Grant, Genevieve; Gnanaseelan --- "Show us the data! Shining a light on settled injury claims" [2017] PrecedentAULA 40; (2017) 141 Precedent 4

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SHOW US THE DATA! SHINING A LIGHT ON SETTLED INJURY CLAIMS

By Dr Genevieve Grant and Rumesh Gnanaseelan

Most injury compensation claims settle – appropriate dispute resolution (ADR) is entrenched and trials are rare. So how can we work out what is happening in the personal injury claims landscape? Data on settled matters are our best window into the civil justice of injury compensation, but access remains challenging.

WINDOWS INTO CIVIL JUSTICE AND INJURY COMPENSATION

Few injury compensation claims are litigated, and even fewer make their way to determination by a judge. The vast majority of claims are settled between the parties – typically a ‘one-shotter’ injury claimant and a ‘repeat player’ insured or insurer defendant.^[1] The negotiations and ADR processes leading to these settlements play out in lawyers’ offices, mediation venues and meeting rooms at courts every day.

One consequence of ADR’s success has been the narrowing of the window that litigation and trials offered us into injury compensation claims.^[2] This window only ever offered a partial view: in the injury compensation landscape, litigation is atypical and matters proceeding to trial have always been outliers that are unrepresentative of the broader body of claims. Still, with the growth and institutionalisation of ADR, the share of cases reaching a court – and about which the public might find out through court statistics,^[3] media reporting, or published judgments – gets ever smaller. In addition, non-disclosure agreements are often deployed to keep the terms of settlements confidential. Given these parameters, getting a clear picture of the reality of injury compensation claim characteristics and outcomes can be very challenging.

Aggregated insurance data on settled claims can potentially provide us with an alternative window into claiming activity.^[4] Yet, in Australia, accessing claims data is not straightforward and settled claims are a vastly underutilised information resource. This limits our understanding of the trends in personal injury claims and the civil justice experienced by injured claimants. This article explains why we should make greater use of data on settled claims, as well as the barriers to doing better and how we might overcome them.

WHAT IS SETTLED CLAIMS DATA AND WHAT CAN IT TELL US?

The making and settling of injury compensation claims generates a range of administrative data in law firms, courts, compensation schemes and insurance companies. Large compensation schemes and insurers routinely amass vast bodies of data about their claims load.^[5] This might include details of the characteristics of claimants, their claims and the handling of those claims by an insurer over time. Access to data about settled claims can tell us a lot about the way our injury compensation systems are working,^[6] such as:

• the number and types of claims being made;

• average amounts of damages paid;

• the attributes of the parties involved (including, for example, their use of legal services);

• the duration of claims and how and when they are settled; and

• litigation behaviour by the parties.

Importantly, data collected over an extended period can help us to understand trends in claim characteristics and activity over time. Where it is collected before and after law reform, it can also enable us to empirically investigate the impacts of reforms on claim numbers and characteristics.

Understanding claiming is critical to developing an evidence base about the performance of insurance and compensation systems. In the absence of good data about these issues, systems are vulnerable to untested allegations – such as assertions about changes in claiming activity^[7] and the magnitude of damages awards.^[8] Fifteen years ago, the establishment of the Inquiry into the Review of the Law of Negligence (the ‘Ipp Committee’) was informed by the perceived increase in the amount and costs of litigation.^[9] The limited evidence base on the trends in claiming over time was a source of concern for both the Committee and a range of commentators,^[10] but did not prevent the sweeping tort reforms of the early 2000s.

Beyond the light it can shed on the workings of compensation systems, opportunities are increasing for claims information to inform injury prevention and safety practices. For example, the 2016 Duckett Review of Victorian Hospital Safety and Quality Assurance recommended that better use be made of available data to facilitate and expedite identification and investigation of deficiencies in care.^[11] Claims data can contribute to the identification of the most severe or prevalent injuries, and facilitate comparisons between healthcare settings.^[12] Common injuries can be analysed to target improvements in specific areas, and evaluate which methods of practice are most effective.^[13] Admittedly, medical negligence claims data have significant limitations: they represent a very small slice of medical adverse incidents, since few injured patients initiate a claim.^[14] Nonetheless, there is untapped potential for reports on settled claims to provide a useful resource to inform patient safety improvements.^[15]

WHAT DATA CAN WE CURRENTLY ACCESS ON SETTLED CLAIMS?

Alarmingly, we have made relatively poor progress in developing accessible resources to monitor our systems of injury compensation and civil justice. The data is patchy and varied, most often held by individual law firms, insurers or compensation agencies. Annual reports of individual schemes can be useful, but little system-level data is made available, even to researchers.^[16]

Some efforts to improve the situation have been neglected, or underfunded. After the 'insurance crisis' of the early 2000s, the Australian Prudential Regulatory Authority established a database of public liability and professional negligence claims information.^[17] Unfortunately, the impact of this data has been relatively underwhelming: little use of it has been made by researchers, and almost none beyond the actuarial profession.^[18] This may in part be because of the skills required to access and make sense of the data, which is published in a relatively raw form. The Australian Institute of Health and Welfare published a highly informative series of reports on medical negligence claims, but this series was recently discontinued, possibly due to financial constraints.^[19]

The more successful stories in the establishment of accessible and well-used claims data sources typically come from no-fault schemes. Safe Work Australia has for many years published an excellent series of annual reports on workers’ compensation claims, covering Australian states and territories and New Zealand.^[20] More recently, the Institute for Safety, Compensation and Recovery Research at Monash University has established the Compensation Research Database (CRD).^[21] The CRD compiles decades of transport crash and workers’ compensation claims data and is proving to be a very valuable resource for understanding the operation of Victoria’s major injury compensation schemes. To date, it has mostly been used to explore health-related matters, such as factors associated with repeated workers’ compensation claims;^[22] patterns in the use of healthcare services following transport injury;^[23] and return to work.^[24] Data from the New Zealand no-fault compensation scheme has been used to explore a wider range of justice-related practices, including claiming behaviour.^[25] Still, these data sources have not been used to routinely explore the characteristics of claims to the extent that settled claims data could be.

THE BARRIERS TO BETTER DATA AND HOW WE CAN OVERCOME THEM

The key barriers inhibiting the use of claims data fall into three categories: concerns about privacy and confidentiality; data accessibility and comparability; and our capacity to use the data for building the evidence base. The 2017 Productivity Commission Inquiry Report on Data Availability and Use cited public concern over privacy and mismanagement as key obstacles to fully exploring the benefits of data.^[26] Privacy for parties is often regarded as one of the chief benefits of ADR,^[27] and non-disclosure agreements signed in the settlement process operate to keep the details of some individual claims secret.^[28] These should not be barriers to establishing de-identified datasets of large volumes of claims, and steps can be taken to prevent claims from being identified where their characteristics are unusual. Such practices are routinely employed by the Australian Bureau of Statistics.^[29] Where university researchers are involved, the oversight of university ethics committees also plays an important role in ensuring that data are used and managed in ethically appropriate ways.

The accessibility and comparability of data can also present significant challenges. Access to settlement data is heavily reliant on the discretion of those who hold the data – typically insurers and compensation schemes – and their willingness to share it.^[30] Data has a high commercial value, and insurers need to perceive adequate incentives to provide access.^[31] As Tom Baker has documented, insurers benefit from a greater understanding of how the civil justice system operates.^[32] Data comparability can present related problems: the fragmented nature of our injury compensation systems, and the involvement of various public authorities and private entities can make it difficult to collate and analyse information, particularly when contributors have differing methods of data collection.

Once we have better data, the legal profession and policy community need to be positioned to make use of it. Specifically, we need more lawyers and legal researchers equipped with the empirical skills to use the data to engage in policy debates. Too often our focus in innovation is on the need for greater technology-based skills, rather than the capacity to better use the evidence base we have to improve justice systems. As Dr Catrina Denvir, Director of the Ulster University Legal Innovation Centre recently observed, the development of ‘quantitative and statistical literacy – the ability to understand, apply, visualise and infer from data – underpins technological literacy and yet receives very little attention from those who encourage innovation in the legal curriculum’.^[33] To make the most of claims data as a resource, we need to know how to derive insight from it.

CONCLUSIONS

Appropriate and early resolution is the optimal outcome in any personal injury claim. The embedded place of ADR in the claims process means private settlements are the norm. ADR has significant benefits for all stakeholders, including claimants, insurers, and compensation and legal systems. Still, the current shortage of readily accessible claims data is at odds with our need for a clearer picture of the operation and effectiveness of injury compensation systems. Insurance data on settled claims provides us with an opportunity to address this evidence gap. Much can be learned from no-fault compensation schemes and their utilisation of claims data to observe claim and injury trends and manage risks. Importantly, improved learning and practice will not automatically flow from the existence of a dataset – the legal profession and researchers must be appropriately equipped to make use of it, for the benefit of the broader community.

Dr Genevieve Grant is a Senior Lecturer in the Faculty of Law, Co-Director of the Australian Centre for Justice Innovation and Senior Research Fellow at the Institute for Safety, Compensation and Recovery Research at Monash University. EMAIL [e-mail].

Rumesh Gnanaseelan is a Graduate Lawyer at MinterEllison in Melbourne.

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^[1] M Galanter, ‘Why the “Haves” Come out Ahead: Speculations on the Limits of Legal Change’, Law & Society Review, Vol. 9, 1974, pp95-160.

^[2] M Galanter, ‘The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts’, Journal of Empirical Legal Studies, Vol. 1, 2004, pp459-570.

^[3] See for example S Forell and C Mirrlees-Black, Data Insights in Civil Justice: NSW Local Court (Law and Justice Foundation of New South Wales, 2016).

^[4] T Baker, ‘Transparency through Insurance: Mandates Dominate Discretion’ in JW Doherty, RT Revill, L Zarakas (eds), Confidentiality, Transparency and the US Civil Justice System (Oxford University Press, 2012) 184, 185.

^[5] In the medical negligence context, see W Toh, L Satchwell, J Cohen, ‘Medical Indemnity – Who’s got the Perfect Cure?’, paper presented at the Institute of Actuaries of Australia 12th Accident Compensation Seminar, Melbourne, 22-24 November 2009.

^[6] Baker, above note 4.

^[7] On the lack of an evidence base to support the ‘compensation culture’ myth in the United Kingdom, see eg A Morris, ‘Spiralling or Stabilising? The Compensation Culture and Our Propensity to Claim Damages for Personal Injury’, The Modern Law Review, Vol. 70, 2007, pp349-78.

^[8] See the discussion of the evidence base underpinning the Ipp Committee Report in H Luntz, D Hambly, K Burns, J Dietrich, N Foster, G Grant, S Harder, Torts: Cases and Commentary, 8^th ed, LexisNexis, 2017, pp5-6.

^[9] Commonwealth of Australia, Review of the Law of Negligence: Final Report, 2002, pix.

^[10] Ibid, [6].

^[11] Department of Health and Human Services (Victoria), Towards Zero: Supporting the Victorian Hospital System to Eliminate Avoidable Harm and Strengthen Quality of Care (Report of the Review of Hospital Safety and Quality Assurance in Victoria), 2016, pxiv.

^[12] MM Mello, DM Studdert, AB Kachalia, TA Brennan, ‘“Health Courts” and Accountability for Patient Safety’, The Milbank Quarterly, Vol. 84, 2006, pp459-92.

^[13] K Wallis, S Dovey, ‘No-Fault Compensation for Treatment Injury in New Zealand: Identifying Threats to Patient Safety in Primary Care’, BMJ Quality & Safety, Vol. 20, 2011, pp587-91.

^[14] AR Localio, AG Lawthers, TA Brennan, NM Laird, LE Hebert, LM Peterson, JP Newhouse, PC Weiler, HH Hiatt, ‘Relation Between Malpractice Claims and Adverse Events Due to Negligence: Results of the Harvard Medical Practice Study III’, New England Journal of Medicine, Vol. 325, 1991, pp245-51.

^[15] Action Against Medical Accidents, Proposals for Ensuring Patient Safety Lessons are Learnt from Litigation (21 July 2016) <https://www.avma.org.uk/?download_protected_attachment=Patient-safety-litigation.pdf>.

^[16] For a comprehensive overview of the key data sources for workers’ and transport crash compensation and medical negligence claims, see Luntz et al, above note 8, [ch 1].

^[17] Australian Prudential Regulation Authority, National Claims and Policies Database <http://www.apra.gov.au/GI/Pages/national-claims-and-policies-database.aspx> .

^[18] A key exception is the useful report by K Misra, M Liu, C Peng, ‘Review of Claims Trends for Liability Insurance in Australia’, presented to the Actuaries Institute General Insurance Seminar, 17–18 November 2014 <http://www.actuaries.asn.au/Library/Events/GIS/2014/GIS2014MisraEtAlLiabilityPaper.pdf> .

^[19] See Australian Institute of Health and Welfare, Medical Indemnity Publications <http://www.aihw.gov.au/publications/medical-indemnity/> . See also Bill Madden, ‘Medical Indemnity Series Discontinued’, blog post on Bill Madden’s Wordpress (21 September 2015) <https://billmaddens.wordpress.com/2015/09/21/aihw-medical-indemnity-series-discontinued/>.

^[20] Safe Work Australia, Annual Publications <https://www.safeworkaustralia.gov.au/workers-compensation#annual-publications>.

^[21] Institute for Safety, Compensation and Recovery Research, Compensation Research Database <http://www.iscrr.com.au/evidence-data-and-research/using-data/compensation-research-database-crd> .

^[22] R Ruseckaite, FJ Clay, A Collie, ‘Second Workers' Compensation Claims: Who is at Risk? Analysis of WorkSafe Victoria, Australia Compensation Claims’, Canadian Journal of Public Health, Vol. 103, 2012, pp309-13.

^[23] R Ruseckaite, B Gabbe, AP Vogel, A Collie, ‘Health Care Utilisation Following Hospitalisation for Transport-Related Injury’, Injury, Vol. 43, 2012, pp1600-5.

^[24]J Berecki-Gisolf, FJ Clay, A Collie, RJ McClure, ‘Predictors of Sustained Return to Work after Work-Related Injury or Disease: Insights from Workers’ Compensation Claims Records’, Journal of Occupational Rehabilitation, Vol. 22, 2012, pp283-91.

^[25] MM Bismark, TA Brennan, PB Davis, DM Studdert, ‘Claiming Behaviour in a No-Fault System of Medical Injury: A Descriptive Analysis of Claimants and Non-Claimants’, Medical Journal of Australia, Vol. 185, 2006, pp203-7.

^[26] Productivity Commission, Data Availability and Use: Inquiry Report (Report No. 82), 2017.

^[27] R Field and N Wood, ‘Marketing Mediation Ethically: The Case of Confidentiality’, QUT Law & Justice Journal, Vol. 5, 2005, pp143-59.

^[28] WM Sage, JS Jablonski, EJ Thomas, ‘Use of Nondisclosure Agreements in Medical Malpractice Settlements by a Large Academic Health Care System’, JAMA Internal Medicine, Vol. 175, 2015, pp1130-5.

^[29] See Australian Bureau of Statistics, ‘How the ABS Keeps Your Information Confidential’ <http://www.abs.gov.au/websitedbs/d3310114.nsf/home/survey+participant+information+-+how+the+abs+keeps+your+information+confidential> . See also, however, Productivity Commission, above note 23.

^[30] Baker, above note 4, [186].

^[31] Ibid.

^[32] Baker, above note 4.

^[33] C Denvir, ‘The Rise of the Multidisciplinary Lawyer: A Challenge for Legal Education’, Legal Futures (26 May 2017) <http://www.legalfutures.co.uk/blog/rise-multi-disciplinary-lawyer-challenge-legal-education> .