Commonwealth Numbered Regulations - Explanatory Statements

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MEDICAL INDEMNITY (UMP SUPPORT PAYMENT EXEMPTION) REPEAL REGULATIONS 2020 (F2020L00450)

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Health

Medical Indemnity Act 2002

Medical Indemnity (UMP Support Payment Exemption) Repeal Regulations 2020

Authority

Section 79 of the Medical Indemnity Act 2002 (the Act) provides that the
Governor-General may make regulations prescribing matters, which are required or permitted by the Act to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.

Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

Purpose

The purpose of the Medical Indemnity (UMP Support Payment Exemption) Repeal Regulations 2020 (2020 Regulations) is to repeal the Medical Indemnity (UMP support payment exemption) Regulations 2006 (the 2006 Regulations).

In 2002, United Medical Protection Ltd (UMP) (now Avant Mutual Group), a medical defence organisation (MDO) that provided medical indemnity insurance to 60 per cent of Australian doctors went into provisional liquidation. UMP's financial difficulties were related to its high levels of "incurred but not reported" (IBNR) liabilities. To preserve the indemnity arrangements of UMP's doctors, the Australian Government established the IBNR scheme (set out in Division 1 of the Medical Indemnity Act 2002) to fund the IBNR liabilities of UMP (and any other MDO in similar circumstances).

In order to recoup some of the associated costs of the IBNR scheme, the Australian Government introduced the Medical Indemnity (UMP Support Payment) Act 2002, which introduced a levy on the members of MDOs (mostly doctors) who were benefiting from the scheme. This levy was originally known as the IBNR levy, but as UMP was the only participating MDO, it was renamed the UMP support payment (UMP SP).

In 2005, the then Medicare Australia (now Services Australia) identified a number of current and former UMP members who were liable to pay the UMP SP for various past contribution years. When this error became known, these individuals had not been notified of their liability and were not provided with the same opportunity to pay as other members.

Regulation 26 of the Medical Indemnity Regulations 2003 set a payment due date for the 2003-04, 2004-05 and 2005-06 contribution years.  Therefore, the affected members had technically defaulted on payment despite the fact that they were not notified of their correct liability, and may have accumulated late payment penalties, which applied to any individual who had not paid the UMP SP by the due date.

The purpose of the 2006 Regulations was to exempt the affected members from paying the UMP SP for each of the years that they did not receive an invoice, and to ensure that they were not liable for incurred late payment penalties.

Some of the affected members also received a subsidy to help with the cost of their medical indemnity insurance through the Premium Support Scheme (PSS) under subsection 43(1) of the Medical Indemnity Act 2002. However, a condition of receiving the subsidy was that the UMP SP contribution had to be paid in full by a specified payment date. As the specified payment date had passed, these members were technically not eligible for past or future subsidies.

The effect of the 2006 Regulations was to ensure that the affected doctors were never liable for the UMP SP for the specified years, and therefore, never late with any payment. This also assured the eligibility of the affected members for the PSS.

The 2006 Regulations declare that the financial year commencing on 1 July 2006 is the last contribution year for UMP (now Avant Mutual Group). As UMP support payment is no longer payable, the Medical Indemnity (UMP Support Payment) Act 2002 and 2006 Regulations are redundant.

Schedule 1 of the Medical and Midwife Legislation Amendment Act 2019 repeals the Medical Indemnity (UMP Support Payment) Act 2002. The 2020 Regulations repeals the 2006 Regulations.

Details of the 2020 Regulations are set out in Attachment A.

The Regulations are a legislative instrument for the purposes of the Legislation Act 2003 (Legislation Act).

The Regulations commence on 1 July 2020.

Regulation Impact Statement

The Office of Best Practice Regulation has certified that the First Principles Review and Thematic Review of the Medical and Midwife Indemnity Schemes are equivalent to a Regulatory Impact Statement.

Consultation

The Australian Government has worked collaboratively with the Australian Medical Association, relevant peak bodies, medical indemnity insurers and relevant government agencies.

Government has consulted extensively during the development of the medical and midwife indemnity reforms, including through the First Principles Review and Thematic Review, the development of the Medical and Midwife Legislation Amendment Act 2019 and targeted stakeholder consultation on limited exposure drafts of the legislative instruments. It was found, through the Thematic Review, that the 2006 Regulations are spent and no longer required.

Statement of Compatibility with human rights

Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires the rule-maker in relation to a legislative instrument to which section 42 (disallowance) of the Legislation Act applies to cause a statement of compatibility to be prepared in respect of that legislative instrument. The Statement of Compatibility has been prepared to meet that requirement. The Statement of Compatibility is included at Attachment B.

Attachment A

Details of the Medical Indemnity (UMP Support Payment Exemption) Repeal Regulations 2020

Section 1 - Name

This section provides for the title of the instrument to be Medical Indemnity (UMP Support Payment Exemption) Repeal Regulations 2020.

Section 2 - Commencement

This section provides for the whole instrument to commence on 1 July 2020. 

Section 3 - Authority

This section provides for the instrument to be made under the Medical Indemnity Act 2002.

Section 4 - Schedules

This section provides for each instrument that is specified in a Schedule to this instrument to be amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument to have effect according to its terms.  

Schedule 1--Repeals

This Schedule repeals the Medical Indemnity (UMP support payment exemption) Regulations 2006.

Attachment B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Medical Indemnity (UMP Support Payment Exemption) Repeal Regulations 2020

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Medical Indemnity (UMP Support Payment Exemption) Repeal Regulations 2020 (2020 Regulations) is to repeal the Medical Indemnity (UMP support payment exemption) Regulations 2006 (the 2006 Regulations).

In 2002, United Medical Protection Ltd (UMP) (now Avant Mutual Group), a medical defence organisation (MDO) that provided medical indemnity insurance to 60 per cent of Australian doctors went into provisional liquidation. UMP's financial difficulties were related to its high levels of "incurred but not reported" (IBNR) liabilities. To preserve the indemnity arrangements of UMP's doctors, the Australian Government established the IBNR scheme (set out in Division 1 of the Medical Indemnity Act 2002) to fund the IBNR liabilities of UMP (and any other MDO in similar circumstances).

In order to recoup some of the associated costs of the IBNR scheme, the Australian Government introduced the Medical Indemnity (UMP Support Payment) Act 2002, which introduced a levy on the members of MDOs (mostly doctors) who were benefiting from the scheme. This levy was originally known as the IBNR levy, but as UMP was the only participating MDO, it was renamed the UMP support payment (UMP SP).

In 2005, the then Medicare Australia (now Services Australia) identified a number of current and former UMP members who were liable to pay the UMP SP for various past contribution years. When this error became known, these individuals had not been notified of their liability and were not provided with the same opportunity to pay as other members.

Regulation 26 of the Medical Indemnity Regulation 2003 set a payment due date for the 2003-04, 2004-05 and 2005-06 contribution years.  Therefore, the affected members had technically defaulted on payment despite the fact that they were not notified of their correct liability, and may have accumulated late payment penalties, which applied to any individual who had not paid the UMP SP by the due date.

The purpose of the 2006 Regulations was to exempt the affected members from paying the UMP SP for each of the years that they did not receive an invoice, and to ensure that they were not liable for incurred late payment penalties.

Some of the affected members also received a subsidy to help with the cost of their medical indemnity insurance through the Premium Support Scheme (PSS) under subsection 43(1) of the Medical Indemnity Act 2002. However, a condition of receiving the subsidy was that the UMP SP contribution had to be paid in full by a specified payment date. As the specified payment date had passed, these members were technically not eligible for past or future subsidies.

The effect of the 2006 Regulations was to ensure that the affected doctors were never liable for the UMP SP for the specified years, and therefore, never late with any payment. This also assured the eligibility of the affected members for the PSS.

The 2006 Regulations declare that the financial year commencing on 1 July 2006 is the last contribution year for UMP (now Avant Mutual Group). As UMP support payment is no longer payable, the Medical Indemnity (UMP Support Payment) Act 2002 and 2006 Regulations are redundant.

Schedule 1 of the Medical and Midwife Legislation Amendment Act 2019 repeals the Medical Indemnity (UMP Support Payment) Act 2002. The 2020 Regulations repeals the 2006 Regulations.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights, as it does not raise any human rights issues.

The Hon Greg Hunt MP, Minister for Health