On 3 September, the High Court reached a unanimous decision to overturn the Queensland Court of Appeal’s ruling in Stewart v Metro North Hospital and Health Service. This decision has illuminated the concerns of the interpretation of “reasonableness’ under the Civil Liability Act 2003 (Qld). This decision is a pivotal moment for medical malpractice insurers. By expanding on the definition, underwriters are now facing greater exposures to include clients’ preferences and not just cost benefit analysis or clinical effectiveness.
Background
Michael Stewart was 62 in 2016 when he was admitted to Redcliffe Hospital with abdominal pain and nausea. He received negligent treatment from Metro North Hospital and Health Service (MNHHS), which led to serious complications and ultimately resulted in brain damage, paralysis and whole person impairment. By the time the proceedings commenced, Mr Stewart was largely non-verbal, and required 24-hour care.
After being discharged from the hospital in late 2016, Mr. Stewart was moved from his private residence and admitted to a residential aged care facility wherein his physical health declined as a result of insufficient therapy. This additionally, impacted his mental health as he was not permitted to keep his dog or have his son stay overnight.
Mr. Stewart contended that the residential aged care facility did not adequately address his medical, social, and nursing requirements, and he expressed his intention to relocate to a private rental residence, utilising any compensation received from his claim against MNHHS to assist with this transition.
During the trial, Mr. Stewart’s litigation guardian requested compensation to facilitate his transition from institutional care to a rented home, which would be supported by professional caregivers. The objective was to reinstate a sense of normalcy, dignity, and independence in Mr. Stewart’s life. The estimated cost for this home-based care model was $4.91 million, which is $3.8 million more than his prior institutional care setup.
The decision
On 3 September, the High Court handed down a unanimous judgment declaring that, according to ABC News “the Supreme Court of Queensland and Court of Appeal’s approach to “reasonableness” was in error.
“Mr Stewart was entitled to compensation in a sum which, as far as money can do, would put him in the same position as he would have been in had MNHHS not acted negligently.”
The implications
The intent of compensatory damages under an insurance programme is based on the common law (“tort”) or in this specific case, The Civil Liability Act 2003 (Qld), which as stated above entitles plaintiffs to compensation in a sum which, so far as money can do, will put them in the same position as they would have been in had the client (“Defendant”) not acted negligently.
This landmark ruling introduces several key implications for medical malpractice insurance programmes:
1. Coverage expansion:
The decision broadens the definition of “reasonableness” under the Civil Liability Act 2003 (Qld). The Court found that the assessment of damages for future care should not be limited to a narrow cost-benefit analysis of clinical outcomes alone. Insurers will now face greater exposures due to this broadening of the ‘reasonableness’ definition. Insurers will likely scrutinise their underwriting modelling framework and adjust with caution. The High Court clarified that once a “plaintiff” can show that their preferred care model is a reasonable response to the consequences of their injury, the burden shifts to the “defendant” to prove that the plaintiff acted unreasonably in declining a cheaper alternative. The implications this will have on claims settlement costs will no doubt lead to premium increases, capacity restrictions and, potentially, deductible implications.
2. Psychosocial factors:
The High Court held that “reasonableness” must also consider a plaintiff’s psychosocial and quality-of-life factors. In Mr Stewart’s case, the desire to live at home with his family and dog was a crucial factor in his overall wellbeing. The Court recognised that the benefits of home care, such as improved mental health, social connection, and engagement in therapy, could be greater than those achieved in institutional care, even if the clinical care was technically “sufficient”. In such circumstances, a Director’s liabilities, governance and enterprise risk management frameworks will need to adhere to a comprehensive and evidence-based approach to ensure the plaintiff’s (patient) personal circumstances as well as their mental and physical wellbeing are factored into the decision-making process.
3. Claims strategies:
For insurers, the ruling means that damages for home-based care may now be recoverable even where a cheaper institutional option exists. The case signals that courts will give greater weight to the plaintiff’s personal preferences and the non-clinical benefits of a care plan, provided there is evidence to support that the care plan is a reasonable response to a plaintiff’s needs.
Insurers in turn will need to ensure their reserving methodology accounts for the High Court’s expanded interpretation of reasonableness as to care plans and beyond.
