The latest industry insights into compensation law.

Proposed legislative changes to create offences for claim farming

Recently, the Personal Injuries Proceedings and Other Legislation Amendment Bill 2022 has been introduced in Queensland Parliament to amend a number of existing Acts, namely the Personal Injuries Proceedings Act 2002 and Workers’ Compensation and Rehabilitation Act 2003.

Of key interest are the proposed amendments intended to address the issue of claim farming, a process by which a third party, contacts or approaches individuals to pressure them into making a compensation claim for personal injuries.

As stated in the Bill’s explanatory notes, its objective, with respect to claim farming, is to stop the practice for personal injury and workers’ compensation claims.

A clear distinction needs to be made between claim farming and a person making enquiries about their legal rights and making their own informed decision on making a claim.  Claim farming involves unethical tactics, including misleading persons into thinking a claim farmer acts for a government agency or insurer and harassing individuals, often through unwanted cold calls.  A claim farmer will collect an injured person’s details and then sell that information to a company or unscrupulous law firm who will make a claim for that person on their behalf.   The prospect of being paid for harvesting clients only encourages farmers to engage in more unethical and misleading practices.

This is in contrast with an injured person enquiring directly with a law firm to seek legal advice and coming to their own decision on making a claim.  No third party is paid for coercing an injured person into making a claim, rather, payment is made to the law firm, if retained, for actually providing a legal service.

Good firms should be motivated by meeting a need for legal services in the community and should not treat their clients like commodities.   Claim farming is not only highly unethical and frowned upon in the legal profession.  It has been made illegal in Queensland for CTP motor vehicle accident claims and law firms are required to make declarations at various points in a CTP claim confirming that they have not engaged in claims farming.

The earlier introduction of anti-claim farming provisions in Queensland’s CTP insurance scheme appears to have been successful in interrupting the claim farming market.  However, there are now concerns that the claim farming industry has pivoted to claims within the public liability and workers’ compensation space.  The Bill, if it becomes an Act of Parliament is intended to expand prohibitions similar to what already exists in our state’s CTP scheme, over to other sectors of personal injury law.

The practice of claim farming is already taken very seriously in Queensland’s CTP insurance scheme.  Reports of such practices to the Motor Accident Insurance Commission are taken seriously and often prompt investigation by the Commission.  The expansion of anti-claim farming provisions to other sectors of personal injury law will mean that law firms will have to provide even more formal assurances that they are not engaging in the practice.  However, if the provisions have a lasting impact on stamping out claim farming practices, it is a small price to pay and well worth it.

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