Medical and Midwife Indemnity Legislation Amendment Act 2019 (105 of 2019)

Schedule 5   Universal cover

Medical Indemnity Act 2002

4   After Part 2

Insert:

Part 2A - Universal cover obligation

Division 1 - Introduction

51 Guide to the universal cover obligation provisions

(1) This Part prevents medical indemnity insurers from refusing to provide medical indemnity cover for medical practitioners in relation to private medical practice, except in certain circumstances.

(2) This Part also specifies when a medical indemnity insurer may require a medical practitioner to pay a risk surcharge.

(3) Medical indemnity insurers must keep records and provide information in relation to these requirements.

51A Winding up of medical indemnity insurer

This Part has effect subject to section 116 of the Insurance Act 1973.

Note: Under that section, a general insurer must not carry on insurance business after it starts to be wound up. A general insurer will not contravene this Part by refusing to enter into an insurance contract if the winding up of the insurer has started.

Division 2 - Requirements in relation to providing professional indemnity cover

52 Division applies for the purposes of the AFCA scheme

A medical indemnity insurer is not required to comply with this Division other than for the purposes of the AFCA scheme (within the meaning of the Corporations Act 2001).

Note: A medical practitioner can make a complaint to AFCA about certain issues relating to medical indemnity insurance.

52A Universal cover obligation

A medical indemnity insurer must not refuse to enter into a contract of insurance with a medical practitioner to provide professional indemnity cover unless:

(a) in relation to a contract of insurance between the practitioner and the insurer to provide professional indemnity cover, the practitioner:

(i) failed to comply with the duty of the utmost good faith (within the meaning of the Insurance Contracts Act 1984); or

(ii) failed to comply with the duty of disclosure (within the meaning of that Act); or

(iii) made a misrepresentation to the insurer during the negotiations for the contract but before it was entered into; or

(iv) failed to comply with a provision of the contract, including a provision with respect to payment of the premium; or

(v) made a fraudulent claim under the contract; or

(b) the practitioner places the public at risk of substantial harm in the practitioner's private medical practice because the practitioner has an impairment (within the meaning of the Health Practitioner Regulation National Law); or

(c) the practitioner's private medical practice poses an unreasonable risk of substantial harm to the public or patients; or

(d) the practitioner poses an unreasonable risk of harm to members of the insurer's staff because of persistent threatening or abusive behaviour towards members of the insurer's staff; or

(e) the practitioner has persistently failed to comply with reasonable risk management requirements of the insurer; or

(f) the circumstances specified in the rules apply.

52B Medical indemnity insurer to notify of refusal

(1) If a medical indemnity insurer refuses to enter into a contract of insurance with a medical practitioner to provide professional indemnity cover, the insurer must notify the practitioner in writing in accordance with any requirements specified in the rules.

(2) Without limiting subsection (1), the rules may specify:

(a) the information that must be included in the notification; and

(b) a time within which the insurer must notify.

52C Risk surcharge requirements

(1) Subject to subsections (3) and (4), a medical indemnity insurer may require a medical practitioner (the practitioner ) to pay, as part of the amount payable for professional indemnity cover provided by a contract of insurance with the practitioner, an amount (the risk surcharge ):

(a) to reflect that, because the practitioner engages, or has engaged, in conduct that deviates from good medical practice, the practitioner's private medical practice is likely to pose a higher risk to patients than similar practices (see subsection (2)); or

(b) in circumstances specified in the rules.

(2) The private medical practice of another medical practitioner (the comparison practitioner ) is a similar practice if the insurer reasonably considers that the practitioner and the comparison practitioner have similar practice profiles for the purposes of calculating premiums for professional indemnity cover, except that the comparison practitioner does not engage, and has not engaged, in conduct that deviates from good medical practice.

(3) The risk surcharge must not exceed the amount:

(a) specified in the rules; or

(b) worked out in accordance with a method specified in the rules.

(4) The offer to enter into the contract of insurance to provide the professional indemnity cover must:

(a) identify the amount of the risk surcharge; and

(b) state the reason for requiring payment of the risk surcharge;

in accordance with any requirements specified in the rules.

52D Medical indemnity insurer may be required to offer interim cover until complaint is finalised

(1) A medical indemnity insurer must offer to enter into a contract of insurance with a medical practitioner to provide professional indemnity cover if:

(a) a contract of insurance between the insurer and the practitioner provides professional indemnity cover (the initial cover ); and

(b) the insurer refuses to enter into a contract of insurance with the practitioner to provide professional indemnity cover (the subsequent cover ) starting after the initial cover ceases; and

(c) the practitioner makes a complaint to AFCA in relation to the refusal; and

(d) the initial cover, or professional indemnity cover provided as a result of an offer made for the purposes of this section, ceases before the complaint finalisation date.

(2) The offer must comply with any requirements specified in the rules.

(3) However, the insurer is not required to offer to enter into a contract of insurance that provides professional indemnity cover after the complaint finalisation date.

(4) In this section:

complaint finalisation date means the earlier of:

(a) the day the subsequent cover starts; and

(b) the day 60 days after the complaint is finalised.

finalised : a complaint is finalised when:

(a) the complaint is resolved by agreement between the insurer and the practitioner; or

(b) the complaint is withdrawn; or

(c) AFCA closes the complaint because:

(i) it has excluded the complaint, or decided not to continue to consider the complaint, and the timeframe in which the practitioner may object to the decision has expired; or

(ii) it has made a preliminary assessment in relation to the complaint and the timeframe for requesting a determination of the complaint has expired; or

(iii) it has determined the complaint; or

(d) the complaint otherwise ceases to be dealt with by AFCA.

Division 3 - Records, reporting and information

53 Records

(1) The rules may require a medical indemnity insurer to keep records relating to the following:

(a) a refusal by the insurer to enter into a contract of insurance with a medical practitioner to provide professional indemnity cover;

(b) a requirement by the insurer that a medical practitioner pay a risk surcharge.

Note: Failure to keep the records is an offence (see section 53A).

(2) Records required by the rules must be retained for a period of 5 years (or any other period specified in the rules) starting on the day on which the records were created.

Note: Failure to retain the records is an offence (see section 53A).

53A Failing to keep and retain records

(1) This section applies if section 53 or rules made for the purposes of that section require a person to keep records or to retain records for a particular period.

(2) The person commits an offence if the person fails to keep the records or fails to retain the records for that period.

Penalty: 30 penalty units.

(3) An offence against subsection (2) is an offence of strict liability.

53B Medical indemnity insurer must report annually

(1) If, in a financial year, a medical indemnity insurer refuses to enter into a contract of insurance with a medical practitioner to provide professional indemnity cover, the insurer must notify the Secretary within 2 months after the end of the financial year of:

(a) the number of times in the financial year the insurer refused to enter into a contract of insurance with a medical practitioner to provide professional indemnity cover; and

(b) any other matter that relates to the insurer's obligations under Division 2 and that is specified in the rules.

Note: Failure to notify is an offence (see section 53C).

(2) If, in a financial year, a medical indemnity insurer requires a medical practitioner to pay a risk surcharge, the insurer must notify the Secretary within 2 months after the end of the financial year of:

(a) the number of times in the financial year the insurer required a medical practitioner to pay a risk surcharge; and

(b) any other matter that relates to the insurer's obligations under Division 2 and that is specified in the rules.

Note: Failure to notify is an offence (see section 53C).

(3) The Secretary may, by notifiable instrument, approve a form for the purposes of notification under subsection (1) or (2).

(4) If the Secretary does so, the notification must be in the approved form.

(5) Within 3 months after the end of the financial year, the Secretary must publish on the Department's website any information notified under paragraph (1)(a) or (2)(a) in relation to the financial year.

53C Failing to report

(1) This section applies if section 53B requires a person to notify the Secretary of a matter within a particular period.

(2) The person commits an offence if:

(a) if the Secretary has approved a form for the purposes of the notification - the person fails to notify the Secretary of the matter in the approved form within that period; or

(b) otherwise - the person fails to notify the Secretary of the matter within that period.

Penalty: 30 penalty units.

(3) An offence against subsection (2) is an offence of strict liability.

53D Secretary may request information

(1) The Secretary may request a medical indemnity insurer to give the Secretary the following information, in the form requested by the Secretary:

(a) the number of times in a period the insurer refused to enter into a contract of insurance with a medical practitioner to provide professional indemnity cover;

(b) the number of times in a period the insurer required a medical practitioner to pay a risk surcharge;

(c) any other information that relates to the insurer's obligations under Division 2 and that is specified in the rules.

Note: Failure to comply with the request is an offence (see section 53E).

(2) The request:

(a) must be made in writing; and

(b) may require the information to be verified by statutory declaration; and

(c) must specify the day on or before which the information must be given; and

(d) must contain a statement to the effect that a failure to comply with the request is an offence.

The day specified under paragraph (c) must be at least 28 days after the day on which the request is made.

53E Failing to give information

(1) This section applies if a person is given a request for information under section 53D.

(2) The person commits an offence if the person fails to comply with the request.

Penalty: 30 penalty units.

(3) An offence against subsection (2) is an offence of strict liability.