Tough rules for bigger ACC payouts

Lump-sum payouts are back - but the 'suffering' clause has gone, reports SIMON COLLINS

An arm will be worth $46,704, but a little finger will be worthless, under a new lump-sum compensation scheme being introduced on April 1.

The new scale, approved by Accident Insurance Minister Lianne Dalziel, will be more generous to victims of serious accidents than the last lump-sum scheme, which had a maximum payout of $27,000.

But, unlike the old scheme which was abolished in 1992, it will pay nothing for accidents that reduce a person's overall functioning by less than 10 per cent.

The new scheme will pay lump sums to about 6000 people a year and cost only $55 million. The old scheme paid more than 15,000 people a total of $245 million in its last year in 1991-92.

Many claims under the old scheme were for historical sexual abuse claims, which will not qualify under the new scheme because it will apply only to events on or after April 1.

ACC chief executive Garry Wilson said the new scheme would also pay out only on the basis of permanent loss or impairment, which was worth up to $17,000 under the old scheme - not on "pain, suffering and loss of enjoyment of life", where the old scheme paid up to $10,000.

"The story was that if you had been sexually abused it was $10,000," he said.

"Under the new system the whole basis of payment of lump sums is quite different.

"It will only be paid on disability, or ongoing impairment.

"So for someone who breaks an arm, they won't get anything apart from medical attention, because their arm will get fixed.

"If they lose two fingers, then fairly quickly you can establish an ongoing impairment."

Sensitive Claims Unit manager Gail Kettle said fewer than 10 per cent of the people who claimed ACC subsidies for sexual abuse cases in future would qualify for lump sums, and then only one or two years after they started counselling if it was clear then that the abuse had permanently impaired their daily activities.

She expects sexually abused people who do get lump sums to be assessed as only 10 per cent to 20 per cent impaired, qualifying for lump sums of between $2500 and $6459. Those assessed as less than 10 per cent impaired will get nothing.

The president of the Society for the Promotion of Accident Victims, Mervyn Castle, said the new scheme was a "betrayal" of the original vision of Sir Owen Woodhouse's royal commission in 1967.

Sir Owen did not propose lump sums, but in a 1988 report he recommended ongoing payments to compensate for impairment, pain and suffering.

Ongoing "independence allowances" of between $10 and $64 a week were introduced in 1992 to replace lump sums.

But they did not compensate for pain and suffering, and since 1997 the ACC has defined "impairment" on a purely medical basis so that a leg, for example, is worth the same 40 per cent impairment for everyone.

Mr Castle said the new scheme would preserve the unfairness of the past five years.

"If you lose your leg and you're an accountant or a lawyer, I don't mean any disrespect but that is not as serious as a labourer losing his leg," he said.

"With the labourer, his capacity to work is destroyed. His self-respect is destroyed.

"His family is likely to be destroyed - pretty quickly you find that happens.

"But a professional ... we can still do things. That is the big issue."

However, the president of the Council of Trade Unions and a former ACC director, Ross Wilson, said he accepted this as the price of getting lump sums back.

"Unless you have a subjective assessment process you can't do that degree of fairness in every individual," he said. "The CTU perspective is that we are pleased to see lump-sum compensation restored, because it's totally anomalous that you can be awarded damages for damage to your reputation and not be able to get anything for physical or mental illness as a result of a trauma."

Although the criteria for lump sums will be the same as for the existing independence allowances, ACC still expects more people to apply for the lump sums - 6000 a year, compared with just 364 new independence allowances granted last year.

Garry Wilson said many people did not bother to apply for independence allowances because they were only small weekly amounts.

He expects that to change when the payouts become lump sums.