INTRODUCTION... 3 EXECUTIVE SUMMARY Definition of Serious Injury... 5

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2 INTRODUCTION... 3 EXECUTIVE SUMMARY Definition of Serious Injury Identification of the cost of a serious injury to the Victorian community and economy Countermeasures to reduce serious injury occurrence Measures to reduce the severity of serious injury DEFINITION OF SERIOUS INJURY... 7 Serious Injury Data Definition of Serious Injury... 7 (i) The light work back... 8 (ii) The psychiatric injury... 9 (iii) The minor or subtle acquired brain injury... 9 (iv) Exclusion from statutory entitlements... 9 (v) Transport Accidents in the course of employment The Transport Accident Act Serious Injury Threshold IDENTIFICATION OF THE COST OF A SERIOUS INJURY TO THE VICTORIAN COMMUNITY AND ECONOMY Costs Not Compensated Under the Transport Accident Act Costs Beyond the Scope of the Transport Accident Act Volunteer Costs COUNTER-MEASURES TO REDUCE SERIOUS INJURY OCCURRENCE: MOTORCYCLE FILTERING MEASURES TO REDUCE THE SEVERITY OF SERIOUS INJURIES AND THE EFFECTS OF SERIOUS INJURY The Administration of the Act Unreasonably low TAC Schedule of Fees for Medical Services Failure to provide information to the injured in relation to potential entitlements Systematic provision of misinformation in relation to the extent of entitlements Page 1

3 4.2 Proposed Legislative Amendments Loss of Earnings & Loss of Earning Capacity Rates Loss of Earnings & Loss of Earning Capacity Rates: The Self-Employed Abolition of the medical excess Introduction of an Economic Dislocation Payment Conclusion Page 2

4 INTRODUCTION Our insight into the nature, burden and cost of serious injuries sustained in motor vehicle accidents is gained from working, on a daily basis, for and with clients who have been injured in road accidents. We are privy to the nature of the injuries sustained, the resulting physical and psychological symptoms, the dislocation from work and everyday family and social life and the ripple effect on families of those who are injured Some of these clients are continually confronting difficulties in obtaining access to appropriate and optimal medical treatment. In this context, we welcome the opportunity to make a submission to an inquiry which includes Terms of Reference to identify measures to reduce the occurrence and the severity of injuries sustained in motor vehicle accidents. There are systemic issues around access to medical treatment for TAC funded patients. By way of example, we hear time and again from our clients about the dispiriting experience of being referred by their local general practitioner to recommended medical specialists for the treatment of their road accident injuries only to have the specialists decline to accept the referral once they are told that it is a TAC matter. Likewise, we have increasingly noted a reluctance of allied health practitioners such as physiotherapists, whose treatment is so crucial in reducing the long term severity of injuries, to treat TAC patients. We see that the issues confronted by Health and Allied Health Practitioners in treating TAC funded patients as rebounding on those injured by delaying or restricting access to their treatment. In the course of our work we are confronted with another practice which reduces access to appropriate funded treatment. This is the systematic provision of misinformation by the TAC, and often the failure to provide information at all, in relation to compensation entitlements. We appreciate the opportunity to highlight details of these systemic issues with the administration of the Transport Accident Act 1986, issues which deny the injured access to care and compensation benefits which would operate to reduce the severity of the long term impact of their injury. We also advocate for some legislative amendments to mitigate against some of the unfortunate financial consequences of suffering a serious injury, which would at the same time promote a better measure of the true cost of serious injury to the Victorian community and economy. This is in the context of there being significant funding gaps for the seriously injured, their families, carers and their medical and allied health providers of which we are aware through Page 3

5 the course of our daily work and further through recent meetings and consultations with various injury support groups and health professionals and their professional associations. There are recommendations open to be made by the Committee, which if implemented, would reduce the long term severity of many transport accident injuries and the long term impact on the injured person, their families and on the Victorian economy as a whole. We consider the severity of the impact of injuries in a broad sense, including the financial impact on the injured person and their family. We also recognise the importance of identifying the true cost of serious injury to the Victorian community and economy, which will inform decisions with respect to the allocation of resources, made on the basis of reliable and comprehensive data. The definition of serious injury informs the calculation of the associated costs and we note the importance of a definition with a sufficiently broad set of criteria to provide an accurate measure. Page 4

6 EXECUTIVE SUMMARY 1. Definition of Serious Injury 1.1. A single working definition of serious injury should be adopted 1.2. The definition needs to be based on a number of alternative criteria - meeting one of these criteria would bring the injury within the serious injury definition, and 1.3. Any single measure such as an overnight hospital admission is demonstrably inadequate, and would lead to a narrow definition of serious injury which would in turn lead to an underestimation of the cost of serious injury to the Victorian community and economy. 2. Identification of the cost of a serious injury to the Victorian community and economy The starting point is the Transport Accident Commission (TAC) claims costs, including the cost of medical and related services, loss of earnings benefits and other compensation benefits paid to Claimants pursuant to the provisions of the Transport Accident Act 1986 ( the Act ). We emphasise that there are considerable costs associated with relevant serious injuries which are not met by the TAC, notably: 2.1 Non-compensable costs incurred as a result of legislated shortfalls 2.2 Costs beyond the scope of the Act, including costs incurred by and on behalf of the injured, and the losses they incur as a result of their injuries; as well as costs to and losses incurred by the families and other carers of the seriously injured, and 2.3 Volunteer organisation direct costs and opportunity costs. 3. Countermeasures to reduce serious injury occurrence We focus on a specific measure the introduction of legalised filtering (capable of immediate implementation) to reduce the occurrence of serious injury to motorcyclists. 4. Measures to reduce the severity of serious injury The severity of injuries, and the severity of the associated short term and long term physical, psychological, emotional and financial impact on those injured in motor vehicle accidents and their families, can be significantly ameliorated by two related sets of improvements associated with the TAC claims processing and the framework of entitlements set out in the Act. Page 5

7 4.1 The improved administration of the Act by the TAC in terms of: Provision of relevant information to the injured and their families in a timely manner about the nature and extent of their statutory entitlement to particular compensation benefits Ending the systematic provision of misinformation in relation to the extent of entitlements, and Removal of TAC policies which are contrary to the legislative obligation to meet the full reasonable cost of medical treatment. We see improvements in administration of the Act as important in leading to early access to appropriate treatment and compensation benefits which, in turn, will promote more rapid and complete recovery reducing the injury severity. 4.2 We also propose legislative amendments which, while relatively modest in terms of scheme cost, would significantly improve the lot of the seriously injured and their families One of our recommendations in this regard the introduction of a one-off lump sum payment to the seriously injured in the immediate period of weeks after an accident would also improve the measurement of the cost of serious injury, as detailed below. Page 6

8 1. DEFINITION OF SERIOUS INJURY Serious Injury Data The starting point in considering appropriate classifications of the severity of injury is the available data which records and describes injuries which have been sustained in motor vehicle accidents. In this regard we make reference to the recommendations in Chapter 2 of the Road Safety Committee Inquiry into Motorcycle Safety. 1 We note the importance of those recommendations in the context of the current enquiry. It would seem that the recommendations could equally apply to motor vehicle accidents generally with minor modification to the extent that the Chapter 2 Recommendations refer specifically to motorcycle accident related matters. 1.1 Definition of Serious Injury An appropriate definition of serious injury will require alternative criteria to be adopted with serious injury to be established in the event that one of the relevant criteria is met. This is in recognition of the array of types of injuries (both physical and psychological) which can be suffered in and as a result of motor vehicle accidents and also the range of consequences which may flow from a particular injury for an injured person depending upon their individual circumstances. While a definition of serious injury as, for example, an injury sufficiently serious to warrant an admission in hospital 2 may be appropriate as one alternative means of proving serious injury, this is not broad enough to capture many serious injuries. Any such narrowly confined definition would not be adequate. Any definition of serious injury should capture injuries which have serious long term consequences for the injured person, irrespective of whether the injury required an immediate hospital admission post-accident. The overwhelming majority of people who sustain a serious injury in a motor vehicle accident will become entitled to claim no fault compensation entitlements pursuant to the Act. Accordingly, criteria to determine whether a serious injury has been sustained could be based around the extent of the entitlement to some or all of these benefits. 1 RoadSafetyCommittee,ParliamentofVictoria, DataQualityandAccuracy (Chapter2)InquiryintoMotorcycleSafety (2012)pp Ibid.,pp Page 7

9 The no fault compensation entitlements fall into three broad categories: medical and related expenses loss of earnings and loss of earning capacity benefits, and a potential lump sum impairment benefit dependant on meeting the relevant impairment threshold. The appropriate criteria need to be considered carefully as in our experience there is significant potential for people who have sustained a serious injury on any ordinary view to nonetheless not meet criteria which may be developed by reference to some combination of the entitlement to no fault benefits referred to above. Categories of claimants who may not readily meet criteria based around the extent of their entitlement to the three types of statutory benefits referred to above, notwithstanding the fact they would appear to upon any reasonable view have sustained a serious injury, may include: (i) The light work back Consider a young man who sustains a low back injury in a motor vehicle accident causing ongoing symptoms which are considered likely to be permanent. He may have a history of performing both administrative work (which he may have been performing as at the date of the accident) and also more physically based manual work. As a result of his injuries he may suffer significant ongoing levels of pain on a constant basis and he may be unable to lift objects of any significant weight. He may be physically incapable of returning to the more physically based manual work which may in fact have been his preference and he may be unable to return to a range of sporting and recreational pursuits which he enjoyed prior to the accident. He may have attended his local general practitioner and been prescribed ongoing medication and he may have had an opinion from an orthopaedic specialist who advised, at least in the short term, surgery is not recommended. He may have had some physiotherapy treatment. He may quite consistently use non-prescription analgesia for which he may or may not go to the trouble of seeking reimbursement from the TAC. The person in the example above may be a stoic individual who has missed relatively little time away from his administrative work role despite his significant ongoing symptoms. His life has been interrupted to a very significant degree and in the medium to long term he may ultimately be a candidate for surgery which would attract significant long term medical expenses. Surgery however may never be a recommended option for him. Such an individual may become entitled to little by way of earning and loss of earning capacity type benefits and may not qualify for lump sum impairment benefits. Depending on Page 8

10 the circumstances of the accident he may or may not be able to access common law compensation. (ii) The psychiatric injury In our experience, some people who have suffered little or no significant physical injury in or arising out of a motor vehicle accident may suffer serious and in some cases severe and disabling psychiatric injuries. An example is the development of a Post-Traumatic Stress Disorder. Such a condition may be disabling. It is often the case however that a person suffering from such a condition may have had relatively little by way of ongoing medical treatment or counselling. It is often the case that the process of obtaining TAC approval for liability for the cost of ongoing treatment can be daunting for people with serious psychiatric injuries; to the extent that they are obtaining ongoing psychological treatment, some ultimately seek out treatment funded outside the compensation scheme. (iii) The minor or subtle acquired brain injury The description of an acquired brain injury as minor or subtle is incongruous. Any brain injury which has any permanent impact on cognitive function would fairly be described as a serious injury. Again however, depending on whether the person was an earner prior to the accident in which the acquired brain injury was suffered, it may be that such an injury would not give rise to any significant entitlements to statutory no-fault benefits referred to above given that in general terms brain injuries are not susceptible to much by way of ongoing medical or related treatment. (iv) Exclusion from statutory entitlements There are various exclusionary provisions in the Act such that injured persons may be disentitled to some or all of the usual statutory benefits depending on a range of factors. Accordingly seriously injured claimants who may be at the high end of the spectrum in terms of seriousness of the consequences of the injury (including ongoing incapacity for employment) may not fall within a definition of serious injury tied to the criteria of the extent of entitlements to no fault benefits referred to above. For example, a driver injured in an accident who did not hold a current licence to drive a vehicle of the class being driven may be disentitled from claiming loss of earning benefits. (v) Transport Accidents in the course of employment A significant number of transport accidents occur in the course of employment. In these circumstances the seriously injured individual is not entitled to any no fault benefits from the TAC. Rather, despite the fact that the injuries have been sustained in motor vehicle accidents, the statutory entitlement by way of payment of medical expenses, income support and statutory lump sum compensation are payable by the WorkCover Insurer in accordance with the provisions of the Accident Compensation Act There would accordingly need to be a measure of serious injury by way of consideration of the entitlement to the equivalent Page 9

11 no fault benefits to which such a person was entitled pursuant to the Accident Compensation Act The Transport Accident Act Serious Injury Threshold There is a multi-faceted definition of serious injury set out in the Transport Accident Act 1986 which acts as a threshold which must be met in order to be able to make a claim for common law damages. This threshold is however set at a very high level beyond the level of what is considered to be a serious injury in ordinary language. We submit it is straightforward that the legislative definition of serious injury which acts as a common law threshold, is not an appropriate definition to adopt for current purposes. The threshold operates to limit access to common law entitlements to only the most seriously injured and excludes many injuries which would fairly be described as a serious injury as that phrase is widely understood by the community. Further, the serious injury threshold is only potentially relevant and is only considered in certain circumstances, namely where the person injured in circumstances involving negligence on behalf of some other party, is seeking to exercise their common law rights. Summary In conclusion, no single definition - even a multifaceted definition will capture all true cases of serious injury. We believe it is important to carefully consider the appropriate criteria for serious injury and to ensure these are sufficiently broad, such that as many true cases of serious injury are captured within the definition as possible, and the true cost of serious injury can be best measured. Page 10

12 2. IDENTIFICATION OF THE COST OF A SERIOUS INJURY TO THE VICTORIAN COMMUNITY AND ECONOMY The direct TAC claims cost is a starting point in calculating the cost of a serious injury. This includes the cost of medical and related treatment for the injuries, loss of earning and loss of earning capacity benefits paid to the claimant as well as lump sum awards. It is also important to recognise that there are very considerable non-compensable costs, notably: (i) costs of losses incurred of a type which are dealt with by the Transport Accident Act but which are not compensable. For example, the difference between the income earned prior to the transport accident and the maximum 80% of pre-average weekly earnings paid by way of a loss of earning or loss of earning capacity entitlement (ii) costs of a type which are beyond the scope of the Transport Accident Act. For example, the income lost by a partner or parent of an injured person who gives up work or reduces their hours in order to be an unpaid carer, and (iii) volunteer organization expenditure and time. 2.1 Costs Not Compensated Under the Transport Accident Act Examples of losses incurred as a result of legislated shortfalls between the loss suffered and the compensation which may be paid include: the initial $584 of the cost of medical services received by injured people who are not admitted to hospital for at least one day- being the medical excess which is not the liability of the TAC the difference between the pre-accident weekly earnings and the amount paid by way of a loss of earning benefit and loss of earning capacity benefit which is generally at the rate of 80% of the pre-injury level up to a statutory maximum the difference between the statutory maximum amount payable by way of a loss of earning benefit or $1,170 (gross) and loss of earning capacity benefit ($991 net) and even the figure of 80% of pre-accident weekly earnings the failure to include loss of employer funded superannuation, and any loss of earning capacity suffered beyond the three year anniversary of the transport accident being the point at which income support benefits of all types finalised for TAC claimants, save for an extremely small proportion of claimants whose level of whole person impairment is assessed at 50% or higher. Page 11

13 A particular loss associated with injury sustained in transport accidents injury for a selfemployed claimant is worthy of particularly close examination. In particular, an issue arises as a result of the definition of pre-accident weekly earnings self-employed persons, earnings and income from personal exertion provided in Section 5 and 6 of the Transport Accident Act. The interpretation taken by the TAC of the relevant provisions has the effect that no account is taken of the fact that fixed costs of a business will continue, by definition, at the same level whether the business owner is fully engaged in running the business or alternatively whether he or she has been incapacitated as a result of a transport accident related injury. Below in Section 4, we seek to demonstrate how this approach results in a calculation of an entitlement to an income support benefit from the TAC at an unrealistically low level. The interpretation adopted can result in the business owner being better served by closing a business, rather than making every effort to maintain the business as a going concern. 2.2 Costs Beyond the Scope of the Transport Accident Act In some circumstances where a serious injury has been suffered, particularly where the injury is severe or where a young child has been injured a spouse/partner or parent of an injured person may see the only course reasonably open to them being to give up work or to reduce their work hours at least in the short term. This is particularly common where an injury requires an extended period of hospitalisation and/or rehabilitation. In these circumstances there will be no income support entitlement from the TAC for the support person taking leave from employment. It follows that there is currently no readily available method to measure the extent of this cost. 2.3 Volunteer Costs Another potentially hidden cost of serious injury is the cost associated with the significant amount of volunteer work performed to assist seriously injured motor vehicle accident victims. These costs include the direct costs of running a volunteer organisation as well as the cost of the time given up by the volunteers working on behalf of the organisations. Some such volunteer organisations are of significant size and scope and have as their main or indeed in some circumstances sole focus the provision of assistance to people injured in road accidents. As by definition these services are being provided without charge or at the very least at very heavily subsidised rates, there will likely be no ready measure of the cost of this valuable work. Page 12

14 3. COUNTER-MEASURES TO REDUCE SERIOUS INJURY OCCURRENCE: MOTORCYCLE FILTERING Maurice Blackburn, in conjunction with the Victorian Motorcycle Council, would like to emphasise a countermeasure to serious injury occurrence specifically relating to motorcycle riding. Motorcyclists are exposed road users who do not have the same level of protection enjoyed by passenger vehicle occupants. This makes riders more susceptible to injury in a collision, even a minor collision. One cost effective solution for improving motorcycle safety and reducing the incidence and frequency of motorcycle related injury, is to implement a motorcycle specific strategy called traffic filtering. Some quantification of the benefit can be found in Steve Guderian s 2011 paper, which analyses the American context and makes a compelling case for filtering, or lane sharing as it s termed in the U.S. Filtering improves rider safety and reduces serious injury. Traffic filtering is the act of riding between, or to one side of queued/queuing slow moving lanes of traffic. (See figure 1). It is practiced by riders all over the world, notably in the UK and California, and both the Hurt Report 3 and MAIDS 4 studies show safety advantages in the practice. The most likely collision a rider faces in heavy traffic is from the rear. The potential for a rider to be hit from behind (and consequently injured) is not trivial. Figures from the Queensland Annual Road Traffic Crash Reports 5 show that rear end collisions are relatively prevalent. Another risk faced by riders comes from being merged into by a lane changing vehicle. Many drivers looking for a lane change opportunity make only a quick head check or only use their side mirror before commencing a lane change and thus merge directly into the space occupied by the rider. A collision is imminent unless evasive action is taken or the merge is aborted by the driver. By riding between the queues of traffic, the rider significantly reduces the risk of being rearended and substantially reduces the risk of being merged into as a solid lane of traffic presents far fewer spontaneous lane changing opportunities. 3 AssociationofEuropeanMotorcycleManufacturers(ACEM),MAIDS:MotorcycleAccidentInDepthStudy(2009). 4 Hurt,HH.etal,MotorcycleAccidentCauseFactorsandIdentificationofCountermeasures( TheHurtReport )(1981). 5 Queensland,DepartmentofTransport,RoadTrafficCrashesinQueensland:AReportontheRoadToll,Availableonlineat Page 13

15 There is a broader potential benefit flowing on from the public education campaign accompanying legalised traffic filtering, namely improved rider safety from an increased driver awareness of motorcycles. Improved driver awareness would reduce the prevalence of inattentional driver blindness and consequently reduce the occurrence of what is now commonly known as the SMIDSY accident type ( Sorry Mate, I Didn t See You ). Drivers being more likely to see a motorcycle are therefore more likely to respond appropriately to them. The direct safety benefits of filtering are therefore three fold; avoided rear-end and sideswipe collisions and a general reduction in SMIDSY incidents. In addition to this however, legitimised filtering would be expected to encourage a greater uptake in commuting riding. Based on overseas studies such as those conducted by FEBIAC from Belgium, 6 the community benefits could be significant. For as little as a 10% modal shift towards powered two wheelers, the road system could experience a 40% reduction in congestion, leading to consequent environmental and economic benefits, but importantly, fewer stressed and frustrated drivers making poor safety decisions at peak times, potentially improving road safety for all. The filtering proposal has clear merit and deserves genuine consideration. Fig 1: Busy Eastern Freeway showing space available and progress being made by filtering motorcyclists. Note the substantial space available for motorcycles to make easy and safe progress. Note the bumper to bumper proximity of most cars. 6 FédérationBelgedesIndustriesdeL'AutomobileetduCycle'réunies'(Febiacvzw),CommutingByMotorcycle:Impact Analysis,(Transport&MobilityLeuven),ReportNo.10.69,(2011). Page 14

16 4. MEASURES TO REDUCE THE SEVERITY OF SERIOUS INJURIES AND THE EFFECTS OF SERIOUS INJURY In our submission, there are currently a number of systemic issues with the administration of the Act which result in injured TAC claimants being denied access to treatment in a timely fashion or obtaining access to optimal specialist care; or missing out on treatment all together. Rectifying these issues will assist in reducing the severity of symptoms and incapacity caused by road accident injuries. These matters are dealt with below at 4.1 The Administration of the Act. Further, we propose legislative amendments which, while relatively modest in Scheme cost, will operate to improve access to appropriate medical care (in relation to the removal of the medical excess), remove leakage from the TAC Scheme and inappropriate costs shifting to the public health system and elsewhere and assist in ongoing measurement of the true cost of serious injury to the Victorian economy. We suggest further legislative amendments which we submit will operate to somewhat reduce the severity of the economic impact on the seriously injured and their families by introducing a fairer level and assessment of income support benefits, particularly for the self employed. Finally we suggest the introduction of what we have coined an Economic Dislocation Payment, to assist the most severely injured and their families, another measure which we suggest will assist to keep an ongoing measure of the true extended cost of serious injuries on the injured, their families and the community and economy as a whole. 4.1 The Administration of the Act Unreasonably low TAC Schedule of Fees for Medical Services Pursuant to Section 60 of the Act the Commission is liable to pay to a person who is injured as a result of a transport accident the reasonable costs of medical services. It is undoubtedly the case that to allow for the efficient administration of the scheme the TAC has to set some standard rates for standard kinds of treatment. Where there are some unusual characteristic of treatment required (in terms of time spent or complexity) then the onus can be on the Claimant to seek a reimbursement of a higher amount than the standard rate that the Commission adopts. The problem arises where the TAC sets standard rates for various treatment modalities at an unreasonably low rate, which is very significantly below any market range of costs for the treatment in question. Page 15

17 An example is the TAC schedule rate allowed for a standard physiotherapy consultation - currently set at $ Data obtained by the Australian Physiotherapy Association reveal that the average standard physiotherapy consultation fee in Victoria in 2012 was in the amount of $ Our experience from speaking with physiotherapists and from feedback from our clients reveals that this has the following implications: Some physiotherapy clinics will not take on patients who are TAC funded given the low TAC schedule rate which is magnified by the additional administrative burden which is required to obtain authorisation for TAC funding as compared to regular private patients. At physiotherapy clinics which will treat TAC patients this work tends to be allocated to the most junior of practitioners. Physiotherapy clinics are increasingly introducing a gap payment representing the difference between the TAC schedule rates and the standard private practice rates charge to other patients. Many TAC claimants cannot afford to pay the gap fee. By setting the schedule rate so far below the actual range of costs in the marketplace, that is, so far beneath the reasonable cost of the treatment, the TAC is engaging in an ongoing breach of its obligations pursuant to Section 60 of the Act to pay the reasonable cost of the treatment involved. The impact of this ongoing breach is the limitation of access to physiotherapy treatment by those who have suffered a serious injury in a transport accident, a treatment so often crucial to achieving optimal recovery and reducing the severity of the serious injury suffered. The same applies to not only other forms of physical therapies but also to treatment by medical specialists of various descriptions. We are routinely made aware by our clients of the difficulties they have in finding an orthopaedic surgeon who is willing to take on a TAC patient. Another common example is in relation to dental treatment - specifically the significant gap between TAC Scheduled Rates and the actual cost of dental treatment. These difficulties can be particularly acute for those who live in regional Victoria, and do not have options in terms of treatment providers. Page 16

18 4.1.2 Failure to provide information to the injured in relation to potential entitlements In our experience many injured people have had an apparent entitlement to: 1. Make an initial claim for compensation benefits pursuant to the Act of which they are unaware, or 2. Claim/receive a particular type of compensation benefit (where the client has an accepted initial claim for compensation with the TAC), and have not made a claim, but would have done so, had the TAC notified them of the potential entitlement. An example of the first scenario above, which we have recently seen on more than one occasion, is where the TAC have failed to notify a family member of a person who suffered fatal injuries in a transport accident of the family member s potential entitlement to compensation benefits on the basis that they have suffered a psychological injury as a result of the accident requiring treatment and also potentially giving rise to other compensation entitlements. In the recent examples which have come to our attention this failure to alert the injured persons has occurred despite the TAC having had ongoing contact with the injured persons in the relevant period when a claim could have been made. A recent example of the second scenario above involves a situation where a person who has subsequently become a client of our firm was hospitalised immediately after suffering serious injuries in a transport accident. As a result the injured person was unable to continue in her role as the unpaid primary caregiver in respect of a disabled member of her immediate family. This was a cause of significant distress and dislocation during the period of hospitalisation. Despite the existence of a specific legislative provision for compensation to cover the cost of employing a person to provide the relevant care for the first 12 weeks after the date of injury, this was not brought to the attention of our client during that period. We propose that the TAC should review any existing protocols in relation to the provision of information to the injured and their families in the difficult period immediately post suffering a serious injury or the loss of a family member. We emphasise that in the type of example referred to in the first scenario above, the failure to provide the relevant information can lead to a seriously injured person being denied access to funded medical care which would tend to minimise the severity of the injury sustained. Page 17

19 4.1.3 Systematic provision of misinformation in relation to the extent of entitlements As noted above the TAC has a statutory liability for the reasonable cost of medical services required to treat transport accident injuries. The statutory liability involves a continuing obligation to consider requests to meet the cost of treatment from time to time as the need for such treatment may arise. The TAC has, however, developed a routine practice of communicating to claimants that decisions that are made to finalise the TAC s current liability for the cost of a particular type of treatment at a particular point in time actually operates once and for all. Such decisions give the impression, deliberately, that once a decision is made with respect to TAC liability for a certain treatment such as physiotherapy treatment that this is the end of the TAC s liability for the cost of such treatment once and for all. This is contrary to the reality of the TAC s continuing obligation at law. The active implementation of this policy has removed the TAC from even the possibility of exercising its statutory obligation to consider its liability for the cost of treatment, on the merits of the request at the relevant time. This can lead to the TAC failing to even consider its obligation to fund required and compensable costs of medical services which the patient may as a result go without with obvious implications for the long term severity of the injury in question. Case Study The point is best illustrated by use of a case study which demonstrates the two types of determinations regularly made by the TAC, which in conjunction misrepresent the TAC s obligations at law: Decision Type 1: Decision to finalise liability for the cost of treatment Decision Type 2: Subsequent refusal to consider liability for the same kind of treatment, on the basis of Decision Type 1 having previously been made April The client sustained injuries including spinal injuries in a transport accident and at a time thereafter commenced receiving TAC funded osteopathy treatment September After funding a number of sessions of osteopathy treatment the TAC made a determination to the effect that there is no clinical justification for the provision of hands on physical therapy to treat the relevant injuries and that the TAC will cease funding osteopathy treatment or any other physical treatments such as physiotherapy, chiropractic or acupuncture (which were not being sought) as of 6 October 2007 (Decision Type 1) Page 18

20 3. The patient is finding the treatment helpful in reducing symptoms and improving functionality and seeks an internal review of the TAC decision to finalise liability for treatment October The TAC issues a review decision maintaining the terms of the original determination. 5. Over time the client s symptoms fluctuated but ultimately deteriorated. In 2010 the treating General Practitioner made a referral to an Orthopaedic Surgeon for an opinion in relation to future treatment options. The Orthopaedic Surgeon advised against surgery at least at the current time but made a recommendation for a course of physiotherapy treatment in light of the extent of the current symptoms November Upon receiving the request for acceptance of liability for the cost of the proposed physiotherapy treatment, the TAC issued a proforma letter (Decision Type 2) to the effect that a determination had been made on 6 September 2007 finalising liability for all physical therapies and noting that the 12 month period within which review of that determination could have been sought at VCAT had expired. 7. The TAC subsequently refuses further requests to consider the merits of the current request to accept liability for ongoing physiotherapy treatment at the current time in Reliance continues to be placed on the fact of the previous determination (Decision Type 1) to finalise liability in Proceedings are commenced in the Supreme Court of Victoria seeking an Order to compel the TAC to consider whether it had an obligation to fund the physiotherapy treatment in question. 9. The TAC then conceded that it did in fact have such an obligation. Despite the outcome of the proceeding referred to above, the TAC continues to make proforma determinations using the same language as the 12 November 2010 determination above. That is, the TAC continues, on a consistent basis, to refuse to consider the merits of requests for funding of current treatment contrary to its obligations at law. We propose that the Road Safety Committee makes recommendations to the TAC to the effect that the current policy of making proforma determinations of this type (Decision Type 2) should come to an end, given these decisions misrepresent the TAC s obligations at law. We further suggest a recommendation to the effect that the TAC should add an additional paragraph to its Decision Type 1 letters, which seek to finalise liability for the cost of certain types of medical treatment. The additional paragraph could explain that the decision which has been made only relates to the TAC liability for the type of treatment specified as matters currently stand, and that should the Claimant s situation or the need for treatment change in the future, that the TAC Page 19

21 should be contacted to consider its current liability for the cost of any required treatment. This would do no more than explain the existing rights of the injured at law. We further submit that it would be appropriate for a recommendation to be made that the TAC should write to all TAC clients who have received the Decision Type 2 letters, in order to rectify the misinformation previously provided, and to enquire as to whether the claimants in question have any current treatment needs which ought to be properly considered by the TAC on their merits, at the current time. 4.2 Proposed Legislative Amendments Loss of Earnings & Loss of Earning Capacity Rates The Act provides that an earner who is injured in a transport accident and suffers a total loss of earnings, is entitled to a weekly payment in the amount of 80% of pre-accident weekly earnings. This entitlement can continue up until the 18 month anniversary of the accident. Beyond 18 months (and in almost all cases only up until the 3 year anniversary of the accident) the entitlement is calculated at the rate of 80% of the earners pre-accident earning capacity. This benefit is calculated on a post-tax basis. Both of these types of benefits are subject to statutory maximum payments (indexed annually) which are currently set at $1170 gross for loss of earnings benefits and $991 net for loss of earning capacity benefits. This compares with the Australian average weekly earnings figure as at November 2012 of $1, gross. This means that for an earner on average weekly earnings, income support entitlements are paid at less than 80% of pre-injury earnings. Obviously the greater the amount by which pre-injury earnings exceeds the average weekly earnings figure, the lower the percentage of pre-average weekly earnings that the injured person is actually receiving. A reasonable expectation would be a system of income support benefits designed in such a way that, if there is to be a maximum cap imposed, all but high earners would be under that cap. The expectation would be that the vast majority of earners would be entitled to 80% of their pre-accident weekly earnings and this is clearly not the case. The implications of a cap being set at a level which will affect so many earners are clear in the context of the cost of housing and the high proportion of income typically allocated to mortgage repayments or rental payments. Page 20

22 By way of comparison, ongoing WorkCover weekly payments of compensation which are payable to workers who are injured in the course of their employment, pursuant to the Accident Compensation Act 1985 are currently capped at $2, per week. We submit that the caps currently in place in relation to the Transport Accident Act should be increased to a level commensurate with the Accident Compensation Act 1985 maximum Loss of Earnings & Loss of Earning Capacity Rates: The Self-Employed The self-employed experience particular difficulties when they suffer from a transport accident injury related incapacity for employment. The entitlement to income support benefits is made by reference to the pre average weekly earnings, which is based upon the proceeds of the business of the self employed prior to the accident occurring. The TAC will consider the revenues of the business as it operated prior to the transport accident less all costs both fixed costs and variable costs incurred in the course of running the business. The usual position is that the TAC will then calculate the entitlement to Income support benefits at the rate of 80% of the pre average weekly earnings figure which is essentially a profit calculation. This calculation however takes no account of the fact that when there is an incapacity for work suffered by a self employed person the fixed costs of the business, by definition, continue on at the same rate regardless of a total incapacity for work and an associated cessation or reduction in revenues. This deficiency needs to be remedied to avoid the recurring situation whereby a sole trader may be in a better financial position by ceasing to trade in the short term rather than maintaining the business as a going concern. An example of a remedy to this problem would be a legislative amendment to the effect that the self employed person s income replacement benefit is calculated on the basis of the loss of proceeds of the business (the loss of profit calculation) plus an additional amount to cover the fixed costs associated with continuing to run the business. Further consideration needs to be given to the specifics of the legislative amendments required to remedy the situation for self-employed people generally and sole traders in particular. The one certainty is that there needs to be a significant legislative amendment to rectify the current deficiency which not only impacts directly upon the injured person but also directly affects employees of the business as well as suppliers and customers and so forth, that is, the cost of the injury on the Victorian community and economy. Page 21

23 4.2.3 Abolition of the medical excess As noted above, pursuant to the provisions of the Transport Accident Act, unless there is an admission to hospital for at least one day following a transport accident, the TAC is not liable for the initial cost of medical services up to $584. We suggest that a cost benefit analysis of the retention of the medical excess be undertaken. In our view the medical excess should be abolished for reasons including the following: There is no readily apparent logical reason for its continued existence The operation of the excess tends to shift costs arbitrarily and unnecessarily onto the public health system The excess impacts most severely the most vulnerable being those people who are not in a position to finance treatment on a private basis Once injured people, particularly the most vulnerable (including those suffering from significant psychological injuries) are directed towards treatment which is not funded by the TAC, there is a tendency to not shift to TAC funded treatment once the medical excess is reached, and There is a tendency for the most vulnerable to go without treatment at all with obvious adverse implications for the extent of their recovery and the long term severity of their injuries. We submit that the excess reduces the likelihood of optimal recovery especially for the most vulnerable patients. The medical excess also mitigates against the proper measurement of the cost of a serious injury to the community as the cost of medical treatment is not being billed to and recorded by the TAC Introduction of an Economic Dislocation Payment We submit that consideration should be given to the introduction of an additional no fault statutory benefit. The proposed benefit will take the form of a single lump sum payment, or be paid in a small number of instalments over the initial period of weeks and months after a transport accident. The benefit/s would be payable to the injured person on behalf of themselves and their family in recognition of the economic dislocation which is inevitably suffered when particularly serious injuries are sustained in a transport accident. Page 22

24 As noted throughout the Submission document above, there are various costs experienced by the seriously injured which are not compensated by the existing Compensation Scheme. The new compensation benefit would not be designed to fully compensate the injured person and their family for all of these losses but would nevertheless be seen as some acknowledgement of the disruption to their lives. Entitlement to payment of the benefit could be dependent upon alternative criteria such as: a hospital and/or rehabilitation facility stay of a certain period of time, for example, 14 days, or a family member taking a period of time off work, for example, 14 days or more, in order to care for the injured person. In making the claim for the Economic Dislocation Payment the injured person would alert the TAC to the impact of the injuries and the cost of the injury to the broader family. The provision of this information to the TAC would go some way to improving the information held in relation to the extended cost of serious injury to the community and to the economy. Page 23

25 CONCLUSION There is no single, ready definition of serious injury currently being used, which would capture the various categories of serious injury which tend to be suffered in motor vehicle accidents. It is important that a definition of serious injury is formulated so that ultimately the true costs of serious injuries to the Victorian community and economy can be captured, so far as is possible. Any such definition must be broadly based on multiple, alternative criteria. The starting point in identifying the cost of serious injuries are the direct claims costs paid by the TAC, given that a large majority of motor vehicle accident injuries result in a claim being lodged with the Transport Accident Commission for payment of various statutory benefits. It is important however to also include various costs which are either not compensated pursuant to the provisions of the Transport Accident Act 1986, or are entirely beyond the scope of the Act. Measures are open to improve the administration of the Act, relating to TAC Schedule Fees and issues around the provision of information in relation to compensation entitlements. These measures would improve access to treatment, which in turn, would reduce the severity of injuries sustained. Legislative amendments have been proposed which, if implemented, would improve access to appropriate medical treatment as well as reduce the financial burden associated with suffering a serious injury in a motor vehicle accident. Our submission is based upon our own experience in assisting our clients through the compensation process, and is also informed by the experiences of our clients and of other stakeholders, including professional associations, treating health practitioners and representative bodies. We welcome the opportunity to provide this submission for the consideration of the Committee. Page 24