We are often asked if payments from a medical negligence claim will impact entitlements to TPD and income protection benefits which arise from the same or related illness or injury. This article will look at how your TPD or income protection claim can be impacted by a medical negligence claim.
Medical negligence claims are compensation claims made against a doctor, hospital or other medical professional for mistakes made when you receive medical treatment. Claimants need to prove that the medical professional failed in their duty of care and this failure led to pain, suffering, loss of earning capacity, additional medical expenses or other losses.
Common examples of medical negligence include diagnostic errors (including delays in diagnosis), errors during surgery and failure to warn patients of the risks of treatment.
Will claiming TPD impact my medical negligence claim?
We are often asked this question, and the short answer is no.
A TPD benefit is not compensation for pain and suffering or medical expenses and it is not lost income. A TPD benefit is lump sum insurance benefit (paid out via an insurance policy, often held inside superannuation).
The amount of TPD paid out is usually a predetermined amount which is not calculated with reference to any specific loss, and because the amount of the benefit is not related to a particular loss (i.e. it’s not an indemnity benefit), it will usually not impact any amount of compensation that you may be entitled to due to a medical negligence claim (or, in fact, any other type of personal injury claim, including worker’s compensation claims).
As with worker’s compensation claims, the medical evidence which is available in support of your TPD claim may have an impact on outcomes achieved on your medical negligence claim and vice versa.
We can rely on the medical reports to support the two claims simultaneously. However, your medical negligence claim may require that you have a particular type of impairment due to the impacts of the botched surgery or medical negligence particularly. This will not be the case with a TPD claim which only requires that your condition causes you to be unlikely to be able to return to work due to your illness or injury.
That is when lodging a TPD claim, it is not important what conditions make you unable to work, only that you are unable to work due to illness or injury. Therefore, if you are making a medical negligence claim for damages (compensation) related to a particular incident, you should be careful to ensure that any medical evidence exchange for your TPD claim does not contradict the medical negligence case you are making.
Should I finalise my medical negligence claim before bringing my TPD claim?
No, it is not normally necessary to wait until your medical negligence claim is finished to bring your TPD claim.
However, there may be some limited situations where you decide to wait. These situations include where you are seeking loss of wages via a medical negligence claim but will be making a TPD claim for an injury/illness sustained as a result of the treatment subject of your medical negligence claim.
However, even in this situation, we would usually find a way to carefully bring both claims to avoid having to delay your TPD claim for the many years that it can take to finalise a medical negligence claim. Legal advice and assistance are highly recommended if you have a medical negligence claim and are seeking to pursue a TPD claim.
Will claiming income protection impact my medical negligence claim?
In short, it is possible that claiming an income protection benefit may impact your medical negligence claim (and vice versa).
Because one of the kinds of damage (usually called ‘heads of damage’) available under a medical negligence claim is loss of income, claiming an income protection benefit, which is also a payment for loss of income, can reduce the amount of your medical negligence payment.
Similarly, if you are receiving income protection insurance benefits and you are paid a medical negligence settlement, it’s likely that your income protection insurance benefits will be stopped or reduced for a period because of the medical negligence payment. You should seek legal advice if you’re considering an income protection claim after receiving any other form of lump sum compensation settlement.
Reduction or cessation of income protection payments after a personal injury payout
Every income protection insurance policy is a little bit different about how your payments will be stopped or reduced. The most common way that a reduction is applied is that the income part of your lump sum payment will be converted to a monthly benefit over a 5-year period, and your income protection benefit will be offset by this amount each month.
If the amount of the lump sum compensation payout, when converted to a monthly amount, is more than your monthly income protection entitlement, you will not be paid any income protection benefit. Also, if the amount of your lump sum compensation payout related to loss of income cannot be carved out of the total amount of compensation, it’s possible that your whole medical negligence lump sum benefit will be used to calculate your income protection payments monthly offset.
In some cases, there is case law which we can rely on to challenge the offset and reduction of income protection benefits when you are paid a lump sum medical negligence payment. Whether the offset can be challenged will depend on the wording of the offset clause specific to your insurance policy.
Get help from a TPD and income protection lawyer
If you are pursuing a medical negligence claim and you are also unable to work due to illness or injury and are considering claiming TPD or income protection benefits, we recommend that you get in touch for some expert advice on how to run these claims side-by-side.
There are usually large offsets related to income protection claims, but depending on the timing of any medical negligence payout, it may be possible to challenge the offset. At the very least, you should get advice to make sure that the offset has been accurately calculated.
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