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Bill to stamp out the ‘insidious practice’ of claim farming in motor accident claims

Bill to stamp out the ‘insidious practice’ of claim farming in motor accident claims

On 14 June 2019, the Queensland Parliament introduced the Motor Accident Insurance and Other Legislation Amended Bill 2019 (Qld) (Bill) to address the practice of ‘claim farming’ in claims for personal injuries relating to motor vehicle accidents. 

What is ‘claim farming’?

The term ‘claim farming’ is not defined in the Bill

In the first reading speech of the Bill, Deputy Premier Jacqui Trad described the practice of claim farming as follows:

Claim farming involves anonymous persons cold calling members of the public about whether they have been involved in a motor vehicle accident.  They falsely identify themselves as calling on behalf of an insurer, the [compulsory third party] CTP Regulator – the Motor Accident Insurance Commission – or another government agency, allegedly with the sole purpose of helping the individual make a CTP claim. 

They use high pressured tactics and deceptive behaviour to elicit the individual’s personal information and agreement to submit a claim, often with the lure of quick and easy compensation.  This information is then sold, for a fee, to a lawyer or claims management service provider to handle the claim.

The practice of claim farming is widely condemned by lawyers working in personal injuries, as well as insurers across all types of personal injury claims.  For members of the public, the practice signals a breach of privacy through what is assumed to be, unlawful disclosure of their personal information.

Since February 2019, over 500 complaints have been submitted to the Motor Accident Insurance Commission (the Commission) about claim farming.

The Bill

The Bill aims to address the practice of claim farming through two major reforms:

  • a prohibition on the act of cold calling or personally approaching another person without their consent and soliciting or inducing them to make a CTP claim; and
  • making it an offence, for anyone to pay claim farmers for the names of potential CTP Claimants or to receive payment for a claim referral or potential claim referral.

The Amendments

The Bill proposes a number of amendments to the Motor Accident Insurance Act 1994 (Qld) (MAIA).  These include the following:

  1. The requirement of a law practice to complete a Law Practice Certificate (Certificate) (in a form approved by the Commission and verified by statutory declaration) and provide the Certificate to a Claimant prior to the commencement of a claim, after the start of a claim or prior to finalisation of a claim.
  2. The Certificate must state:
    • that the supervising principal and each associate of the law practice have not:
      • given, agreed to give, or allowed or caused someone else to give consideration to another person for a claim referral or potential claim referral for the claim in contravention of section 74(1); or
      • received, agreed to receive, or allowed or caused someone else to receive consideration from another person for a claim referral or potential claim referral for the claim in contravention of section 74(2); or
      • if section 74 does not apply to the supervising principal or an associate to the law practice – the circumstances mentioned in section 74(3) why it does not apply.
      • the supervising principal and each associate of the law practice have not personally approached or contacted the Claimant or solicited or induced the Claimant to make the claim in contravention of section 75; or
      • if section 75 does not apply to the supervising principal or an associate of the law practice – the circumstances mentioned in section 75(3) why it does not apply.
  3. A prohibition against a person (a payer) giving, agreeing to give or allowing or causing someone else to give consideration to another person (a payee) for a claim referral or potential claim referral. 
  4. A prohibition against a person (a payee) receiving, agreeing to receive or allowing or causing someone else to receive consideration from another person (also a payer).
  5. A prohibition against a person personally approaching or contacting another person and soliciting that person, the authorisation of the Commission to make application to the Court for an injunction restraining a person who the Commission reasonably believes has engaged, is engaging or is proposing to engage in conduct, whether in Queensland or elsewhere, that contravened, or is contravening the prohibitions referred to above.

Other changes

In addition, the Bill also sets out to:

  1. Amend to the Motor Accident Insurance Regulation 2018 (Qld) and the prescribed Notice of Claim form, by requiring a Claimant to provide additional information in their Notice of Claim including:
    • the Claimant’s Medicare number;
    • whether the Claimant requires an interpreter and, if so, the language of the interpreter;
    • a diagram showing, to the best of the Claimant’s knowledge, where the driver of each occupant of a vehicle was sitting in the vehicle at the time of the accident;
    • telephone numbers and email addresses of the owner and driver of each vehicle, involved in the accident;
    • telephone numbers and email addresses of the witnesses to the accident;
    • whether a claim has been made under a comprehensive insurance policy or a third party property damage policy and if so, the insurer for the policy, the policy number and any claim number relevant to the accident;
    • more detailed information in the medical Certificate which accompanies the Notice of Claim, including the date the Claimant was first examined by a doctor and their Health Practitioner Regulation National Law unique identifier;
    • the date the Claimant first consulted a lawyer about the possibility of making a claim;
    • the date the Claimant first retained a law practice to act for the Claimant in relation to the claim.
  2. Extend the 50/50 rule cap on legal costs in speculative personal injury claims to interstate law practices.
  3. Provide the Commission with additional powers.  The addition of a new Part 5B proposes to give special investigation powers to the Commission and most notably includes a section prohibiting an investigated person, or an associated person, from answering a question put to them by an investigator which:
    • might incriminate them; or
    • require them to disclose privileged client communication.

Penalties

A penalty in excess of $39,000 per offence may apply for:

  • contraventions of the claim farming provisions;
  • a failure by a law practice to provide a Certificate; or
  • the provision of a Certificate by a law practice which is false or misleading. 

Additionally, a law practice who contravenes the claim farming prohibitions will not be entitled to recover any fees or costs, including disbursements, that relate to the provision of services for the claim and will be required to repay any amount received that relates to the services to the person from whom it was received.

Exceptions to claim farming

Under the Bill, ‘claim farming’ is not defined. However, ‘consideration’ is defined to mean a fee or other benefit.  Consideration does not include a gift, other than money or hospitality, if the gift or hospitality has a value of $200 or less. 

A ‘claim referral’ does not include the advertisement or promotion of a service or person that results in a claim using the service or person if the advertisement or promotion is made to the public or a group of persons.  For example, an advertisement of services provided by a law practice on the website or in the newsletter of a sporting association or charity, would not contravene the legislation.

Considerations

The first reading speech suggests that the Bill is aimed at eliminating the unsolicited contact with members of the public by persons or organisations, who attempt to induce individuals to make CTP claims and sell their personal information.

Concern has been expressed among members of the profession that the prohibitions contained in the Bill may have unintended consequences for law practices with relationships with community organisations such as unions, sports clubs and community legal centres. However, by contrast, such organisations do not usually make unsolicited contact with individuals to induce them to make a claim.

If a law practice is paying any entity, or person, a monetary amount for a singular claim referral or potential claim referral (or multiple referrals), that law practice should review its arrangements, as against the Bill.  However, law practices that do not engage in such practices, should not be concerned.

While the potential penalties are high, the Bill only targets claim referrals in CTP claims and therefore, leaves open the potential for claim farmers to target individuals with other types of personal injury claims.

The amendments to Notice of Claim forms will allow CTP insurers to gather more information, at the start of a claim, than ever before.  This data will better identify potential referral relationships between particular health care providers and law practices.  Health care providers who refer prospective Claimants to a law practice may, or may not, contravene section 67 of the Personal Injuries Proceedings Act 2002 (Qld).  Under the MAIA in its current form, the Commission may impose licence conditions which require CTP insurers to provide that data so as to allow investigations into referral relationships between doctors and lawyers.

To report a claim farming incident relating to a motor vehicle accident, contact the Commission through this link.

Kate Denning

Kate Denning is the Founder & Principal of Denning Insurance Law. Kate is an Accredited Specialist in Personal Injuries (Qld) and opened her own practice out of a desire to deliver high value, specialised legal services. Kate has been practising as a solicitor in Queensland for over 17 years. Her passion for delivering great results, approachable manner and breadth of experience, set her apart from her competitors.

Kate DenningBill to stamp out the ‘insidious practice’ of claim farming in motor accident claims

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