On 27 May 2021, the Minister for Health, Greg Hunt, introduced the Medical and Midwife Indemnity Legislation Amendment Bill 2021.
The stated purpose of the Bill is to ensure that claims made against all private practising midwives are eligible under the Commonwealth’s medical and midwife indemnity schemes. The estimated impact on the fiscal balance over the forward estimates is $0.9 million.
Medical indemnity insurance is essential
Medical indemnity insurance provides financial protection to both medical practitioners and patients in circumstances where a patient sustains an injury (or adverse outcome) caused by medical misadventure, malpractice, negligence or an otherwise unlawful act. In Australia, it is compulsory for all registered health professionals to hold medical indemnity insurance under the Health Practitioner Regulation National Law Act 2009.
Since the early 2000s, the Australian Government has implemented a range of financial and regulatory measures to support the medical indemnity insurance industry. This stemmed from concerns about the stability and viability of the market following the collapse of the largest medical defence organisation in Australia (United Medical Protection and its wholly owned subsidiary Australian Medical Protection Limited). The legislative framework for government-supported professional indemnity insurance for midwives was established in 2010. Further legislative change designed to support the long-term stability and affordability of medical indemnity premiums was implemented through the Medical and Midwife Indemnity Legislation Amendment Act 2019 (see the accompanying Bills Digest for further background).
There are multiple insurance schemes to support claims against midwives
The Midwife Professional Indemnity Scheme (MPIS) supports professional indemnity insurers who indemnify eligible privately practising midwives for claims in relation to their practice of midwifery. The Commonwealth has a contractual arrangement with Medical Insurance Australia Pty Ltd (MIGA) from 1 July 2020 to 30 June 2023 for the delivery of the MPIS.
The Midwife Professional Indemnity Run-off Cover Scheme (Midwife ROCS) provides secure, ongoing insurance for eligible midwives who have ceased private practice because of retirement, disability, maternity leave, death or other reasons, with 100% of costs covered by the Commonwealth (funded via a levy on premium income). It provides liability cover for work done in the past, prior to adopting the run-off cover.
Under the Allied Health High Cost Claims Scheme (AH HCCS), the Commonwealth funds 50% of the amount of claims that exceed the AH HCCS threshold, up to the limit of an allied health professional’s indemnity. A claim made against an allied health professional or a midwife engaged as an employee to practise as a midwife, related to an incident (or series of incidents) in connection with their practice that occurred on or after 1 July 2020, may be eligible.
The Allied Health Exceptional Claims Scheme (AH ECS) protects privately practising allied health professionals, including midwives indemnified under their employer’s professional indemnity insurance policy, against personal liability for eligible claims that exceed their level of insurance cover. The Commonwealth will pay 100% of the cost of eligible claims once the claim exceeds the limit of the allied health professional’s indemnity insurance contract. The scheme is fully funded by the Government.
The two Allied Health Schemes were established though the Medical and Midwife Indemnity Legislation Amendment Act 2019 (see Schedule 6 of the accompanying Bills Digest).
Schedule 1 expands access to the Allied Health Schemes
Schedule 1 of the Bill amends the Medical Indemnity Act 2002 to expand eligibility for the two Allied Health Schemes. This will mean claims made against registered only midwives (midwives whose registration is not endorsed by the Nursing and Midwifery Board of Australia to prescribe scheduled medicines) will be eligible where the claims relate to incidents that occurred on or from 1 July 2020.
Item 1 inserts definitions of the terms ‘midwife insurer’ and ‘midwife professional indemnity cover’ into subsection 4(1) to clarify the distinction in eligibility between the Allied Health Schemes and the MPIS.
The Bill amends the basic payability rules for the AH HCCS (Item 2, paragraph 34ZZB(1)(c)) and the criteria for certifying claims under the AH ECS (Item 4, paragraph 34ZZK(1)(c)). Currently, both paragraphs require that if the claim is made in relation to midwifery, the incident(s) that is the subject of the claim is in the course of practice of a kind that eligible midwives could be expected to be engaged in as employees and therefore covered by their employer’s indemnity arrangements.
The Bill replaces this with the requirement that if the allied health profession is midwifery, then the practitioner must not be an eligible midwife that: already has midwife professional indemnity cover in relation to the claim; or is already covered for claims made against them in respect of their practice, and where they are the only person indemnified. The latter cohort will continue to only have eligibility under the Midwife Professional Indemnity Scheme. The changes allow claims made against registered-only midwives to be made under the respective schemes.
The Schedule also includes transitional provisions to ensure insurers and medical defence organisations are not disadvantaged by the retrospective commencement of Schedule 1 (Item 8) and removes now redundant provisions (Items 3, 5 and 7).
Schedule 2 expands access to midwife professional indemnity schemes irrespective of employment arrangements
Schedule 2 of the Bill amends the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010 to expand eligibility for the MPIS and the Midwife ROCS from 1 July 2021 to cover claims made against eligible midwives in private practice, irrespective of whether the midwife is covered under a professional indemnity insurance policy as an employee or in an independent capacity. The Explanatory Memorandum states the Aboriginal Community Controlled Health Services requested government support for access to an insurance product for its employed midwives who are currently unable to obtain indemnity insurance to extend their services to intrapartum care (care provided during labour and birth) under an indemnity insurer.
Item 1 amends the definition of ‘midwife professional indemnity cover’ within paragraph 5(1). Currently, the definition requires the person being covered to be named and to be the only person covered by the contract. The amended definition is broader, requiring first, that the insurance covered by the contract is cover that an eligible insurer is required to provide under an arrangement with the Commonwealth, and second, that the person to whom the cover extends is specified or referred to in the contract, whether by name or otherwise.
Item 2 adds a note that a single contract of insurance may provide midwife professional indemnity cover for more than one person. These changes allow for contracts that provide cover for multiple employees under a company’s insurance contract.
Items 3 and 4 repeal subparagraphs 11(3)(g), 11(3A) and 11(3B). These relate to criteria for certification of a claim that currently restrict midwives operating under certain employment arrangements from accessing the MPIS and Midwife ROCS. Repealing subsection 11(3)(g) supports expansion of those schemes to all eligible midwives irrespective of employment arrangements. Subparagraphs 11(3A) and 11(3B) are then redundant as a consequence.
Item 5 repeals the definition of ‘private practice as a midwife’ within paragraph 31(5) and associated clarifying provisions within paragraphs 31(6) and 31(7) and substitutes a new definition for ‘private practice as an eligible midwife’. The new definition excludes previous subparagraph 31(5)(c) which placed eligibility limitations based on a midwife’s employment arrangements.
The application provision within item 6 clarifies that amendments made by Schedule 2 only apply to claims that relate to an incident that occurs on or after 1 July 2021 or an incident that occurred in the course of providing treatment to a patient during a pregnancy where the pregnancy ends on or after 1 July 2021.
The Bill expands access to existing Commonwealth-supported schemes to provide indemnity insurance to privately practising midwives. It appears to address unintended exclusions and will provide further options assisting all midwives to be suitably covered if a medical indemnity claim is made. The Senate Standing Committee on Community Affairs considered the Bill and unanimously determined there were no substantive matters that require examination.