Accident Compensation Corporation

Features

ACC is the sole and compulsory provider of accident insurance in New Zealand for all work and non-work injuries. The corporation administers the ACC Scheme on a no-fault basis, so that anyone – regardless of the way in which they incurred an injury – has coverage under the Scheme. Due to the scheme's no-fault basis, people who have suffered personal injury do not have the right to sue an at-fault party, except for exemplary damages.

The ACC scheme provides a range of entitlements to injured people, however 93.5 percent of new claims in 2011–12 were for treatment costs only. Other entitlements include weekly compensation for lost earnings (paid at a rate of 80% of a person's pre-injury earnings) and the cost of home or vehicle modifications for the seriously injured. The scheme offers entitlements subject to various eligibility criteria.

Initially ACC was not available to New Zealand's war veterans, as the scheme was not introduced until 1974 and was not retrospective. However, ACC law specialist John Miller claims that a 1992 law change did make the scheme retrospective. Full funding of historic claims was due to come into effect in 2014.

ACC plays a role in workplace safety through (for example) Workplace Safety Management Practices (WSMP).

History

ACC has its origins in the 1900 "Workers' Compensation Act" (Workers' Compensation for Accidents Act (1900)), which established a limited compensation scheme for workers who had suffered injuries where there was no directly responsible party. In 1967 a New Zealand Royal Commission, chaired by High Court judge Owen Woodhouse, recommended extending this compensation to cover all injuries on a no-fault basis. Following this report, on 1 April 1974 the New Zealand Government established the Accident Compensation Commission to implement the requirements of the 1972 Accident Compensation Act and the 1973 Amendments. The Act was later replaced by the Injury Prevention, Rehabilitation and Compensation Act 2001, which was renamed the "Accident Compensation Act 2001" in 2010. The Annual Report (1989/90) of the Accident Compensation Commission proposed that the distinction between "accidents" (which are covered) and "illness" (which is not) should be dropped. But this proposal was not taken up by the government. In 1992, the government renamed the Accident Compensation Commission as the "Accident Compensation Corporation".

From 1 July 1999, the Fourth National Government allowed private insurance operators to provide work-related accident insurance, and ACC was briefly exposed to competition. The Fifth Labour Government (elected in November 1999) repealed this change, and as of 1 July 2000 re-instated the ACC as the sole provider of accident insurance coverage.

Administration of levies

ACC is primarily funded through a combination of levies and government contributions. Income collected from each source goes into predetermined account based on the source. Costs relating to an injury are paid from one of these accounts based on the type and cause of the injury.

The four main accounts are: Work, Earners, Non-Earners, and Motor Vehicle. There is also a fifth account, Treatment Injury (formerly Medical Misadventure) that draws on both the Earners and Non-Earners account.

Acc for the self-employed – ACC Coverplus Extra

Acc Coverplus Extra was introduced by ACC to provide cover for self-employed workers and business owners that would fail to otherwise be covered adequately by the standard ACC Cover Plus policy. The largest problem with ACC Cover Plus arises at claim time. Business owners and self-employed contractors have to prove loss of income. If someone had only recently started a business and been in operation for less than one financial year it would be extremely difficult to successfully make a claim for loss of income. The major benefit of ACC Cover Plus Extra is that the level of cover is agreed upon with ACC in advance.

With this cover already agreed upon any business would not have to prove loss of income and has certainty on their amount of cover in the event of an accident injury. ACC Cover Plus policy was designed to cover employees and would only pay 80% of the net taxable income. With ACC Cover Plus Extra a self-employed contractor would get 100% of the pre-agreed compensation cover until one was fit for full-time work. A business owner would be able to get compensation under ACC Cover Plus Extra even if the business continued to earn income whilst the business owner was off work injured. This would not be possible with the standard policy.

Funding

ACC initially had a "pay-as-you-go" funding model which collected "only enough levies during the year to cover the cost of claims for that particular year". In 1999 a "fully funded" model was adopted whereby sufficient levies were collected to cover the lifetime cost of each injury – which might require compensation over a period of 30 years or more. However, getting ACC onto a strong financial footing was not easy and in 2009, ACC posted a $4.8 billion loss – described as the biggest corporate loss in New Zealand's history. This cost escalation is thought to have been due to an increase in the number of claims, a widening of entitlements and increased costs of meeting the claims. Another factor was physiotherapy services being made free at the point of delivery leading to over-servicing of clients. Between 2000 and 2008 this appears to have contributed to an increase in physiotherapy costs of 214%.

The 100% reimbursement scheme for physiotherapist services was ended and ACC levies on wages and motorists were increased. ACC chairman John Judge told the Sunday Star-Times that it was going to take a "hard-nosed" approach to get ACC into a sustainable position. This would require "substantial" levy increases and "legislative change to get people off the scheme and back to work quicker". By 2012, ACC had made good progress towards its 2019-goal (of being fully funded), and was $4.5 billion short of matching liabilities ($28.5b) with its assets ($24b).

Towards the end of 2012, ACC Minister Judith Collins announced that Government would not cut ACC levies for the 2013–14 year. While the ACC Board and Ministry of Business Innovation and Employment had recommended reducing the levies by between 12 and 17 per cent, Collins stated that the government's decision was motivated by the uncertain economic conditions and a desire to ensure that reductions to the levy were sustainable. Andrew Little, the Labour Party's ACC spokesman, criticised this decision, claiming that it was driven by the government's attempt to bring the budget into surplus and reducing the levy would provide a boost to the economy. In the 2013 budget, Collins announced a $1.3 billion cut in ACC levies over the next two years. Collins said the Earners and Workers accounts were now fully funded after the Corporation reduced the number of long term ACC claimants from 14,000 to less than 11,000.

In 2012, Collins stated that measures for incentive payments for ACC case managers includes targets for moving long term claimants off ACC support. That year there were 10,400 long-term claimants registered with ACC – down by over 1,000. Green Party MP Kevin Hague said performance pay increased the risk that "we end up with decisions about whether or not someone is entitled to compensation being driven by the financial interests of the case managers and their managers rather than the clinical needs of the claimants."

Violence against staff

In some cases ACC clients have threatened or attempted to harm ACC staff members. In 1999, a staff member was fatally stabbed by a claimant at an ACC office in Henderson. In 2010 ACC logos were removed from company vehicles after several staff were "rammed or driven off the road by other drivers". The following year a threat against former chief executive Ralph Stewart led to a decision for security staff to be posted outside his home. There have been at least two threats to blow up a car bomb outside ACC offices and police have had to be called on several other occasions. In 2012, there were a total of 134 recorded threats made against staff - the majority against case managers "making difficult decisions" on clients' cases.

Client fraud

In 2013, it was reported that 64 people have been convicted of defrauding ACC of a total of more than $10 million over the past four years. This includes clients claiming they were "injured" but who kept working while receiving ACC benefits and medical practitioners who billed ACC for more treatment than they actually provided. Another category of ACC fraudster includes widows who continued claiming payments after their (injured) partners have subsequently died. Sometimes these payments went on for nearly 30 years before the fraud came to light – with one woman receiving nearly $150,000 after her husband had died.

Staff fraud

There have been a number of cases where ACC staff have defrauded the corporation. Jeffrey Chapman, former ACC chief executive from 1985 to 1992, was imprisoned for defrauding ACC and other government agencies; Gavin Robbins, his successor from 1993 to 1997, was also charged with fraud but was acquitted. In 2011, a senior manager was convicted of dishonesty offences involving property leased to ACC by private business interests. In late 2012, Jonathan Wright, an ACC-contracted medical assessor, was convicted of dishonestly obtaining over $18,000 in falsified travel expenses from ACC.

Medical misadventure claims

A New Zealand Herald article in 2000 described ACC as "sick system" particularly in cases of medical misadventure. It said ACC used to make lump sum payments but stopped in 1992. Also legal aid was abolished for appeals against ACC decisions and judges "raised the bar for proof of wrongdoing". Lawyer Antonia Fisher said: "It surprises me that the vast majority don't realise that if there has been a medical stuff-up there is no redress. Our system is appalling and it leads to appalling injustices".

Mislabelling injuries as degenerative

In 2010, it was reported that 48-year-old Aucklander Yahaloma Hochman was refused coverage for spinal surgery by ACC after a motor accident. ACC general claims manager Denise Cosgrove tried to blame Mrs Hochman's injuries on "advanced disc degeneration" which was "aggravated by the road traffic accident and not caused by [it]". Wellington lawyer and ACC specialist John Miller said hundreds of similar accident victims were wrongly being refused treatment for injuries that were being mislabelled by ACC as "degenerative". This was forcing lawyers to request reviews of ACC's decisions. Miller said his law firm had more than 1000 accidents under review and appeals under way and had had to take on extra staff. "We now have 12 lawyers in our firm working on ACC because it's just grown exponentially from the number of declines they have [made]." Orthopaedic Association president Gary Hooper believes ACC is taking a similar hard line with many older accident victims. "ACC is trying to say everyone over 40 has degeneration," he said. Miller said this was a deliberate strategy: "ACC are just acting like these rapacious overseas insurance companies, refusing them holus-bolus on the flimsy grounds of degeneration, because we all have degeneration, and hoping like some of these overseas insurance companies that people won't challenge them," he said.

Bronwyn Pullar privacy breach

ACC has had a number of breaches of privacy relating to claimants. The most significant occurred in 2011 after the release of details of 6700 claimants to an ACC claimant, Bronwyn Pullar. Pullar had been battling ACC since suffering a head injury in 2002—and had 45 separate complaints against the agency—only one of which was about the privacy breaches. In 2011 she and former National Party president Michelle Boag, had a meeting with two senior ACC managers to discuss her concerns. ACC referred the matter to the police claiming Pullar had threatened to go to the media about the privacy breaches if she didn't get what she wanted. The police listened to a tape recording of the meeting and decided there was no case to answer.

In March 2012, ACC Minister Nick Smith resigned from Cabinet after it was revealed that he had written letters on behalf of Pullar, who was a personal friend of his, while he was ACC Minister.

ACC chairman John Judge continued to insist his version of events was correct and as a result ACC Minister Judith Collins did not renew his tenure on the ACC Board. The chief executive of ACC, Ralph Stewart, also resigned the next day. Three other Board members – Murray Hilder, Rob Campbell and John McCliskie – also resigned.

The fallout from the affair continued in May 2012, when Collins sued Labour MPs Trevor Mallard and Andrew Little for defamation over comments they made on Radio New Zealand broadcasts linking her to the leak of an email from Michelle Boag following the release of the files. The case was settled after a High Court hearing in November 2012.

An independent review of ACC was conducted towards the end of 2012 and found the organisation "lacked a comprehensive strategy for protecting and managing claimants' information" and said ACC had an "almost cavalier" attitude toward its clients. The review showed that the culture within ACC enabled its staff to target clients involved in privacy breaches and complaints rather than demonstrating respect for claimants. In 2013, a training Academy for staff was mooted with an "emphasis on a client-centred approach".