ACC only releases 1% of $3.6b set for expanded injury claims

ACC has only parted with 1% of the $3.6 billion it put aside for claims expected to result from a new interpretation of the law.

A 2023 Court of Appeal judgment dramatically increased the scope of cover available to those who can’t work because of injuries suffered when they were children.

People who fall into this category may now be able to receive ‘loss of potential earnings’ from the time they were injured, rather than from the time they sought treatment.

So, those who only reported their injuries, including from sexual abuse, well into adulthood may be eligible for years of backpay from the Accident Compensation Corporation (ACC).

Last year, ACC put $3.6b aside to cover the current and future costs of around 100,000 claims it estimated could be made by people with existing injuries as a result of the judgment.

To date, it has received 262 claims likely attributable to the ruling, and paid out $50.6 million accordingly.

ACC released these figures to the Herald further to a request under the Official Information Act.

Victims potentially missing out

Beatrix Woodhouse – the lawyer who represented a rape victim (referred to as “TN” to keep her identity private) who took ACC to court in the landmark case – believed ACC could do more to broadcast the change.

“Many claimants remain unaware of the expanded eligibility criteria for loss of potential earnings, and as a result, continue to miss out on support to which they are now legally entitled,” she said.

Ken Clearwater, who runs a peer support group for male survivors, made the same observation, despite a member of his group currently going through the process of trying to receive compensation.

“You don’t know what you’re entitled to. Sometimes [receiving support] is sheer luck,” he said.

ACC’s deputy chief executive of service delivery Michael Frampton said ACC made several professional bodies aware that some of their clients/patients may be eligible for compensation.

He said that in early 2024, it contacted the New Zealand Association of Counsellors, the NZ Psychological Society, the NZ College of Clinical Psychologists and the Royal Australian and NZ College of Psychiatrists, as well as ACC’s Sexual Violence Customer Advisory Panel, to let them know about the court ruling.

Frampton recognised the importance of not retraumatising victims and said ACC staff had been given “interim guidelines” on handling sensitive claims.

However, Clearwater believed staff needed more specialist training, because applying for compensation could be “excruciating”.

Frampton said ACC was still working out how it would “fully operationalise” the court judgment, so it could be “implemented appropriately”.

He said ACC was looking at how to alleviate the pressure it was putting on those in the already constrained health and social sectors, as it sought assessments and therapeutic support for claimants.

When the Herald spoke to TN last year, she said that while she was pleased the outcome of her legal battle would help others, she feared the system could be exploited.

Frampton said ACC would continue to review the $3.6b it has put aside to cover claims related to people who have already been injured but may now be eligible for compensation, thanks to the judgment.

“As it becomes clearer how the TN ruling will affect payment patterns, there may be further revisions to the provision,” he said.

Government pressure on ACC to limit costs

As ACC works through the complexities associated with the ruling (too slowly, in Woodhouse’s view), the Government is running the ruler over virtually every aspect of the injury insurer.

The issue is that ACC’s deficit is hampering the Government’s efforts to get its books out of the red.

Finance Minister Nicola Willis is so worried about the situation that she has come up with a new way of calculating the Government’s budget deficit/surplus that excludes ACC.

Using the orthodox measure, there is no surplus in sight, according to Treasury forecasts.

Minister for ACC Scott Simpson has also been considering whether a law change is needed to narrow ACC’s scope and curtail runaway claims costs.

He is questioning whether other government agencies are better placed to support some of those who fall under ACC’s jurisdiction.

With loss of potential earnings worth 80% of the adult minimum wage, this could result in some injured people receiving less.

Simpson’s thinking is high-level at this stage.

His immediate focus is on the three reviews the Government has commissioned into ACC’s culture, investments and claims management.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.