Unexpected Consequences of Compensation Law

Prue Vines, Arno Akkermans

• Publisher: Hart Publishing
• Year: 2020
• ISBN:
  9781509928002
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

This book explores the performance of compensation law in addressing the needs of the injured. Compensation procedure can be dangerous to your health and may fail to compensate without aggravation/creating other problems. This book takes a refreshing and insightful approach to the law of compensation considering, from an interdisciplinary perspective, the actual effect of compensation law on people seeking compensation. Tort law, workers' compensation, medical law, industrial injury law and other schemes are examined and unintended consequences for injured people are considered. These include ongoing physical and mental illness, failure to rehabilitate, the impact on social security entitlements, medical care as well as the impact on those who serve – the lawyers, administrators, medical practitioners etc. All are explored in this timely and fascinating book. The contributors include lawyers, psychologists, and medical practitioners from multiple jurisdictions including Australia, the Netherlands, Canada, Italy and the UK.

PART I

Introduction

1

An Overview of Some Unexpected Consequences of Compensation Law

PRUE VINES AND ARNO AKKERMANS^*

I.Introduction

Compensation law concerns the legal recognition of wrongs which cause harm and the giving of compensatory awards in recognition of the wrong and the harm. The area of personal injury is particularly significant and is often thought of as the primary area of compensation law, with a focus on negligence, workers’ compensation and other schemes; but other areas of private law are also significant where personal injury and/or economic loss may arise. Thus compensation law may encompass a range of causes of action and a large range of systems, all of which are aimed at compensating persons for their harms. Unfortunately, it has become clear that even where the aims of the compensation systems are met, there are often unintended and unexpected consequences of compensation which may badly affect the person who is supposed to be compensated.

Knowledge of these unintended and unexpected consequences has been in existence since the 1970s and earlier, but until recently there was very little systematic discussion of these issues outside Law Commission and Law Reform body¹ reports. Amongst legal academics, the work of Patrick Atiyah in Britain, including The Damages Lottery and Accidents, Compensation and the Law² is one example of significant attention being paid to the actual workings of the compensation system and its real impacts on the people involved in it. Dutch academics have been interested in this for some time.³ Others have begun to pay attention to the issues which may be ‘under the radar’, such as how costs affect this area, how insurance affects it and how the structure of legal systems may affect it.⁴ Academic discourse on unexpected consequences is only beginning to become systematic and to involve more than legal academics. We are now beginning to see the development of systematic empirical work evaluating the ‘side-effects’ of compensation law coming from not only legal academics but also from academics in medicine, epidemiology, psychology and sociology. One of these new interdisciplinary research fields is Compensation Health Research, studying the anti-therapeutic effects of legal arrangements and procedures on the victims of accidents who have suffered injury. It is the mission of Compensation Health Research to provide more detailed understanding and higher quality evidence of what exactly causes the detrimental effects of compensation procedures and how they can be restrained, in order to enable informed changes in policy, case law, the modus operandi of the legal profession and relevant institutions, and to inspire legislative change. Australia has been a leader in this field and there is a significant development of international research and collaboration of which this book is a part.

This book arose out of a symposium held at the University of New South Wales, Sydney, Australia in March 2018. It included a range of researchers from the various fields of law, medicine, epidemiology, psychology and sociology and included Australian, Dutch and Italian participants, and research carried out in those countries and in the USA and New Zealand. In this book we have also been able to include an English and Canadian perspective on the field. Much of the discussion concerns issues which are common to not only most common law jurisdictions, but also to civil law jurisdictions.

II.Promising More than Law Can Deliver?

Taking tort law and personal injury law as the paradigm of compensation law, we are all very much aware that the law often promises more than it can deliver. The harm that compensation law sometimes wreaks on the people involved in it ranges from the mental and physical injury caused by stress to the parties who are in the compensation system – which might be relatively unsurprising but, as becomes abundantly clear from several chapters of this book, is to be considered a central factor for negative health impact on claimants – but also to the vicarious harm done to lawyers and administrators acting for plaintiffs, and occasionally defendants. For parties, long delays and their associated uncertainty may create stress, which can create significant psychological or physical injuries separate from the original injury that led to the claim or suit. Sometimes this may also lead to addictions or other unhelpful outcomes. Other unexpected consequences include the creation of a situation where lawyers advise their clients not to apologise following some kind of adverse incident. This was not an intended outcome of the law, but remains a significant issue in civil liability. Other unexpected consequences include situations where the law falls short – for example, where damages awards are insufficient to support an awardee for the time they were expected to last. The consequences of administrative processes used to carry out compensation law in systems such as workers’ compensation and motor accidents systems can also be unexpected and unintended. The processes of insurance and the operation of compensation law in interacting with insurance is another area where sometimes unexpected consequences arise.

The actual area in which the compensation law is operating may have significant effects on the dynamics, which might create unexpected consequences. Personal injury caused by a traffic accident and that caused by medical malpractice may be experienced very differently by the parties concerned – for example in medical malpractice there will often be a previous relationship which may affect the view of what the best outcome is. Particular areas may also be differentially insured, so that sporting injuries might be treated very differently from traffic accident injuries. There may be different approaches in relation to individuals affecting outcomes and systemic effects. Different expectations and different personnel and different institutions and systems may interweave to create quite different outcomes. In this book we attempt to scrutinise the warp and weft of this weave in order to illuminate the issues.

Two very significant issues concern the identification of what should be compensated for and the identification of what amounts to, or can be regarded as, compensation. The law has been slow to identify emotional issues as part of the discourse of law. The traditional view of damages, in common law and civil law jurisdictions alike, has been that monetary damages are given to compensate for wrongs, and that the damages are awarded in recognition mostly for physical harm which has created deficits in a person’s life which can be made up for by money. This is not to say that legal systems have not recognised emotional harm, but they have been slow to recognise even catastrophic psychiatric illness, and slower yet in most jurisdictions to recognise emotional harms of lesser seriousness. Non-economic loss or general damages has traditionally been awarded in a way which de-emphasises them, and recent tort reforms in the United States and Australia in particular, have placed thresholds and caps on such damages. The reality of emotional harm is only beginning to be recognised,⁵ both as a matter of the harm the law recognises and compensates for, but also in respect of the unintended harms that the legal system inflicts. These, of course, may be physical, economic and emotional.

III.This Book

This book aims to consider in some detail the range of issues that may arise unexpectedly from the ordinary processes of compensation law. It is divided into several parts. There is an Introduction, then a section on current shortcomings of personal injury compensation systems. Part III concerns apologies, and Part IV considers the responsibilities of lawyers.

A.Some Current Shortcomings of Personal Injury Compensation Systems

Part II starts with Chapter 2, ‘Achieving Justice in Personal Injury Compensation: The Need to Address the Emotional Dimensions of Suffering a Wrong’ by Arno Akkermans. He outlines the psychological consequences of suffering a wrong and the ensuing emotional and moral needs of personal injury victims, and argues that compensation procedures generally fail to address these needs but instead often exacerbate them, leading to the experience of injustice and considerably increasing the risk of secondary victimisation. As a growing body of evidence suggests that perceived injustice plays a central role as a predictor of worse health and recovery outcomes, this failure is not only problematic from a justice point of view, but should also be addressed to mitigate the anti-therapeutic effects of compensation procedures. Akkermans submits that these issues go beyond the differences between fault-based and no-fault compensation regimes, and elaborates on possibilities to make claims resolution psychologically more responsive and intelligent regardless of what kind of system is involved, fault-based or no-fault. He identifies adversarialism as a common noxious element, and suggests proactive claims resolution as an antidote, and changing the roles in the game by having assessments carried out by neutral third parties as the most thorough countermeasure. Other suggestions are to provide a broader scope of services than monetary compensation only, to promote personal contact between those involved in the harm-causing incident, and to promote restorative and procedural justice.

The point of view of a medical researcher considering the relationship between compensation and health is taken in Chapter 3, ‘Compensation and Health’ by Ian Cameron. He discusses an extensive range of the literature on the subject, setting out the approach taken by the World Health Organization and its sub-organisations. He notes that it is well known that participation in injury compensation schemes may be associated with limited recovery after injuries sustained in motor accidents and other settings. He discusses the empirical data which suggest that this is likely to be a causal relationship rather than a mere correlation. In his chapter he synthesises the findings of all available Compensation Health Research and considers the mechanisms which may underlie the negative effects. Cameron concludes that health and recovery after injury can be improved by appropriate injury insurance scheme design, and suggests some possible useful interventions.

Alex Collie’s Chapter 4, ‘Apples, Oranges and Bananas’ considers a range of Australian compensation schemes from the standpoint of psychology, drawing on a number of empirical studies which show that aspects of the particular design of a compensation scheme really matter to the outcome for the claimant and that no-fault schemes appear to produce superior health or recovery outcomes compared with fault-based schemes. His investigation considers the individual within the context of the complex social system we all live in. Work disability is affected by all the interactions in this social system and the ‘control’ in the system may be highly dispersed or not in an expected place. This can make the relatively simple analyses which are envisaged by the legal system wholly inadequate. The rapid rate of change of legislation in Australia’s workers’ compensation systems contributes to a situation which is extremely complex. The chapter reports the results of a major study of participants in workers’ compensation schemes across Australia. The results themselves show that often the changes to workers’ compensation schemes suffer from a lack of understanding of the extent of the complexity involved and may not achieve the correct goals, or only one of a multiple number of goals – for example, reducing costs as a goal is quite often achieved, but it is often at the expense of rehabilitation or return to work, despite legislative attempts to do both. The research summarised in this chapter suggests that there is substantial scope to improve workers’ compensation schemes through more effective practices and policy settings, leading to better health outcomes and significant economic and productivity gains.

Katherine Lippel, Ellen MacEachen and Sonja Senthanar in Chapter 5, ‘Workers’ Compensation in Canada: Experiences of Precariously Employed Workers in the return to Work Process after Injury’ bring us a view from Canada of workers’ compensation schemes across different provinces. They discuss the experiences of precariously employed workers in the return to work process after injury, which is an interesting comparison to Alex Collie’s chapter on Australian workers’ compensation systems and return to work patterns. In Canada each province has its own workers’ compensation system. They compare the systems in Quebec and Ontario which differ in relation to the requirements for return to work. In Quebec the employer has the right but no obligation to offer modified work, whereas in Ontario both parties are required to cooperate so that theoretically an employer could be penalised for failing to offer work (although this appears to rarely happen). In Ontario much litigation occurs in relation to the modified work process. Particular aspects of each regime give rise to obvious differences in what happens to workers. For example, in Quebec, benefits are higher than those in Ontario, which meant that sometimes it was not worthwhile for claimants in Ontario to make a claim for what would be a very low benefit. For Quebecois claimants benefits are higher and last longer than in Ontario and this gives the Quebec employer a clear incentive to take the worker back. The picture is extremely complex, which is part of the problem: lawyers may not know who is entitled without extensive investigation in Ontario, workers may be confused, and complex systems may allow employers to duck their obligations, or indeed may create a situation where they are not able to understand their obligations. Lippel et al find that the economic incentives in both systems seem to become finalities in themselves, regardless of the aims of the workers’ compensation system itself.

What happens to lump sum compensation when the plaintiff spends their money on housing? In Chapter 6, ‘Safe as Houses? Lump Sum Dissipation and Housing’, Kylie Burns and Ros Harrington look at this aspect of the effects of lump sum dissipation, This is a very common way for people to use a lump sum, but it is very likely to lead to the person having insufficient resources to manage ordinary living and as many of these people are denied social security, they may become destitute. The authors’ research involved a detailed study of the impact of spending lump sums on housing by analysis of social security appeal cases in the Administrative Appeals Tribunal in Australia. They first critique the justifications for lump sum damages, showing how seriously impeded these are by social security rules of various kinds. Lawyers’ support for lump sum damages should not be dismissed as (entirely) self-interested – many factors create the desire for lump sums, including people’s sense of autonomy and the wish to be free of unwarranted state interference. These are also reasons people spend money on housing. Burns and Harrington show that the social security response to people doing this is to argue that they are ‘double-dipping’ because their lump sum was supposed to be used for income support and spending on housing is characterised as not income support. This narrow characterisation ignores the cultural and emotional value of housing and the fact that income is often ultimately spent on housing.

Chapter 7 is by Christopher Hodges. It is entitled ‘Achieving a Just Culture that Learns and Improves’ and it tackles a number of the barriers to open justice in relation to compensation law, particularly in relation to medical malpractice. Hodges regards this as a situation where there are two clashing institutional cultures: the medical and legal systems. The legal system is focused on individual wrongs, and deals with those after the event, often on the (wrong) assumption that this will deter poor behaviour in future, while the medical system is a systems culture where things may go wrong not because of one individual, but because of the nature of the system and where investigation of the system is more often what is required. Hodges discusses the evidence of what patients want and various approaches from NHS and other systems, and from behavioural sciences to argue where the possibilities of creating a culture that actually learns from its mistakes might lie. His analysis makes clear that both a fault-based system and an adversarial process present strong barriers both to openness of clinical staff with patients about what happened and why, and to medical learning so that future mishaps can be avoided on a wide scale. Hodges submits that ‘fault and adversarial systems are old technology’, and discusses more efficient mechanisms for delivering compensation to those who qualify, and for delivering further functions, especially caring responses, explanations and apologies, aggregating data on adverse events and feeding back information on how to improve both practice and culture in healthcare. He concludes that the traditional legal system is incapable of delivering these objectives.

B.Apologies

The next part, Part III, concerns the treatment of apologies. As an unexpected consequence of compensation law, apologies are a particular issue deserving of investigation. The unexpected thing is the common advice of lawyers to clients not to apologise, which is a consequence of the fear of liability. The compensation systems rarely mention apology and indeed may ignore the subject altogether, but this treatment of apologies comes out of the legal arrangements constituting the compensation system. The fear is always that an apology might mean t...

Table of contents

• Cover
• Title Page
• Contents
• Contributors
• PART I: INTRODUCTION
• PART II: AN AGENDA FOR CHANGE? SOME CURRENT SHORTCOMINGS OF PERSONAL INJURY COMPENSATION SYSTEMS
• PART III: APOLOGIES
• PART IV: RESPONSIBILITIES OF LAWYERS
• Index
• Copyright Page