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Disparity in payouts a sign of the times

COUNCILS, schools, sporting groups and doctors are feeling the pinch of negligence actions and an uncertain insurance environment.

The recent awarding by a jury of $13 million to cerebral palsy sufferer Calandre Simpson in New South Wales sent shockwaves through the medical insurance industry.

In another medical negligence case settled in WA last week, six-year old plaintiff Daniel Burman achieved a payout record, but still only received $5 million.

The majority of other cerebral palsy sufferers in both States only receive meagre disability allow-ances.

Inequities are rife in a legal system that was developed centuries ago.

Awards vary markedly depending on which State the matter is litigated in. Juries in Victoria and New South Wales generously give plaintiffs large awards, while judges in Western Australia keep damages at a more modest level.

As the scope and size of damages awards broadens, the community is becoming nervous about the flow-on effects. While a lucky few effectively win lotto, the majority of injured people go uncompensated. Daily, the media features injured people who are either lucky winners or unlucky losers of our court system.

Law Society president Ken Martin has expressed personal views that would be heresy to many insurance lawyers.

“There is a good case to review our tort system because of the great disparity in outcomes. It is predicated on circumstances that are not rational,” Mr Martin said.

“Compensation should not be made solely on the basis of negligence, and whether the negligent person was insured. It should be made on whether the circumstances are deserving.”

Mr Martin also agreed it was unfair that a victim of a negligent accident received more com-pensation than a victim of an intentional crime.

The public blames the legal community for the development of the US-style litigation culture, while the plaintiff lawyers say they merely represent their clients to the best of their abilities, within the framework provided.

Bottom line responsibility is one issue. Who should pay, is the other.

One option sometimes raised is the New Zealand “No Fault” scheme. Mr Martin suggests that if this could be introduced at a national level, it would solve inequities such as the damages fluctuations between States and the ineligibility of many injured people. However, he does concede there are huge funding issues with the no-fault model and the whole legal framework would require a major overhaul.

Public expectation and political popularity also has always been a negative factor in tort reform. Crises, however, usually bring these kind of mundane insurance issues to the forefront. Tort reform for doctors has already begun in NSW. It remains to be seen if the other States follow suit.

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