Differences in perceived fairness and health outcomes in two injury compensation systems: a comparative study

Abstract

BackgroundInvolvement in a compensation process following a motor vehicle collision is consistently associated with worse health status but the reasons underlying this are unclear. Some compensation systems are hypothesised to be more stressful than others. In particular, fault-based compensation systems are considered to be more adversarial than no-fault systems and associated with poorer recovery. This study compares the perceived fairness and recovery of claimants in the fault-based compensation system in New South Wales (NSW) to the no-fault system in Victoria, Australia.MethodsOne hundred eighty two participants were recruited via claims databases of the compensation system regulators in Victoria and NSW. Participants were > 18 years old and involved in a transport injury compensation process. The crash occurred 12 months (n = 95) or 24 months ago (n = 87). Perceived fairness about the compensation process was measured by items derived from a validated organisational justice questionnaire. Health outcome was measured by the initial question of the Short Form Health Survey.ResultsIn Victoria, 84 % of the participants considered the claims process fair, compared to 46 % of NSW participants (χ2 = 28.54; p < .001). Lawyer involvement and medical assessments were significantly associated with poorer perceived fairness. Overall perceived fairness was positively associated with health outcome after adjusting for demographic and injury variables (Adjusted Odds Ratio = 2.8, 95 % CI = 1.4 – 5.7, p = .004).ConclusionThe study shows large differences in perceived fairness between two different compensation systems and an association between fairness and health. These findings are politically important because compensation processes are designed to improve recovery. Lower perceived fairness in NSW may have been caused by potential adversarial aspects of the scheme, such as liability assessment, medical assessments, dealing with a third party for-profit insurance agency, or financial insecurity due to lump sum payments at settlement. This study should encourage an evidence informed discussion about how to reduce anti-therapeutic aspects in the compensation process in order to improve the injured person’s health.

Trends in lawyer use in road traffic injury compensation claims

“…In terms of the differences in patterns of change across groups, the minimal increase in the proportion of common law claims that involved lawyer use is likely to be due to a ceiling effect. This group had a high initial proportion of lawyer use, perhaps because of the complexity and perceived adversarial nature of the common law claiming process [14,16]. Notably, although the common law claims group and the no-fault impairment lump sum claims group contained the greatest proportions of lawyer use, the actual numbers of claims in these groups were small.…”

“…Lawyers play an instrumental role in enabling claimants to access their legal entitlements, particularly when they might struggle to do so otherwise. Injured claimants may engage lawyers to navigate the complex and unfamiliar compensation process, access benefits, and resolve disputes [14][15][16]. The role of lawyers in facilitating claimant access to entitlements is particularly important in injury compensation schemes, given insurers' fundamental conflict of interest between fairly compensating claimants, and maximising profit or safeguarding the ongoing financial viability of the scheme.…”

“…The few studies that have examined lawyer use have used it as a predictor rather than an outcome [9,19]. These studies have found a relationship between lawyer use and negative recovery outcomes, including physical and mental ill-health [20][21][22]; longer treatment times [20]; delays in, and lack of, claim closure [23][24][25][26]; and lower perceived fairness of the compensation process [16]. However, these studies are observational and cannot establish causality and, as a result, questions have been raised about the direction of this relationship [27,28], the mechanisms linking lawyer use to claimant outcomes [19], and the influence of external factors such as the tendency of lawyers to select cases based on economic viability [9].…”

“…The increase in lawyer use in this study was not due to changes in rates of crashes or hospitalisations from crashes, or variations in observed crash, injury, or (measured) person factors over time: as such, it is likely to be due to other factors. These could include changes in: person factors not included in this study, such as legal consciousness (as greater legal consciousness is associated with greater capacity to resolve legal problems alone, without legal assistance; [54]); compensation scheme factors, such as the complexity and length of the claims process (as more complex and protracted processes are associated with greater legal service use; [14,16,57]); societal factors, such as attitudes towards lawyers and lawyer use (as social stigma and shame can deter claimants from engaging legal services; [58]); and regulation factors, such as legislation (as, for example, new requirements to resolve legal issues in a cost-effective, efficient, just, timely manner could increase the appeal of lawyer use; [59]). These could also include changes in the legal services market, such as increases in the number of lawyers operating in this market (as claimants are more likely to use legal services when these are readily available; [60]), and the proliferation of advertising by these lawyers (as this raises claimant awareness about the possibility of engaging legal services, and the process for doing so, as well as addressing barriers to, and reinforcing benefits of, use; [61,62]).…”

Evaluating the success of legislative amendments designed to reduce work disability

“…Workers' compensation scheme design can influence the health and recovery of those injured (Loisel et al 2005;Collie et al 2016;Elbers et al 2016). For example, Cameron et al (2008) found improvements in health outcomes following the introduction of a package of amendments to the New South Wales (NSW) motor vehicle accident compensation legislation (Cameron et al 2008).…”