a) Lowering the Impairment Thresholds If thresholds were to be lowered, thereby allowing claimants who did not meet the current thresholds to seek non-economic loss damages, it is reasonable to expect that there would be an increase in claims frequency involving claims in the lowest claims size bands. This increase in claims frequency is estimated to increase claim costs by between 4% and 6% of claim payments. The impact on premiums would be in the vicinity of 3% to 5%. Spinal Injuries The application of a threshold of greater than 5% may disadvantage claimants who seek damages for less significant spinal injuries, as these injuries are assessed in increments of 5% under the AMA Guides. The VMIA is unable to model the potential impact of not including this category of claims to allow such spinal injuries to meet a threshold equivalent to 5%, as it has insufficient data for claims relating to such injuries. The size of the group of claimants who would meet the threshold should such a change be made is not known. Psychiatric Injuries It was not possible to model the potential impact of a threshold of 10% for psychiatric injuries, as it has insufficient data for claims relating solely to psychiatric injuries in the medical indemnity claims data. The impact of such a change would need to take into account not only the number of claimants who would reach the threshold who currently do not, but also the extent to which a reduction in the psychiatric injury threshold might impact upon whether the threshold is an effective gateway at all. (b) Introducing a Narrative Test The possible behavioral responses to the introduction of a narrative test in addition to the current impairment threshold and the consequent potential premium impact are considered below. Assumptions the introduction of a narrative test for claims for non-economic loss in the Wrongs Act would be similar to that in the Accident Compensation Act (s. 134AB(16)(37)); the narrative test would apply to permanent injuries only, as the thresholds currently do in the Wrongs Act; and the narrative test would operate alongside and would complement (but not substitute) the existing impairment thresholds. Impact of Introducing a Narrative Test A narrative test would operate to provide a claimant who did not meet the current thresholds with a second chance of accessing the gateway to potentially receiving non-economic loss damages. As a consequence, the number and cost of claims would increase. The impact by way of an increase in claim frequency under a narrative test would be greater than the impact of lowering the impairment thresholds to 5% and 10%. This is because the gateway to claim noneconomic loss damages would be opened to all claimants, rather than just those with permanent impairment equivalent to 5% or 10% as the case may be. Page 9 of 13

10 The increase in the number of claims would result in increased claims administration and legal and investigation costs being incurred by the VMIA and government departments who manage claims under their self-insured deductibles (for example, non-medical indemnity public liability claims). In the context of understanding the potential impact on premiums of the introduction of a narrative test, it is important to appreciate that a narrative test: is a subjective and imprecise test; would require a determination mechanism for disputed claims; would utilise Court time in determining disputed claims. Narrative tests require a determination mechanism for disputed claims. The Accident Compensation Act and the Transport Accident Act each have an Originating Motion process for disputes arising out of the application of the narrative test. In addition, both the Accident Compensation and Transport Accident schemes have deemed serious injury thresholds based on permanent whole person impairment. However, the current impairment thresholds under the Wrongs Act are significantly lower than the statutory schemes. The whole person impairment threshold for a serious injury under the Accident Compensation Act (s. 134AB(37)) and the Transport Accident Act (s. 93(3)) for non-economic loss damages is 30%. Disputes in respect of the application of the narrative tests under the Accident Compensation Act and the Transport Accident Act are generally heard in in the County Court of Victoria, often over multiple days, resulting in combined legal costs and disbursements for each party that frequently exceed $75,000. As a consequence, should a narrative test be introduced into the Wrongs Act in addition to the current thresholds, an anomalous situation may arise whereby the legal costs and disbursements incurred in disputes under a narrative test (and which do not otherwise meet the existing Wrongs Act impairment thresholds) would likely outweigh the potential award of non-economic loss damages to a claimant, whilst utilising significant amounts of Court time. The Court highlighted the subjective nature of narrative tests and the associated burden on the Courts time to determine disputes relating to such tests in the case of TAC v Zepic [2013] VSCA (4 September 2013). Mr Zepic s application for leave to commence a common law proceeding under s. 93 of the Transport Accident Act was refused. Maxwell J in his judgment at paragraphs 144 to 147 stated: Twenty years ago in Petkovski [1994] 1 VR 436 Brooking J said: A lamentable situation has been reached with these applications under s. 93 of the Transport Accident Act 1986, where the applicant tries to satisfy the court that a serious injury has been sustained. They are taking up to five days to hear and sometimes a good deal of oral evidence is given. On appeals to this court some appeal books are as bulky as those which come at the end of a trial, at all events one limited to the assessment of damages. When, after a hearing lasting several days, the judge comes to decide whether to give leave under the section, he may well be in a position or virtually in a position where he could if required assess damages for the injury. If he gives leave, the whole process must then be gone through again at trial, with or without a jury. If there is no oral evidence on the hearing of the application and there are conflicts of expert opinion or other conflicts of fact, the judge hearing the application is left to resolve them on the affidavits as best he can.. I doubt very much whether Parliament had the present foolish, wasteful and inconvenient system in mind when it enacted s. 93. Page 10 of 13

11 The incentive to litigate is made all the greater by the fact that this is the very significant opportunity to sue at common law has been made to depend on the imprecise and impressionistic criteria in the so-called narrative test. That very imprecision, and the likelihood of diverging views to which it gives rise, is inimical to certainty and predictability of outcome. there are reasons to doubt whether it is possible to fulfill the requirement of the rule of law that like cases be treated alike, given the imprecision of the narrative test, the intrinsic difficult of assessing and comparing degrees of pain and suffering, and the nearimpossibility of separating out psychological from organic causes of pain and disability. (c) Replace impairment thresholds with monetary thresholds Replacing impairment thresholds with monetary thresholds is not considered a viable way of regulating the gateway to making a claim for damages for non-economic loss, given the inflationary effect that this measure could have on general damages components of less serious claims, and given that the monetary threshold would only be considered as the claim drew to resolution, either by negotiation or verdict. Summary of Impact of Scenario 2 on Medical Indemnity Premiums Introducing lower thresholds or a narrative test in addition to the current thresholds would allow more claimants in small claims to claim non-economic loss damages. The number of additional claims will be greater if a narrative test is introduced, as this would allow all claimants with a potential gateway to claim non-economic loss damages. The increase in the number of claimants that are entitled to non-economic loss damages, who would otherwise not meet the current thresholds, will have a direct impact on the cost of claims resulting in increased cost of on premiums. The circumstances envisaged in VCEC scenario 2 cannot be precisely modelled. On the basis of the modelling undertaken the impact on premiums is estimated to be in the vicinity of an increase of 3% to 5%. The impact of lowering the thresholds to 5% and 10% is likely to be at the lower end of the estimated range, as opposed to the introduction of a narrative test which would be at the higher end. For non-medical indemnity claims, government departments who retain more significant public liability deductibles would be impacted directly by the increase in the number and cost of claims managed by them Scenario 3: changes to discount rates which apply to lump sum damages for future economic loss The current discount rate under s. 28I(2)(b) of the Wrongs Act is 5%. The discount rate applies to the following heads of damage: future economic loss; future medical and hospital care; future care. The most significant future cost in claims is for future care. The following information is provided in line with VCEC s request to model the effect of changing discount rates to 2%, 3%, 4% and 6%. Assumptions Future economic loss commences at the date of settlement except if the claimant was a child at settlement and in that case it commences from the date the claimant reaches 18 years of age. Page 11 of 13

12 Future medical and care costs are calculated to the age of 75 years. Life expectancy of 75 years is a modest reduction from the life expectancy of the general population. Methodology For each category or head of damage expressed the total amount paid as an equivalent per annum payment, which assumed payments from date of settlement as follows: future economic loss to age 65; and future medical and hospital costs to age 75. This data was then recalculated by. the head of damage using the alternative discount rates (i.e. 2%, 3%, 4% and 6%). The outcomes of this modelling are detailed in Table 5. Table 5: Impact on Medical Indemnity Premium of changes in discount rates Discount Rate 2% 3% 4% 5% 6% Expected impact on claims costs +39% +22% +9% +0% -7% Resulting impact on premium +34% +19% +8% +0% -6% Impact on Premiums A change in the discount rate would have a very significant impact on premiums because: all claims that involve a future loss will be impacted by a change to the discount rate; the modelling indicates that a change in the discount rate to 2%, 3%, or 4% percent will increase the costs of claims and directly result in premiums being increased; for example a 3% discount rate is likely to result in a 19% increase in medical indemnity premiums Scenario 4: the impact of restoring the common law rights to Sullivan v Gordon damages VCEC has requested the impact of restoring the common law rights to Sullivan v Gordon damages for loss of capacity to care for others on the cost and availability of insurance to be modelled. The circumstances envisaged in VCEC scenario 4 are not capable of precise modelling as the VMIA has no data on awards of Sullivan v Gordon damages. Scenario 4 also involves a subjective or behavioural element. The VMIA has made comments in respect of this scenario and modelled an estimated percentage range of the impact on premiums using data for the award of Griffiths v Kerkemeyer damages to claimants over 18 years of age. Sullivan v Gordon damages compensate a claimant in situations where the claimant can no longer provide gratuitous services to another person or persons due to their incapacity arising from the injury. Such damages are different to Griffiths v Kerkemeyer damages as they focus on the needs of a third party and not the claimant themselves. Following the decision in Sullivan v Gordon (1999) 47 NSWLR 319 s. 28ID of the Wrongs Act was introduced. A cap on the amount of such damages that could be awarded, not a statutory entitlement to Sullivan v Gordon damages was provided by s. 28ID. Sullivan v Gordon was overruled in the High Court Case of CSR v Eddy [2005] HCA 64 (Eddy). In Eddy, the NSW Dust Diseases Tribunal had awarded approximately $165,000 for Mr Eddy s inability to continue to provide gratuitous assistance (vacuuming, cleaning, gardening and general maintenance) to his wife, who suffered from osteoarthritis. This included care that would be needed after the claimant s death (the lost years). In Eddy, Sullivan v Gordon damages were the largest component of the total damages awarded. The High Court found Page 12 of 13

13 that damages for the claimant s loss of capacity can be recovered as part of general damages, which compensate a claimant for loss of amenities and expectation of life. Following the decision in Eddy, s. 28ID was rendered obsolete as it did not provide a statutory entitlement to Sullivan v Gordon damages. Some States have introduced a statutory entitlement to Sullivan v Gordon damages. In New South Wales s. 15B of the Civil Liability Act NSW (2002) is a partial reinstatement of Sullivan v Gordon damages, with key requirements such as: the third party must fit within the definition of a dependent (such as a child, grandchild, sibling, uncle, aunt, niece, nephew, parent or grandparent, member of the claimant s household); the services would need to be provided for at least a 6 hours per week and for a period of at least 6 months; there would need to be a reasonable expectation that if the claimant had not been injured the claimant would have provided those services for the period of time referred to above; a claimant s dependents must not be capable of performing the services themselves by reason of their age or physical or mental incapacity; and the services are needed and are reasonable in all the circumstances. A partial reinstatement of Sullivan v Gordon damages is also found in the ACT under s.100 of the Civil Law (Wrongs Act) 2002 and in Queensland in s. 59 of the Civil Liability Act In considering restoring the common law right to Sullivan v Gordon damages the VMIA note that the largest single component of claims costs in medical indemnity claims is for future care. Inconsistencies There is no entitlement to Griffiths v Kerkemeyer or Sullivan v Gordon damages under the Accident Compensation Act or the Transport Accident Act. Damages for non-economic loss are paid as compensation for pain and suffering, loss of amenities of life and loss of enjoyment of life. Consideration should be given to the question of whether a separate head of damages for Sullivan v Gordon damages would result in duplication as non-economic loss damages incorporate provision for damages for loss of amenities of life. Impact on premiums It is difficult to assess the potential impact of Sullivan v Gordon damages as the VMIA has no specific data. These damages could potentially be claimed for very significant periods, for example lifelong care for a family member that may be disabled. What the VMIA claims data does show is that future care costs paid to adults in claim settlements represents approximately 8% of total medical indemnity claim payments. On the basis of the VMIA modelling the upwards impact on premiums of introducing a statutory entitlement to Sullivan v Gordon damages could be in the order of magnitude of 5% to 10%. Page 13 of 13