ACC Abuses

Housecleaning Required

We all understand the basic principle of insurance.  Large numbers of people pay small amounts of money into a big pot.  When damage occurs to some, the pot of money is accessed to compensate them or restore them.  It is an excellent service.  But the potential for conflicts of interest are very high.  Paying out claims reduces profits.  The owners or shareholders of an insurance company, therefore,  have an interest in refusing claims.  The more claims management refuses, the higher their profits. 

Moreover, in any dispute the refused claimant is usually at a severe disadvantage.  In most cases they do not have the financial resources (and as a result of the damage they have suffered which formed the occasion for the claim in the first place, they have usually even less resources) to take the insurance company to court, whilst the insurance company has plenty of resources to fund a legal defence, should they need one. Moreover, they have access to "experts" who are funded by the company: so they are likely to sing from the company's songsheet.

These problems are compounded exponentially when the insurance company is owned by the government, the insurance is compulsory, and the "service" is a statutory monopoly.  When harder fiscal times hit and the government's books are in the red, as now, the owner (the government) has powerful incentives not to pay claims.  The NZ Herald is running an expose upon the practices of the ACC--the state insurance monopoly for compensating people when they have suffered and accident.  It has been alleged that if anyone is over 40, the Corporation routinely puts an injury down to "natural degeneration" and has a bevy of tame "experts" to back their decisions. 

Orthopaedic Association president Gary Hooper said the corporation was taking a similar hard line with many older accident victims.  "ACC is trying to say everyone over 40 has degeneration," he said.

One of Auckland's six or seven specialist spinal surgeons, who asked to remain anonymous, said the corporation was using a handful of retired surgeons and some practising general surgeons as far afield as Timaru to declare that injuries were due to degenerative conditions on the basis of x-rays and scan results, without seeing the patients.  "We are seeing people rejected for no good reason. I've had 40, 60, 100 cases in the last few years," he said. "This is coming to a head. There is a number of us who have to go into bat for our patients on a weekly if not daily basis."

He said the system was unfair because people who could not afford lawyers, and many immigrants who did not know the system, did not challenge ACC's decisions.
Mr Miller (an accident specialist lawyer) said ACC deliberately rejected many people on the basis that only a few would appeal.  "ACC are just acting like these rapacious overseas insurance companies, refusing them holus-bolus on the flimsy grounds of degeneration, because we all have degeneration, and hoping like some of these overseas insurance companies that people won't challenge them," he said.

This situation, if true, amounts to breach of contract and theft on the part of the ACC and the government.  And it rings true, does it not?  This is certainly a circumstance where neither the government nor the ACC can be trusted.  The conflicts of interest are too great.  The remedies, however, are simple, effective, and easy to hand. 

Firstly, make the ACC operate in a competitive environment by allowing other (private) insurance companies compete with the ACC.  (The government has talked about doing this, but has failed to act.  Presumably the minister responsible for ACC, Dr Nick Smith has been captured by the Corporation and is now enslaved to its interests.)

Secondly, regulate to ensure that all medical diagnoses in claims cases be made by independent experts approved by the respective professional associations.  In addition, every company should be required to change the experts they use regularly, in a similar way to the requirement that companies change their auditors periodically.

Thirdly, ensure that courts are accessible to claimants and encourage out-of-court settlements by setting up an industry funded ombudsman with teeth to rule on complaints quickly.

Finally, require annual publication of the claims paid versus refused data, together with actions taken by the ombudsman broken down by company.

These simple measures would go a long way toward mitigating conflicts of interest in the accident compensation insurance industry and cleaning house at the ACC.