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Proposed changes to ACC review costs "insufficient"

10 November 2016

A proposal to increase the amount clients of ACC can claim in costs incurred during dispute resolution processes doesn’t go far enough, says the New Zealand Law Society.

In a discussion document called Consultation on Changes to the Injury Prevention (Review Costs and Appeals) Regulations 2002, the Ministry of Business, Innovation and Employment (MBIE) is proposing an inflation-based increase of 14.9% for costs incurred by clients during independent statutory reviews of their cases.

MBIE’s proposal follows the release of an independent report by Miriam Dean QC on ACC’s dispute resolution processes in September.

While the Law Society welcomes the proposed 14.9% increase as an initial step in improving ACC claimants’ access to justice, it says the amount is “insufficient to provide adequate support for claimants”.

What can currently be claimed?

Under the Accident Compensations Act 2001, ACC clients can claim costs they incur during a review. Costs can be awarded to clients if a review decision is made fully or partly in their favour.

Even if a review decision doesn’t go their way, clients can still claim costs if the reviewer considers that the case has been reasonably brought. The maximum amounts that can be paid to clients are set out in the Injury Prevention (Review Costs and Appeals) Regulations 2002.

In its discussion document, MBIE says the intent of the regulations is “not to absorb the full costs of claimants upfront but to maintain a margin of individual responsibility, with payment following costs incurred. This is important to address the risk of excessive litigation and cost inflation”.

Why are the costs being reviewed?

The regulations have not been substantively reviewed since 2002, but there was an inflation increase in 2008 and a GST increase in 2010.

MBIE said it had heard from stakeholders who were concerned that the prescribed costs were “no longer in line with inflation and do not provide adequate support for clients, especially for more complex cases”.

It said the recent Independent Review of the Acclaim Otago report into the accident compensation dispute resolution system confirmed there are shortfalls in some areas, especially around costs of medical evidence.

MBIE has proposed increasing the regulated costs by 14.9%, based on the Consumer Price Index increase from the first quarter of 2008 to the first quarter of 2016.

What are the concerns about the proposed increase?

The Law Society says the 14.9% inflation-based increase “while welcome, is insufficient”. It says that the amount available for legal representation and medical evidence is far below the actual costs incurred.

What would the Law Society like to see happen?

MBIE’s discussion document notes there are likely to be further, more substantive changes to the regulations: “Work is underway to better understand the nature and extent of the issues and to inform assessment for substantive changes to the regulations.”

The Law Society agrees that further work on the Regulations is required and says it would welcome the opportunity to assist with that work.

The Law Society says it is “clearly beneficial” for appeals that have merit to be investigated and resolved at the review stage, rather than progressing to court.

“Increasing cost awards under the regulations for medical evidence and legal representation to a more realistic level would very likely contribute to resolving disputes at an earlier stage, thus minimising the number of appeals to the District Court.”

Other information

Independent report on ACC dispute resolution released

Government response to ACC dispute resolution report encouraging

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Last updated on the 10th November 2016