Dr Kerryn Phelps, AMA President to the National Press Club, Canberra

We have seen life in Australia as we know it changed forever by the farce that public liability has become.

When school excursions have to be cancelled, when a local community is unable to hold its annual fundraiser, when pony clubs are forced to close down…or when Bondi Beach has to consider whether it can afford to keep providing volunteer lifeguards for the world's most famous beach because someone sued the Council when they dived into a sandbank…something is very very wrong.

But when those same communities are losing their doctors, when we start finding it impossible to find trained doctors to deliver babies or operate on brain tumours…it becomes a matter of life and death.

In Westmead, for example, 18 months ago there were 11 obstetricians delivering babies. Today there are five.

Of all the trainee obstetrician/gynaecologists at that hospital, not one is prepared under the current system to deliver babies when they qualify. They will just practice gynaecology.

It takes a medical generation to turn this sort of situation around.

The medico-legal system as it has evolved has provided fertile pastures for the growing legions of plaintiff and defence lawyers to graze upon over the years.

The emergence of 'no-win-no-fee' lawyers has created a Lotto mentality amongst some injured patients who might otherwise not receive the care and rehabilitation they need.

So, for some there is a windfall. For most, it's a massive shortfall.

Medical practitioners have been gob-smacked at some of the judgments that have emerged from courtrooms.

Lawyers and judges with no understanding of the nature of the practice of medicine routinely accuse doctors who have been going about their work diligently and responsibly of negligence.

They fail to take into account the nature of the clinical setting.

In the cold hard light of a courtroom, they make no effort to explain or consider the split-second high-drama decisions that must sometimes be made in life and death circumstances.

It's not in their interests to do so.

It's a case of 'sue now, and don't ask questions later'.

Even eminent judges have felt compelled in recent months to come out and criticise the legal system and the "Santa Claus mentality" that has allowed this crisis to develop.

In a speech entitled "Negligence: the Last Outpost of the Welfare State, NSW Chief Justice, Jim Spigelman, said that some judges have 'got it wrong' in awarding payouts for negligence over the years. He has listed a series of legislative and procedural reforms he sees as necessary

The medical indemnity crisis cannot simply be swept under the carpet as it has been for the better part of the past decade.

It is an issue that has profound effects on the whole community.

It is a social problem that needs a national solution with national leadership.

Despite significant advances in tort law reform in NSW and moves afoot in other States and an "iron clad guarantee" from the Federal Government, medical indemnity premiums are set to rise again by 50 to 100% in the next six months.

And the Federal government is talking about a levy on top of that for the next five to ten years.

They want doctors to pay for years of governments failing to heed the medical profession's warnings about this crisis.

It's not that the reforms are not working. We can only imagine the situation we would be facing if the NSW reforms were not in place or the Federal government had not stepped in at the 11th hour to prop up UMP.

So we have reached the stage where we are forced to ask the question: IS MEDICAL PRACTICE AN UNINSURABLE RISK?"

One issue I would like to take up here and now is this concept of trying to create a commercial marketplace for medical indemnity insurance.

I must say my colleagues and I were stunned at Senator Coonan's suggestion in April that several commercial insurers were interested in entering the market.

That, of course, has not eventuated and never was going to in the prevailing climate - and UMP limps on under the provisional liquidator.

Medical indemnity should not be treated as a commercial opportunity. It is and should be a service for doctors and injured patients, NOT an opportunity for commercial insurers to line the pockets of insurance company executives and shareholders.

It has been said to me that the interest of commercial insurers in the medical indemnity industry would be a sign that stability has returned to the scene.

I say that the best indication of stability returning to the scene would be a massive reduction in the number of cases being mounted against doctors.

It is worth noting that the main sources of injury in Australia - motor vehicle and workplace accidents - are covered by statutory schemes with only limited recourse to the court system. That is the only way they can be sustainable.

There is no open commercial insurance market for compulsory third party motor vehicle insurance.

Why should we expect one to develop for medical injury, at least without radical change to the legal system.

Even if there were insurance companies champing at the bit to get into this so-called "market", is childbirth - with all its inherent unpredictability and potential for disaster - actually insurable?

Is an emergency room overcrowded with the very seriously injured and ill, and often staffed by doctors-in-training, an insurable risk?

Would any insurance company in a commercial market accept a policy for a doctor to remove a deep-seated brain tumour - an operation that might prolong life but at the possible price of greater disability?

One of life's great ironies is that the better medical science has become at treating disease and keeping people alive, the greater have become our patients' expectations of the perfect outcome.

With this has come the greater likelihood of punishing the doctor for less than perfect outcomes.

Is medical practice an uninsurable risk? Today I will explore this very question which cuts to the very heart of the debate.

Just over a week ago, I attended the Annual Conference of the British Medical Association.

While I was there, I met with the President of the American Medical Association. Like here, the medical indemnity situation in the United States is dire.

The American Medical Association has declared that only eight States are off the medical liability danger list, and they are the States which have had meaningful tort law reform…such as California, Hawaii, Indiana and Rhode Island.

Twelve US states are in crisis, with another 30 heading that way.

They are seeing physicians retiring early, moving to States where the problem has been contained, or giving up high-risk procedures because of liability concerns. Sound familiar?

A woman in Arizona recently delivered her baby in a car on the way to hospital 80 kilometres away because her nearest hospital no longer provided obstetric services.

A man in Texas died from his head injury because it took seven hours to find a hospital with a neurosurgeon to treat him.

Mississippi physicians are crossing their fingers because there are no 'level 2' trauma rooms north of Jackson.

This is not from the 'only in America' file. It's happening here, too.

It is important to point out that this is not just about affordability of medical indemnity premiums, although that is a big factor and the cost must of course be passed on to patients.

In many cases, a commercial decision is made to settle a case rather than risk the cost of defending it, even when the doctor has not been negligent.

It is also very much about the nature of the adversarial legal system that relies on a culture of shame and blame…and the trauma for a patient of bringing the action, and for the doctor of defending it.

There is also the issue of the cost to the community of a cumbersome and inefficient way of providing injured patients with the care they need through the courts.

Let's look at some indicative figures.

The average number of private deliveries per obstetrician is about 100 per year. The average indemnity premium is $80,000. That works out at $800 per delivery.

The MBS rebate for a normal delivery is $425.00.

Estimated legal costs across the board are 45-50% of medical indemnity premiums.

So the entire Medicare budget for obstetric deliveries goes to lawyers. And we thought Medicare was for patients?

The UK is just starting to look at the impact that so-called 'clinical negligence litigation' is having on their health budget and their health system.

'Clinical negligence litigation' is actually a preferable term to "medical indemnity" because medical accidents are not just about doctors. They are also about nurses, administrators, computers, hospital procedures and system failures.

According to respected British authority, Professor Sir John Kennedy, for reasons of safety alone, the only solution for the future is, and I quote, 'to get rid of clinical negligence litigation'.

Yes, you heard me right - 'To get rid of clinical negligence litigation'.

Why so?

Once again, it is not just about cost, although the cost to the National Health Service is currently estimated at 400-500 million pounds per year - with two to four billion pounds worth of 'tail', plus social security, medical care costs and lost productivity.

No, the urgency is because litigation is the enemy of safety.

Let's examine why.

What do supporters of litigation claim are their objectives?

• Compensation for patients
• Accountability of the health professional
• Deterrence of the conduct that led to the litigation
• Generating a culture of safer care.

Professor Kennedy argues convincingly that litigation fails to achieve any one of these objectives.

When you look at compensation, very few people who suffer harm from a medical accident take legal action, very few who commence an action get any payout at all, and very few people get very large amounts.

So, a socially just model of compensation is not achieved.

What about accountability?

The shame and blame culture of medical litigation means that doctors are advised not to confess to accidents, not to disclose adverse events for fear of expensive and traumatic litigation.

The really bad, obvious cases of negligence are settled on the quiet because they are not worth defending, and nobody gets to find out because secrecy is the condition of settlement.

The possibility of litigation actively prohibits open disclosure.

To make headway on quality and safety we need to have a culture which values the reporting of adverse events for the opportunity they give to improving the system. At the moment the culture is one of terror of the legal risk.

So this means that the system learns nothing about its failures because there is no routine reporting of adverse events or accidents and therefore accountability is not achieved - and neither is deterrence.

If there is no system for looking at why things went wrong, there is no possibility for improvement to safety in the system.

In fact, litigation works against safety because of the culture of defensiveness. It makes monitoring and data collection impossible.

It also leads to what we call "defensive medicine". That is where a doctor changes the way they practice medicine for the purposes of avoiding legal action rather than what is clinically best practice.

An example of this might be the patient with a simple headache who gets a CT scan or an MRI of their brain rather than a couple of paracetamol and a good lie down and see how you are going in a week or so. JUST IN CASE that headache is a brain tumour or a rare blood vessel malformation once described in an ancient Greek text.

This adds not only cost to the health system but also the possibility of adverse events related to the investigative procedures themselves. BUT the doctor has covered their legal risk.

Even this week we have been treated to yet another threat of class action against a pharmaceutical company and doctors following the publication of the Women's Health Initiative study at Harvard.

Following an extraordinary media beat-up which had some media commentators claiming the study showed that 26 per cent of women who took HRT long-term develop breast cancer, the medical profession was left to try to deal with the understandable anxieties of women in total confusion about their HRT and whether it was going to kill them tomorrow.

Then along came the plaintiff lawyers saying they were going to have a go at a class action for women who had taken HRT and developed heart disease or breast cancer.

For a start, the study showed that the increase for breast cancer was in the order of 8 in 10,000 women, and that the risk of heart disease was about one-thousandth the risk of being a smoker.

How exactly these lawyers were going to determine which women were going to get the breast cancer whether they had taken the HRT or not is beyond me.

But let's just say in our wildest imaginations that they decided to have a go and drag this one through the courts.

Are the thousands of doctors who had prescribed HRT in good faith to women who were presented with all of the available evidence at the time at risk of litigation?

All would be stridently defended. Who is likely to win? The lawyers, of course!

And what of the pharmaceutical companies who researched and produced the HRT?

History gives us the example of the tragedy of thalidomide. If this sort of class action proceeded, there is unlikely to ever again be any research into medication for the treatment of morning sickness in pregnant women.

If such a class action were to proceed under these circumstances it would plunge medical research and medical practice back into the Dark Ages.

No pharmaceutical company would be prepared to put research funding into hormone treatments...just in case it came back to bite them in the rear thirty years down the track.

On the one hand the consumer lobby calls for faster, more streamlined drug approval mechanisms.

Yet research that emerges only after thirty years of experience in large populations of women demonstrates a small negative effect.

Rather than being celebrated as a triumph for medical research and a valuable addition to the information available to women to make an informed decision about HRT, it is turned into an opportunity for a few legal firms to make a killing.

But what could die in the process is medical practice.

We need to 'treasure' medical mistakes as they are the clues to building our safety mechanisms.

Without "trial and error" we are likely to perpetuate error because we would not know any better.

Is it possible to get rid of clinical negligence litigation? Is this desirable?

Well, they're giving it a go in some countries, some more effectively than others.

At the AMA National Conference this year we heard from Dr John Adams, the Chairman of the New Zealand Medical Association, about New Zealand's Accident Compensation Corporation - the ACC - which also handles medical accidents.

The ACC administers New Zealand's accident compensation scheme, which provides accident insurance for all New Zealand citizens, residents and temporary visitors to New Zealand.

In return, people do not have the right to sue for personal injury, other than for exemplary damages.

In 1989, medical mishap was included in the scheme, and lump sum compensation payments were abolished and replaced with periodic payments.

Under the ACC scheme, a patient undergoing treatment accepts that there are certain risks involved.

If a patient is injured as a result of medical treatment they are quickly assessed

If a complication occurs which is severe or rare (defined as less than 1% chance), then the patient is assessed and the ACC makes a determination whether the injury was a result of medical error or mishap.

A medical error is defined as a failure to observe the standard of care and skill reasonably expected in the circumstances.

However, medical error does not exist solely because the desired results were not achieved or because subsequent events show in retrospect that different decisions may have produced better results.

OR the failure in question consists of a delay or failure attributable to the resource allocation decisions of the organisation.

There is a parallel complaints and discipline system for health professionals ensuring accountability.

Our medical colleagues from across the Tasman admit the system has its faults but they manage to work with it and pay on average $1000 per doctor per year.

In the Netherlands, the legal system limits the level of damages payable and clinical negligence has been removed from tort law. An arbitration board deals with smaller claims.

Physicians in the US are starting to look at a no-fault compensation scheme to keep malpractice out of the courtroom.

I'll read you an extract from last week's edition of American Medical News:

"Physicians launched an all-out attack on the medical liability crisis at the American Medical Association's Annual Meeting in June, making liability reform the AMA's 'highest legislative priority'.

"They're calling for legislation at the state and federal levels. They want a public education campaign geared to help the public understand how the crisis affects access to care.

"They want a state-by-state analysis of litigation costs under the current tort system.

"They want grassroots physicians to call and write their legislators.

"They want to study a no-fault liability system. And, by December, they want a plan for a national liability reform event, perhaps a rally or march."

Sound familiar?

This is a very interesting development and a natural progression of action already undertaken in individual US States.

A colleague told me last week of an initiative in Florida in the early 1990s.

They introduced a no-fault compensation scheme for neurologically impaired babies.

Babies with cerebral palsy or other problems linked to birth were automatically eligible for this scheme.

A Study by Duke University found that under this system people were getting better services, and that care and rehabilitation services were better targeted.

Interestingly, the study found that before the system was introduced, lawyers were getting around 45 per cent of compensation payments. After the scheme, this amount came down to five per cent.

Isn't that interesting?

So, where are we in Australia on solving our medical indemnity crisis?

We have three major activities happening and one major deadline.

There is the Prime Minister's Departmental Taskforce led by the head of the Department of Prime Minister and Cabinet, Max Moore-Wilton.

This involves senior offices of PM&C, Treasury, Finance, Health and Ageing, and Attorney-General's.

The AMA has been working closely with this group.

Then there is the Eminent Persons Group reviewing the law of negligence.

This is urgently needed because most cases arise out of medical accidents, not medical negligence. As medical science advances and new technology is introduced to save and preserve life, new risks and higher patient expectations are introduced.

By definition, doctors are working with sick or injured people, so there is an inherent risk in everything we do. Yet the expectation of the community and the legal system is becoming more and more unrealistic.

As a minimum, we should expect the Eminent Persons Group to advocate a return to the Bolam principle. That is, a patient should expect a standard of care in keeping with accepted professional practice of the time, and that it is not open to a court to find that a standard medical practice is negligent.

One example of the courts ignoring the realities of medical practice and redefining negligence is that of Kalakerinos vs Burnett.

In this case a country GP referred a patient to a gynaecologist in a nearby town. The patient was reluctant to make the trip. The GP was subsequently sued because the patient's condition was not treated and the GP, according to the judgment, did not make sure the patient had attended their appointment.

The GP was effectively sued for the complacency of the patient.

And then we have the work of Mr David Lombe, the provisional liquidator of United Medical Protection. We have yet to discover whether UMP is viable in the longer term.

Facing them all is the deadline of 31 December 2002.

This is when the Government's UMP guarantee expires and it's also around the time when more than 20,000 doctors will have received their UMP insurance renewals - with the huge premium increases expected to be in the range of 50 to 100%.

For some doctors, however, their personal deadline will have already passed. They will have made their career choices. Some will leave the profession. Others will steer away from high-risk procedures.

As I said earlier, any significant change to the make-up of the medical workforce can take a generation to turn around.

Patients and communities would become significantly disadvantaged.

Both the Eminent Persons Group and the UMP provisional liquidator are due to report by the end of August.

What progress will we have by then, I wonder?

Despite these groups working on solutions, little progress is being made. As the Roman historian, Suetonius, put it, things are 'hastening slowly'.

Progress is stalled - due mainly to differing priorities.

The AMA sees the urgent response based around:

• A national reform of the law of negligence, with as a minimum the return of the Bolam test
• Consistent and coordinated tort law reform in all States and Territories
• A national standard Statute of Limitations of three years for adults and six years for minors
• Assessment of liability by properly accredited experts
• Removing Medicare payments and hospital costs from any awards
• And a proper community-funded national care and rehabilitation scheme as a minimum for the severely disabled at a set level of impairment.
• Effective management of the so-called "tail". Until now the tail has been looking for a donkey to pin itself onto. Unfortunately the Federal government has picked the medical profession as that donkey with its suggestion of a levy. This puts the tail before the donkey.
• There are many reasons that the "tail"…that is the estimate of the cost of injuries that have never been reported…has in essence become the big problem. Without uniform and strictly enforceable statute of limitations, severely injured patients have an indefinite time, at least 25 years in some states, to bring a legal action against a doctor.
• No actuary could ever predict what a cerebral palsy case might be awarded by a court in a quarter of a century, yet the medical profession is expected to both estimate and fund that amount today.

While the Government is prepared to look at much of this agenda, their priorities at the moment seems to be a levy on doctors and a subsidy for high-risk specialties. But no detail.

The AMA believes it is imperative that any discussion of a levy be put off until we have done all we can on tort law reform in every State and Territory and introduced the national care and rehabilitation scheme.

For doctors to agree to any levy at this time would be throwing

money into a black hole.

If the Government drives its Chevy up to this levy, it will find that the levy is dry.

Downward pressure must be placed on premiums, and this is just not happening yet.

While the tort law reforms in NSW are yet to slow premiums, I shudder to think how high they might be without these reforms.

It is vital that all the other States catch up with NSW. Nationally harmonised tort law reform must proceed, particularly statute of limitations.

As it stands, from the point of State reforms, NSW is leaps and bounds ahead of the pack.

Queensland has now taken some AMA advice and is getting there.

South Australia has gone for the soft option.

But Victoria has not even stepped up to the starting blocks. Perhaps the starter's gun is held by the plaintiff lawyers in Victoria.

So where are we if State tort law reform is not achieved and legislated by, say, the end of October?

Where are we if the Government hasn't legislated for a suitable community-funded care and rehabilitation scheme for the severely disabled?

Where are we if medical indemnity premiums continue to spiral out of control?

I'd say we'll all be in big trouble. There'll be chaos.

It's time to fast track or change tack.

Australia must have a back-up plan.

For a start, we can't wait until December 31 to make decisions.

The Government must be prepared to extend its guarantee to give the States and Territories enough time to get their reforms through and for premiums to start coming down.

This extension must not be conditional on the imposition of a levy on doctors.

And, given the overseas experience, a national debate must begin on the possibility of a national medical accident scheme.

Different versions of a scheme have been raised by both sides of politics, Bob Carr and Joe Hockey the most notable. In an editorial this week, the Australian Financial Review also backed such a scheme.

We need to go forward. We need an alternative to the current adversarial legal system for medical negligence.

As a community we need to put an end to the notion that patients have the basic right to sue their doctors. That does not appear in any human rights charter.

Instead, we should promote the concept that patients have a right to safety and good care, and support if they are harmed.

The litigation system stands in the way of many people accessing that right to care and support which should depend on patient need, not proving some form of conduct by the doctor or the system. And it stands in the way of improving safety in the health system.

To cover all bases, the AMA is prepared to explore a National Medical Accident Scheme.

Such a scheme would support the needs of people who suffer impairment as a result of medical accident.

The scheme would:

• Be Government funded
• Provide services for long term care of the severely impaired
• Be governed by an impairment threshold. Anyone who suffers significant impairment from a medical accident who needs support should be entitled to the benefits of the scheme.
• Allow small claims to be handled through a non-adversarial complaints mechanism with genuine cases of negligence, properly defined, referred to appropriate professional review.
• Provide effective risk management aimed at improving safety in the health system.
• Support Medical Defence Organisations to remain as providers of membership services like complaint review, representation at inquests and tribunals, disciplinary matters - the so called 'road service' matters relating to legal compliance.
• Support Open Disclosure in a non-adversarial environment. Open disclosure is only possible in the absence of litigation.

The medical indemnity crisis makes it necessary for us to at the very least closely examine such a Scheme for Australia.

As the Fin Review so neatly put it, 'it is worth considering as part of broader reforms'.

Time is running out to fix the medical indemnity crisis. I hope I have been able today to bring the enormity of the problem into focus for you.

I began this address by posing the question: Is Medical Practice an Uninsurable Risk? The answer to that question is inevitably yes.

I'm happy to take any questions on medical indemnity or other medical issues.

Thank you.