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COVID-19 indemnity scheme – What does it mean and how does it change what’s already in place?

There are many Australians still on the fence with being vaccinated for COVID-19. Many cite concerns over the side affects of Pfizer and AstraZenenca and are opting to wait until a potentially safer option becomes available. Others might forgo vaccination entirely out of fear of the side effects.

It’s outside the scope of this blog to comment on whether these concerns and fears are reasonable or without grounds. However, such concerns and fears inevitably slow down the rate of vaccination in the community and the Australian Government now appears to have taken concrete action to encourage more people to vaccinate.

Earlier this month, Federal Minister for Health Greg Hunt announced plans to establish a COVID-19 Vaccine Claim Scheme.

As explained on the Department of Health website:

The creation of a fit-for-purpose COVID-19 vaccine medical indemnity scheme will support increased vaccination uptake by assuring Australians that health professionals, including GPs, nurses and pharmacists administering COVID vaccines as part of the Commonwealth vaccination program have appropriate indemnity coverage. 

In the event someone suffers a significant adverse reaction, causing injury and economic loss because of vaccination, the Scheme will help guide potential claimants through a no fault claims process scheme.

Proven claims will be able to receive appropriate compensation without the need of formal court processes. Potential claimants accessing the scheme will still have the option of pursuing action through a court judgement if that is their preference.

The COVID-19 Vaccine Claims Scheme will be backdated to the start of the national vaccine rollout – 22 February 2021 – and will be linked to the Human Biosecurity Emergency Period under the Biosecurity Act 2015.

This is not the first initiative of its kind.  The United Kingdom already offers a Vaccine Damage Payment to its citizens. The United States have also already implemented their National Vaccine Injury Compensation Program.

While the announcement claims that the scheme will be backdated to 22 February 2021, the details of the scheme are not yet finalised and the government is still consulting with various peak bodies, indemnity insurers, patient groups, states and territories. Assuming that the scheme is eventually established, its final form may not necessarily be what various groups are expecting or advocating for and it may not satisfy everyone.

Let’s discuss some of the implications of this scheme and some of the ongoing uncertainties with the announcement, based on what we do and do not yet know.

Who is paying for all this?

The terms “COVID-19 Vaccine Claim Scheme” and “COVID-19 vaccine medical indemnity scheme” are open for a bit of interpretation when it comes who pays the bill for claims.

Outside of the medical indemnity space, there are a number of government created indemnity schemes in Australia that manage the cost for compensating claimants in different ways.

In Queensland for example, most employers are covered by WorkCover Queensland for work-related injuries suffered by employees. WorkCover Queensland is a government entity and the claims made through it are essentially paid out or “insured” by the state. Though, like a private insurance company, WorkCover will collect insurance premiums from employers.

In contrast, Queensland has also created a Compulsory Third Party Insurance (“CTP”) scheme that mandates that all registered motor vehicles be insured by private insurance companies that offer the same base coverage for injuries caused by negligent drivers. In this example, the cost of paying claims is shifted to private companies under a government mandated insurance scheme.

What approach the scheme will take, be it similar to the above examples or entirely different, remains uncertain.

Does the scheme replace private indemnity insurance?

It is important to note that most health practitioners already have some form of private indemnity insurance, though the degree and scope of coverage will vary among practitioners and insurance products.

Whether or not the COVID-19 scheme intends to complement the existing private insurance products available, replace private insurance products entirely and shift the cost of paying claims to the Commonwealth of Australia, standardise the insurance coverage held by health practitioners or do something else entirely is not yet known and the correct approach is an interesting matter for debate.

Fault vs no fault schemes

Use of the term “no fault” scheme means that the ability to claim through the scheme will not be tied to a health practitioner being negligent and causing injury to the person vaccinated.

This would be similar in some respects to WorkCover Queensland’s statutory scheme, which does not require blame for an injury to be put on the employer for a claim to be accepted.  Queensland’s CTP scheme, in contrast, does require negligence or blame to be established against the driver of the car the CTP insurance company has insured.

A no fault scheme will likely significantly expand the scope of coverage available when compared to the health industry’s existing collection of private insurance products, most if not all of which will not offer coverage unless fault is established against the health service provider.

Is the scheme an alternative to going to court?

The wording of the Minister’s announcement makes clear that a person will be able to both access the scheme and still pursue action in court if that is their preference, that is, make a common law claim for damages.  At the same time, the scheme has been presented as an alternative to engaging with the formal court process.

Again, we can look to our Queensland examples. Persons who received benefits from a statutory claim with WorkCover Queensland can technically still pursue a common law claim against their employer. However, such claims generally can only be pursued until after WorkCover have issued a Notice of Assessment with an offer of lump sum compensation for the injuries suffered by the claimant. Depending on the severity of the permanent impairment assessed, accepting such an offer can extinguish a right to pursue a common law claim. Any statutory benefits paid by WorkCover Queensland may also be deducted from any settlement or judgement monies gained from a common law claim. This includes common law claims against CTP insurers and parties other than WorkCover Queensland or an employer.

Whether a similar or different model is adopted by the COVID-19 scheme again remains uncertain. However, in the writer’s view, if the scheme is to operate as a complete alterative rather than a mere compliment to existing common law rights, it is likely that any compensation available via the COVID-19 will become unavailable or refundable following a successful common law claim.

Is the scheme a good idea?

In the writer’s view, the proposed scheme offers some notable and important benefits to Australians but will likely have its detractors.

Private insurers will not doubt be against any proposal that will replace them with the Commonwealth in the medical indemnity market. The writer has reservations with any proposed scheme that could limit or hinder any existing common law rights and processes rather than compliment them. The economic and financial implications with implementing the scheme may also be a matter for debate.

What should be a clear however is that that the creation of a no fault scheme will encourage more Australians to vaccinate by providing re-assurance to those being vaccinated that they will at least receive some form of compensation for any significant adverse reactions, even if there is no evidence of negligence. This is a good thing, when compared to trying the access the limited scope of private insurance currently available.

Ray is an Associate who works in the Brisbane office of vbr Lawyers with Greg Black. Ray successfully completed a Bachelor of Business and Bachelor of Laws and also his Practical Legal Training at QUT.
Greg is widely regarded as one of Australia’s leading compensation law experts. Greg has a very healthy practice and enjoys providing his clients with superior personal service in every case. Greg is absolutely committed to achieving the best settlement outcomes for his clients while keeping the legal costs down.

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