Exceptional Claims Scheme
What is the Exceptional Claims Scheme (ECS)?
The ECS is the Government's scheme to cover doctors for 100% of the cost of private practice claims that are above the limit of their medical indemnity contracts of insurance, so that doctors are not personally liable for very high claims.
These claims can be either a single very large claim or an aggregate of claims that together exceed a threshold for a contract's limit.
How will this Scheme be funded? Will doctors have to fund the Scheme?
The Scheme is fully funded by the Government. Doctors are not required to make a contribution.
What claims will the ECS cover?
The Scheme will cover incidents that were notified after 1 January 2003 or which occur during the life of the Scheme that are covered by a contract of insurance even if these are not notified until after any winding up of the Scheme.
What cover does a doctor need to have to be covered by the ECS?
The doctor must have medical indemnity insurance cover to at least the nominated threshold.
The threshold is set by the Government through legislation. It is currently:
- $20 million for claims not notified from 1 July 2003 when contracts of insurance were required under the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003.
- $15 million for claims notified from 1 January to 30 June 2003 (this is for members of UMP whose insurer AMIL was the first to offer contracts of insurance with a cover limit. The cover limit was $15 million, this was increased to $20 million on 1 July 2003).
However if the doctor has a contract of insurance which has a limit higher than the threshold, the Scheme will apply above the contract limit.
The doctor must be named or referred to in the insurance contract. The ECS will not cover corporate bodies, even if they are run by a doctor.
What are the eligibility criteria for the Scheme?
The incident that gives rise to the claim must be:
- notified or have occurred during the operation of the Scheme. The Scheme will respond even if the claim is not made until many years after the Scheme ends;
- notified under a contract of insurance provided by a general insurer with a contract limit to at least the level of the threshold;
- the claim which relates to the incident must exceed the insurance contract limit (or be one of many claims that together exceed the contract limit);
- within the scope of the contract, that is: if not for the cover limit the contract of insurance would have covered it;
- occur in Australia or its territories or under certain circumstances (such as aid work) provided overseas; and
- occur in part or whole in the treatment of a private patient (public patient treatment is the responsibility of States and Territories).
How will deductibles and excesses be treated under the ECS?
Any deductible or excess in the contract will be treated as a deductible or excess. In entering into the contract, the doctor agrees to make these payments.
So, if a doctor has agreed to pay the first $10,000 of each claim, and there is claim that exceeds the contract limit, the Scheme will only pay once the doctor meets the first $10,000 of claim.
Who can apply for the ECS?
A doctor, or someone acting on his or her behalf, which may be the doctor's insurer or someone acting on his/her behalf, can apply to the Medicare Australia
What will the ECS payments cover?
ECS payments can include:
- damages amounts to patients;
- legal costs;
- administrative costs associated with managing the claim; and
- costs incurred by your MII in managing an incident that they are notified of which may or may not go on to become a claim.
As large claims may take many years to finalise, applicants can apply for a Qualifying Certifiacte and receive payments progressively as costs are incurred, where it can be established that the claim will exceed the threshold, prior to the claim being finalised.
Payments to MIIs before an ECS claim is finalised will be paid under an Exceptional Claims Protocol. Payment will include an administration fee paid to the MII.
How will an ECS indemnity payment be made?
The ECS indemnity payment is made to the person who applies. This might be different to the person who applied for the qualifying certificate.
The person must forward the payment on to discharge the doctor's liability. This would usually take the form of paying the plaintiff's solicitor.
Any overpayments would be recovered from the person who applied.
What if a payment is made by Medicare Australia and the applicant fails to pass it on?
Medicare Australia will seek to recover the amount paid from the applicant.
How is the ECS different from the High Costs Claims Scheme?
Because the ECS covers claims above the insurance contract limit, the ECS allows for payments directly to doctors, whereas the High Cost Claims Scheme assists MIIs with the cost of claims they manage. These differences are reflected in:
- the ECS application and payment processes directly affect doctors; and
- there are requirements for defence of the claim to be conducted prudently and for a legal practitioner to assess the reasonableness of a settlement amount.
How will any changes to the threshold affect the contract limits offered by insurers?
There will be time for insurers to reflect any changes to the threshold in their insurance contract:
- an increase in the threshold would be set by regulation and can only take effect three months before the start of a policy year. A decrease in the threshold would not take effect until at least three months after the regulations were registered on the Federal Register of Legislative Instruments, would have an immediate effect.
- a regulation to change the threshold will only apply to contracts entered into after the making of the regulation.
How will the ECS affect an insurer's financial and prudential obligations?
MIIs may contact the Australian Prudential Regulation Authority to find out about financial and prudential requirements.
Australian Prudential Regulation Authority
GPO Box 9836
Sydney NSW 2001
How long will the Scheme be in operation?
There is no sunset clause for the ECS, although it can be ended by regulation. The Scheme will be reviewed to determine if it remains necessary in the light of State and Territory tort law reform and claims trends.
The Scheme will continue to cover claims and costs associated with notified incidents, that arise from incidents that occurred during the operation of the Scheme even if the claim is not made until many years after the Scheme ends.
Before taking action based on the information provided on this page, you need to consider your own situation and the relevant laws. You should seek advice that takes account of your particular set of circumstances.
The Department of Health and Ageing makes reasonable efforts to ensure that the information provided on this page is accurate. However, before relying on any information on this page, you should always check that the information is accurate, current and complete. The Department does not guarantee the accuracy, currency or completeness of the information on this page. The Department accepts no legal liability for the information on this page.
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