Managing legal risk beyond ACC: practical tips for healthcare providers and practitioners

Events which have taken place in the last decade have brought the provision of health and disability services into the spotlight. Health consumers are becoming increasingly aware of their rights and as a result the number of health-related complaints and disputes has risen significantly.  

In this article, we will outline the types of damages which are available to health consumers if a treatment injury occurs, highlight what exemplary damage claims are, identify the necessity of insurance beyond ACC for healthcare providers and practitioners, and provide tips for healthcare providers and practitioners to mitigate legal risk.

Statutory Bar

New Zealand’s (NZ) accident compensation scheme (ACC) is often described as a “social contract”. Under this scheme, individuals are barred by the Accident Compensation Act 2001 (Act) from suing for compensation for personal injuries in exchange for receiving  compensation without the need for lengthy litigation.[1]  The costs are shared across the wider community, funded through a combination of  employer levies, individual contributions, and government funding, and no finding of fault or negligence is required for the injured person to receive cover.

This statutory bar applies only to injuries covered by the Act and to damages intended to compensate the injured party.[2]  Despite this, a consumer may still bring a claim against a health provider for exemplary damages, even if ACC cover has been granted, because exemplary damages are intended to punish wrongdoing rather than to compensate the injured person.[3]

This is relevant for healthcare providers and practitioners who may be subject to a claim for a breach of duty to their patients in tort, as well as a civil proceeding initiated by the Health and Disability Commissioner following a finding of a breach of the Health and Disability Code of Consumer’s Rights.[4]

Exemplary Damage Claims

In the context of personal injuries in NZ, exemplary damage claims can be brought against any party who has intentionally contributed to or caused the personal injury suffered.  For example, a claim could be brought against a medical practitioner or provider who has been negligent when carrying out their role, or who has not adequately trained its staff, resulting in an injury to the claimant.

Within the NZ courts, exemplary damage claims have proven to be a high threshold to satisfy, where awards (in the rare cases they have been given) are typically limited to a modest sum.[5]  This is because these types of claims are confined to acts or omissions which involve “intention or subjective recklessness”.[6]

The leading case in NZ on exemplary damages is the Supreme Court decision Couch v Attorney-General [2010] NZSC 27.  In this case, the Court held that exemplary damages are available only “if the defendant deliberately and outrageously ran a consciously appreciated risk of causing personal injury to the plaintiff”.[7]  While intentional torts are often linked to individual behaviour, organisations can also be held liable either directly or vicariously.  In the context of a healthcare provider, the key question is whether the organisation’s “management was subjectively reckless as regards a particular person’s safety or welfare”.[8]

The Interaction between ACC and Insurance

In NZ, employers are entitled (through levy payments) to ACC workplace cover for their employees.[9]  However, ACC does not cover all types of injuries, nor does it fully remedy the consequences of an injury.[10]  Healthcare providers and individual practitioners may still be subject to claims for exemplary damages, investigations by the Health and Disability Commissioner (HDC) and/or investigations and disciplinary actions.  Where a breach of patient rights is found, a case can also be referred to the Human Rights Review Tribunal or the Health Practitioners Disciplinary Tribunal.  To manage these risks, employers and practitioners often hold employers’ liability insurance or medical malpractice/professional indemnity insurance respectively to protect them from legal risks.

Tips for Healthcare Providers

The risk of exemplary damages claims, HDC investigations, and disciplinary actions not only poses financial consequences for healthcare providers and individual practitioners but can also have a significant reputational impact.  As a result, we have prepared a set of practical tips to help healthcare providers and individual practitioners to reduce the likelihood of such claims.

• Know your legal responsibilities

The Health Practitioners Competence Assurance Act (HPCA Act) regulates the competency of healthcare practitioners and their respective professions.[11]  One of the ways it achieves this is through the appointment of independent regulatory authorities (set out in Schedule 2 of the HPCA).  These regulate different health related professions and set standards of practice relevant to the profession in question.

The Health and Disability Commissioner (Code of Health and Disability Services Consumers’ Rights) Regulations (Code) is another crucial piece of legislation.  This sets out the rights of consumers of health-related services, which health practitioners must understand and put into practice. The HDC helps investigate and enforce the Code (where necessary) upon receipt of a complaint.

• Maintain good record keeping

The importance of accurate, contemporaneous and thorough documentation of all patient interactions, assessments, treatments and decisions is essential for all healthcare providers. Detailed documentation is not only integral to providing continuity of care, but it is also a crucial line of defence if a complaint or claim arises. Regulators, tribunals and courts often regard a provider’s documentation as the most reliable evidence in determining whether care was appropriate, and clear and thorough documentation can significantly influence the outcome of any legal or regulatory proceeding. Thorough documentation demonstrates clinical reasoning, informed consent processes and adherence to professional standards, providing tangible proof that a provider has acted responsibly and without recklessness in safeguarding the safety and welfare of those in its care.

• Implement robust internal policies and procedures

Healthcare providers should regularly review and update their policies and procedures, particularly those relating to patient consent, effective communication with patients and their whanau, patient safety, privacy and complaint handling.  Doing so ensures that policies remain legally compliant, reflect current best practice, and are fit for purpose for both the organisation and the communities it serves.  Well-maintained and thorough policies provide clear guidance for staff and demonstrate to regulators and the courts that the organisation takes a proactive and comprehensive approach to managing risk and upholding professional standards.

• Ensure your staff are adequately trained

Healthcare providers have a responsibility to ensure that all staff are competent, adequately trained and supported by the organisation to carry out their roles safely and effectively.  Adequate training helps minimize the risk of errors, poor patient outcomes and potential regulatory or legal claims.  Providers should implement regular training sessions and encourage the ongoing professional development of their staff.  Staff members must be aware of the organisation’s policies and standard operating procedures, including where to access them.  Clear records of staff competencies should be maintained to demonstrate the proactive approach of the organisation to providing safe and appropriate care.

• Take a proactive approach to risk management and incident reporting

Providers should adopt a proactive approach to identifying and managing clinical and operational risks.  Incident reporting systems should be used to record near misses, emerging risks and adverse events, with clear escalation pathways to ensure management is alerted and appropriate risk mitigation strategies are implemented.  These systems enable providers to analyse trends, identify underlying causes of incidents, and implement improvement strategies to prevent recurrence.  A strong incident reporting culture should be encouraged.

• Seek legal advice when uncertain

At Duncan Cotterill, our specialist Medico-legal team is here to help with any legal concerns, or enquires.  We have experience in advising and representing a broad range of health sector clients across the motu and have deep health sector knowledge and medico-legal expertise which helps us address medico-legal issues in context and achieve the best possible outcome for our clients.  If you have any questions about the topics outlined above, or about health sector law more generally, please contact a member of our health law team.

Special thanks to Special Counsel Simone Tune, Solicitor Bella Belcher, and Solicitor Anna Yu preparing this article.

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.