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Page 1

General Purpose Standing Committee No. 1



Personal injury
compensation legislation









Ordered to be printed according to Standing Order 231

Page 2

LEGISLATIVE COUNCIL

Inquiry into Personal Injury Compensation Law




ii Report 28 – December 2005

New South Wales Parliamentary Library cataloguing-in-publication data:

New South Wales. Parliament. Legislative Council. General Purpose Standing Committee No.
1 Report on personal injury compensation legislation / General Purpose Standing Committee No. 1.
[Sydney, N.S.W.] : The Committee, 2005. – 279 p. ; 30 cm. (Report ; no. 28)
Chair: Gordon Moyes.
“Ordered to be printed December 2005, according to Standing Order 231”.
ISBN 0734764235

1. Personal injuries—Law and legislation—New South Wales.
2. Compensation (Law) —New South Wales.
I. Title.
II. Moyes, Gordon.
III. Series: New South Wales. Parliament. Legislative Council. General Purpose Standing Committee
No. 1. Report ; no. 28

DDC 346.9440323

Page 139

GENERAL PURPOSE STANDING COMMITTEE NO. 1




Report 28 – December 2005 107

The CARS dispute resolution process

12.5 As indicated in Chapter 3, disputed claims under the Motor Accidents Compensation Act 1999 are
resolved through the Claims Assessment and Resolution Service (CARS), with support from
the Medical Assessment Service (MAS), which is intended to provide an independent medical
assessment procedure for resolving medical disputes. Assessments by CARS assessors are
binding immediately on the insurer, and on the injured person if that person accepts the
assessment within 21 days. Claims cannot go before the courts unless they have been through
CARS, except where CARS Assessors issue an exemption on the basis that there are complex
legal issues or difficult matters of fact to decide. 300

12.6 In its written submission, the NSW Bar Association argued that users of CARS are becoming
increasingly dissatisfied with its operation. What was intended to be a quick and easy process
has become increasingly bureaucratic:

personnel at the MAA now regularly reject CARS applications for minor technical
deficiencies

CARS assessors regularly require the provision of chronologies, schedules of
damages, statements from all the witnesses and written submissions, such that there is
now more legal work required to prepare a CARS application than to run a District
Court case

Insurers cite inconsistency in decision making by CARS assessors, delays and absence
of substantive appeal rights.

12.7 The Bar Association also submitted that the minimum processing time for CARS is four
months on average, and the minimum time to have a matter determined through the MAS is
six months. The Bar Association compared these processing times unfavourably with
litigation through the District Court.

12.8 Accordingly, the Bar Association submitted that the CARS system is a prime illustration of
how an attempt to produce a low cost and easy-to-use alternative dispute resolution system
has become tied down in bureaucratic processes, and recommended that the use of CARS
should be limited to only the most simple of cases, with larger cases more quickly and
efficiently disposed of in the District Court.301

12.9 In evidence, Mr Goudkamp, President of the Australian Lawyers Alliance, also submitted that
the annual cost of running the CARS/MAS system now exceeds $6 million per annum, and
that the process is extremely cumbersome, bureaucratic and slow:

Cases that normally should be finished in 1½ to two years are now taking four to five
years – perhaps even longer – from the date of the accident. As a CARS assessor I am
hearing a lot of these cases. I am yet to hear a case now closer than 2002. In most of
the cases I am hearing, and other CARS assessors are hearing, the accidents occurred
in 1999, 2000 and 2001, and we are now halfway through 2005. These are not
complicated cases. The reason they are being so delayed is that cases are simply
incapable of being resolved until the whole MAS process, including the initial


300 Submission 54, The Cabinet Office, p35
301 Submission 29, NSW Bar Association, p27

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LEGISLATIVE COUNCIL

Inquiry into Personal Injury Compensation Law




108 Report 28 – December 2005

assessment, applications for reviews and reassessment, has been finalised. It is an
extremely slow process.302

12.10 By contrast, in its written submission on behalf of the NSW Government, The Cabinet Office
argued that the establishment of CARS has led to an improvement in the average time of
notification, determination of liability and finalisation of full claims. The Cabinet Office
indicated that the main improvement has been a 25% reduction in the time taken for insurers
to decide liability.303

12.11 The Committee also notes the evidence on finalisation rates from the Motor Accidents
Assessment Service (MAAS) Bulletin of August 2005. The Bulletin indicates 100% of all
applications received by the MAAS (both CARS and MAS) in 2001-2002 have been finalised.
For 2002-2003, 99.75% of MAS applications have been finalised, and 95% of CARS claims
have been finalised. For 2003-2004, the figures are 98% and 84% respectively.304

Legal costs and returns to claimants

12.12 In its written submission, The Cabinet Office argued that the Motor Accident Compensation Act
1999 and associated regulations has delivered a significant reduction in the cost of
administering the motor accidents compensation scheme, with as much as possible of the
premium dollar now being returned to injured motorists. In particular, The Cabinet Office
highlighted that:

legal costs have been reduced by about two-thirds from $85.9 million in a comparable
period before the reforms to $27.4 million since the reforms

legal costs on an average claim have decreased from $3,250 to $960

investigation costs have more than halved, dropping from $60.1 million to $27.1
million over two comparable periods

the return to claimants under the Motor Accidents Compensation Act 1999 scheme has
averaged 61.3% of total premiums, compared to 58% under the previous scheme

actual payments to claimants under the Motor Accidents Compensation Act 1999 scheme
have increased from 80% of premiums to 86% due to the reduction in the level of
legal and investigation expenses.305

12.13 Commenting on the overall operation of the NSW Motor Accidents Scheme in its first five
years, Mr Bowen observed:

These trends indicate that injured people now lodge their claims more quickly. They
access their claims for treatment of their injuries more quickly. They settle their claims


302 Mr Goudkamp, President, Australian Lawyers Alliance, Evidence, 6 June 2005, p6
303 Submission 53, The Cabinet Office, p33
304 MAAS Bulletin, Volume 5, No 3, August 2005, p3
305 Submission 53, The Cabinet Office, p32. See also Mr Bowen, Evidence, 4 July 2005, p18

Page 278

LEGISLATIVE COUNCIL

Inquiry into Personal Injury Compensation Law




246 Report 28 – December 2005


Chapter Fifteen read.

Resolved, on the motion of Ms Parker, that Chapter Fifteen be adopted.

Executive Summary read.

Resolved, on the motion of Ms Parker, that the Executive Summary, as amended, be adopted.

The Committee noted that Ms Rhiannon would circulate to Committee members by email a draft
paragraph for inclusion in Chapter Nineteen regarding small claims.

The Committee thanked Mr Stephen Frappell for his work on the report.

3. Adjournment

The Committee adjourned at 1:35pm until Thursday 1 December 2005 at 9:30, in the Parkes Room.


Stephen Frappell
Clerk to the Committee



DRAFT Minutes No 53
Thursday, 1 December 2005
Parkes Room, Parliament House at 9.40 am

1. Members Present
Revd Moyes (Chair)
Ms Parker (Deputy Chair)
Mr Colless (Cusack)
Mr Donnelly
Ms Griffin (Primrose)
Ms Rhiannon
Mr West

2. Deliberative meeting – Inquiry into personal injury compensation


Confirmation of Minutes 52
Resolved, on the motion of Ms Rhiannon, that Minutes No.52 (as amended) be adopted.

Chair’s Draft Report
Chapter Nineteen read.

Resolved, on the motion of Ms Parker, that Chapter Nineteen be adopted.

Chapter Fifteen read.

Resolved, on the motion of Mr Colless, that Chapter Fifteen, as amended, be adopted.

Resolved, on the motion of Ms Parker:

Page 279

GENERAL PURPOSE STANDING COMMITTEE NO. 1




Report 28 – December 2005 247

That the Committee’s report (as amended) be the report of the Committee and be signed by the Chair
and presented to the House in accordance with Standing Orders 230 and 231, together with the
minutes, answers to questions on notice, transcripts, correspondence and tabled documents.
That pursuant to the provisions of section 4 of the Parliamentary Papers (Supplementary Provisions) Act
1975 the Committee authorises the publication of all minutes, answers to questions on notice,
correspondence, and tabled documents.
That the Committee Secretariat be permitted to correct typographical, stylistic and grammatical errors
in the report prior to tabling.

3. Adjournment

The Committee adjourned at 9.58 pm until a date to be determined.


Stephen Frappell
Clerk to the Committee

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