Category: Insurance

20 August 2021

This is a review of the 2017 Motor Accidents Act by Clayton Utz, lawyers, and Deloittes, accountants. It is under the umbrella of SIRA, but it is for the Minister for Customer Service, Victor Dominello as part of the review of the legislation.

The terms of reference are in the Discussion paper, which is the first reference at the end.

Summary of this Submission:

The key message of this submission is that the major problem of the CTP system is the insurers’ ability to refuse treatments, and SIRA’s unwillingness to force them to pay for reasonable treatments.  What is happening is at the level of systematic corporate fraud.

The CTP system exists to pay for the treatment of people injured in Motor Vehicle Accidents, yet a concentration on premium levels and the financial aspects of the scheme has led to a neglect to examine the workings of what should be a medical system.  If two parallel hospitals had grossly different medical results, medical administrators would be called in to examine what was wrong.  Yet when the CTP system and Private health system get wildly differing results from similar populations of doctors and patients, lawyers and accountants are called in. Clearly medical expertise is needed and this needs to come to the actual processes that the insurers are using to pay or deny treatments. Tinkering with the wording of Acts, Regulations or Guidelines will make no difference if they remain poorly enforced.

SIRA needs to take a more active role in regulating the medical decisions of insurers.  It should also refer to injured people as patients, not ‘customers’.  The word ‘customer’ suggests that there is choice. There is not. The patients do not want to be customers at all, though they did buy a policy from someone (often a different insurer some years before).

CV of Dr Arthur Chesterfield-Evans

I am a currently practising GP with degrees in surgery and Applied Science in Occupational Health principally treating WC and CTP injuries. 

I have worked in Occupational health for 40 years and was for 9 years an Australian Democrat MLC.

I have written submissions to the Hayne Royal Commission on Banking and Financial Services with regard to the NSW WC and CTP insurance schemes, the Dore and McDougall inquiries into WC, and can make these available.  I include some appendices with information about insurer behaviour as appendices to this submission.

Perspective

I am writing a submission to this review from the position of a Nominated Treating Doctor (NTD), and as such see the scheme as it actually works in practice.  I submitted to the Hayne Royal Commission into Financial Services, but that inquiry did not have time to look at State insurance schemes, (though they stated that they were within its terms of reference). It seems that the key problem is that the whole scheme and orientation and skills of those both creating the scheme and those conducting the inquiry have been in the area of accounting or law trying to supervise insurers.   

I note in the Background introduction to your discussion paper that there was ‘extensive consultation and deliberation on the part of the NSW Government, SIRA, the insurance industry, the legal profession, road users and other stakeholders as the best way to reform the scheme[1]’.  Presumably the patients for whom the scheme exists and the doctors who treat them are covered as ‘other stakeholders’, but the fact that they are last and not even specifically mentioned exemplifies the distorted priorities of the scheme.  Hopefully it does not presage the same approach in this review, but I note that it is being done by lawyers and accountants, who will need to consult more widely if they are to get much insight into why the system is such an expensive failure.

My view as a Nominated Treating Doctor is that the key problem is that the whole scheme is viewed through a financial prism, with relatively unsupervised insurers gouging profits by refusing treatments to injured people.  The amount of money gouged can be seen from the percentage of the money actually paid to treat as opposed to overheads and profits.  The appalling medical results are a consequence of the treatments delayed and denied by insurers. The system will not be fixed until the issue of insurers interfering in treatments is addressed. This will involve a much tougher regulatory regime where insurers are made to pay for treatments. Currently there is no punishment or disincentive that discourages unreasonable treatment delays or denials.  The simplest solution is to require insurers to pay the reasonable medical costs.  Obviously there would also have to be some effort to contain unreasonable medical bills.  Compulsion and Punishment are harsh words, and politically difficult, which is the reason that it is not spoken or much less done, in a political context where the wording of legislation appears to be dictated to ministers by the insurers.

The Key Issue

The key issue overlooked is that CTP is a medical insurance scheme, which primarily exists to pay for the treatment of people injured in motor vehicles. The standard of medical care should be that achieved by privately insured patients.  If there were two hospitals with similar populations and staff competence but wildly varying outcomes, a medical administrator would be asked to look at the situation and would look at the medical results and ask doctors.  Yet in the WC and CTP schemes for some reason they ask lawyers and accountants.  Tinkering with the words in Acts, Regulations and Guidelines are of no use if they are not enforced.

The Economic Framework

To look at the broader economic framework, it might be noted that because the two World Wars were fought over access to markets, the conference at Bretton Woods in 1944[2] set up the world to be one market, with those who succeeded in selling their products advancing at the expense of those who did not.  It has been reinforced by trade treaties that have prevented countries having protectionism and lessening trade barriers.  It may have prevented wars.  But it has allowed the rise of multinational companies, who cannot be controlled by any one government and can avoid taxes.  Some of these companies have become more powerful than many governments and governments are increasingly unwilling to intervene in markets. Often they see themselves as pleading for capital investment in their jurisdiction, so their key objective is to lower costs for business. 

In terms of the cost of products, in this case insurance, a market system will only reduce prices when there is real competition, and this requires transparency.  If there is an imperfect market, it needs to be regulated.  The NSW CTP scheme is like this.  It is a cartel that is poorly regulated.  Added to this there has been a rise in the corporate ethos that the sacred duty of a manager is to make a profit.  This was most famously espoused by Milton Friedman in 1970 who said, ‘The  only social responsibility of business is to use its resources and engage in activities designed to increase its profits…so long as it stays within the rules of the game, which is to say engages in open and free competition without deception of fraud’.  The first part of this quote has set a new norm, and sadly the government no longer fills the second half of the quote; the role of setting boundaries in terms of insurer behaviour. 

Corporate Responsibility

The lack of any sense of social responsibility was well illustrated in the testimony of John Nagle at the Parliamentary Inquiry into iCare where he was trying re-define the end point of treatment and payment by iCare to be when people were declared fit for partial work, rather than when they actually returned to work[3].  This would have saved iCare a lot of money by pushing people off workers compensation to a much lower level of Centrelink NewStart benefit.  In other words, he displayed no concern for the social consequences of his actions, he was merely concerned with the financial result for iCare.  His personal sense of entitlement[4] to benefits and nepotism are another issue, again as a result of the emergence of a new class of managers who have little understanding of or care for those who are affected by their decisions. The situation in the CTP system is analogous to the WC system. 

Government Oversight

In terms of the government’s oversight or regulation of the CTP insurers, it is illustrative to look at the dismal history of government regulation in Australia.  Governments never ‘regulate’ powerful interests effectively. Banks, casinos, insurers, nursing homes, mental health systems, media, miners, builders have all had recent scandals.  They all in theory have had regulatory bodies but any change comes from whistle-blowers, never regulators.  Even after the scandals the inquiry reports make little difference.  NSW insurers have had the Dore report, the McDougall Report and a Parliamentary committee, but insurers continue to dud patients, and SIRA still does not discipline them, support NTDs, collect relevant statistics or even look at relevant areas when complaints are made.

I note from the SIRA website that there have been 40,879 claims. Of these 16,315 (40%) requested internal insurer reviews, and there are 7,169 (18%) disputes[5].  The Dispute Resolution Service (DRS) had 77% Medical disputes, which are basically insurers refusing to pay for treatments, but only 40% of these had been resolved with another 11% withdrawn. We might ask wonder what the average delay was, and note that people sit in pain for months waiting for these disputes to be resolved.  We might also ask why so many were withdrawn- perhaps they got treatment elsewhere.  The DRS also only upheld the complaint in 422/742 (56%) of cases[6]. SIRA did not give figures for the percentage of Internal Reviews that upheld the original insurer decision, but my experience is that it is high, perhaps 80%.  It is hard to believe that these internal reviews are other than a time-wasting fob-off measure so that the patient will go elsewhere for treatment.

The government has been keen to keep insurance premiums low and seems willing to let insurers compete to do this with minimal supervision of their activities.  The NSW government has a vested interest in trying to shift the CTP costs to the other health funding bodies, the Federal government (Medicare), Private Health Insurers and patients.  Naturally this is unstated. 

Consumers’ Lack of Power

Since the consumers do not know which company delivers the best deal, the market is no discipline at all.  SIRA was set up by insurance interests as if to regulate insurers and make sure that they were very diligent in not paying too much.  SIRA do not have a corresponding diligence in making sure that insurers give a fair deal to patients.  It is hard to escape the conclusion that if SIRA were to have the temerity to challenge insurers seriously it would have adverse effects on the careers of those within SIRA.  The only way that the situation will be improved is if SIRA’s role is changed to that of an auditor and policeman.  Currently the incentives are all for treatment denials as the insurers are in a perpetual conflict of interest situation. Any moneys that they avoid paying to patients, they keep as profits, so if no one stops their treatment denials, that is what they will do.

Health Insurance Efficiency

A comparison of health insurance systems is illustrative.  Medicare’s overheads are about 4.5%.  Private health insurers, who compete but are obliged to pay at least a proportion of doctors’ fees, have overheads of about 12.5%, whereas CTP insurers only pay out about 50% or less.  The US Health System is widely regarded as the worst in the developed world at delivering equitable health care, and US key health indices, infant mortality and life expectancy are very poor as a result.  The US health care system is however, the best in the world at doing what it was arguably set up to do, to turn injury and illness into profit.  Comparing US health funds, their overheads vary from about 12.5% to over 35%, and it might be noted that they control which doctors patients may go to, and what those doctors may do. They have high costs in terms of patient churn, and the need to account for every tiny procedure and to run a parallel record system.  Because of the complexity of the systems, it is difficult for the patients to make real comparisons of the service that they may or may not be getting.  So the insurers wishing to increase their profit tend to increase supervision and restriction of doctors to keep the costs down, rather than improve services so that they can claim to offer a better product.  The Australian CTP insurers are following this model. 

Lack of Power of Nominated Treating Doctors (NTDs)

From the point of view of the Nominated Treating Doctors (NTD) it would seem that the insurers’ aim is to replace the role of the NTD by their algorithms or flow charts and control the treatment.  (iCare spent a lot of money on computer software to this end).  Cost control is often achieved by refusing investigations, referrals to specialists, or treatments and also by encouraging premature return to work (RTW).  To achieve this last they send their representative, a Rehabilitation Coordinator, to be a presence at a significant number of doctor consultations both to report back to the insurer and often to pressure the Nominated Treating Doctor to follow whatever path that the insurer thinks will minimise their costs.  The Rehabilitation Coordinator is in theory chosen by the patient, but in practice the patient has never heard of such a person and if they are given a choice by the insurer, the choice is from a list that the insurer has compiled.  Again in theory the Rehabilitation Coordinator is a professional who acts in the interest of the patient.  But the individual Rehabilitation Coordinator gets their work from an agency that is chosen by the insurer, so that professional has to please the agency that has to please the insurer.  Most rehabilitation coordinators see the insurer as the client, rather than the patient, which is hugely undermining of their professional role. Many Rehab agencies simply advertise to insurers or employers. The words ‘patient’ or ‘doctor’ are not even on their websites. The Rehab coordinators should be chosen by the patients in consultation with their doctors. If this happened the Rehab coordinators would market to doctors and owe their loyalty to patients as they should.

The position of the NTD is also undermined by the insurer using Independent Medical Examiners (IMEs) to give opinions on the treatments.  NTDs generally do not even get the courtesy of a copy of these opinions which are often used to deny either liability for the pathology or treatments for it.  SIRA has declined to insist that the doctor gets a copy of the report, which may be denying his/her patient’s treatment. 

Independent Medical Examiners (IMEs)

The role of IMEs needs to have close attention.  Insurers seem much enamoured of doctors who will write reports that shift the liability elsewhere, deny that the pathology is serious, deny that the treatment is necessary, or conclude that the patient is ‘faking or exaggerating’.  The doctors are often hired through agencies that take a commission and agencies presumably also will not engage doctors who do not please the insurers with their reports.  I have observed that some of these doctors are flown in from Canberra, Brisbane, Melbourne or Lismore, so clearly the work is very lucrative.  One might ask why there are not enough doctors in Sydney capable of doing such work? 

I have also looked at websites like www.ratemds.com which give patient feedback on the doctors who examine them.  Some doctors who do IMEs have glowing reports about the kindness and competence from the patients that they treat, but terrible reports from the patients having IMEs.  One might term this the Dr Jekyll and Dr Hyde syndrome which seems to be that their judgement and manner changes in different situations, perhaps because they have a predetermined view of patients coming to them with a controversy over their legitimacy, or perhaps the fee structure influences them.

Quantifying Insurer Treatment Denials

I kept statistics of insurer denials of requests for MRIs or specialist referrals, and sent these to the Hayne Royal Commission. I have included this as Appendices 3 and 4. There were considerable differences between insurers which, if made public, would have had a huge effect on the sales of CTP insurers.  I also asked SIRA on a number of occasions to supervise insurers more closely and compile these type of figures, but they have declined to do so.  It might be noted that insurers suffer no sanction if they refuse treatments. You might note that I successfully introduced amendments to the Workers Compensation Amendment Bill in 2000 to penalise insurers who defrauded patients[7], but these provisions are at the discretion of SIRA and have never been used.  They do not even exist in the CTP legislation.  Making these insurer treatment denial figures public would be a sanction that would change insurer behaviour, but it seems that the rhetoric of ‘transparency’ is only rhetoric. 

It must be understood that when insurers refuse treatments, the NTDs are under pressure from the patients to find alternatives.  They therefore use their private health insurance, Medicare, or their own resources to get this treatment. If they succeed in this the CTP insurers have saved money, and so are rewarded for their refusal.  If the case is contested, which is rare if the patient gets treated and recovers, the worst that the insurer suffers is that they have to pay for the treatment, which was usually cheaper than if it had been done at CTP rates. Rewarded again for refusal!  The money is also taken out of the patient’s legal settlement.  It might be noted also that the AMA Guides to the Evaluation of Permanent Impairment also rate people who have had back operations as more impaired, so the insurer benefits from the patient not having had surgery, so tries to delay and hinder the surgery.

All these activities that are aimed at profit maximisation but delay treatments and worsen outcomes. The CTP system is a great cash cow, but does not achieve its principal purpose, which is to treat injury. Like the US system it increasingly emulates, it just makes money for the insurers while the government is loath to rein it in.

It must be conceded that there are examples of doctors overcharging. Some of this is the premium because of the extra paperwork generated by insurers demanding justification for everything. There is also a risk that the doctor will be in an adversarial situation or be called to court, though this is now less frequent.  But some fee disparities are huge.  With come negotiation it is possible for an NTD to get an MRI for a patient for close to the Medicare price of about $250, but the CTP fee is $1750 and a radiology practice, Alfred Radiology was reputed to have changed hands recently for $100 million. This is not in the interests of patients, as the insurers’ response is simply to refuse investigations.  As an NTD, we have no information except via the patients as to what the specialists charge, so NTDs cannot influence this.  I have had a letter from an insurer who demanded that I choose a different specialist as he was too expensive, but there is no data on specialists’ charges or success rates and the insurer merely assumed that I would find a cheaper one in response to their demand.

Control of the process needs to be given to the treating doctors.  The NTDs are almost all GPs, and so have very modest fees relative to the specialists, rehab coordinators, exercise physiologists, physiotherapists, psychologists and presumably private detectives who are quietly and silently used. The role of private detectives is not usually seen by NTDs either, but what happens in practice is that the patient has their liability denied or treatment refused. When they then try to work, often against medical advice, they are photographed and this is assumed to prove that they are fit to work but faking illness and their treatment is even more unequivocally denied.  Usually they only tried to work despite their pain because they had absolutely no money. The myth that CTP is a non-adversarial system is a nonsense, and it seems that only SIRA tries to believe it to justify their highly passive role.  I have spent 35 years in the workers compensation area. I started believing that I had to use my medical expertise to diagnose patient fraud.  I have concluded that very few patients feign injury, of the order of 2% at most, but insurers’ mighty efforts not to pay results in their perpetuating the myth that either there are a lot of people faking, or they have to be very vigilant less anyone be faking.  The cost of all this checking costs far more than the treatments would cost, but it seems that insurers would prefer to spend money on anything but treating people.  I have an example of genuinely injured people who have 4 specialist reports and a security report all trying to deny liability for treatments that were obviously necessary.  3 years after his injury, the man is still substantially untreated.

If an injured person exaggerates their symptoms, IMEs will all write reports and private investigators will film them. They will be denied and vilified. Yet insurers systematically set up overlong protocols so that there are inherent delays and denials that inconvenience every case, create suspicion, an adversarial system, financial hardship and depression and then frequently deny treatment that is entirely justified, but they are never called out.  It is my opinion that over 95% of the fraud in the CTP system is perpetrated by the insurers and less than 5% by patients.  The cost of all this checking, which is far more than the fraud that it supposedly prevents is another reason why the system is a failure. The Banks were criticised by Hayne for their systematic deceptive conduct. Insurers are considerably worse, as they are able either to allege widespread fraud or to claim that they are preventing it.  Frankly this is nonsense.  Very few people pretend to be injured and almost no one ever volunteers for surgery that they do not need.

It might be noted that while medical records can be subpoenaed with absolutely no privacy for the patients, insurer records of denials are in no way available for scrutiny, because while the medical system is supposedly non-adversarial, the legal system is and its privacy is regarded as far more important.  If the insurer records are merely keeping track of the patients history and we are in a non-adversarial system, let them justify the ‘medical decisions’ that they make as doctors have to justify theirs.  I will not hold my breath.  My view is that insurers make their decisions for cost and legal reasons which would often not stand any reasonable medical scrutiny from someone who actually knew the patient.

It might also be noted that insurers have recently been pushing for treatments to be assessed by their ‘cost-effectiveness’.  This might sound fine but if we consider an experiment where two groups of patients with back pain were treated with one group having a GP who regularly prescribed pain killers, and the others had no treatment, arguably at the end of the year the backs of the two groups would be the same, so a year’s pain relief would not be ‘cost-effective’.  Insurers should pay for standard treatments and negotiate with medical colleges if guidelines are needed to define these. If they wish to pay for research on the success rates of various regimes, let them liaise with SIRA and the doctors and set up protocols to do this.  The NTDs would probably be willing to assess the end points.  Insurers should not merely be able to refuse treatment venally or at whim, which from an NTD perspective appears to be the current situation.

Insurers Influencing Treatment Guidelines

The creation of treatment guidelines also need to be mentioned.  There are guidelines for the treatment of Whiplash injuries.  The combination of whiplash injuries with low back pain is probably the commonest GP presentation of motor vehicle accidents. Patients are rear-ended and get whiplash and low back pain.  Medical guidelines were produced on the treatment of whiplash which suggested that no scans were needed unless certain ‘red flag’ conditions were met.  The groups who are most responsible for treating whiplash would be emergency doctors and neurosurgeons. Neither of these had a representative on the committee that created the guidelines which had insurer representatives and doctors who all took a very long-term view of the situation. Whiplash however is an acute condition, and an early diagnosis can save months of time for the cost of a simple MRI (or even a CT, though these have dangerous levels of radiation if done as a routine in a population).  Yet these Whiplash guidelines have been widely used by insurers to deny scans on MVA patients. The lesson is that SIRA should not have any insurer representatives either in the creation of guidelines or in the selection of doctors who are to adjudicate the disputes that the insurers create.

Objectives of the Act

The key elements of this submission relate to Objective (a) to encourage early and appropriate care. As is stated[8] the key to this is post-accident recovery, not monetary compensation. This means optimum treatment as soon as possible. 

The insurers have a lot of time to make their liability decisions and can even ask for more time to do exhaustive investigations and demand past medical records, and deny liability or treatment until these are obtained.  Doctors regard this as tiresome, as the records may be old, the patient may no longer be with them.  Overseas students of visa holders may not have records available, and often see doctors at random as they have no Medicare.  Insurers boast (e.g Allianz) that they have a flexible workforce with part-time workers which is good for women. This is fine, but the injured people have to wait until the claims manager is back and the decision is delayed. The delays and denials have immense effects on the mental health of injured people and the insurers then sometimes endeavour to prove that they had previous psychological problems. The fact that they are injured, in pain, cannot work, and have their personal and family relationships undermined, have a loss of income and have had their treatment refused is presumed to be not relevant.  I attach a list of 83 examples of insurer misdeeds that I sent to the Hayne Royal Commission as Appendix 1. This list is somewhat dated now, but new examples continually recur at much the same rate.

The key point is that the insurers are the chief cause of the failure to deliver timely and appropriate care, and are the reason why the treatment and results are inferior to normal private patients, or even Medicare ones (when the Medicare delays are ignored.  The Medicare waiting time for non-urgent operations is often over a year).  No progress will be made in fixing the health aspects of the CTP system until the insurers are made to pay for the treatments that the NTDs try to initiate.  The insurers try to undermine and supplant the roles of the NTDs, but have neither the expertise nor the patient contact and knowledge to make this a viable proposition.  The insurers manage the claims to minimise their costs and do not acknowledge that letting the doctors get on with the cases would be the best way to optimise outcomes.

The question for this inquiry should be, ‘How do we make insurers actually meet their obligations under the Act when every dollar they save by not treating patients goes to their bottom line?’  It is understood that insurance staff, who are somewhat pretentiously called ‘Case Managers’ which assumes either that they have supplanted the doctors’ role  or that the money is more important than the medicine.  They are paid bonuses to get the cost of claims below certain targets. This results in the Claims clerks managing the money, rather than the patient’s interest.  One might ask how they can be expected to manage in the interest of the patient, when their own interest is to minimise the cost of the treatment?  The problems in the insurance schemes are the incentives and protocols from top management, yet the Claims clerks are the ones abused for refusing treatments, and in most cases will not give their surnames, calling themselves Alison S. or similar.  For people whose job is to give out money to help people this alone is a good indication that they are not working as the legislation intended.  Claims clerks should be referred to as claims clerks, not case managers, by SIRA.  Insurers should be prohibited from providing incentives for these clerks not to treat people. SIRA should audit insurer records systematically and random checks should be carried out by dedicated medical teams to see that insurer protocols are reasonable.  Currently insurers routinely demand complete medical records of patients, but there is no transparent process that looks at their records. SIRA, even when acting on complaints merely asks the insurers for explanations and in the writer’s experience accepts them.  They do not even look at the records of cases against which complaints are made.  Insurers have far too much power against patients and doctors.

Objective (b) to provide financial support for persons injured is very important and was a major improvement in the 1999 legislation.  Many people live from payday to payday and are unable to buy food or pay the rent if there are interruptions to their incomes.  This is particularly the case in students on visas or people on work visas, who it must be noted have no Medicare so are completely at the mercy of CTP insurers when they are unable to work.  It is my view that there should be significant penalties for insurers who unreasonably deny liability or treatment as currently there is no sanction for this. As a minimum the rates of denials and delays by insurers should be collected by SIRA and published to have some consumer pressure to discourage unreasonable and venal insurer behaviour.

Objective (e) is not being met because consumers have no data on which to base their purchase decisions. Competition only works if consumers have data on which to base purchase decisions and it behoves the regulator to set up a framework for competition. Simply setting up an opaque oligopoly market will not deliver any benefits for consumers, as this system amply demonstrates.  SIRA must get data on the rate of refusals of treatment requests by different insurers and publish them.  Currently the only data consumers have is price or ads on TV.

Objective 9(f) to discourage fraud in connection with third party insurance is a worthy objective, but it must be recognised that the main fraudulent behaviour is by the insurers setting protocols that systematically delay or deprive patients of benefits that they are reasonably entitled to. Any effort to control the alleged fraud by patients should not take more resources than the fraud is likely to cost. It seems that the allegations of patient fraud are grossly exaggerated, and the process of excluding it a huge and unjustified overhead of the system as a whole.  Currently it is a make-work scheme for insurers, investigators, IMEs and lawyers. 

Objective (h) is being met very poorly.  There is no comparison of insurer behaviour and no research into successful treatment in areas such as back surgery where the systematic collection of data could yield real benefits.  NTDs would benefit from knowing which surgeons did certain procedures, what they charged and what their results were. The NTDs could also have input into an assessment of the pre- and post-treatment condition of the patient.

I note that you are in the First Stage of the Review and that you are considering whether it is necessary or appropriate to engage ‘directly with stakeholders’.  I can assure you that it is.  The remarkable feature of the SIRA Surveys of WC and CTP surveys is that they seem to be couched in the most euphemistic terms imaginable.  There were 893 CTP patients surveyed and 885 WC patients[9].  The result of this is frankly shocking, but SIRA seems extremely sanguine in their report.  25% of CTP patients have a mental illness, 22% have moderate of extreme pain and those who have such pain, 40% have had a poor experience of their CTP insurer. Only 56% of patients felt that the insurer was efficient in their dealings with them, i/e 46% did not.  Only 51% said that they resolved concerns quickly, 49% did not, and only 54% felt that they acted with empathy, 46% did not.

There is no way that anything like 25% of people have a mental illness before their car accidents, so as any working doctor is likely to tell you, the mental problems are caused by the accident, and mostly by the poor way they are treated by the insurer, who, if it gets serious enough sends an IME to probe their private life and find another reason for their distress. Only just over half those surveyed are happy with the insurers at all.  Yet SIRA seems totally unfazed by this very unsatisfactory picture. It is reported almost without comment except that the information might help insurers.

Minor Injuries

Some definitions need to be addressed also.  ‘Minor injuries’ have been greatly used by insurers to lessen their liability.  While the discussion paper claims (page 9) that ‘minor injury’ is a technical term’ in the Act, in practice it is equated with triviality and used to deny payments. Whether it is merely a term of denial or whether it is term of denial because the injury is considered insignificant by the insurer is surely lost in practice.  It seems that insurers take the wording of diagnoses from the first certificate and on the basis of that determine that it is a minor injury and are very reluctant to change that classification as further facts come to light, or if the patient does not recover as they would like.    Emergency Departments try to limit their work to looking after emergencies, so tend to note diagnoses that are likely to be fatal, and discharge patients with significant pathologies such as back or neck injuries that are not immediately life-threatening.  I have had three patients discharged by EDs with significant spinal injuries requiring surgery and one requiring neck surgery.  None of the three back surgery patients (from 3 different hospitals) had that diagnosis mentioned in their hospital discharge summaries.

The diagnosis ‘soft tissue injury’ is basically a meaningless nonsense.  Apart from bones, all tissues are ‘soft’.  The exclusion of nerves, tendons, ligaments, menisci or cartilage means that most orthopaedic injuries are not soft tissue, yet whiplash and back pain are routinely dismissed as ‘soft tissue’.  It has merely become a convenient term to dismiss inconvenient persistent pain.

Minor psychological and psychiatric injury that is ‘not a recognised psychiatric diagnosis’ has resulted in a lot of semantics, as psychological definitions are not as precise as one might like.  People are often very stressed after accidents, and this is very often compounded by long delays and callous behaviour by insurers, who take no responsibility for this, and often use Psychiatrist and Psychologist IMEs to deny it, prying into their personal lives.

In Regulation 4, an injury to a spinal nerve that results in neurological signs is significant, and should not be a minor injury.  I recognise that cavilling over medical definitions may beyond the scope of this inquiry, but this is part of the framework that allows insurers to deny claims and hinder treatment, which is why the current CTP scheme is so unsuccessful compared to the results achieved by normal private medicine where the doctors are able to get on with their work without venal interference.

The CTP scheme needs to cover ‘at-fault’ and ‘not at fault’ drivers equally. (Section 3.11)

The purpose of the scheme is to cover the cost of motor vehicle accidents.  If a person has an accident and are at fault, they should be punished according to the Highway Code.  The penalty should not be that they cannot get treatment for a condition that might be life changing.  Even an episode of gross negligence does not justify a lifetime of suffering or the withholding of treatment. It merely seems petty vengeance or venality at a legislative level.

Entitlement to Benefits and treatment overseas

It is interesting that treatment benefits are not available outside Australia.  I have quite a number of Korean patients on student or work visas who were injured in MVAs here. Often these were denied reasonable treatment and it was hard to avoid the conclusion that insurers simply wanted them to go home so that they could avoid paying for necessary surgery.  A least 2 of them went home and had successful surgery in South Korea and commented that the surgery was better than in Australia and about a third the price.  If refusal of overseas surgery is to continue the price and availability of surgery here needs to be improved. 

Restricted Duties Support

While in theory patients can have support during recovery by having some degree of wage subsidy, there has been quite a lot of abuse of this provision. Some insurers have been keen that patients do any ‘make work’ task that allows them to classified as ‘fit for restricted duties’ and thus entitled to less damages.  Some employers have been happy to take such workers while their wages were subsidised, with no intention of employing them beyond the subsidised period.  Insurers have also been generally unkeen to pay for vocational training with the same amount of money as there was not a certain job at the end of the training.  Often the patient’s best interest was not much a consideration in this reckoning. There is an absence of ‘good faith’. I note that ‘insurers…must manage claims consistently with the principle of proactively supporting claimants to optimise their recovery and return to work activities,‘ and that ‘Compliance with this obligation is, as with all requirements of the Guidelines, a condition of each insurer’s licence to issue third-party policies’.

These type of heavy sanctions are very unlikely ever to be applied and tend to be imply an all-or-nothing sanction regime, while there is minimal oversight from SIRA for the day to day monitoring of individual claims management.  Obviously SIRA cannot oversee every decision on every claim, but if it were to investigate thoroughly a significant number of complaints and impose graded sanctions on insurers who had been unreasonable or unfair, it might make some difference to insurers’ currently unsatisfactory behaviour.

The General Questions in the Discussion Paper:

1. The objectives of the Act are acceptable, though in practice the preoccupation with saving money in claims and premiums has allowed a lax regulatory regime to be set up by insurance  interests in SIRA and a distortion of their priorities to optimising insurers’ already enthusiastic  cost control. This has allowed insurers to get away with unreasonable costs in investigating claims and denial of treatments, which has meant that the medicine actually delivered is of far poorer quality than the private medicine equivalent that it is supposedly funding. 
2. A detailed analysis of the faults of the Acts, Regulations and Guidelines are somewhat beyond me at this time, but the lack of supervision and sanctions on insurers make lofty words and intentions often more noted in the breach than the observance. The lack of detailed knowledge of the Act, Regulations and Guidelines by both patients and doctors has made this easy for insurers.  SIRA has not stepped up to ensure reasonable insurer behaviour.  Tinkering with wordings of the Act, Regulations or Guidelines is unlikely to be helpful without far better enforcement.
3. The evidence for the failings of the CTP system are in this submission and in my submission to the Hayne Royal Commission.  (I attach my statistics on insurer denials from my submission to this inquiry and my list of patients who were subject to unreasonable insurer decisions as Appendices 3 and 4.  Some of these decisions were WC and some CTP.)  Further evidence of insurer misdeeds are in my submissions to the Dore Inquiry and the McDougall inquiry, while those submissions were directed to the WC system have great parallels in the CTP system. The government has tried to make the two systems behave similarly, and to a large extent they have succeeded in practice, with iCare behaving as a private insurer and denying treatment in a similar way, though not quite as badly as in CTP, as the legislation supports the patients better, and the influence of Unions as advocates may contribute positively towards patient welfare. 
4. In general terms policing the existing laws offers more hope than minor tinkering with them, At fault drivers should have the same benefits as not at fault drivers, Section 3.11.  The Whiplash guidelines need to be re-written with significant input from emergency doctors and neurosurgeons and no input from insurers.  Similarly insurers should have no input to SIRA medical appointments or future guidelines. The insurers’ role is to pay for treatments, not to determine what they are, and this needs to be made clear in the acts, regulations and guidelines and policed by SIRA.
5. As stated above, the care delivered by the CTP system is grossly inferior and far more expensive than comparable privately insurer health cover, when they should be similar. This is really a matter requiring investigation by a competent medical administrator, who has unfettered access to insurers’ files and can analyse the reason for their adverse decisions.  The inherent delays in approving obvious treatments should be removed and probably the best way to do this would be to have the medical colleges define reasonable treatment pathways for common conditions and have NTDs able to do these without waiting for insurer approval.  An alternative would  be to have doctors able to treat the patients as they saw fit, limited by costs per procedure with medical panels looking at any over-servicing or overcharging and counselling the doctors. This might allow some initial problems, but in the longer term would sort out acceptable norms and lower the current unacceptable waiting times and treatment denials.
6. This writer is of the opinion that delay in payment to victims is unacceptably long, but is unsure of what is the reason for this.
7. The lack of payment for attendant care  services considerably worsens the situation for injured patient where the partner has to give up time to look  after them.  Partners are unable to do their own paid work or have their study disrupted by looking after patients and insurers are often reluctant to give them home care for significant hours or for significant periods of time.  ADL (Activities of Daily Living) assessments should be done by an assessor not chosen by the insurer and the carers given reasonable help and this should not be prohibited by Section 3.25, which should be repealed.
8. As above.  Section 3.25 does limit achievement of the objectives of the Act.
9. The term ‘Minor injury’ is an artificial construct which merely reflects a finite period after which the insurers wish to have the right to cease payments without having to argue over every case.  Most patients discontinue treatment when it becomes unnecessary, and the arbitrary selection of 6 months is merely for insurers’ convenience. The term could not be defined because it was not in any way a medical term.  It should not exist as a medical entity. If insurers choose to review claims at a particularly point of time they may do so, but their bullying of doctors and use of Rehab coordinators to do this should have some sanction.
10. The definition of ‘minor’ does align with a lack of perceived seriousness of an injury.  Naturally this does make it likely that it will resolve in a shorter period of time.  But if it does not do so the patient should still be entitled to be treated. The idea that treatment should be ceased because the patient has ‘stopped improving’ also needs to be challenged.  Insurers often want to close claims which are stable but have serious ongoing pain, such as knee, neck or back injuries, which often require ongoing pain relief or later surgery. The early definition of ‘minor injury’ has caused a lot of angst and dispute, and should be disallowed.
11. Statutory benefits for at fault and not at fault persons should be the same. The treatment or non-treatment of motor vehicle accidents should not be a mechanism for punishment of driving misdemeanours. It is also very poor policy to have a CTP scheme yet leave a segment of the population without medical treatment.
12. As above
13. As above
14. From the point of view of the injured at fault drivers it would be a great improvement.  It would not affect not at fault drivers who would get the same service that they get now. It would presumably raise premiums as some people would have increased coverage. It would lessen the strain on other parts of the health system that presumably pick up the tab for the treatment of the at fault drivers.  It is extraordinary that these questions are even being asked!

Statutory benefits in the form of weekly payments equivalent to weekly wages are a major benefit of the 2017 scheme.  It might be noted that many people live from week to week. It would behove SIRA to survey and be aware what percentage of the recipients are in this situation and in which demographics and to concentrate their efforts on giving these people a better deal. Changes in the IR laws have meant a casualisation of the workforce with less job security, the use of job agencies which have the discretion to reduce shifts at whim without actually sacking anyone.  There has been increased use of sub-award wages and cash payments, particularly in overseas students or working visa holders.  Often these people are unable to prove their income and efforts need to be made to ascertain or verify their pre-injury incomes so that they can get paid fairly, as most people do not have a significant surplus in their incomes and a major medium-term income downgrade often spells extreme financial stress and mental depression. SIRA should develop protocols to assess this income and have an appeal mechanism. Sometimes bank statements are evidence, but this does not always seem to be accepted.  It is also important that these benefits are paid promptly. SIRA should keep records of when injured people supply their income details and the delays they experience.  If this were monitored, it is likely that insurer performance would improve.  The cessation of payment should be when they are recovered from their injury, not at an arbitrary 6 months.  The fact that 24% of people with ‘minor injuries’ have not returned to work at 6 months is further evidence that the injury was not minor.  Obviously if they were not working at the time of the injury, they will not be getting these payment in any case.

The various categories of time for cessation of benefits seem to exist so that the costs of the treatment of MVAs can be passed from the State CTP scheme to other elements of the health system in Australia, i.e Private Health Insurance funds, Medicare or the patient themselves.  In general, if someone is injured in a motor vehicle the motor vehicle scheme should cover their loss of income and treatment, and the premiums of road users should cover this.

I note the list of obligations that the injured persons have to the insurers (page 14). These are usually trumpeted as part of the case management plans which come from insurers.  Conspicuously missing from these plans is the insurers’ obligation to pay for reasonable treatment in a reasonable time frame.  The obligations of both parties should be set by SIRA, who should provide the templates for these insurer statements. At present they are like the bank sending notice of variation of interest rates; non-negotiable. They simply define what the insurers want, and serve to set a norm in the insurers’ interest, often requiring a signature of assent at the bottom.  Both the patient and the doctor have to sign to get paid.

1. Damages seem to vary very widely depending on the competence of the patient’s solicitors. Some solicitors seem to go for high-turnover cases with low settlement values. This needs to be examined systematically. Some of my patients with ongoing serious problems have been settled for derisory amounts, which they are not supposed to disclose.  The non-disclosure clause seems very much in the insurer’s interest.

Finally I would be very interested to know what steps you are taking to ensure input from both treating doctors and specialists and from patients to your inquiry.  These last are the people for whom the scheme exists, yet it seems that their voice is the least heard. The inquiry was not well publicised to doctors, let alone to patients.  Patients also have a poor understanding of the law and regulations, so are less likely to come forward.  It might be noted in terms of motoring organisations, NRMA used to have the slogan ‘On the Motorists’ Side’ but since their listing as IAG are now the insurer who on my figures and backed up by a more numerous sample deny more treatments than any other insurer.  They cannot be considered to speak for motorists’ interests in this situation.

Assessment of Permanent Impairment

In terms of real improvement of the CTP legislation, there needs to be a better way of assessing permanent impairment.  The AMA Guidelines for the Assessment of Permanent Impairment are in the legislation but are a nonsense that delivers very unfair outcomes.  The Guidelines are used because the legal process priced itself out of such assessments- more money was spend arguing about the money than there was there to give the patient, so this unfair AMA system was introduced.  It now has two lots of vested interest supporting it; the insurers who do not have to pay much, and the doctors who do the lucrative medicals.  The problem is that the AMA Guidelines make no distinction between an impairment and a disability.  If one has poor vision, that is an impairment.  If glasses correct this, there may be minimal disability.  Injuries that prevent people doing physical work cause a much greater disability to people who are manual workers than to those who are clerical.  But the key problem with these guidelines is that they do not consider pain because it cannot be measured and they try only to use things that can be measured quantitatively.  Back pain is the commonest cause of disabling disability, and a painful back may have a similar range of movement to a non-painful one, so that patients may be rated with minimal impairment by the tables, but be hugely disabled and unable to work at all.  I suggested an alternative scheme as an amendment to the Workers Compensation Amendment Bill No 2 2001, but this has not been examined further[10].  It involved an expert panel of three comprised of an appropriate medical specialist, a rehabilitation person who looked at what the patient could actually do, and a third member who looked at the labour market and what a person could reasonably be paid, to compare with their previous situation. The amendments were not supported as there had been insufficient discussion of the concept, which remains the case. 

Summary

The key message of this submission is that the major problem of the CTP system is the insurers’ ability to refuse treatments, and SIRA’s unwillingness to force them to pay for reasonable treatments.  What is happening is at the level of systematic corporate fraud.

The CTP system exists to pay for the treatment of people injured in Motor Vehicle Accidents, yet a concentration on premium levels and the financial aspects of the scheme has led to a neglect to examine the workings of what should be a medical system.  If two parallel hospitals had grossly different medical results, medical administrators would be called in to examine what was wrong.  Yet when the CTP system and Private health system get wildly differing results from similar populations of doctors and patients, lawyers and accountants are called in. Clearly medical expertise is needed and this needs to come to the actual processes that the insurers are using to pay or deny treatments. Tinkering with the wording of Acts, Regulations or Guidelines will make no difference if they remain poorly enforced.

SIRA needs to take a more active role in regulating the medical decisions of insurers.  It should also refer to injured people as patients, not ‘customers’.  The word ‘customer’ suggests that there is choice. There is not. The patients do not want to be customers at all, though they did buy a policy from someone (often a different insurer some years before).

Appendix 1:  83 cases of Insurer Misdeeds as given to the Hayne Royal Commission

                This is 2 files, a datafile list of the cases and an explanation of them

Appendix 2:  As given to the Hayne Royal Commission, a 2 week sample of my patients, illustrating how many of them had a problem with insurers refusing some standard treatments. It was 76% overall, with the rate varying between insurers

Appendix 4: Insurer Radiology Treatment Denials as given to the Hayne Royal Commission

This has two sample populations, my own practice and a larger survey, which was seeking services from insurers. I do not want to give the source of the second survey, but there is a discussion of the similarity of the results.

[1] Statutory Review of the Motor Accident Injuries Act 2017 Discussion Paper 5  July 2021 p3.

[2] https://en.wikipedia.org/wiki/Bretton_Woods_Conference

[3] parliament.nsw.gov.au/lcdocs/transcripts/2380/Transcript%20-%203%20August%202020%20-%20%20CORRECTED.pdf pp 57-63,  85-88

[4] https://www.parliament.nsw.gov.au/lcdocs/transcripts/2380/Transcript%20-%203%20August%202020%20-%20%20CORRECTED.pdf p57-63, 79-82

[5] www.sira.nsw.gov.au/CTP-open-data accessed 14/8/21

[6] www.sira.nsw.gov.au/CTP-open-data op cit.

[7] https://www.parliament.nsw.gov.au/Hansard/Pages/HansardResult.aspx#/docid/HANSARD-1820781676-22301

[8] Statutory Review of the Motor Accidents Act 2017  5 July 2021 Clayton Utz p8

[9] /www.sira.nsw.gov.au/resources-library/workers-compensation-resources/publications/workers-and-claims/summary-of-the-sira-customer-experience-and-health-outcomes-study

[10] https://www.parliament.nsw.gov.au/Hansard/Pages/HansardResult.aspx#/docid/HANSARD-1820781676-24372

Appendix 1:

Appendix 2

Appendix 4: