Medical Indemnity Webcast via Rural Health Education Foundation

Well, tonight we will provide you with the best available advice from the government, the AMA and the Rural Doctors Association. We will also hear from the provisional liquidator. The program will also provide you with an opportunity to ask the panel about issues in relation to medical indemnity. The numbers to phone now are 1800 817 268. If you are phoning from the Sydney metropolitan area, that is 9715 8715. The fax numbers are 1800 633 410. Again, if it is from the Sydney metropolitan area, it is 9715 8700. We have already been inundated with questions and faxes, and we will endeavour to address these as we work through the program. We will provide you with some useful resources and contacts at the end.

Let us introduce our panel to you. We have David Lombe, who is the provisional liquidator for United Medical Protection, UMP, and Australasian Medical Insurance Limited, or AMIL. David is from Deloitte. Welcome, David.

MR LOMBE: Thank you.

DR SWAN: Dr Kerryn Phelps is president of the Australian Medical Association. Welcome, Kerryn.

DR PHELPS: Thank you.

DR SWAN: The Minister for Health and Ageing is with us too, Senator Kay Patterson. Minister, thank you for coming in.

SENATOR PATTERSON: Thank you.

DR SWAN: And Dr Ken Mackey, who is the national president of the Rural Doctors Association of Australia, based in WA. Ken, thank you.

DR MACKEY: Thank you.

DR SWAN: Kerryn, what is the story from your point of view?

DR PHELPS: Thanks, Norman. Welcome everyone to this really important broadcast. We hope tonight to be able to provide you with the security and the confidence to continue looking after your patients. We want to ensure that you will be able to afford to stay in practice providing a full range of medical services to your communities for the long time. The AMA has treated medical indemnity reform as a priority issues for many years. Considerable time and resources have been devoted in our push to keep the system secure and affordable. Our focus has always been on curing the disease rather than applying a band-aid to this spreading problem. The disease is the mix of disparate factors that forced indemnity premiums to skyrocket out of control. UMP was a victim of that disease. At least in the eyes of the AMA, it is not a terminal victim.

By successfully treating UMP, the AMA saw a way to stop the disease spreading across the whole industry. We have acted swiftly and carefully to help resolve a crisis that threatens to wreak havoc with the provision of medical services to all Australians, a crisis that would see the worst medical workforce shortage in Australia's history. The first step was to treat the patient, UMP. Last year, on behalf of our members and the profession, we asked Ernst and Young to report on UMP and its most recent call on doctors. UMP cooperated on that report. We circulated the relevant advice from that report to our members. Following the advice of Ernst and Young, we insisted that UMP should start publishing estimates of the unfunded tail, or IBNR. By and large, this information has been forthcoming and has provided the AMA, UMP members and the government with a much clearer picture than ever before. As a result of the AMA's endeavours, the workings of the medical indemnity industry became historic and transparent. UMP and the industry have since been hit by a string of unexpected events: an increase in the number and size of claims, including the $14 million Colanda Simpson case; the full impact of the HIH collapse, a major UMP reinsurer; and the September 11 catastrophe in the United States and its international shockwaves affecting the global reinsurance market.

UMP's resultant woes have driven home the stark reality that the medical indemnity tail must be covered if equity of access to medical services in Australia is to be maintained. A social problem of the first order had emerged. A community response was needed. The entry of the federal government to the medical indemnity debate has been most welcome. Despite the federal government guarantee until the end of the year, many doctors have let us know they remain uncertain about the present, let alone the future. That is why we are here tonight - to ease that uncertainty.

The response from doctors to this broadcast has been amazing. We will attempt to answer as many of your questions as possible tonight, but we will not get to all of them. We will do our best. The pieces are falling into place to solve or at least ease this crisis for doctors, patients and communities. The governments and medical defence organisations have begun to respond. The New South Wales state government has introduced tort law reform, extended public coverage to all doctors working in the public system, and endeavoured to make some reforms around medical indemnity premiums. The federal government has just introduced legislation to enable large lump sum payments to patients to be replaced by periodic payments. After initially extending the capital guarantee of $35 million to UMP to 30 June 2002, the federal government is now guaranteeing the payment of settlements and claims made by doctors over the period 29 April to 30 June this year.

The Prime Minister has indicated that his government will guarantee UMP settlements and claims made to 31 December this year on a claims made basis. He has come up with a scheme to deal with the unfunded tail of claims. However, this proposal includes a yet to be determined form of levy on doctors. This is being challenged by the AMA, and it will need to be examined very closely. I am sure that Senator Patterson will provide specific information about the government guarantees.

Medical defence organisations have taken a range of steps to be more transparent and to ensure that their finances are in order. Where possible, they are offering coverage to doctors who want to switch MDOs. While every doctor will need to make their own individual decision as to how and indeed if they keep practicing, the measures taken so far appear to offer a reasonable degree of comfort in terms of doctors having coverage in the short to medium term. But these measures are not comprehensive and they do not address the unsustainably high level of premiums facing many proceduralists. Nor do they satisfy the fundamental long-term reform requirements that will be needed to make the medical indemnity system viable again.

As the AMA has been saying all along, the key to a viable medical indemnity industry for the longer term in Australia is a viable UMP. As I understand the government guarantee, if UMP goes into liquidation, UMP insured doctors would not be covered for their tail for the period from 1 January 2001 to 28 April 2002 and from 1 July 2002 to 31 December 2002 unless they can shift to another MDO and buy tail cover for these periods. The government is aware of this issue. As I understand it, it is not prepared to make an additional commitment until they see if the need arises. Of course, if UMP is able to keep trading into the future, this issue will not arise. Members will be covered by claims made policy on an ongoing basis. Clearly, the next milestone in this issue will be when we get a decision from UMP's provisional liquidator, Mr David Lombe, about the commercial viability of UMP. Maybe he will be able to give us an indication tonight.

In the meantime, I am very aware that there is an established legal process that Mr Lombe must follow in all this. Long-term viability of the medical indemnity system will require reform of the courts and their processes, including extra witnesses and judges experienced in medical cases, and shorter statutes of limitations in the states. Some of the state governments are actively working on these issues, but we need a much quicker and more positive response. On top of this, the federal government will need to develop a national scheme to bring the costs of the very high settlements under control. There are not many of these, but when a single claim can run to an overall cost of $17 or $18 million, they have the capacity to completely destabilise an otherwise viable insurance market.

The AMA has proposed that a national scheme for the long-term scare of severely injured patients, which is a very major cost in these big awards, must be developed on a community-funded basis. I know that the government is also looking at the possibility of a scheme covering the excess of a fixed amount - say, $5 million in the big cases. The costs of these big cases have to be brought under control or some of our key specialties, such as obstetrics and neurosurgery, will become totally uninsurable. Without cost subsidies from other parts of the profession, these specialties are already uninsurable. It is not just a matter of holding the line; some premiums have already reached totally unsustainable levels and are driving doctors out of procedural work. Many of the doctors who have faxed questions into this program are in this position. They cannot afford the premiums and the pressure and the risk that goes with, for example, delivering babies in a country town. Rural obstetrics is rapidly becoming a thing of the past. Similarly, neurosurgeons are paying $10,000 per month just to keep practicing. They cannot keep this up, so something has to give. Rather than going down the path of adding a levy to the current level of premiums, we will be talking to the government about subsidising premiums so that doctors can stay in practice and the current range of services can be maintained.

I hope I have given you some idea of the distance that we have come in this last 12 months, which is not insignificant. I am heartened to see the resources and efforts being applied to this complex issue by the federal government. The AMA has maintained its independence while working closely with UMP and the other MDOs, the various colleges and organisations that represent doctors and with the federal and state governments. I have no doubt that there are some very tough negotiations still to be made. But I can assure you that the AMA will work with the government to deliver the best possible outcome for doctors, patients and communities right across Australia. We will keep you informed every step of the way. Thank you very much.

DR SWAN: You are saying you want comfort. You want absolute comfort here.

DR PHELPS: Everyone wants absolute comfort. But the situation we need to point out is that while the government and the UMP liquidator are working on things day to day and week to week, there is a very complex situation here. We have eight different state and territory governments. We have four or five government portfolios federally who are working on this issue. We have the liquidator and the medical profession. There is a lot of cooperation that needs to happen, is happening and a lot of work across a lot of different areas that needs to be brought together so that we can have the long-term reform so that the situation can be fixed once and for all. It is no good having just a bigger band-aid.

DR SWAN: How much can doctors take on trust?

DR PHELPS: Doctors with UMP right now - I think we should get an opinion from David Lombe about this - are really in no different situation at the moment than they were before the crisis hit with UMP. They are no different than the doctors with other MDOs at the moment. That may change as at 31 December.

DR SWAN: Are there any sleeping issues about MDOs that we are yet to find out about?

DR PHELPS: I think the IBNR issue is one that may become an issue.

DR SWAN: These are the actual estimates of claims that may be in the pipeline or might not be in the pipeline?

DR PHELPS: That is right. These actuarial estimates of the tail may well be a big sleeper issue - in fact, they are a big sleeper issue - unless we can get these long-term reforms. It is the long-term reforms, such as the statute of limitations, redefining medical negligence - that is a very important one - and the long-term care and rehabilitation scheme. These are the things that will bring that IBNR down to a more manageable level.

DR SWAN: If I were a patient - I am thinking of the public and a few aspects of this - I would have a genuine desire, particularly for people in the country, to have the services. We are just playing a game here. The game is we knew for a long time that UMP was in trouble. Are we just playing it right up to the wire so that we can get the reforms, and, from the patients' point of view, so doctors can wiggle out of their responsibilities?

DR PHELPS: I think things have gone well beyond that. I believe that the public out there are very well-informed about the situation. People in country towns know their GPs and obstetricians. They know that they are getting less access to the services than they used to be able to have. We know that people are leaving procedural work, and that is a tragedy that will take more than a generation to fix. People also know that if doctors are having to pay more in premiums unless this situation is contained, those costs have to be passed on. They either have to be passed on through increased Medicare rebates or they have to be passed on to patients in terms of gap payments.

DR SWAN: Post December, have we just got to go with the flow and see what happens?

DR PHELPS: I believe that by December - and this is a question that I believe the minister is probably better placed to answer - we should be able to get in place the state and territory reforms and the federal reforms that we need in order to contain the situation. The government guarantee until 31 December was designed to give us that respite, to give us that time to be able to formulate and put in place the necessary legislation and schemes to be able to make sure that people in need of care are going to be able to get care and that premiums will be affordable in the future.

DR SWAN: What is your analysis of the politics, in a sense - not politics in the sense of Labor and Liberal and the coalition - within the government? Observers have noticed, for example, how the Assistant Treasurer is dealing also with issues to do with insurance - the legality of it all, including tort reform. Senator Patterson, the Minister for Health and Ageing, is dealing with others. There has been an indication that the two have not necessarily seen eye to eye on all issues. What is your view of the unanimity of purpose within the government?

DR PHELPS: I think the fact that the Prime Minister has set up a task force within his own department is an indication of the priority the government has given this particular issue. Far be it for me to be a spokesperson for government, but certainly from my detailed observations, the government is aware of the urgency of the situation now. They are dealing with it at the highest level. It is very complex. We have got four or five different portfolios. We have Treasury, Finance, Health, the Attorney-General's Department and the Prime Minister's department all working on this issue trying to get in place all the reforms across all those portfolios that need to be put in place. Indeed, agreements are not only from the department level but at ministerial level. It needs to be guided by the Prime Minister's department so that there is an overview across all this. It needs to have the input of the medical profession, which the AMA is providing.

DR SWAN: In times past, the AMA has had to deal with difficult and complex issues in negotiations with the government. They have been accused of getting too much into the government's pocket. Are you able to retain your independence through all this?

DR PHELPS: I do not think I have ever been accused of that sort of interest. Far from it.

DR SWAN: Some of your predecessors have.

DR PHELPS: Not me. The important thing is that the AMA has always and will retain its independence as a voice for the profession. But, in doing so, it is very important that the government and the AMA work very closely in cooperation with this. There is no room for politicking in this particular situation. We have a crisis on our hands. Everyone has the same goal. From my observation, everyone is working towards that same goal. That goes for the state and territory governments and the federal government.

DR SWAN: I will leave it there. I noticed from the minister a smile on the issue of independence. I will come to Kay Patterson in a minute. The person I want to turn to now is David Lombe. Before I do so, I remind you to phone in your questions to 1800 817 268. If you are in the Sydney area, that is 9715 8715. You can also fax questions to 1800 633 410 or 9715 8700. David Lombe has been the provisional liquidator of UMP and AMIL. He is with us tonight. Welcome, David. Thanks very much for coming on to the program.

MR LOMBE: Pleasure.

DR SWAN: I guess it is stating the bleeding obvious, but you had better tell me what a provisional liquidator actually is.

MR LOMBE: A provisional liquidator is a liquidator appointed provisionally when a company has not been, in effect, wound up.

DR SWAN: But is it not just a prelude to going down the gurgler?

MR LOMBE: That is not necessarily the case. My role is to determine the financial position of the company and then report back to the court, and particular to Justice Austin, as to the financial position. Then Justice Austin will make an order, if he deems it appropriate. But the company, I must stress, has not been wound up. My appointment is provisional.

DR SWAN: You are in a peculiar position, because normally if they have a provisional liquidator, such as for HIH or One.tel or something like that, you look at the balance sheet, you look at the money going in and the money going out, and you make a judgement that it is either solvent or it is insolvent. You have a guarantee from the government here. How does that complicate your traditional role of the provisional liquidator?

MR LOMBE: It does complicate the role. As I indicated, as a provisional liquidator normally you would not be renewing policies. A provisional liquidator would not normally be making payments to patients. The reason I am able to do that is because of the financial assistance package that the government has given to me as provisional liquidator. So you are quite right; it is an unusual set of circumstances.

DR SWAN: Are you operating outside the corporations law?

MR LOMBE: It is not operating outside the corporations law. The corporations law provides for a liquidator appointed by a court to go back to the court and refer matters to the court for directions. That is precisely what I have done. In relation to the first stage of the government guarantee, I have gone back to the court and south the approval of the court for payments to be made. That is the role that a liquidator should exercise in terms of those sorts of difficult questions. But it is a really unusual set of circumstances. This has been recognised by Justice Austin. He has been saying that my role as provisional liquidator has been in fact a wider role. It is a role that perhaps in the past the court may not have contemplated.

DR SWAN: This is a judge in the New South Wales Supreme Court to whom you report?

MR LOMBE: Yes. It is Justice Austin.

DR SWAN: Just to be clear on what you have just said, normally you would be protecting creditors and giving them equal justice, in a sense.

MR LOMBE: That is correct. The last thing I would normally be doing is making payments to patients who have been injured. But because of the government guarantee and because of the approval of the court, I am able to do that.

DR SWAN: On what basis do you decide whether it is a going concern? You have got this guarantee.

MR LOMBE: The government guarantee puts an interesting factor there. That may in fact cause the company to be solvent. But that is a matter that is part of the considerations.

DR SWAN: Take us through some of the things you have gone to the court on. You have got permission to pay out on awards made to patients.

MR LOMBE: That is correct.

DR SWAN: Have you got permission to pay legal fees?

MR LOMBE: Yes. That is correct. We are able to, in terms of matters before the court, deal with those matters in the ordinary course. If the matter should be settled, we can settle during the government guarantee period. If the matter should be defended, we can defend that matter. It is operations as normal. It is operating normally as UMP-AMIL would.

DR SWAN: If I am an obstetrician in business and somebody makes a claim, I can consult with a lawyer in the usual way and it will be paid for in the usual way?

MR LOMBE: Yes. You are given the framework of how that works when you have insurance from a medical defence organisation.

DR SWAN: What about policy renewals? We are coming up to 30 June. It is a particular issue in Queensland.

MR LOMBE: Policy renewals have been covered by the government's second part of the guarantee. So I am now in a position, pursuant to orders we obtained last night in the Supreme Court of New South Wales at approximately 6.30, to write policies.

DR SWAN: So you can write?

MR LOMBE: I can renew policies, to be correct.

DR SWAN: Can you write policies?

MR LOMBE: I cannot write policies. If a person is not a member of UMP-AMIL, I cannot write a new policy for that person. But I can renew policies.

DR SWAN: If you are a senior registrar and you are going to become a consultant and you want to take out a policy with UMP, you cannot do that? You would have to shop elsewhere?

MR LOMBE: In those circumstances, it would be a provisional liquidator write ago new policy, rather than renewing a policy, that would be the case.

DR SWAN: What will happen to premiums on renewal?

MR LOMBE: We are presently looking at premiums. We expect they will be consistent with the way in which UMP-AM IL have previously determined their premiums.

DR SWAN: Which is what?

MR LOMBE: There is in the order of a 50 per cent increase at the beginning of this year.

DR SWAN: You expect that to flow through?

MR LOMBE: Yes.

DR SWAN: And of the call? I understand that the tail end of the call, which started a year or so ago, people have had. When does that come to an end?

MR LOMBE: I believe there are three years to go on that call. It is a debt that was paid in a particular year, I believe the 2000 year. What has been done is that there has been a deferral of that payment. In other words, terms have been given to the doctors. If they leave, those payments are still due and payable. It is a debt to the company.

DR SWAN: If you decide to go to the nick or another MDO, you still owe the call?

MR LOMBE: That is correct.

DR SWAN: Can you escape the levy? If the levy comes on, it will come from this?

MR LOMBE: No. I think that is a question we all have not got to yet.

DR SWAN: If you did pay the call?

MR LOMBE: If you don't pay the call, you are a non-financial member and, therefore, you lose whatever benefits that a financial member is entitled to.

DR SWAN: There are so many dates here. I get by far and away confused. There is 1 January 2001, 28 or 29 April, 30 June, and another 31 December. Let us walk through that slowly so that I can understand it.

MR LOMBE: I will certainly do my best.

DR SWAN: What happened on January 1, 2001? UMP changed the way it operated in processing claims?

MR LOMBE: They were a claims incurred organisation at that point. They changed to claims made.

DR SWAN: What does claims incurred involve?

MR LOMBE: Claims incurred refers to when the actual incident occurred. If the procedure occurred on a particular date, that is what you would refer to generally as the claims incurred.

DR SWAN: And claims made?

MR LOMBE: Claims made is when an actual claim is made; in other words, when they applied to UMP-AMIL.

DR SWAN: So what the practical implication of that change?

MR LOMBE: The practical implication is that if you were still a member at the time of the incident up until January 2000, you were covered. If you subsequently ceased being a member and left, then you only have the right of discretion to January 2001. Subsequent to that, if you have left, you do not.

DR SWAN: So if you have continuity of membership, you do not need to worry?

MR LOMBE: If you have continuity of membership, you do not need to worry.

DR SWAN: Okay. Why is UMP declared a problem?

MR LOMBE: My understanding of the matter is that the directors of UMP-AMIL approached the Supreme Court of New South Wales to have a provisional liquidator appointed because of a number of factors. One of those factors was the level of the IBNR. Another factor was one of the reinsurers, which was HIH, which was placed into the provisional liquidation. Therefore, there was a loss in terms of the reinsurance that UMP-AMIL had. The other factor was that we had a situation with APRA and prudential requirements.

DR SWAN: With HIH?

MR LOMBE: Yes. That was part of the processes that it was going through. As a consequence, UMP-AMIL would not have been able to write insurance policies under some of the new proposals coming through.

DR SWAN: We have a question from a general practitioner in Tasmania, who asks: can a doctor insured with UMP from 1 January until 31 December 2002 be 100 per cent sure he is covered, or should he reinsure with another MDO now? If so, would there be any refund for the premium paid for this year?

MR LOMBE: There be would be no refund. UMP-AMIL have never paid refunds. In terms of that coverage, he can be assured that he is certainly covered. He is covered because of the terms of the government guarantee.

DR SWAN: A pathologist from Victoria also wants to know of UMP's situation and have a realistic assessment of future premiums so that an informed decision can be made as to whether to stay with UMP or move. I suppose that goes to the question of whether or not UMP is really undercharging for its premiums.

MR LOMBE: In recent years, UMP-AMIL have been charging policy rates. But there is a question about prior years. Perhaps that goes to one of the reasons why UMP-AMIL found itself in the circumstances it did and proceeded now.

DR SWAN: We have a caller on the line. It is Dr Maken from Victoria. Good evening, Dr Maken.

DR MAKEN: Good evening, Dr Swan.

DR SWAN: What is your question?

DR MAKEN: My question is that much of the discussion is in relation to UMP. But is there not a factor that strips the viability of UMP and applies across the board in all states and to all the indemnity funds? I am wondering whether we could have any observations or comments on why only two of the state governments have actually taken any significant action at this stage?

DR SWAN: Kerryn, do you want to pick up on that?

DR PHELPS: Sure. One of the problems with all this has been raising the sense of urgency amongst eight different state and territory governments and, of course, with the federal government as well. The New South Wales government acted because they had to act. They made significant tort law reforms, to their credit. They are now looking at the statute of limitations in the spring session. It looks as though New South Wales will form attempt plate for any future tort law reforms in the other states. I understand that the Queensland government is currently looking at their situation. The ACT government is looking at their situation at the moment. It is happening a little bit like a domino effect. I suppose the states and territories where the situation is worst is where we are seeing the response most quickly. But no state or territory will be immune. They were supposed to have come back to the federal government with the plans for tort law reform by 30 May; that is another date. I do not believe that has happened. We certainly at AMA state and territory level will be placing pressure on our respective governments to make sure that they do move forward with tort law reforms and that they recognise their integral part in the long-term solution to this crisis nationally.

DR SWAN: Kay Patterson, some states must be cocky in their confidence that there is no problem.

SENATOR PATTERSON: I think that is my state. It is the state in which I live. It is the state I represent. Good evening everyone. Kerryn is right. On 23 April, we had a seminar or forum with all the health ministers and the medical defence organisations and the peak bodies of the medical profession, including the AMA and doctors. We had plaintiff lawyers and a large number of people there - 80 people, in fact. The health ministers came out with a direct statement, a communiqu , all agreeing that we needed tort law reform, that we needed the issue of structured settlements, which Senator Coonan has now brought into the Commonwealth parliament as a result of the general discussion on public indemnity. We have also been discussing the issue that Kerryn Phelps has been talking about, which is about a form of caring for people over the long-term. That is one that is going to take us awhile. Hopefully during that period, there is that respite to 19 December, we will be able to continue that. The main issue of tort law reform is for the states. I know that I am talking to the Queensland minister today; I was in Brisbane. She indicated that they are going to have legislation coming before the house. I think Victoria has legislation on the way.

I think this crisis with UMP has alerted everyone, not only the crisis with UMP, but also the public indemnity issue and HIH and September 11 have really brought to a head the whole issue of indemnity, but in particular medical indemnity. I think the states are well aware that they need to come to the party and engage in the sort of reform we have been talking about: tort law reform and statutes of limitation and those sorts of issues.

DR SWAN: How many medical defence organisations are you actually worried about at the moment from the information you are getting from the department and AMIL?

SENATOR PATTERSON: One of the issues - it is not a disagreement; I think Kerryn indicated that - concerns Senator Coonan, the Assistant Treasurer. Her department deals with the prudential arrangements. My concern is about the doctors and allaying the fears and concerns. Perhaps we should have had Senator Coonan here as well because she is dealing on a day to day basis with the liquidator, Mr Lombe, on a regular basis and dealing with those issues. So she is the one who is more across the issue of how many medical defence organisations we are concerned about.

DR SWAN: Since these issues have come up, I have a question here from a child practitioner in Western Australia with 33 years of practice behind her. Her question is based on the question from Dr Maken. The focus has been on UMP. Many doctors have commercial insurance with Aon Risk. Aon is no longer offering medical indemnity for underwriters. How do we obtain retrospective cover?

SENATOR PATTERSON: I do not know the answer to that question. Again, as I said to you, Senator Coonan is the one who has been dealing with the prudential issues. I do not know whether Kerryn has come across that particular medical defence organisation. I have not been made aware of that.

DR PHELPS: I understand it is a broker. The situation is that doctors who find that their medical defence is no longer in place are going to need to look at the other MDOs and make a decision about where they place their insurance. As we know, it is a critical decision and one that is a very difficult one to make at the moment. But it is a matter of getting on the phone and talking to each of the MDOs, have having a look at the prospectuses and making sure that you are getting the cover that is right for you.

DR SWAN: They may charge you a fee for your tail as well as your premium. Is that right?

DR PHELPS: I think you definitely have to look at that, yes. There are some of the MDOs who are offering retro cover back to 1 January 2001, when claims made cover came in. I think it is almost impossible at the moment to get insurance prior to that time.

DR SWAN: It is ostensibly a political concern of yours, isn't it, that it does not spread?

SENATOR PATTERSON: I think the government has demonstrated very clearly that we are not going to leave doctors uncovered and we are not going to see patients denied services. Hopefully, doctors will see, and I think Dr Phelps has indicated today, the will of the government in terms of working together in unchartered waters. We have been never been in a situation before. We are feeling our way step by step. It is one of the difficulties for those out there where things are changing on a daily basis. For example, this time mid yesterday afternoon, we were not' sure what the court would decide about the government's second guarantee. We now know that it has been accepted by the court and that the liquidator can move towards writing renewed policies and paying claims.

So what we are asking of that is to understand that we are working around the clock. Senator Coonan is working in particular on the prudential side of it. She is working assiduously to ensure with the medical profession, in particular with the AMA, to address these issues. But each time we turn a corner, we face another issue. What people have to understand is that we are working to make sure that we keep premiums affordable and that we ensure that the state governments realise they have a role to play too in making sure that we have reasonable tort law reform and other reforms in place to actually keep premiums at a level that the community can afford.

DR SWAN: Dr Lombe, back to you as the provisional liquidator. Is UMP a going concern?

MR LOMBE: The issue of UMP-AMIL is under consideration at the moment. I have not' completed an assessment of their financial position. Certainly the impact of the government guarantees is extremely interesting. We will be working through that concept at the moment.

DR SWAN: What are the milestones? What do you have to achieve by when? When can we expect what when?

MR LOMBE: I think it is worth looking at what we have achieved to date. To date, we have had the first phase of the government guarantee, which we have referred to the court and sought directions on that. That is now in place and we can make payments and operate normally. We have now gone in terms of the second phase. The first thing we have had approved by the court is the capacity to renew policies. That is very important for the medical profession. The next aspect of the second phase would be to move towards a situation where we implement the full government guarantee. That means, in other words, moving to a position where we can make payments for that period between July and December.

DR SWAN: Trade normally.

MR LOMBE: We are trading normally now. It is just a question of the fact that the first phase of the government guarantee was from 28 April to 30 June. The second phase is from 1 July to 31 December. We have implemented a portion of that second phase by virtue of it being approved by the court. We now need to implement the other aspects of the government guarantee in the second phase.

DR SWAN: But the problem really isn't cash flow, is it? The problem is going to be the balance sheet and whether or not you have enough in the bank for APRA?

MR LOMBE: With respect, the issues are cash flow. Under corporations law - section 95A, to be precise - you have to make a determination as to whether a company can pay its liabilities as and when they fall due. We are obviously looking at balance sheet solvency as well. But that is an issue we have to go to. Over laid on top of that is effectively APRA solvency. APRA has to have a certain margin, a certain capital, if you like, for a company to be able to write insurance policies. That is another issue.

DR SWAN: There is a caller on the line, Dr Springholme from Queensland. Good evening, Dr Springholme.

DR SPRINGHOLME: Good evening, Norman. The question I have is: if we make no forward progress with UMP or indeed any other medical indemnity organisation, what happens to claims prior to 1 January 2001? As everyone realises, a lot of medical misadventure with obstetrics and other issues take years to develop. Does it mean that we are always going to be completely in fear or at risk of prior problems coming up in the future?

DR SWAN: That is an excellent question. If you do not mind, I will divide it into two. I will ask about the situation currently, because that is what I was going to go on to, David, and ask details about the tail and details about the tail should things not go well for UMP in the longer term or in the medium term? Take us through the tail and your understanding of it and what the various issues are.

MR LOMBE: The tail is claims incurred but not reported. In AMIL-UMP's financial statements at 30 June 2001, they reported a tail of claims incurred but not reported of $455 million. The situation is that presently the government has undertaken to under write that tail. That will be, on my understanding, the resolution of it. How the resolution and the industry moves forward and where UMP is going to fit into that is a question that will be answered in full consultation with the government as we move forward.

DR SWAN: And specifically Dr Springholme's question?

MR LOMBE: In respect of which aspect?

DR SWAN: In other words, you have to just wait and see about the premiums for the 1 January situation if UMP is declared insolvent or things fall apart?

MR LOMBE: Yes. I think that is the answer, yes.

DR SWAN: But from now until 31 December we are okay?

MR LOMBE: Yes. That is exactly right. But with the parachute effectively of the government guarantee.

DR SWAN: Are there any other issues that you think need to be on the table that we have not raised?

MR LOMBE: I think there are some issues that doctors needs to understand in terms of my appointment. It is an appointment that is administrated under the Corporations Act. It there might be times when particular ideas seem very straightforward and sensible and you say, "Why can't the liquidator do that?" The issue is that I simply cannot because I am not permitted under the Corporations Act. That is simple things like making payments. As I mentioned before, if we did not have the government guarantee, I would not be able to make payments to patients. It is an important thing.

A lot of people, I suspect, are wondering why we are constantly going off to court. To a lay person, they say, "There must be something suspicious about that or there must be some problem or issue there." I can certainly say there is not. Certainly they are complex issues we are dealing with. That is one of the issues that the court has to work through. The court has to work through and ensure that the things we are dealing with are not in any way affecting the rights of other creditors. Leaving that aside, it is the process, it is the nature of my appointment as provisional liquidator that creditors need to have to go to the court and seek court approval for the sorts of things that we are attempting to do. Again, I stress that the things I am doing are somewhat unusual for a provisional liquidator with you not outside the bounds of a what a provisional liquidator should do. There are certainly matters where I need directions from the court to be able to do them.

DR SWAN: Have you seen anything in the courts from your investigations so far that leave you cause for concern in terms of UMP's operations?

MR LOMBE: In terms of UMP, I receive a tremendous amount of cooperation from the staff and management of UMP. It has been a pleasure to deal with them. In terms of our review of the books and records, there have been no difficulties there. The company has been maintaining proper books and records. We have been facilitating a review of those books and records. I do not have any difficulties in the way I am being treated. Certainly we are having records made available to us. The company certainly has the records that one would expect a company of this nature to have. So if I want a particular cash flow, I want a particular document, that document is red isle available and I am receiving 100 per cent cooperation from management and staff.

DR SWAN: We have a faxed question from Dr Julian Palmer , who asks: why should we stay with UMP?

MR LOMBE: If you do not stay with UMP, you may find that you have a gap in your cover. The government has considered the position very carefully of UMP and has agreed to provide this financial package. I think members should avail themselves of it. I encourage members to do that.

DR SWAN: So sit tight for the moment is your advice?

MR LOMBE: That is actually my advice.

DR SWAN: Ken Mackey, from the Rural Doctors Association of Australia, what have you been hearing out there as you have been traveling around?

DR MACKEY: The faxes and emails are running hot. The phones are running hot. 'Uncertainty' is the word - confusion and uncertainty. That is what is coming through to me. Unfortunately, there is a mistrust with the whole legal system and the insurance system and sometimes their representatives. That is what is coming through to me. Doctors are starting to say that they have had enough. Some are actually resigning from their positions.

DR SWAN: Is that rural mythology, or is it actually happening?

DR MACKEY: It is actually happening. Certainly some places have closed up on some days. They are open again on other days. But the inference is that they want to close up because this is such a stressful situation for them. Some doctors are very stressed because of this situation.

DR SWAN: Have you any statistics?

DR MACKEY: Not as yet. Some of our state association haves done surveys. One question was are you considering leaving medical practice? 60 per cent are actually considering leaving medical practice.

DR SWAN: And the impact on recruitment?

DR MACKEY: Very, very significant. We are very concerned that the young registrars and the young doctors are not going to think of rural practice, especially rural procedural practice, as being the vocation that they should have.

DR SWAN: Is this just an issue for GP and specialists involved in procedural work, or is it a concern for everybody?

DR MACKEY: It is a concern for everybody. The urban GPs should be just as wary and just as concerned as any rural GP or rural specialist or any rural procedural doctor. They should all be concerned.

DR SWAN: Do you have any evidence of rural procedural GPs giving up their procedural work?

DR MACKEY: There are significant numbers that have given up their private procedural work. They are want to go do the public work. They are covered under the treasury managed fund as having insurance and indemnity for public hospital work and public patients and public patients in public hospitals but not for private cover.

DR SWAN: Kerryn.

DR PHELPS: We have done a survey, which was published in the Medical Journal of Australia which showed that a very significant number of obstetricians will not be delivering babies in the next five to 10 years. That figure could be as high as 75 per cent will not be delivering babies in 10 years.

DR SWAN: That is urban and rural?

DR PHELPS: That is urban and rural. The serious situation here is that we will start to be having trouble to get people to go into that specialty from their junior years. That may never be recoverable. It may never be a repairable situation. So we have to put in place now the reforms that will get people to stay interested in obstetrics as a career and to keep them in the job. We need to look at incentives and encouragement for GPs to continue to deliver babies in rural areas as well. That has dropped off massively over the last few years. Medical indemnity premiums are a major source of that concern. It is not just the premiums; it is the stress of thinking you might be sued if something goes wrong in a high-risk activity. I do not think we can over state too much the effect of that stress. Ken can probably comment on that from the point of view of his rural colleagues.

DR MACKEY: It is of great concern. Some doctors have taken had to take time off to relieve their stress.

DR SWAN: If you put the obstetrics situation to one side, difficult though it might be, given that you have heard tonight from David Lombe and presumably we will hear from Kay Patterson, are those fears rational?

DR MACKEY: I think they are understandable. I think they are rational. I think the doctors are probably needing some more assurance from the discussions so far. I would think it is reasonable for them to think that by the end of the year there may be a solution. In other words, they should hang on until the end of the year.

DR SWAN: What are you doing?

DR MACKEY: I am continuing.

DR SWAN: Do you work in private practice?

DR MACKEY: I am a surgeon, so I do not practice.

DR SWAN: Can you give me an example of where it is working and where you think there is a model that might be applied?

DR MACKEY: The model that is working is in Victoria. There are communities there that have no concern. The doctors do not have any concerns with the indemnity that they have. They continue to work.

DR SWAN: Why not?

DR MACKEY: Because the state government in Victoria have said that they will cover the doctors for all their work. It is a one-stop shop. They are getting cover for their private patients in the hospitals and public patients in the hospitals and private patients at the surgery. It is all in the one indemnity fee, which is a reasonable fee. They are content with the situation.

DR SWAN: We will come back to that with Kay Patterson in a minute. I will come back to the same question I asked Kerryn Phelps a minute ago. In this scrabble for safety for medical indemnity, what about the concerns patients have about quality and safety of care?

DR MACKEY: The patients are always the first concern, especially given that rural doctors are so close to their communities. They have not been forgotten. The doctors are saying that they are considering their communities and their own families and themselves. They are all being considered.

DR SWAN: Kay Patterson, give us an update on what is happening government wise?

SENATOR PATTERSON: I welcome the opportunity to talk to all of you this evening about this issue of medical indemnity. I thank the AMA and rural doctors and Mr Lombe, who I am sure has a lot of things to do other than talking to you. I think it is important that we allay the anxiety that has been spoken about. I assure you the Commonwealth is committed to fixing the medical indemnity problem. So you can continue to offer vital medical services to rural communities across Australia. I understand the need for certainty in relation to medical indemnity coverage. I say to you that we are in unchartered waters. We have not had this situation before. I understand that many doctors feel concerned and that you find the whole process quite complicated. I am a psychologist, I am not a lawyer. I must say I find the whole concept of provisional liquidation quite interesting and challenging as well. I hear the liquidators say that they are going off to court not because there is something uncertain about the government's guarantee but because they need to get approval by the court to actually undertake and continue to do the work as a provisional liquidator. None of the letters that have come to my office and the department make it plain that you need to know that you are covered. But there is no magic wand that I can wave or anybody else can wave to fix the problem overnight. What we are trying to say to you here tonight is that we are all working together to address this issue. It is not just an issue for the medical profession or for the Commonwealth government or insurers. It is for the state governments also. It is the courts and the legal profession, the medical profession and both the Commonwealth and states governments. They all have a part to play in putting in place affordable medical indemnity insurance into the future.

The Commonwealth is responding as quickly as it can to the issues. As Dr Phelps said, the Commonwealth made an initial guarantee, as you know, to the provisional liquidator in early May. The Prime Minister on 31 May announced a range of additional measures. The Commonwealth is continuing urgent work on medical indemnity issues. They are consulting closely with the profession to ensure that this works proceeds.

As I said before, I appreciate the anxiety you all feel. I ask that you continue to provide services as you have done before. I will turn now to the detail of what we have done so far. Prior to the decision of the UMP board to seek the appointment of a provisional liquidator, the Commonwealth, as you have heard, offered a guarantee to ensure that claims that were properly payable or incurred in the period from 29 April to 30 June would be met. On 31 May, and I know we have been through some of these dates before, but I do not think it hurts to reiterate them - on 31 May 2002, the Prime Minister announced a Commonwealth guarantee to the provisional liquidator from 1 July to 31 December 2002.

As you have heard, Mr Lombe is not able to act on that guarantee and make payments and accept their merit following the approval given yesterday in the Supreme Court.

As Dr Phelps has pointed out, there is a difference between the two guarantees. We have gone through that before. The initial guarantee from 29 April to 30 June, was for claims incurred basis in relation to incidents occurring during that period as well as private cover on claims payable during that period. This means that the Commonwealth is guaranteeing that claims can be paid by the provisional liquidator if a doctor was a member of UMP at the time of the incident regardless of when the claim was made. That is for the claim period between 29 April and 30 June. The new guarantee applies, as we have said, on a claims made basis, which means that both the doctor must be a member of UMP at both the time of the incident and of the claim. Dr Phelps has raised the question of what happens if UMP does go into provisional liquidation. It is a fair question. It may cause concern for doctors. There are several points I would like to make to address this concern.

First, we are offering the guarantee on a claims made basis. The government is normalising insurance arrangements for medical practitioners insured with UMP. As Dr Phelps has said, under this arrangement doctors will have the same cover as they had before UMP applied for provisional liquidation. We are going back to the situation of 1 January 2001. Secondly, the Commonwealth government is doing all it can to fix the problem with medical indemnity. As I said, there are a lot of people across government working very hard on all aspects of the issue. Third, the Commonwealth accepts that you need to be insured in order to keep working and we will continue to work to create the environment in which you can obtain the insurance you need.

With regard to the argument of hours and the levy, a second major element of the Prime Minister's announcement on 31 may was that the Commonwealth will fund IBNRs where these are have not been funded by the medical defence organisation concerned. Whether I was first briefed on medical indemnity issues shortly after becoming minister, I was amazed to learn that under current accounting standards, MDOs were not required to account for IBNRs as they went. Everyone agreed that the MDOs will have to fund these claims once they were reported and settled.

The fact that they were not required to be reporting meant that they did not have to be shown on the balance sheet. Although some MDOs have very prudently taken steps to account for IBNRs and make provision for them, some MDOs, including UMP, had not. As a result, and you all know that there is some pile of some 400 and 500 cases - I am sure the provisional liquidator will know shortly exactly what that is - across the MDO sector that were not provided for in the assets of MDOs. The Commonwealth has issued a guarantee to cover the tail of MDOs that have not made proper provision for it themselves. But we expect doctors in those MDOs to pay the cost of the guarantee through a levy over a period of at leaves five years. We know that the levy will be a concern for doctors. I note Dr Phelp's comment that the AMA does not welcome the levy. But the details will be developed in close consultation with the medical profession.

All I can say now is that speculation of the levy of tens of thousands of dollars a year for average doctors is completely unfounded. If responsibility for the tail of between $300 and $400 million was simply divided equally between all UMP members over five years, the average member would pay a maximum of a few thousand dollars a year.

The other important point I would like to make is that the levy is a formal way for the medical industry to make provision for liabilities that should have been addressed many years ago. Members of UMP have enjoyed the benefits and, as we have heard not in the last couple of years but before that, lower than appropriate premiums over a reasonably long period. It is now time to return those benefits. Were it not for the Commonwealth's proposal, members would be making up the shortfall through a series of calls or be without insurance cover. I must say here that just before Easter the Prime Minister personally met with Dr Phelps and a range of other doctors from the AMA and the college of general practice, surgeons, obstetricians and gynecologists. He personally met with them and agreed at that meeting that they would be prepared to fund the tail over time. A levy is a mechanism to achieve this in an effective and responsible way.

With regard to the longer term - it is an issue of course for all of us - a concern for all of us is that the longer term strategy is aimed at making medical indemnity insurance commercially viable. The Prime Minister's announcement on 31 May effectively restates the commitments agreed to, as I mentioned before, to the Commonwealth, state and territories ministers at the recent medical indemnity forum. Following the forum, state and territory health ministers, Senator Coonan and the AMA, as I said, issued a joint communiqu which outlined several broader areas for further work, including supporting work coming from Senator Coonan's ministry on public indemnity, legal costs and administrative reforms, paying costs, clinical risk management, medical defence industry supervision and information for decision making.

The purpose of all these areas for work is to support the long-term strategy of making medical indemnity viable. Part of this strategy lies, as we have said, in tort law reform. I expect the views of forum participants on these issues to be channeled through the processes established by Senator Coonan. The expert panel of three eminent persons to examine the law of negligent lens will report in by August 2002. Part of it lies in a better way of paying for and delivering long-term care for the catastrophically injured. I expect the Health Ministers Advisory Council, AHMAC, the working group of that council on medical indemnity, to continue its work on this issue. I have to say that that work has been going on long before this crisis occurred, the work of the council, on these issues. So there have been things happening behind the scenes and over a period of time.

That working group will report back with other Commonwealth and state officials to the Council of Australian Government, or COAG, officials as necessary. They are meeting on September 2002 was anticipated at the time of the forum. It is anticipated that that they will report back by then. It is integrating the work the work of the AHMAC with the work of Senator Coonan the processes she is undertaking. They will be integrating that work as necessary. Both these elements will involve close cooperation with states and territory governments, which have prime responsibility for these issues.

Another part lies in encouraging structured settlements. We introduced legislation, I think it came into the House of Representatives last week, to remove taxation disincentives to grant this form of settlement. It is now up to the states to introduce legislation to allow the forum of settlements to be reworded. Another part involves including transparency in the financial reporting of MDOs and in bringing all of the insurance business of MDOs under the prudential framework for general insurers. This is a long-term issue that should give doctors much better information about their MDOs. A meeting between AHMAC, Treasury officials and other senior officials of COAG in September 2002 again was anticipated at the forum.

Other work that is in progress as a result of the forum includes the Australian council for safety and quality in health care continuing to develop a list of adverse events for specific action and then making recommendations to the health ministers by July 2002. The AHMAC working group is continuing to work towards an establishing a national database for all medical neglect generals claims from July 2002.

If after all these changes are introduced, premiums for some groups of doctors are unsustainable levels, the Commonwealth will consult with the profession in developing further measures for these practitioners. I understand that doctors are very concerned about the future of UMP after 31 December 2002. Unfortunately, I and Dr Phelps and Mr Lombe do not have a crystal ball and we cannot state categorically what will happen to UMP. What I can say with absolute certainty is that the Commonwealth is doing all it can to ensure the availability of viable medical indemnity insurance into the future. By guaranteeing the tail and setting in train a wide ranging reform process to address underlying costs for others, they are giving UMP every chance to get back on its feet.

I am writing to all the doctors this week providing them with a copy of the Prime Minister's statement of 31 May so that everyone understands the current state of play. As events unfold, that information will be available from information lines on 1800 007 757 or through the department of health website at www.health.gov.au or UMP website at www.ump.com.au. So those two sites are what you need to keep looking at so that we can keep you fully informed. Thank you.

CHAIRMAN: And we will look at all those details at the end of the program. We will give you more details of resources and contacts. So, thanks very much. Kerryn Phelps. Do all doctors have to pay the levy?

SEN : That is an issue that will be discussed and worked out with the medical profession. All doctors who are members of the UMP have a liability.

CHAIRMAN: They certainly will, but as a question, if you are member of - if, for example in Victoria, would you have to bail out people in UMP?

SEN PATTERSON: No, UMP - we will deal with UMP's trouble, but we have to look at the other medical indemnity organisations and if any of the others do not meet the provisional arrangements, that issue will have to be addressed.

DR PHELPS: Can I say there are obviously going to be a number of conditions around any sort of levy being agreed to, and I think if you have a look closely at the Prime Minister's statement which will be arriving this week, you would have - I would like doctors to notice that the Prime Minister never said that the trial would have to be fully funded by levies from doctors, but that there would have to be a contribution, and I think that is an important distinction, that doctors would not be expected to fully fund the IBNR and the second thing is that at the meeting with the Prime Minister there was not an agreement at all for doctors to fully fund the IBNR.

What we have agreed was that doctors would consider making a contribution provided that the appropriate reforms had been put in place to contain the IBNR and that doctors would not be expected to be throwing money into a black hole in the absence of substantial reform.

CHAIRMAN: We had a question about whether or not this does indeed cover private practice indemnity.

DR MACKEY: Not all doctors are covered. The procedural GPs are the ones who are particularly covered and some other doctors, but essentially the current State government that had the idea to try and make sure that there was continuation of the delivery of procedural services in Victorian towns and that is the model that I was talking about, that it is possible to keep doctors working, keep the services going, in the rural towns.

CHAIRMAN: Minister, this might be a rather cunning question, but I will ask it anyway. The Prime Minister has commented on the extent to which there is a free market in medical indemnity, I understand, and commented for example on the New South - I am not certain whether he has commented on the Victorian legislation, certainly on the New South Wales legislation, suggesting that it creates abnormal premium situations which would be a deterrent for new entrance into the market. So to what extent are solutions like the Victorian or indeed the New South Wales or the forthcoming Queensland solutions, in the government's view going to be a deterrent to new entrance into the medical indemnity market?

SENATOR PATTERSON: Well, I think the most important thing we need to have is to ensure that we have appropriately reforms. I mean, I did not know and I think many of my colleagues were not aware that an obstetrician can receive anything up 21 years and a period of growth, another five years, I think, for procedures.

You have people who have died, people who have retired, who are still sitting waiting for possibility of a claim and they are the sorts of things - and this is, I think, what Dr Phelps was talking about - unless we can really address those long term issues in State-law reform, the Commonwealth has made a commitment to look at the issue of the provision - provision can be made for people who are seriously injured or people who have long term rehabilitation requirements.

But to be able encourage anybody to go into the market and to deal with medical defence, we need appropriate reforms in place from the States. I had hoped that would uniform reform across the States so that people could not shop, and that is one of the other things that does concern me into the future, that people could use the best jurisdiction to get the best outcome, and I think Dr Phelps is nodding.

We both were hoping through that forum that we would get some sort of agreement. But, look, we have to take it step by step, and to get the sort of reform we are getting, I think is very important and will be a brake on the drivers of premium increases.

DR PHELPS: I think is clearly a challenge to the leaders of the State and Territory governments to work together to get fundamental reform in every State and Territory before the end of this year, in a format that very closely resembles one State to the other, so that there is some harmony and that there is not a reinventing of the wheel in every jurisdiction.

CHAIRMAN: Dr Phelps, have you got your phone calls and faxes because we are running out of time in this program so now is the time to get it in. The number to call in on is 1 800 817 268 and Sydney Metro area 9715 8715. The fax number is 1 800 633 410, or 9715 8700 if you are faxing from Sydney.

And indeed, just this issue is probably the most faxes we have had in before the program started was about just this issue, expressing concern about the likely inadequacy about the type of tort reform proposed by Federal and State governments.

And an orthopaedic surgeon from Tweed Heads says "That government actions with Federal and State will be superficial, unlikely to meet any real reduction in indemnity premiums", and so on and so forth.

I mean, pie in the sky, how much confidence can you have? I know we live in the Federation this is serious.

DR PHELPS: There are some very critical reforms that will make a massive difference to the future of premiums. The statute of limitations is one. You cannot have IBNRs being estimated on the basis of a case that might come up in 25 years time. I mean, how do you estimate what a Court is likely to award, 25 years away? I mean, 25 years ago, you could not have dreamt of the awards that are happening now. So, that is a matter of urgency that the States can deal with.

The second thing is the long-term care and rehabilitation scheme, some way of managing these big awards that are being made by Courts. Now, if we can take long term care costs out of that equation, then one should - the IBNRs will become more manageable and more predictable. And if we can get those fundamental reforms into place, then I think we have a chance of long term management and real management of these IBNRs and the long term future of health services.

SEN PATTERSON: I think also it makes it much easier, I am not an actuary, but there must be some sort of much greater stability or surety if you have more predictable in what the costs would be. I mean, if you are insuring a building, you know how much the building costs, and it is insured for seven years, and what the estimate might be. The thing that surprised me when I was just coming into the portfolio is that the enormous task of trying to estimate the claims that might occur and it seemed to me an absolute impossibility to put an accurate figure on that. And I think what Dr Phelps is saying is that with these sort of reforms, with this bringing some sort of certainty into the system, which means that insurers do not have to have absolutely exorbitant prices to cover what might be the case.

DR PHELPS: And the State and Territory AMAs will be watching very closely the reforms in each State, to make sure that they do have bite. I mean, there were some concerns in Queensland for example that Peter Beattie is not addressing the issues of capping the threshold. Now, unless you deal with those tough issues at the first bite - - -

CHAIRMAN: ..... can you explain?

DR PHELPS: The capping is done with these claims and the threshold at which people can make claims against their doctors for negligence. And the other difficult issue that the States must take control of is the issue of "defining medical negligence". Now, the Court system has taken the definition of negligence away from the profession over the years and I think we have to get back to that, even back as far as what as known as Volum ? Principle, which is the actions of a reasonable doctor is considered by his peers as being the definition of "medical negligence" or otherwise, and rather than some unrealistic definition that is created by the Court system.

CHAIRMAN: Kay Patterson, have government funds been drawn upon yet, or are going to?

SENATOR PATTERSON: I do not know. Mr David Lombe would know better than I.

MR LOMBE: To date we have made two payments - one payment of approximately 4 million and one payment of a million.

CHAIRMAN: Out of your own reserves or out of government Treasury?

MR LOMBE: It has been paid from UMP resource funds and we are continuing to work through those. It is a process that needs a lot of dotting the I's and crossing the t's and we are working through it as quickly as we can. We have a number in the pipeline and we are certainly endeavouring to process those as quickly as possible.

CHAIRMAN: Minister, a question here from a frustrated rural doctor and he is expressing dissatisfaction with the government's rescue package and says the way forward is not to further tax doctors and patients in an out of control of litigious culture and he asks, "Do you realise that someone with a $10,000 levy, rural doctors have had to charge everyone $48 for a 15 minute consultation and that would mean the end of bulk billing?"

SENATOR PATTERSON: Well, I am not going to speculate about the levy and I indicated what I thought the levy could possibly do if it were to be divided equally amongst all members of UMP. The level of the levy will need to be negotiated carefully with the medical profession and I think, as I said before, it is a five step process. We are in uncharted waters. It is something we have never had before. I think the Prime Minister does actually indicate it was not an issue of the government's making. That maybe we should have addressed earlier the issue of long term care and rehabilitation, but it was also the States that need to undertake reform, but I think also it is a shared responsibility in terms of the problem, and it is a shared responsibility in terms of the solution.

DR PHELPS: Could I just add to that that we are very well aware and have made the government aware of special issues for, for example, newly qualified doctors, doctors approaching retirement who are looking at exit fees to get out of working, and what they might have to pay in terms of ongoing cover, for doctors who are working part time. These are all very special cases that will need to be negotiated carefully over the next few months. So the issue of the levy is by far from clear.

CHAIRMAN: Yes, doctor.

DR MACKEY: I think what rural doctors are trying to work out there is all the different elements that they are going to have to pay. Now, they have got the premiums to pay, the have got the call to pay, they are going to have this new levy to pay. They are also going to have to pay for the tail if they want to leave practice, and they have also got to pay for some exit fee as well.

There is a whole number of different issues that affect different doctors in different ways and we have got to dissect those elements apart and try and work out, amongst all the other things that they have got to do, just what they are going to have to pay, and that is their greatest concern - how many dollars are they going to have to cough up in a few weeks, or 1 January?

CHAIRMAN: I want to be clear that what we are seeing tonight is that those are questions post-31 December 2002. That is not to say that we want to go - will not be bothered by them, they are not real questions, but they are questions post-31 December.

SENATOR PATTERSON: I think I would to just make it clear, Dr Mackey, and reiterate because the levy is to cover for the tail and I think to include that as a list of things that have to be paid, the levy will cover the tail and we are going to negotiate the levy with the medical profession. We realise it is at least five years, so will spread over a period of time, and I think the important thing is that we need to understand that the government is working as closely as we can with the medical profession to ensure that we do with this problem, and I think the Provisional Liquidator said maybe UMP all along was not charging appropriate premiums, and this is an issue that has been left.

I think what we - we are going to spread that power across a period of time to enable doctors to deal with it and I think that we need to keep more informed on a step by step basis but I hope you will appreciate that this a very difficult issue and it has a number of areas that need to be dealt with. There is the financial area, there is the levy for State and Federal across a number of portfolios and agencies as well as the Doctors.

And I hope that we can all address it with goodwill and good faith, because that is how we are approaching it, as the Commonwealth government, and that we will find solutions, and solutions that actually have long term outcomes, and I think that is what Dr Phelps and I are aiming for, to ensure that this is a problem that is not just a particular bandaid, but we actually cure the disease rather than - and treat the symptoms rather than just putting a bandaid on an old wound.

CHAIRMAN: We have seen what rural doctor are asking you, David Lombe, what efforts are needed to identify who is responsible for UMP's collapse - the directors, the auditors, the government?

MR LOMBE: People often assume that for some particular cause, maybe a major fraud or something of that nature - - -

CHAIRMAN: We have had one or two examples in the press recently?

MR LOMBE: They have, they have.

CHAIRMAN: It is .....

MR LOMBE: I think that causes people to be suspicious and what is simply a very startling cause of the failure with UMP, anyway. I think it is very much the issue of the premium not being sufficient to meet the claims that are now being paid out. And maybe there are some decisions that they took about we know what the claims made have also impacted on their financial position. But the new work we are doing at the moment, we are not seeing any dramatic reason for the failure.

DR PHELPS: Can I just say, I think we have to go a step further back, comments by Senator Patterson and I have heard Mr Lombe say that it is the fault of not enough premiums being paid. I mean, ultimately patients have been paying lower fees because doctors have not had to pass the higher premiums on, so patients have also benefited from the fact that premiums were at the level that they were. And I think if we go back one step and if we are looking at the causation of this disease, it is the system that has gone crazy that has created the higher premiums as time has gone by.

And so what we need to do is go back and fix the legal and the medico legal system that has created the problem in the first place.

SENATOR PATTERSON: I think too, it has most probably been different in different jurisdictions, too, and that is what - I think you agreed, Dr Phelps, that in some jurisdictions we have seen higher claims, we have seen more litigation than in other States, and so that has put pressure on premiums.

DR PHELPS: Indeed. And the greatest evidence for that is that the highest levels of litigation do not correspond with the highest levels of negligence. So, there is something wrong.

CHAIRMAN: Okay, we have got two fellows on the line. We have got Dr David Dance from Queensland. Good evening, Dr Dance.

DR DANCE: Good evening. Good evening, panel. My immediate question that I have to make my mind up before the end of this month is whether I stay with UMP or not. Now, a lot of the government promises are made to UMP members and to UMP. Am I chained to UMP in order to get the maximum benefit of these government funded promises? Or can I leave? But what is the exposure to my practice if I change MDO on 30 June?

CHAIRMAN: David, do you want to do that?

MR LOMBE: I think one of the stages you could find yourself in is the fact that you may have a gap in your cover, but it is entirely a matter for yourself as to whether you wish to stay with UMP. Of course, with the government guarantee, I am encouraging members to stay with UMP because I think that is in their best interests.

CHAIRMAN: And presumably, although you cannot really comment, which MDO will virtually cover that gap, I assume?

CHAIRMAN: Thanks, Dr Dance. There was a further question from Dr John Malone from Broome in Western Australia. Good evening.

DR MALONE: Yes, good evening, CHAIRMAN, and panel. I am greatly encouraged, Chairman, by the alacrity our Prime Minister and his government have shown and I understand, if I may direct the question, Chairman, to Mr David Lombe. I understand that Trowbridge Consulting were the authors of a confidential report to your firm and reported on the seminar on 25-28 November. Do you believe that you can actually calculate the quantum of the tail and bearing in mind what our President, Dr Kerryn Phelps has said a few moments ago?

DR LOMBE: I am not particularly aware of the Trowbridge involvement but certainly we have a team of actuaries presently trying to calculate the tail, if you like, the ANR, and they are working through what they regard as being difficult data, not because there is anything wrong with it, but just the nature of the data, and will be attempting to calculate an IBNR in accordance with proper actuarial principles.

CHAIRMAN: Do you want to tell us any more about this report that you are privy to, Doctor Malone?

DR MALONE: Yes, I understood, Chairman, that the Trowbridge Consulting were actually an in-house organisation linked to the provisional liquidator's firm. I may have misunderstood the information that fell off the back of the truck, but that was my understanding.

CHAIRMAN: It is a truck with a long distance then, it has got to Broome.

DR MALONE: ..... thanks .....

MR LOMBE: Towbridge used to be a branch of Delloitte's a subsidiary, if you like.

CHAIRMAN: But you are not aware of this report?

MR LOMBE: No, I am not particularly aware of it, no.

CHAIRMAN: Thank you very much, Dr Malone. There was another question for you, what role have you taken in working with the government to develop the submissions that have been put in place?

MR LOMBE: In terms of the situation with the government, I would really like to compliment the government for its approach in relation to this crisis. It has been extremely pro-active in working through the issues, and I have been to Canberra on a number on occasions and some meetings have been late at night, working through various scenarios. It is a joint process. It is a process which - where my ideas are welcomed, and we had some very frank discussions about the issues and I have had nothing but excellent rapport with the government and I would compliment the government and the people they have assigned to the task, in terms of Treasury and other people, and certainly my discussions with government Ministers have been very, very good, and very productive.

CHAIRMAN: And to what extent have the policies put in place, been based on your advice?

MR LOMBE: Well, certainly it has been a joint process. It has been a process where the government has had certain views and the government, from those views, I guess, by discussion with various parties and stakeholders, etcetera, and I have also had my own views about the way the matter should move forward and I certainly openly expressed those views to the government and hope they look at those views and made decisions accordingly.

CHAIRMAN: We have another call on the line, Dr Fitzgerald from Queensland. Good evening, Dr Fitzgerald?

DR FITZGERALD: Yes, good evening. My question is, I am a surgeon and I am aware that in New Zealand surgeons pay about $1000 per year for their medical indemnity cover. What is the difference, why do we not at a system that New Zealand has? Can you give us some ideas about that?

CHAIRMAN: Kay Patterson.

SENATOR PATTERSON: Well, the only issue in New Zealand is that they are not a Federation. They have a National government and they - - -

CHAIRMAN: Is that a cop out, Minister.

SENATOR PATTERSON: They do not have any States and so they have one set of legislation and then they - I think it is a fixed - and I am not sure on this, but I think - and again, this is the thing that Kerryn would be much more informed about the comparative arrangement, but I think they have a fixed payout for indemnity and they have a national scheme for people who are permanently disabled or require long term rehabilitation. Some people will tell me that although it looks good from afar, they have some problems internally, but I have not investigated that because it would be very difficult to overlay that over in Australia in our federated system.

CHAIRMAN: Kerryn?

DR PHELPS: It is a no-fault scheme which has its advantages and disadvantages and probably an in-depth analysis of that particular scheme is beyond the scope of discussion tonight, but suffice to say that we certainly have had a look at it. I have had discussions in New Zealand with the NZMA. We have had the President and CEO of the New Zealand Medical Association at our national conference to give us an address on the New Zealand system.

It has its attractions, but as I said, it is a no-fault scheme and a doctor can only be sued for what is basically serious criminal conduct with relation to patient care, and that all other medical accidents are assessed by an independent government tribunal which decides which are the worthy claims and which are not, and the doctors are - if there is an element of medical negligence of medical misadventure involved, if there is indeed medical negligence, then that is referred to the appropriate authority or tribunal for which the doctor has to pay a small amount of insurance in order to have the appropriate representation at that particular hearing.

As I said, it is a no-fault scheme. It has a few pitfalls but, once again, I think it is one of the models that we have been looking at, but at this stage does not seem to have a great deal of support here in Australia.

CHAIRMAN: Thanks, Kerryn. A question from Dr Stephenson who is a rural Registrar in Queensland, to you, David. "Will another call be made on UMP members as apart from the levy?"

MR LOMBE: The call has been always an aspect that we were considering, certainly an aspect that was always on the agenda. However, I take reference to the comments that were made by Justice Austin that as a consequence of the government guarantee, it seems unlikely that the Provisional Liquidator will come before me seeking a further call. It is an item that is still on the agenda, but rather than being at the top of the agenda, I think it has significantly moved down as a consequence of the government guarantee.

But there is always an issue in terms of our moving forward as to what capital it needs. And if it is going to write business without the government guaranteeing the future, it needs certain capital to comply with that real requirement. So that is still an ongoing issue, but in the present circumstances, and until we see what the plan is for the future, what the answer is for the future, it is very much down in the agenda.

CHAIRMAN: There is only another way of acquiring - the provincial backup required, is a merger .....

MR LOMBE: Absolutely, absolutely, and that is certainly one of the options that is running through my mind at the moment. There are many.

CHAIRMAN: .Any interest …..

MR LOMBE: I would rather not pre-empt that but - - -

CHAIRMAN: Just twist my arm.

MR LOMBE: There is a very good chance.

CHAIRMAN: There is a question from a Queensland procedural general practitioner. "What can be done in the very near future to reassure doctors that it's safe and economical for them to resume obstetric and anaesthetic practise?" Do you want to pick up on that one, Kerryn?

SENATOR PATTERSON: The thing is that for doctors who are members of UMP are now covered with the government guarantee at the same level they were before these crashes, and that is why we are saying to doctors we want you to continue to work and you are covered until the end of December, and of course we will be working during that time to address the issue. We are now more aware of the situation from the Provisional Liquidator and that you will need to know and be assured that you are covered for the period of the new agreement and would take that, because ..... until the end of December you covered in the same way as you were covered when UMP was running last year. Most people would have to say you must be better covered. I do not think there is any I can add as many would love to have a government guarantee.

I think a lot of people have said to me, "We'd love a government guarantee". But for the time being, that is the situation. I hope that you all understand, and I am sure you do, that it is the government's attempt to address this issue, and as Dr Phelps has said ...... Dr Phelps, I would not wish that on you - - -

CHAIRMAN: Funny about that. The Prime Minister has drawn up the thing, has he not?

SENATOR PATTERSON: ..... but the important thing is that we have to address each of these issues and it is very difficult, and I know it is very difficult for you out there, if we are here, and hearing every day exactly what is going on, but let me assure you, and I think the Provisional Liquidator has said that the government is cooperating with all its might to address what is a very difficult issue and it is of great concern. And as Health Minister, my concern is about the fact that you will never be able to continue to practice, and patients are never going to receive your services. And that, to me, as Health Minister, is the important thing.

Senator Coonan has agreed that keep me across the prudential arrangements from constant contact with her, because as Health Minister, I have you and the patients at heart and I am pleased to hear the Liquidator say that he is getting full cooperation from the government, because that is what we are aiming to do.

CHAIRMAN: Ken Mackey?

DR MACKEY: What our association has been telling its members is that they have got to make their own risk assessment. That means accepting what the government said, having a look at other information that is available, and assessing their ..... satisfaction is the most important thing. It is only the individual that can come up with their own risk assessment, but taking into account all the information and communications that have been made available.

CHAIRMAN: Kerryn?

DR PHELPS: And they may be very much aware of the concerns of doctors who are working in the higher cost specialities and we have already begun negotiations with the Prime Minister's Indemnity Taskforce about what can be done about these escalating and unaffordable premiums, and at the moment I think that there is some positive response to the idea putting a ceiling on the amount of premium that any individual practitioner might have to pay, and looking at subsidies, above and beyond that, in order to maintain ongoing services in areas like obstetrics. So, once again, that is a work in progress, but it is certainly something that we are very much aware of.

CHAIRMAN: Kay Patterson, I come back to the policies of this. We have got a Prime Minister's Office. We have got the Treasurer's office through Helen Coonan. You have got the Minister for Health and Ageing. Who is moving this?

SENATOR PATTERSON: And the Attorney-General, as well?

CHAIRMAN: Sure. Who is moving this?

SENATOR PATTERSON: The Department of Prime Minister and Cabinet is moving it in terms of this high level committee, and that was one of the issues that we had to do. Because it across a number of portfolios that are addressing this issue, that the Prime Minister put in place this very high level committee with whom the Liquidator has been working, and I think he indicated to you that it is working. As I said to you before, it is something we have never experienced before. We have had to put together a committee of high level officials that report to the Ministers. The Ministers are constantly updated. The Minister's officers work for that committee and they work in conjunction with the medical profession and with the Liquidator to address this issue, but the committee is led by the Prime Minister and Cabinet.

CHAIRMAN: We have got a question here from a consultant physician in Rockhampton in Queensland who asks, "For those UMP members approaching retirement age, and whereas doctors without a track record, does the panel recommend the policy of alienation of personal assets?" - presumably of tucking it away in the wife's name of a partner's name - "as an effective tactic to protect them from the risk of being sued for an as yet identified incident?" I mean - what do you do? I mean, I have seen that if you go in with your assets with express risk of avoiding - for the express purpose of avoiding risk, you are not dealing with it and the Court will go for them anyway?

MR LOMBE: I have an interest in bankruptcy as well, as a Trustee in Bankruptcy. If a particular person becomes a bankrupt, and an assessment would be made as to whether they have disposed of assets, in the light of a claim - in other words, to defeat their creditors - if a doctor today disposes of his house by virtue of a sale to his wife, providing that sale was done legally and not as a result of a claim, well then that might be a valid disposition. Therefore it would be a matter of how long it took before a claim came in, or whether the circumstances - well, it was in fact a valid disposition of that asset .

CHARIMAN: Yes, I think I said I liable for their IBNR - - -

MR LOMBE: Maybe. But in the circumstances, it is not an unusual thing for professionals to do that. I think it is quite common and that advice is often given by lawyers to their clients, to divest themselves of assets if they are working in a profession where effectively their house and all their livelihood could be lost at age 60.

CHAIRMAN: So you recommend it?

MR LOMBE: I might recommend it. I think every individual needs to make their own assessment and take appropriate legal advice. But if an asset is disposed of simply in light of a claim, then that disposal is invalid.

CHAIRMAN: Invalid.

MR LOMBE: And the Trustee in Bankruptcy will call that asset back into the estate of that particular person and it will be available for distribution to their creditors.

CHAIRMAN: A question here. "If one decides to retire in a few months, or after July 2002, would one still have to pay the levy?" Has even that been decided, Kay Patterson?

SENATOR PATTERSON: Well, as Dr Phelps said where they are studying the issue of the levy, and I think that is their work in progress and I think to pre-empt what would happen in that situation I think is very premature and I think they are the sorts of levels of detail. And as I have said before, and I will keep saying, this is something we have not had to deal with before and we have come to the point of the levy and now we have to decide how that levy will be distributed.

DR PHELPS: The issue of retirees is one that we have already had the opportunity to discuss with the Prime Minister's Taskforce and retirees would not be caught up in this.

CHAIRMAN: There is a question from Dr Hope from Lismore. Good evening, Dr Hope.

DR HOPE: My question is to Mr Lombe. He made a comment about a possible gap in cover for United Members who have either recently left or may be considering leaving United. I would like to sort of draw him out on whether that gap in cover refers to prior to 1 January 2001, or subsequent 1 January 2001?

MR LOMBE: It is subsequent to January 2001.

CHAIRMAN: So subsequent to January 2001. Does that answer your question, okay?

DR HOPE: Yes.

MR LOMBE: What I would undertake to do, I think there is a number of relevant questions that are around this 2001 date. I mean, people have resigned already. What I would undertake to do is tomorrow publish some questions and answers which we have done previously on the UMP website, but particularly to deal with these issues because they are complex, they are tricky. I think sometimes in this sort of forum things can get misunderstood. So I will publish some questions and answers to deal with that issue tomorrow on the website to try and assist people to understand that sort of issue. But, again, I am not encouraging people to leave. I am actually encouraging to stay with UMP pursuant to the government guarantee.

CHAIRMAN: So that website is www.ump.com.au?

MR LOMBE: That is correct.

CHAIRMAN: www.ump.com - sorry, United MP is it, rather than UMP? We will just clarify that. I think it is ump.com.au, but we will come back to confirm that, later. Sorry about that confusion. Let us go to another question here, just really for the panel in general. Do you agree that the legal systems needs to be excluded from reaching compensation cases, not being subject of controls or accountable by audit?

DR PHELPS: It would have to do with thresholds, of course, and I think one of the issues that we really do need to look at is the amount of legal costs that goes into any settlements for patients, and particularly the smaller ones. I think, David, you can probably comment a little more on this having seen more of the finer detail of the MDO settlement, but it seems certainly from all that I have heard that a great deal of the money that ostensibly goes to patients goes into legal costs?

MR LOMBE: Look, I think that is certainly an issue. I would not like to sort of criticise the legal profession in that sense, but I agree with you, Kerryn. I think it is certainly an issue.

CHAIRMAN: And do you agree that a fairer and cheaper and more effective system for compensation should involve capping payouts, more lump sum, no-fault, and arranged by Commissioner Bird as exists with workers compensation? Kerryn?

DR PHELPS: I think we need to look at all sorts of different models directly into the future, but one of the things we must not do is to lose patients' rights to the appropriate care that they need, particularly in the event of serious injury and you also must not, I think, interfere with the doctor's right to practice medicine and the work that we are trying to do, and that is currently being impeded by the system of medical indemnity that we are currently facing. So, in order to find a balance, what we have to do is to work with the States and the Federal government to find models that will provide appropriate care to patients, be aware of patients' rights and also be aware of doctors' rights. And that is a delicate balancing act at times. Well, I think we are moving with every day.

If we can get the long term care and rehabilitation scheme set up and running, then I think that will make an enormous difference and then, State by State, as quickly as we can get all effective reforms into place.

And, let us face it, as I said before, the New South Wales court law reforms are a great template for the other States to go with, without reinventing the wheel, then we can - I think that that provides a very substantial framework for how we might proceed dealing with the other civil liability reforms that are being mooted around the country at the moment. We really do have, I think, glimmers of hope on the horizon.

CHAIRMAN: It is an act of trust, though, in governments, if you will forgive me, Minister, to say that the State will trust - as a patient, will trust that the services will be available in the new thinking that is going on in terms of how you will be cared for with what might be quite considerable disability. What guarantees are there for patients?

SENATOR PATTERSON: At the moment, we are still working on that systems of care for people who are seriously injured or who have long term rehabilitation needs and I think this whole exercise has had to be one of trust because it is a whole new approach to medical indemnity and, as I said before, it cannot happen. For example, the legislation that Senator Coonan brought into the Chamber, or brought into the House of Reps which will come into the Senate, has to have the cooperation of States to be implemented.

So, there is a certain amount that the Commonwealth can do, but there has got to again be a level of cooperation with the States. So, we have this whole new world that we are moving into. It has to be based on a lot of trust and I think it has been to date, and I think we have seen enormous strides in what was at Christmas time, a very serious crisis. And I think we have moved in six or seven months a very long way, especially with the States suggestion in issue as well, and I think it is due to a very good working relationship with the AMA and it also the pressure that has been brought to bear on the States, but also I think that forum was a formidable time as well as acknowledging that something needed to be done, and be done very quickly. And I had - I could emphasise more clearly at that forum. I kept saying that the States really needed to address the reform as quickly as possible because there was the risk that if it is out of kilter, it is has got problems. So we had keep all running along as quickly and as smoothly as possible.

CHAIRMAN: It is unitedmp.com.au, so forgive me for mistrust. So, it is www.unitedmp.com.au for those questions tomorrow and I will give you that at the end. We have got another call, Dr McCallum from Sydney on the line. Good evening, Dr McCallum.

DR McCALLUM: Good evening.

CHAIRMAN: Your question?

DR McCALLUM: My question was, why are UMP members being encouraged to stay with the organisation? It does not seem a very good deal in terms if you have to pay the levy, and the cover is not guaranteed for very long. I was wondering if, particularly some of the people there could explain that to me?

SENATOR PATTERSON: Well, if I could say that you are thinking UMP so that you could escape the levy, then you are out of luck, unfortunately, because the levy, if it comes in and another reform, will apply to anyone who was a member of any MDOs with unfunded IBNRs, any time from 1 January 2001. So anyone who left any time after 2001 - January - will still be up for the levy for the unfunded tail, no matter which MDO you belong to which might have had an unfunded component at that time.

CHAIRMAN: What other costs will you be up for, if you decide to abandon? David?

MR LOMBE: You will still have to pay the call. The call is a debt on the company, to settle the debt of a company, and that relates to a prior near call. It is just simply that the company will allow doctors to pay it off. So you would certainly still have the call to pay and one of the costs you would have in transferring to another MDO.

CHAIRMAN: And with that, any outstanding premiums as well?

MR LOMBE: Yes, absolutely. Yes, absolutely.

CHAIRMAN: I hope that has answered your question, Dr McCallum, thank you very much. So, off to practice in Monte Carlo perhaps might be the only option - but do not come back, because we will get you. A question for you, Kerryn Phelps, what assurance has the Prime Minister give you that his proposed national call on members of unfunded MBAs will not impose on GPs any financial subsidy for the more highly specialist colleagues? A collegiate question, if I might say so.

DR PHELPS: There are no assurances at all except that there will be consideration given to retirees, people in the higher cost specialties and junior doctors who are facing the beginnings of their careers. Clearly there will need to be assurances given to other doctors in other categories, such as part time general practice. However, that being said, it all sounds a little indistinct because that is how it is at the moment. The levy news really only came to us a couple of weeks ago and there has not been the opportunity to sit down and really talk turkey at this stage, but we will be planning to do that over the coming months, and suffice to say that the tail will become more manageable and therefore whatever levy is agreed to, much smaller, provided we can get these reforms into place. And if we can get these reforms into place, then everything becomes more manageable, including not every levy may have to be paid, and including the future.

CHAIRMAN: Question to you, David Lombe. If I resign my membership from UMP but change my mind within 28 days before the policy has expired, can I rescind my resignation?

MR LOMBE: Well, my understanding is that you can, you are able to do that.

CHAIRMAN: And is there a time limit on this rescinding?

MR LOMBE: Well, within the 28 days.

CHAIRMAN: So, within the 28 days. A further question for both you, Kay Patterson, and Kerryn. We have heard what the problems and implications are now. What is going to happen over the next 12 months? What can we look forward to? What is ahead?

DR PHELPS: The crystal ball question.

CHAIRMAN: Absolutely. If you are .....

DR PHELPS: Absolutely. A lot of it is unknown and so it is impossible to say, you know, this is exactly what we are expecting over the next 12 months. But I think what we can predict is that there is going to be an incredible amount of activity behind the scenes, that the AMA has committed a high level taskforce to work with the Prime Minister's Taskforce. We have set up lines of communication. I am able to call the Minister. I am able to call the Prime Minister's office to discuss any concerns that we have and make sure that there is an open communication so that the pieces can fall into place. We also have on - very much on the game, every State AMA and - State and Territory AMA and they are all working with their respective governments to ensure that there are politicians in those - in other words are well aware of the urgency of tort law reform State by State and the need to have some harmonisation of those reforms.

So, there will be an enormous amount of activity, particularly in the next six months. I am hoping very much that by the time the government' guarantee of 31 December reaches its conclusion, that those reforms will be in place and that the six months after that, maybe everybody who has been involved in legal medical indemnity cases can perhaps sit back a little and take a few deep breaths and see how the reforms are going to work in practice.

CHAIRMAN: Senator Patterson?

SENATOR PATTERSON: Well, I would have to agree with Dr Phelps and the thing is I would rather be looking into the crystal ball at this time, this year, than this time, last year. And I think I can actually see ..... than anybody could have. Last year, the States - really none of the States had really addressed the issue, then the need for law reform, and the need for statutes of limitation, I think it has been impressed on everybody and I do not think there is a State Minister who is not aware that there is a need for reform. I think it is not only now Health Ministers who know about it. It is Attorney-General's, and it is Treasurers at the States and at the Federal level, so I think people's minds are much more focused on it and maybe as painful as this has been for all of you, and as difficult as it has been for everyone, I know that it has been incredibly difficult and it is unsettling and very stressful. Maybe we needed to have this crisis to really bring to a head the issue that we have been talking about tonight, to actually have a long term, sustainable medical indemnity, and that is really what we want.

And I think it is - I hope we will be able to sit back and take a deep breath in January and February, and I will be working hard to ensure that. But hopefully, you, too, will be able to take a deep breath, knowing that you have got a medical indemnity system which is much more affordable into the future, and I think that is what we all working towards.

CHAIRMAN: Senator Patterson, thank you. And I would to thank you, Kerryn Phelps, David Lombe and Ken Mackey. It has been a very productive discussion. We have got many more questions that people have asked or faxed in tonight, and we have not been able to answer all of them. But these questions will be posted, and answers will be posted in the Federal AMA's website at www.ama.com.au. And as you have heard, they will also be on the UMP's website and that is www.unitedmp.com.au. So thank you very much again to you all for coming on tonight's program. If you are interested in obtaining more information about the issues raised tonight, here are some resources and contacts for you.

The Commonwealth Government has established a hotline to answer any questions you may have. The Minister has already given you that number, but I can give it again. It is 1-800-007-757 - 1-800-007-757. And it is open from 8.30 am to 6.30 pm, Monday to Friday. You can also get into a number of websites, and these include the Australian Medical Association's one which I have just given you. It is www.ama.com.au. And they have got regular updates on medical indemnity issues. Or you can call the AMA's office in Canberra, and that is on (02) 6270 5450 - (02) 6270 5450.

And United Medical Protection also puts regular updates on its websites and as I keep on telling you, it's - I do not know where you got the idea it was UMP - it is www.unitedmp.com.au and David Lombe will in fact put out some of these more detailed questions and answers on the website tomorrow. And the Royal Doctors Association of Australia also has a website, not to be outdone, and theirs is www.rdaa.com.au. All the contacts details, along with the website links, will be placed on the Rural Health Education Foundation's website, which is at www.rhef.com.au. You can also obtain a video copy of tonight's program by calling the Foundation on 1-800-6460015 - 1-800-646-015 or you can write to us by logging on to the website at any time.

The next program will take place on 25 June. It is on the management of diabetic retinopathy and this will be followed by the secondary prevention and rehabilitation of cardiac disease on 23 July. Other programs scheduled for the rest of 2002 include prostate cancer, and erectile dysfunction, cervical cancer, allergies, arthritis, and the human health of Royal Committees. I hope you have enjoyed tonight's program and I hope you find it useful information. There is an evaluation form in the Foundation's website, so please take a minute to complete it. And I hope you will still be practising after 1 July so that you can join in and contribute to our programs as always. And, of course, the program is accredited for CPE points, so please register by completing the attendance on the appropriate form. Above all, thanks always to you for attending and taking the time to contribute. I am Norman Swan. Good night.

ENDS