Q & A on 2GB discussing CTP Legislative Changes 20/06/13

Thursday, 20 June 2013

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CS       This week we are talking personal injury law in our Ask an Expert Legal Matter segment with Turner Freeman. Turner Freeman, the personal injury specialist is Gaius Whiffin who’s from Turner Freeman and they’re our sponsors of the programme. He joins me in the studio right now. Gaius, thank you very much for coming in.

GW     Thanks Chris.

CS       Now, the reason we’ve got you on the show today is to discuss some of the upcoming changes to CTP legislation. It has been a major issue on our programmes for several days now because we’ve now had the State government put a halt to the legislation that they were trying to get past in the Upper House for more consultation. It indicates to me that maybe there should have been a lot more a lot earlier.

GW     Yeah, well that’s right. I mean, what’s happening is the Bill is passed the Lower House.  It’s before the Upper House. The Government’s admitted it doesn’t have the numbers in the Upper House at the current time to pass it. So the Government’s, and this was only yesterday, basically that it’s been deferred. It’s been deferred until August. The Government’s making noises about having a lot more consultation, having working groups and so-forth. We’ll wait and see, we don’t have any real idea as to what’s going to happen in that regard at this stage.

CS       One of the criticisms of the legislation and, even the Premier admits, that it’s still to be finalised which is quite dysfunctional as far as I’m concerned seeing that it’s already gone through the Lower House and he’s in the Lower House, is the fact that after five years, there’s no injury compensation to a victim.

GW     Well, that’s right. There are…it’s basically created a two tier system. Previously, the system was that it only compensated people that were injured as a result of someone else’s fault on the roads.

CS       Yeah

GW     So this has created a two tier system where there’s one rule for everyone and one rule for people…so called innocent victims of motor vehicle accidents. To have entitlements as an innocent victim, you have to get over certain thresholds which we can come to in a moment. But, if you don’t get over those thresholds and if you’re in the first year so to speak, yes you’re right, five years, unless you suffer from 20% whole person impairment. Now 20% whole person impairment…someone with a back fusion may not get over it, certainly major shoulder/knee surgery doesn’t get over that level.

CS       What about losing an arm? That wouldn’t get over it either?

GW     Oh losing an arm would, but basically you have to lose a lot of the arm…sorry to be flippant…

CS       To qualify?

GW     Yeah, basically you would.

CS       Yeah, ok. So the universal rights now: weekly payment with caps, treatment expenses with caps, small lump sums and that has been reviewed?

GW     No, at the moment, the only people that can claim if you’re injured in a motor vehicle accident are those who are innocent i.e. no fault or…but there can be some degree of contributory negligence and you’d get your damages reduced accordingly. What you can claim at the moment is your full economic loss. So, there are no caps. What you can claim is your full medical cost, past and future. You can claim for the assistance that’s been provided to you by family members and friends around the house, showering assistance, there can be all sorts of assistance that you need. There are caps on…there are, not caps…there are thresholds to meet with some of these but if you’re seriously injured, you will get proper compensation. You only get compensation for your pain and suffering if you’re over 10% whole person impairment.

CS       Right. How does someone go about going through this legal and bureaucratic red tape to qualify?  It must be a nightmare, coupled with the fact that they’ve just gone through a horrible event?

GW     Well, that’s the problem and there are…the scheme itself requires a basic step by step process in terms of proceeding with a claim.

CS       How long can it take?

GW     Oh it can take years.

CS       Years?

GW     It can take years and the more serious the injury, the longer it will take. The injury has to stabilise, it has to reach what they call maximum medical improvement before you can realistically try to resolve a case. Now, if that’s going to take two years, well you’re two years down the track. Until you get that maximum medical improvement then you can’t look at the value of a claim because you don’t really know what’s going to happen with future medical treatment, you don’t know if you qualify for the pain and suffering. That’s the situation at the moment.

CS       See this is also designed to reduce the payments for those who pay for their Greenslip. Gee, I tell you what, if I had a dollar for every person who’s phoned this open line in the last three days saying that I’m paying $200 more/$250 more with recent changes, gee, I’d be a very rich person.

GW     Yes. The Greenslips are at a high rate and that’s one of the reasons for the Government to seek to change it. Whether or not this particular Bill will actually lower Greenslips in the longer term.

CS       You think it’s debatable?

GW     In the longer term, it’s very very debatable.

CS       Because we’ve got corporations now who have to appease their shareholders and if you’ve got competitors around about the same price scale in the insurance game well why would they want to drop their price $300?

GW     Well the interesting thing is the insurers have never complained about this scheme.

CS       That’s the giveaway.

GW     They are making profits a lot more than they were supposed to.

CS       Yeah. And yet claiming that the price we pay for Greenslips is linked to the high cost of claims for compensation and personal injury. Do you believe that?

GW     No I don’t. And just to quote from the actual White Paper the Government put out here…”The main reason for the inefficiencies are insurer’s expenses, higher than predicted profit margins because of the uncertain nature of the scheme.” The insurers are taking up to 20% of profits in some cases. There’s…all these figures can get bandied around as they always do.

CS       20%?

GW     In some…there is certainly an argument that’s out there that they’re taking up to 20% of premiums.

CS       So this is as a result of price gauging, we’re paying big sums for our Greenslips?

GW     Partly…there are a number of other reasons. The scheme itself has a number of inefficiencies in it and the process is a debatable process. I mean, to go from one step to another, it can be made a lot simpler. There have been alternate solutions put out to this Bill and it’s time for consultation. Really.

CS       Back to the drawing board you think?

GW     I think it’s back to the drawing board and, I’m not saying nothing needs to be done about this scheme. The scheme has been operating since 1999 so it’s been there a while. It something that’s had a fair go so to speak but to actually make some amendments, you can’t ram them through. You can’t ram them through the way this has happened.

CS       Ok, I want to take a break now but let’s come back and talk about some of the alternatives, and also the Victorian scheme, which seems to be offering prices for Greenslips at about $100 less. It is a subject that is annoying so many who have to drive a car and who have to get their car insured and we need to get to that. Let’s talk about some of the alternatives after we take a break. And, don’t forget, Gaius Whiffin will take your call from Turner Freeman. Turner Freeman’s the sponsor of our Legal Matters’ segment this afternoon. It’s 14 to 2.

Our Legal Matters’ segment this afternoon. We are talking about personal injury with the personal injury specialist at Turner Freeman Lawyers, Gaius Whiffin is happy to take your calls on 131873. Now, you spoke before the break about alternatives. That is, an alternative to the scheme which is obviously unsustainable financially but at the same time, unsustainable for you and I to pay our Greenslip, it’s ridiculous the prices we’re having to pay at the moment. And a lot of people talk about the Victorian system. In brief, so we understand it, what is the Victorian system and is it something we should be looking at?

GW     Well, the Victorian system is what this was based loosely on. The Victorian system is, at the moment as I understand it, going broke, so it’s not something which I understand will help out this system. It does have lower Greenslips but you can lower Greenslips in New South Wales by doing things differently.

CS       Like what?

GW     Well what this Government’s done in putting forward this Bill is it’s equated innocence with at fault. There are 7,000…there are likely to be 7,000 new claims per year through the CTP system for those drivers at fault. Now you have to make a value judgment. Do we compensate everyone who’s injured on the roads? Or do we compensation those people who are the innocent victims? That’s always been the latter. To change it to the former is a big change. A big change in thinking.

CS       Because it doesn’t protect a large chunk of claimants?

GW     It doesn’t protect people that have just gone about their normal life, on the roads, or pedestrians or motor cyclists or whatever and, through no fault of their own, have had their life potentially ruined. I mean, this Bill can create a danger for everyone, no matter how careful they are, once you go onto the roads, as a pedestrian, as a motor cyclist. The motor cyclists specifically are up in arms about this legislation. Because, of course, they’re the innocent victims more than anyone else. As soon as…they can be the most careful motor cyclist in the world but as soon as they get hit by an at fault driver, this Bill will cause them severe issues unless they are basically 20% whole person impairment and are unable to work again.

CS       As a motor cyclist, I can’t believe that I pay these astronomical sums for a Greenslip because if I prang into you in my two wheels and my one meter and a half long motor cycle, I doubt whether I’m going to injure you as much as I would injure you in the Mazda that I would drive.

GW     Exactly. The motor cyclists have got a big gripe about that and the whole pricing mechanism of Greenslips is, of course, something which is up for grabs. I mean, there doesn’t seem to be much differentiation and you hear a number of alternate solutions. You should work out your Greenslip based on this and that and the other but, realistically…

CS       What about getting it back into the hands of a GIO-like State Government insurance body like we had it? Will we go broke if we do that?

GW     If you use this system, yes. I mean, that was tried back in…well it was always the GIO and then they tried this Transcover deal in about 1988, that didn’t work, that went broke. And they developed the first similar Act back in 1988 and then that formed into this Motor Accidents Compensation Act 1999. And those two Acts, yes the Greenslips have gone up but you want to look at the real reasons for that and this system, I don’t think, will fix those reasons and this system results in the innocent victims of motor vehicle accidents, especially those that don’t earn, especially children. Children get very little under this Act.

CS       Because they can’t be compensated for something they don’t earn?

GW     Yeah, they don’t earn, they get their medical expenses cut off after five years so, you know, if you’re dealing with a…

CS       Prosthetic.

GW     Yeah, well…prosthetic, you’re probably over the necessary thresholds but you’re dealing with…it could be a significant knee injury, the person’s growing up, they’re not necessarily over this 10% whole person impairment which was the threshold for medical expenses and they have the accident when they’re 18, they need some significant surgery because they’ve grown up now, they need it.

CS       They’re paying on their own.

GW     They’re on their own. The Government’s response to all of this is private health insurance, income protection insurance. That’s what they put, people can’t afford that.

CS       No, of course they can’t. Not nowadays. Can I ask this question…a hypothetical question. I’m in the bank, I’m drawing out some money, there’s an armed robbery goes on…I’m injured in that armed robbery. I’m either pistol whipped or kicked in the ribs or whatever. But this is a bank robber that ends up in jail that has no money. Where do I go?

GW     Well, you can’t go against the bank robber. He’s got nothing there. And you can’t…you know, it’s a question of the circumstances. I mean, the bank’s security measures. I mean, I don’t know whether there’d be anything against the bank. That might be a possibility. Otherwise you’re stuck with Victims Compensation. A Victim’s Compensation is where…

CS       Well that’s been torn….as well

GW     Absolutely torn to bits. And that’s gotten through. That’s the debate that the Minister that was responsible for this particular legislation was thrown out of…because he’d yeah…

CS       Alright, we’ve been down that track.

GW     Sure you have.

CS       Thank you very much. Gaius, thank you very much for your information and your explanation as to where we’re heading with this and maybe there is something to look forward to, in that there’s further consultation and maybe even a reshaping of the system.

GW     Well, they’ve said formal consultation. What we’d like is some sort of measures, some sort of committee that’s going to look into this and look at the reasons for the change…the Greenslips basically.

CS       Ok, good stuff. Thank you very much for that Gaius. Gaius Whiffin.