What Can You Be Sued For?

 

The Accident Compensation Legislation As A Shield For The Health Professional 

 

Introduction

One of the features of the accident compensation scheme, following the recommendation of the Woodhouse Report and embodied in a succession of Acts of Parliament culminating in the present Accident Rehabilitation & Compensation Insurance Act 1992 ("the 1992 Act"), was the creation of a statutory bar to proceedings for damages for personal injury where there was cover under the accident compensation legislation.

In this way, the scheme had important implications, not only for those who might suffer the consequences of a personal injury but also for those who might arguably be said to be the cause of the injury. Prior to the scheme, health professionals and their employees were liable to face actions for damages brought before the New Zealand courts in which those whom they had treated sought monetary relief in respect of unfortunate outcomes of treatment. As medical professionals deal directly with the physical wellbeing of persons (rather than with their possessions or financial wellbeing), the risk of legal proceedings to recover compensation for those unhappy with the results of medical treatment was a substantial one and professional indemnity insurance was an important commodity for the prudent medical professional.

The accident compensation scheme ushered in by the Accident Compensation Act 1972 ("the 1972 Act") was responsible for a fundamental shift therefore in an aspect of the practicalities of medical practice. Since 1972, New Zealand has stood to one side while medical practice, in jurisdictions in which litigation against medical professionals occurs, has faced rising professional indemnity costs, ever increasing damages awards during inflationary times and the phenomenon of defensive medicine (in which concern for the wellbeing of a patient is supplemented by concern to avoid litigation).

There can be no doubt that the accident compensation scheme has been a source of some comfort to those whose practice necessarily means that the statutory bar removes a real risk of involvement in professional liability-based litigation. Indeed, so complete has the statutory "shield" come to be regarded that the legal profession has not instinctively regarded medical professionals as likely targets of civil action arising from their professional activities.

For that reason, health professionals will be interested in any suggestion that the shield has grown smaller or developed holes. Any changes to the extent of cover provided under the scheme may have an impact on potential civil liability. It is essential for those potentially at risk from such changes to look carefully at changes in the statutory scheme to monitor their potential exposure to legal claims. The aim of this paper is to assess the changes which have been effected by the 1992 Act from that point of view

top

The Statutory Bar To Proceedings - Cover Under The Act

The bar to court action

In considering the potential for common law liability under the 1992 Act the starting point must be the statutory bar provided by section 14. It states:

No proceedings for damages arising directly or indirectly out of personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 that is suffered by any person shall be brought in any Court in New Zealand independently of this Act, whether by that person or any other person, and whether under any rule of law or any enactment.

While the words of the bar differ from the equivalent section 27(1) of the Accident Compensation Act 1982 ("the 1982 Act"), it is doubtful that the differences are truly material. In the final analysis, operation of the bar is still linked to cover under the Act.

The crucial issue therefore is whether the injury in question is covered under the Act. If it is, section 14 bars an action at common law for damages; if it is not, then no statutory bar applies, and it is the apparent intention of the Legislature to leave the question of remedy to the common law and the Courts. Cover, the central issue, therefore needs to be considered by examining the relevant provisions of the 1992 Act.

Preliminary comments on approach to interpretation

Before examining the provisions of the Act in detail, a few observations should be made. First, the Act reflects a new philosophical approach to accident compensation. The 1972 Act and the 1982 Act were essentially schemes of social insurance. Under the 1982 Act, all personal injuries by accident were covered regardless of fault and the statute barred any action for damages resulting from such an injury. This was reflected in the long title to the 1972 Act:

An Act to make provision for safety and the prevention of accidents; for the rehabilitation and compensation of persons who suffer personal injury by accident in respect of which they have cover under this Act; for the compensation of certain dependants of those persons where death results from the injury; and for the abolition as far as practicable of actions for damages arising directly or indirectly out of personal injury by accident and death resulting therefrom and certain other actions.

In line with this social purpose, the courts adopted a generous approach to the interpretation of cover under the Act. Occasionally, they stretched the law to extraordinary lengths to ensure coverage under the Act. This approach was reflected by Justice Richardson in ACC v Mitchell [1992] 2 NZLR 436, 438-439:

[A] generous unniggardly interpretation of personal injury by accident is in keeping with the policy underlying the Accident Compensation Act of providing comprehensive cover for all those suffering personal injury by accident in New Zealand wherever, whenever and however occurring, and to do so in the place of common law remedies.

Now the social nature of the new legislation is clearly limited. It is essentially a piece of compulsory private accident insurance. This is reflected in the long title to the 1992 Act:

An Act to establish an insurance-based scheme to rehabilitate and compensate in an equitable and financially affordable manner those persons who suffer personal injury.

I would suggest that this move away from a scheme of social insurance to one based on private commercial principles may be reflected in the approach that the courts will take in interpreting the 1992 Act. Whereas the courts previously had been prepared to find coverage under the Act in almost all situations where the common law might have provided a remedy, a different approach to interpretation would now seem likely. If it does not clearly come within the wording of the Act, I do not think that the courts will strive especially to include it. They will be more prepared to recognise a right at common law to sue. This would seem to be the result contemplated by the then Minister of Labour, Mr Bill Birch, when he proposed the new scheme:

[P]eople have the right to sue in any situation not covered by the Act where the courts otherwise recognise a right of action. . . . As the boundaries of cover under the scheme are more clearly defined, it may be possible that (in cases not covered by the scheme) there will be more court actions for damages than in the past.

However, I do not think that the Courts are going to suddenly adopt an unduly technical interpretation to the Act, as some commentators would seem to suggest. The principle behind the Act is still a just and equitable system of compensation for personal injury. In addition, the approach of the courts in interpreting provisions affecting cover may be influenced by the existence or otherwise of a common law remedy, arising from a reluctance to see a claimant with no compensation whatsoever.

This leads into a further preliminary point. Lack of cover under the Act does not necessarily equate with liability at common law. There still must be some recognised head of liability under which the plaintiff can bring an action. In this respect, the principal focus will be on the law of negligence and its respective duties of care.

Cover

The principal provision concerning cover is section 8. It provides:

(2) Cover under this Act shall extend to personal injury which -

• Is caused by an accident to the person concerned; or
• Is caused by gradual process, disease, or infection arising out of and in the course of employment as defined in section 7 or section 11 of this Act; or
• Is medical misadventure as defined in section 5 of this Act; or
• Is a consequence of treatment for personal injury.

 (3) Cover under this Act shall also extend to personal injury that is mental or nervous shock suffered by a person as an outcome of any act of any other person performed on, with, or in relation to the first person (but not on, with, or in relation to any other person), being -

• An act that is within the description of any offences listed in the First Schedule to this Act; and
• An act that was performed in New Zealand, or outside New Zealand where the person on, with, or in relation to whom the act was performed was ordinarily resident in New Zealand when the act was actually performed (even if the person is ordinarily resident in New Zealand on the date in which the personal injury is deemed to have been suffered).

Section 10(1) also assists with determining the scope of cover because it deals with express exclusions from cover, as follows:

General exclusions from cover -

(1) For the avoidance of doubt, it is hereby declared that personal injury caused wholly or substantially by gradual process, disease, or infection is not covered by this Act unless it is -

(a) Personal injury caused by gradual process, disease, or infection arising out of and in the course of employment as defined in section 7 or section 11 of this Act; or

(b) Personal injury as medical misadventure; or

(c) A consequence of personal injury or treatment for personal injury covered by this Act.

It is clear that cover under the 1992 Act is restricted to personal injury (as that term is understood for the purposes of the Act).

Personal Injury

Personal injury is defined in section 4 as:

[T]he death of, or physical injuries to, a person, and any mental injury suffered by that person which is an outcome of those physical injuries to that person, and has the extended meaning assigned to it by section 8(3) of this Act.

"Mental injury" is defined as:

[A] clinically significant behavioural, psychological, or cognitive dysfunction.

Section 8(3) deals with the mental consequences of certain listed criminal offences. I do not propose to deal with them here. It is the only basis on which cover is available for purely mental injury or nervous shock.

The current definition is in contrast to the equivalent provision in the 1982 Act. In that Act, personal injury itself received no separate definition. It was part of the larger concept of "personal injury by accident". The definition of this phrase was broad, encompassing all the elements of the present definition. The major difference is that now it is clear there must be a physical injury to the person for there to be a personal injury. Unless covered under section 8(3), mental injury is covered only where it is attendant upon the existence of a physical injury. In addition, the definition of mental injury is defined to a reasonably high standard, and potentially will not cover all mental injuries suffered. Therefore, the new definition of cover gives rise to the first major limitation on cover under the Act; if the injuries are purely mental and do not result from a physical injury, or are mental but are not of such a standard as to satisfy the test for mental injury, there will be no cover and potentially the negligent inflictor of such injuries could be liable at common law.

The possibility of actions in such circumstances has aroused much comment in the academic community. Principally, this has focused on what would appear to be the reintroduction of the tort of negligent infliction of emotional distress. This tort deals with the shock caused to a person who is not physically injured by the defendant but who is a witness to the physical injury of another caused by the defendant's negligence. It is a difficult area of the law, requiring at the very least a close personal relationship between the physically and the mentally injured victims, and a degree of foreseeability of the resulting emotional harm. However, it does have a potential application to the medical community. Take as an example the situation that arose in ACC v F [1991] 1 NZLR 234. In that case, F's wife had suffered a gynaecological medical misadventure making sexual relations between the couple impossible. He applied for compensation for his reactive depression. If that situation arose under the 1992 Act, it is clear that there would be no cover for F's mental injury. In the absence of any remedy under the 1992 Act, in a climate in which there is a heightened awareness of the possibilities of common law actions, the doctor in question might face an action at common law.

The possibility of a common law action on facts similar to those in ACC v F raises an important issue of the extent of the bar in section 14. The injury in ACC v F would not be a "personal injury" under the 1992 Act, but the injury to his wife potentially was. The question would then become whether a common law claim by the husband would still be barred by section 14 as an action for damages "arising directly or indirectly out of personal injury covered by this Act". It might be held that the husband's claim is an indirect claim arising from a personal injury covered by the Act. Yet for a Court to so hold would mean that F would be denied cover under the Act, but also be prevented from bringing an action at common law. The issue of whether the extent of cover under section 8 equates with the bar in section 14 or is narrower (leaving a potential claimant with no cover under the Act but barred from common law remedies) is one that the Courts will have to resolve.

In addition to excluding from cover mental injury suffered by one person as a consequence of physical injury to another, the definition of personal injury also excludes direct purely mental injury. The facts in ACC v E [1992] 2 NZLR 426 serve to illustrate the point. In that case, E had been sent by her employer to a management course. It involved some intense sessions and, after 4 days, she suffered a major psychiatric breakdown. The evidence suggested that the cause of this breakdown was the stress placed on her by the requirements of the course. In that case, it was held that there was cover under the Act.

If that case arose under the 1992 Act, given that such injuries are not covered by the Act, she might have an action at common law to recover damages if she could establish negligence on the part of either the employer who sent her, or the people who ran the course. To succeed she would have to establish, for example, that she had had no real option but to take part in the course, and that she had made it clear to the employer that she did not think she was up to it but was nevertheless forced to take part; or that the manner in which the course was run negligently ignored the potential for psychiatric damage to the participants.

Another possibility, in a health context, would be psychiatric damage arising from negligent psychiatric or psychotherapeutic treatment. The outcome would be a purely mental injury not tied to any physical injury; therefore, if the psychiatrist or therapist had been in some way negligent in the treatment given, a common law action would be available. Other possibilities include the negligent failure to diagnose correctly the mental illness from which the patient suffers causing suffering or even greater mental damage.

In all these cases, it must be remembered that the provisions that provide cover, including cover for medical misadventure or injuries relating to employment, will have no application. Those provisions relate solely to "personal injuries", and there is no personal injury if the damage is purely mental.

There is also the concern about mental injury as a consequence of personal injury which does not quite meet the standard imposed by the Act. Upset and distress do not seem to reach the standard required, and recovery might be possible at common law. In particular, Professor Todd has argued that, in principle, this should be possible. The common law already recognises damages for pain and suffering and loss of amenity, normally included as part of a larger compensation package for the plaintiff. The principle, as he sees it, is:

[W]hether a claim for upset can be split from that for actual injury and pursued in a tort action, on the basis that upset does not constitute personal injury, as defined.

However, as he admits, such interpretation has an air of unreality to it. To argue that recovery for the actual physical injury is barred, as is an action for serious mental consequences, but that the victim can still sue for the lesser mental anguish is difficult. He suggests that such an action would be prevented by the statutory bar in section 14, as damages arising indirectly out of a personal injury.

If a personal injury as defined is established, one next turns to see whether it falls within the circumstances set out in section 8.

Accident (section 8(2)(a))

The definition of "accident" in section 3 provides five circumstances of cover. There is an important exclusion in section 3:

[A]ny of the occurrences specified above that is treatment by or at the direction of a registered health professional or treatment provided outside New Zealand by or at the direction of a person who has qualifications equivalent to those of a registered health professional in New Zealand.

This does not mean that the definition of accident is of no concern to the medical community. First, as I shall outline later in my paper, the definition of a registered health professional is not comprehensive, and excludes persons such as paramedics, optometrists and hospital administrators. For these people, the accident provisions and section 8(2)(d) (which provides cover for personal injury which is a consequence of treatment for personal injury) will be the only statutory protection from a common law action.

Second, there may be circumstances in which personal injury caused by a registered health professional is not covered by the medical misadventure provisions and it is desired to bring the injury within the accident cover provisions. Whether there is cover turns on whether there has been "treatment" by a registered health professional. The term "treatment" is not relevantly defined. The exclusion in section 3 means that if a patient suffers a personal injury, not covered as medical misadventure (section 8(2)(c)) or a consequence of treatment for personal injury (section 8(2)(d)), but suffered in the course of treatment (in the usual sense of the word) by or at the direction of a registered health professional, there will be no cover, even if there was otherwise an "accident" within the definition of section 3. But what if the causative event does not fit within the natural meaning of "treatment"? For example, if a registered health professional conducts a clinical trial without the approval of the appropriate ethics committee and causes a personal injury by an accident, will there be cover? There would be no medical misadventure cover (for reasons made clear below), but in my view, there is no reason why cover could not be found under the definition of accident. If this is so, then the definition of accident will also be relevant where the occurrence is neither a medical misadventure, (as defined) nor within the undefined concept of treatment.

The five possibilities for an accident giving rise to cover are:

(a) A specific event or series of events that involves the application of a force or resistance external to the human body and that results in personal injury, but does not include any gradual process; and the fact that a personal injury has occurred shall not of itself be construed as an indication of or presumption that it was caused by any such event or series of events; or

(b) The inhalation or ingestion of any solid, liquid, gas, or foreign object where the inhalation or ingestion occurs on a specific occasion; but does not include inhalation or ingestion of a virus, bacterium, protozoa, or fungi, unless that inhalation or ingestion is a result of a criminal act of another person; or

(c) Any exposure to the elements or extremes of temperature or environment within a defined period of time not exceeding 1 month that causes disability that lasts for a continuous period exceeding 1 month or death; or

(d) Any burn or exposure to radiation or rays of any kind on a specific occasion that is not a burn or exposure caused by exposure to the elements; or

(e) The absorption of any chemical through the skin within a defined period of time not exceeding 1 month-

These definitions open many possibilities for common law actions. First, subsection (a) requires the application of a force or resistance external to the body. Therefore injuries which in themselves are caused totally by internal processes raise the possibility of a common law action. An example might be the situation where the hospital administration negligently releases from the hospital a patient with a deteriorating condition. There is no treatment by a registered health professional, nor is there an "accident" under any of these definitions; the personal injury would be caused by the internal process of the deteriorating condition. Cover would be as a medical misadventure or not at all (see section 10(1)).

Subsection (a) also states there must be a specific event or series of events which can be targeted as the cause of the injury, and that a gradual process is not included. Therefore, if the cause of the injury can be determined, but not the exact time at which it occurred, a remedy might exist at common law. The distinction between a series of events and a gradual process is often difficult to make.

Subsection (b) also could prove problematic for the health profession. The proviso that "accident" does not include the inhalation or ingestion of a virus or bacterium must be the cause of unique concern. It is part of the normal work of a health professional and a health facility to deal with patients who have contagious and potentially dangerous conditions. Although the situation of the patient catching such a virus as a result of negligent treatment is likely to be covered as medical misadventure (as defined by section 5), and the possibility of a health professional catching a disease from the patient is probably covered by the provisions relating to work injury, no cover would be available in the situation that might arise when a contagious patient passes a disease on to another patient, or when a contagious disease is passed to a visitor to the hospital. In both situations, if the transmission of the disease was caused by the negligence of the hospital but not the registered staff providing treatment, the possibility must exist for a common law action for damages.

Work related diseases (section 8(2)(b))

The second possibility for cover under the Act under section 8(2) is with regard to work related diseases. As employers, hospital and other health facility operators will have the advantage of the statutory bar by virtue of cover for work related diseases under the 1992 Act. Direct physical injury that occurs at work is likely to fall within the accident cover described above. However, section 8(2)(b) gives an added protection for injuries caused by a gradual process, disease or infection if they arise out of the course of employment.

Section 7 is the central provision relating to this cover. At the risk of oversimplifying the provision, if the gradual process, disease or infection is a result of the victim's employment, and the nature of the employment is such that the risks of such an occurrence are peculiar to that employment, there will be cover under the Act. This cover would seem to protect hospitals against the possibility of their health care workers bringing common law actions against them for diseases or infections caught while at work.

However, some of the exceptions under section 7 substantially reduce this form of cover. Subsection 3 states that this cover excludes gradual processes, diseases, or infections that are attributable to an air conditioning system or passive smoking. The second of these probably no longer has relevance to the hospital system, but concerns must be raised with regard to the exclusion of air conditioning systems. If the cause of infection is traced to an airconditioning system there will be no cover. In such circumstances, if the negligence of the hospital or its staff was established, an action would lie at common law for damages.

Another exception provides that injuries related to non-physical stress are not deemed to be caused by gradual process, disease, or infection. Whether this provision is strictly necessary, given that the injury is purely mental, is doubtful. However, the fact that it has been included serves to emphasise the new possibilities for common law actions that are now available. If workers suffer mental stress from work, and they can attribute their stress to negligence on the part of their employers, the Act will not protect their employers from an action for damages.

A few general observations should be made about section 7. Subsection 6 states that where an employee has falsely represented in writing that they do not suffer from a particular personal injury, or they do not have a specified condition likely to contribute to that personal injury, there will not be cover as a personal injury by gradual process, disease or infection arising out of and in the course of employment. This provision is an example of the Legislature excluding the undeserving claimant from cover in a situation when a common law action in damages is clearly unthinkable. It is one example of the introduction of fault into our "no-fault" system.

Having outlined the provisions of the Act which are of general application, I now turn to sections 8(2)(c) and (d), which will be of the most immediate relevance to the medical profession.

Medical misadventure (section 8(2)(c))

Section 5 provides an extensive definition of "medical misadventure", contrasting starkly with the position under the 1982 Act. Previously, the definition of "personal injury by accident" included the term "medical misadventure", but did not attempt to define it exactly. The Courts, after much debate, adopted four propositions for deciding whether there was a medical misadventure:

1. Medical negligence or medical error is medical misadventure.
2. A totally unforeseen adverse consequence of medical treatment is medical misadventure.
3. An adverse consequence of such treatment which is within the normal range of medical or surgical failure attendant upon such treatment is not medical misadventure.
4. An adverse consequence of such treatment which is outside the normal range of medical or surgical failure attendant upon such treatment is medical misadventure.

Parliament has now removed the definition of medical misadventure from the province of the Courts, and attempted to provide a comprehensive definition within the statute. It is no longer defined in terms of it being an "accident" from the point of view of the patient, although the definition of medical mishap incorporates some of this approach. It is now based primarily on fault or negligence by the registered health professional. If the medical practitioner is not at fault, there is generally no cover.

Medical misadventure is defined in the 1992 Act as a "personal injury resulting from medical error or medical mishap". Medical error is:

[T]he failure of a registered health professional to observe a standard of care and skill reasonably to be expected in the circumstances. It is not medical error solely because desired results are not achieved or because subsequent events show that different decisions might have produced better results.

This would appear to be an attempt to make medical error by a registered health professional the equivalent of the common law liability for negligence.

The definition of medical mishap is more difficult. It is defined as:

[A]n adverse consequence of treatment by, or at the direction of, a registered health professional, properly given, if -

1. the likelihood of the adverse consequence of the treatment occurring is rare; and
2. the adverse consequence of the treatment is severe.

The meanings of "rare" and "severe" are given in the following subsection. To be "rare", the adverse consequence must occur in 1% or less of the cases where the treatment is given. More than this, if it is generally a rare occurrence, but the patient in question has a predisposition toward the consequence which they or their guardian knew of before the treatment, it will not be a medical mishap.

The consequence of a treatment is "severe" if it causes hospitalisation of a patient for more than 14 days, or it causes significant disability for more than 28 days, or causes disability of 10% or more, entitling the patient to an independence allowance under section 54.

Unlike the definition of medical error, the definition of medical mishap, which contains no element of fault, provides cover in a situation where there is no likely common law liability. The complications that do not meet the standard of "rare" or "severe" appear to be regarded as part of the inherent consequences of being sick; as those consequences which are "rare" or "severe" are greater than one could reasonably be expected to face, they conceptually constitute, in themselves, a form of covered personal injury.

There are also other general limits in the coverage of the Act which pertain to medical misadventure as a whole. In themselves, they probably add nothing to the definition of medical misadventure. They are as follows:

There is no medical misadventure if the personal injury results from an abnormal reaction to the treatment, or a later complication in the treatment procedure, unless there was either a medical error or a medical mishap at the time of the procedure (section 5(5)).

Failure to obtain informed consent is medical misadventure if the registered health professional acted negligently in so failing (section 5(6)).

A failure to diagnose correctly, or to provide treatment, is not medical misadventure unless such a failure was negligent (section 5(7)).

A medical error or medical mishap (which includes an omission to treat) resulting from a drug or clinical trial is medical misadventure only if the trial has been approved by an ethics committee or the patient did not consent to participate in writing (section 5(8)).

The section then applies some general provisions with regard to assessing whether medical misadventure has occurred. The corporation must obtain independent advice (section 5(9)). Where there is the suggestion of negligence or inappropriate action by a registered health professional, that person must be given the opportunity to comment on the matter, and if the allegations are proved, the registered health professional must be reported to the relevant authority for disciplinary proceedings (section 5(10)).

Personal injury as a result of treatment for personal injury covered by the Act (section 8(2)(d))

This provision provides a separate head of cover where there has been a personal injury as a consequence of treatment for an earlier personal injury covered by the Act. To be covered under this provision, there must first be a personal injury for which the Act provides cover. Those situations are an accident under section 8(2)(a), a work related injury under section 8(2)(b), or a medical misadventure under section 8(2)(c). If any of these have occurred, and in the treatment of that injury, a further personal injury (as defined in section 4) is suffered, there will be cover under the Act. The provision is not limited to treatment by a registered health professional, it contains no requirement for any element of fault and it does not require an extraordinary outcome (the three principal restrictions on medical misadventure cover). Cover is simply available when the original injury is one covered by the Act and, in the course of treatment of that injury, the victim has suffered another personal injury.

There is potentially a large overlap between a personal injury under this provision, and a personal injury as a result of medical misadventure. For patients the benefit of this provision is that there is no requirement to establish negligence by a registered health professional or an extraordinary outcome in order to claim cover. For the registered health professionals, the benefit will be that there is no incentive for the claimant to criticise their actions and they may not have to face a disciplinary inquiry in relation to the treatment that has been provided. For a person who is involved in giving treatment and who is not a registered health professional, it provides the only likely basis for establishing cover so as to raise the statutory bar.

top

Issues Arising From Restrictive Cover For Medical Misadventure

As can be seen, section 5 is by no means an easy provision to come to terms with, and for the health professional it contains both good and bad news.

Benefits of medical misadventure cover

The good news is that the definition of medical error would appear to encompass any negligent act by a registered health professional in the provision of care. This would thus seem to bar most common law actions against registered health professionals for the manner in which the patient's treatment has been provided, as the basis on which principal liability exists at common law is that of a failure to take reasonable care.

The definition of medical error is, in itself, wide enough to cover a negligent failure to diagnose or treat, or a negligent failure to obtain informed consent. However, for the sake of clarity, the Legislature has expressly provided for cover as medical misadventure in either of these situations. A common law action in negligence still cannot be maintained against a registered health professional for the negligent manner in which they have treated a patient.

The new fault requirement

However, with an important requirement for cover now being negligence on the part of a registered health professional, a large element of fault has been introduced into part of our "no fault" system. Applicants will have to prove negligence in order to claim cover. Added to this is the requirement in section 5(10) that where the corporation considers that the care provided by a registered health professional might have been negligent or inappropriate, the action must be reported to the appropriate regulatory body after the registered health professional has had the opportunity to comment on the allegations. There is also the requirement in section 5(9) that in deciding questions of medical misadventure, the Corporation is to have regard to independent advice provided by the Medical Misadventure Advisory Committees (see The Accident Rehabilitation & Corporation Insurance (Medical Misadventure) Regulations 1992 SR 1992/154). These factors are likely to make the process of a claim for medical misadventure highly adversarial, and extremely expensive. Professor Miller has commented:

One is tempted to characterise the new medical misadventure scheme as a miscegenetic union of fault and no fault, grossly unfair to many victims of medical error.

Although the victims he referred to were the physically injured party, it might prove to be a valid description of the problems that might be faced by the subjects of unfounded allegations of negligence brought to obtain cover on the basis of medical misadventure. The system now actively encourages the making of allegations of negligence against health professionals.

Registration

Perhaps the most worrying aspect, as far as the health industry is concerned, is that cover under the medical misadventure provisions is linked to registration and fear of exposure to civil claims is thereby used as a means of enforcing regulation of the industry. Cover for medical misadventure under the Act applies only to registered health professionals. A registered health professional is defined in section 3 as:

1. Any person who holds a current annual practising certificate issued by the Medical Council of New Zealand, the Nursing Council of New Zealand, the Chiropractic Board, the Dental Council of New Zealand, the Dental Technicians Board, the Occupational Therapy Board, the Pharmaceutical Society of New Zealand, or the Physiotherapy Board; or
2. Any person registered with the Medical Laboratory Technologists Board, the Medical Radiation Technologists Board, or the Podiatrist Board.

In the case of persons who are not registered health professionals, (either because their occupation does not fall to be regulated by one of the specified Boards or because they have no current practising certificate), the only source of protection from common law actions is cover provided for personal injury by an accident (provided that the exclusion in the definition has not been triggered by the involvement of a registered health professional) or if the treatment is for an already covered personal injury. The gaps created by this restriction will leave the unregistered health professional in a precarious position.

Mr Rennie has illustrated this danger with the following example:

[I]f a person's eyesight has been damaged by the negligence of an optometrist [not included within the definition of registered health professional] in circumstances that are not covered by the definition of "accident" (eg where the eye has been treated with a corrosive substance or damaged by a bright light or laser beam and the event is not an "external force or resistance") the treatment will not be covered by the "medical misadventure" provisions in s5 and the injured person may be able to sue the optometrist for common law damages.

The overall package of health care does not depend exclusively on the doctors and nurses. The administrators within a hospital are also clearly outside the definition of registered health professional, yet their negligence has the potential to give rise to a claim for damages.

Professor Todd gives an example of a situation that might now give rise to common law liability:

Suppose, for example, a member of the administrative staff of a hospital negligently fills out a patient's record card and a doctor, reasonably relying on the record, discharges the patient. If the doctor is not negligent there is no medical misadventure, the continuation of an illness or disease is not personal injury by an accident and arguably is not a consequence of treatment for personal injury and there has been no treatment.

It is not too difficult to envisage other examples. What if a doctor, reasonably relying on the availability of some essential commodity commences an operation but finds the crucial item is absent at the critical moment owing to some administrative error, causing the patient an injury? There is no accident, because it is treatment by a registered health professional. There is no medical error, because the doctor was not negligent, nor is there a medical mishap. Yet there has been a potentially negligent act by the hospital administration causing damage to the patient. Assuming the original injury for which the patient was being treated was not a personal injury, and therefore covered by section 8(2)(d), there is no reason why the hospital would not face an action for damages.

Dr Harrison has also raised the possibility of other forms of direct liability of a hospital, or health care service. The situations envisaged are those where the treatment itself may not have been negligent in the circumstances, but under-funding or failure to provide sufficiently expert treatment in effect caused the injury to the patient. Another possibility is what he calls "systems negligence" where the institution has inadequate procedures for dealing with matters such as informed consent.

It is questionable whether the examples Dr Harrison raises are likely to give rise to a remedy at common law. As a matter of policy, courts will be reluctant to blame hospitals for under-funding, or not providing a specialist for an operation. Such situations are a part of the allocation of any limited resource, and there may be difficulties in persuading a court to hold a funding decision to have been negligently made. The example of systems negligence may also present difficulties. Duties such as that to obtain an informed consent lie on the doctor and not the health institution. Procedures set up by such an authority might help the doctor fulfil his or her obligations, but they cannot relieve his or her liability. However, as Dr Harrison rightly observes "win or lose, we will see such claims in increasing numbers while the coverage provisions remain in their present form".

Clinical trials

The strengthening of the self regulatory procedures of the medical profession through the threat of common law liability is further seen in an amendment to the 1992 Act in 1993. It states that where personal injury results from medical error or medical mishap in a clinical trial, it will only be covered as medical misadventure where either:

The trial has been certified by an ethics committee approved by the Health Research Council or the Director General of Health, and that ethics committee has certified that the trial is not principally for the benefit of a drug company; or

The person has not agreed to it in writing.

Cover is therefore denied to the participant in an unapproved clinical trial who has consented in writing to participate. Such a person may sue those supervising the trial. If a trial is not approved and the participating patient either does not consent or gives oral consent to participate, they will be covered against any resulting physical injury (and cannot sue anyone as a consequence). The provision gives rise to an odd consequence: persons conducting an unauthorised trial should not obtain written consent from participants so that cover is available under the Act and they obtain the protection of the statutory bar.

Informed consent

As previously noted, the 1992 Act makes specific provision for cover in the event of a breach of duty by a registered health professional in relation to the issue of informed consent. "Medical error" itself is defined as "the failure of a registered health professional to observe a standard of care and skill reasonably to be expected in the circumstances". Section 5(6) provides:

A failure to obtain informed consent to treatment from the person on whom treatment is performed ... is medical misadventure only if the registered health professional acts negligently in failing to obtain informed consent.

The extent of cover provided by the definition may not be as straightforward as it first appears, especially having regard to the way in which the Courts have approached the issue of informed consent in deciding common law claims brought here and overseas. The term "informed consent" is not defined in the Act and it will be for the New Zealand courts to define in practice. One aspect of the restriction in section 5(6) is reasonably clear: if the claimant cannot establish that the health professional's duty of care included an obligation to provide more information, there will be no cover. This situation does no more, however, than mirror the position under the common law: a medical practitioner's liability for failure to provide sufficient information on risk to enable a patient to exercise informed choice is determined as an aspect of the practitioner's duty of care.

What is the position, however, if the criticism is not that consent to the medical procedure was given on the basis of inadequate information but that no consent was obtained at all. Is cover under the 1992 Act for medical misadventure available in circumstances in which treatment is administered:

1. without any attempt to obtain consent; or
2. in the face of express refusal by the patient; or
3. with consent having been obtained for some entirely different procedure only; or
4. with consent having been obtained by fraud.

The potential difficulty becomes apparent if one examines how common law liability arises in these different scenarios. In summary, the modern approach of the courts in common law jurisdictions to the question of consent is as follows:

The performance of a medical procedure on a patient without consent is, subject to an emergency situation exception, an assault for which the practitioner concerned is liable in damages.

The consent required to avoid liability for assault has been described as "real" consent in the sense that the patient must have an understanding in broad terms of what is proposed.

In circumstances in which consent for one particular procedure has been obtained and quite different one carried out, it is likely that a claim for assault would succeed.

If consent is obtained as a result of information withheld in bad faith or by deliberately lying to the patient, potential claims for assault (on the basis that the consent was vitiated by fraud or deceit (a false representation of fact, intended to be relied on and actually relied on with harm resulting) would be available.

Once real consent has been obtained however, a patient's claim can only be based on negligence. Any question of the adequacy of the information given prior to consent being obtained is considered solely as a matter of the practitioner's overall duty of care to the patient.

It is important to note that the common law only approaches issues concerning consent as a matter of negligence (breach of the duty of care and skill) once real consent has been obtained. The doctrine of informed consent is regarded as having application only once real consent is obtained and the issue becomes one of the adequacy of the information provided.

In the light of the common law approach to the doctrine of informed consent, it must be debatable whether the New Zealand courts will interpret section 5(6), which requires the professional concerned to have acted "negligently in failing to obtain informed consent", as covering the position in which no consent at all has been obtained or the failure to obtain informed consent is deliberate.

In the event that section 5(6) is held to cover only the situation in which real consent is obtained but on the basis of inadequate information as a result of the health professional's negligence, the statutory bar will not protect those concerned from actions for assault, trespass to the person, or deceit.

top

Further Issues Concerning The Statutory Bar

Who decides whether the statutory bar operates?

There is a fundamental change in the new legislation concerning jurisdiction to decide whether there is cover under the Act. Under the 1982 Act, the Corporation had:

[T]he exclusive jurisdiction to determine whether or not any person had suffered personal injury by accident. . .

In practice, this meant that, if a plaintiff brought a common law claim, and the defendant pleaded as a defence the statutory bar, because determination of an essential element of that defence was exclusively the province of the Corporation, the Court had no alternative but to stay the litigation until the Corporation had determined that issue. Delay was the practical consequence of pleading such a defence. Now, however, there is nothing to prevent the Court from determining the entire issue. The only requirement is that of section 14(5):

Where, in any proceedings before a Court, a question arises as to whether or not any person has suffered personal injury covered by this Act ... no determination shall be made by the Court unless the Corporation is party to the proceedings or is given an opportunity to be heard.

Therefore, the fact that there is cover under the Act is by no means an absolute bar to the bringing of proceedings where a question of personal injury arises. If it is doubtful over whether there is a right to cover, and there is a common law action to support a claim for damages if cover does not exist, rather than referring to question to the ACC, it is likely that an expensive Court case would follow.

Damages

One further aspect of the statutory bar as it affects the right to bring proceedings seeking damages appears not to have changed under the 1992 Act. The Court of Appeal has held in relation to the equivalent statutory bar in both the 1972 and 1982 Acts that the provision prevents only the recovery of compensatory and aggravated damages but not exemplary (or punitive) damages).

The distinction between the different forms of damages is that those which are excluded (compensatory and aggravated) are designed to compensate the plaintiff for the injury suffered. Exemplary (or punitive) damages, however, have no compensatory element; they are intended to punish the wrongdoer to the extent that the two forms of compensatory damages fail to do so adequately. In cases where cover is available under the Act, no form of compensatory damages can be awarded and the assessment of exemplary damages in effect becomes the assessment of a "civil fine".

Exemplary damages however are likely to be awarded only in serious cases of clear and deliberate wrongdoing. I would not expect there to be a real risk of any such award of damages in cases of medical misadventure where there is cover under the Act for negligent treatment and a requirement to report the circumstances of such a claim for disciplinary consideration.

The determination of the New Zealand courts to exercise control over the level of jury damages awards and the concept of a civil fine are likely to mean that awards of exemplary damages will not be enormous. In fact, unless long term disability results, potential plaintiffs are faced with the likelihood of relatively modest awards for such things as injury to feelings, pain and suffering, and violation of bodily integrity.

Two examples served to illustrate the point:

In 1990, the High Court awarded damages of $780,000 in a case in which a boy had suffered severe facial disfigurement and permanent brain damage in a motor vehicle accident in 1968. There is no doubt that the size of the award reflected the degree of permanent disability suffered for life.

In 1986, the High Court set aside, as excessive and beyond what any reasonable jury could properly award, damages of $60,000 awarded for wrongful arrest and false imprisonment when the plaintiff's circumstances were indeed compelling. The plaintiff was a young woman who suffered from cancer, the treatment of which had caused hair loss and given her a speech impediment and affected her gait. Shortly after she had left a party, she was stopped by police, who formed the view that she was both drunk and a punk or skinhead. She was arrested for drunkenness and driven around Wellington for some time in the back of a police van in the company of a number of drunken males, before being taken to the police station where she was held for a period before being bailed. During the course of the incident she was verbally abused by police officers, including taunts about her bald appearance. In considering the propriety of the award of $60,000, the High Court held that compensatory damages could have accounted for up to $5,000, that aggravated damages for up to a further $10,000 could have been awarded and that the balance of $45,000 "or anything approaching that" was out of all proportion in the circumstances.

The reality is that one must approach the New Zealand courts, like those in England, and unlike those in the United States, without any expectation for substantial damages awards for intangible loss or by way of punishment. The relative modesty of damages awards in such circumstances (as demonstrated by awards in defamation cases, for example) is a serious practical impediment to legal action having regard both to the nature of legal aid (now more of a loan than a benefit) and the costs and complexity of professional liability litigation. Regardless of the degree of protection which the statutory bar to proceedings affords, in the final analysis, the legal climate in New Zealand, especially after 20 years of a "no fault" accident compensation scheme, does not presently provide encouragement for common law actions against the health industry. It remains to be seen whether this changes as a result of the 1992 Act.

top

NEXT »