$100,000 cap on lump-sum ACC payouts

By VERNON SMALL deputy political editor

Lose a pinky, get nothing. Lose your ring finger, pocket zilch. Lose a thumb, bank $7500. Welcome to ACC's new lump-sum compensation regime.

Accident Insurance Minister Michael Cullen yesterday unveiled the second round of changes to ACC law, reintroducing limited lump-sum payments for permanent physical impairment, abolished by National in 1992.

Under the Injury Prevention and Rehabilitation Bill, due to come into law next October, lump-sum compensation would be limited to $100,000 over a lifetime.

Permanent impairment, which could include mental injury caused by physical injury or sexual abuse, would be assessed as a percentage of "the whole person."

No matter how severe the injuries - whether mental or physical - nor how many times someone was injured, he or she would not receive more than $100,000 over their lifetime, Dr Cullen said.

But National's ACC spokesman, Gerry Brownlee, said many would see that as unfair and it could be open to legal challenge.

"What about a paraplegic who had received the full $100,000 and had got back to work and re-established a life? If you then lost your sight, suddenly there would be no compensation," he said.

Under the bill, assessments would be based on American Medical Association guidelines.

Compensation would be calibrated, giving seriously injured claimants proportionally more than those with less serious injuries.

So the loss of a thumb would be rated as a 22 per cent impairment and a claimant would receive about $7500. The loss of a leg above the knee would be treated as up to 40 per cent impairment and be worth $17,000.

Impairment must reach 10 per cent before any compensation was paid, and impairment of 80 per cent or more would trigger the maximum $100,000 payout.

For example, loss of vision in both eyes would be rated as 85 per cent impairment, entitling the claimant to $100,000. The loss of one eye would be assessed as a 24 per cent impairment and be worth $10,000.

But losing a ring finger - seen as only a 5 per cent impairment - would mean no payment at all.

The amount to be paid to victims of sexual abuse had not been settled, but Dr Cullen said no conviction would be needed to trigger a payment. "It is their right not to take a case," he said.

Lump sums would be indexed to inflation and limited to injuries that occurred after the new law takes effect.

Assessments would be made when a claimant's condition stabilised or after two years, whichever came first.

The Government has estimated the annual cost of the changes at $60 million.

Lump sums would be paid in addition to weekly compensation for loss of earnings, but the current independence allowance, worth up to $40 a week, would be scrapped.

The new scheme would not include payments for pain and suffering, despite Labour's election policy promising up to $15,000 for loss of enjoyment of life.

But Dr Cullen said the new law, following on from the return to a state monopoly in workplace accident cover, was not the final word on ACC reform.

As the corporation's performance improved, further changes to cover pain and suffering could be considered.

However, other areas, such as payments for work-related stress, were difficult to define.

Among other changes in the bill, a claimant's "normal earning pattern" would be used to determine compensation for loss of weekly earnings. That would extend earner status to seasonal workers and those on unpaid parental leave.

Dr Cullen said cover would be restored to those injured by "gravity or twisting," removing the silly anomaly whereby someone injured dodging a falling object was not covered, but someone who stood still and was hit qualified for cover.

Injury prevention would be the corporation's main function and the bill sets out a new rehabilitation principle that would aim to restore "health, independence and participation to the maximum extent practicable."

The bill would make it lawful for ACC to provide information to Child Youth and Family Services "for the purpose of preventing injury arising through unlawful activity," and would require ACC to report medical mishaps to the Health and Disability Commissioner and the relevant professional body.

The Opposition slammed Government claims that employers would not pay more for the extended coverage.

"Dr Cullen has opened the floodgates for lump-sum payouts under the category 'mental injury'," Mr Brownlee said.

"This is another bonanza for lawyers, with all manner of outrageous and inventive reasons being accepted for lump-sum payments."