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4.3.3 MRCC instituting or taking over a common law action against a third party

Division 2 of Part 3 of Chapter 10 of the MRCA allows for the MRCC to instigate or take over a third party common law claim for damages.

4.3.2 deals with the recovery of compensation from a third party by the person or the dependant themselves.

These provisions are designed to allow for the affected person to receive compensation from the third party in substitution to the compensation available under the MRCA.  Unlike the prohibition of common law claims against the Commonwealth when the Commonwealth has sole liability for a cause of action, the third party provisions allow for damages to be pursued through common law to prevent the Commonwealth from paying compensation when the cause of action creates a legal liability for a third party other than the Commonwealth or a potentially liable member.  An example of this would be when a member is travelling home from duty and is run into by another person in their car, creating a liability on the driver of the other car.

In these circumstances, where the affected party has not made a claim against the liable third party, or has made a claim but not prosecuted it (ie lodged the intention to sue with the courts but has not had a hearing), the MRCC can either commence a claim or take over the conduct of the existing claim.

When the delegate becomes aware that there is a common law action that might be instigated or taken over by the MRCC, they must contact the Director of the Benefits, Payments and Rehabilitation Policy section, as the MRCC alone has the power to instigate this action and must be done through liaison with Business Integrity and Legal Services Group.

Delegates may be made aware of the potential for a third party claim either by the information provided surrounding the nature of the incident that led to the accepted condition or where the claimant has indicated that they intend to or have already instigated common law action on the approved claim form.

Once the MRCC decides that a claim against a third party can be commenced or taken over there are certain legislative requirements that must be met by certain parties.

Signing of Documents and Actions Required.

The person (the plaintiff) who would have had the right to claim against the third party is required by sections 396 and 397 of the MRCA to sign any document required by the MRCC to pursue the claim and also to undergo any reasonable request that the MRCC may put on them in order to pursue the claim.  These requirements do carry sanctions if the plaintiff fails or refuses to comply.

If the plaintiff refuses to sign a document required by the MRCC, the MRCC can apply to the tribunal or court hearing the matter, or the Federal Court if otherwise, to have a person appointed by the MRCC made eligible to sign the document on the plaintiff's behalf.  If this course of action is taken the MRCC must inform the plaintiff in writing that it is doing so and allow the plaintiff to be represented at the hearing.

If the plaintiff fails or refuses to comply with a reasonable request for action from the MRCC in relation to the pursuit of common law damages, then the MRCC can suspend the plaintiff's right to compensation under the MRCA until they do comply.

Note carefully that the suspension of compensation that can be made does not affect the plaintiff's right to treatment or compensation for treatment under Chapter 6.

In order for this suspension to be enforced the MRCC must ensure that they have informed the plaintiff of this course of action and given them adequate time to give evidence of a reasonable excuse for a failure to act.  If this excuse is accepted, then a suspension of compensation cannot be enforced.

When a plaintiff's compensation is suspended under section 397 a determination must be made of an end date to the suspension if the plaintiff provides a reasonable excuse for failure within 14 days of the date set for compliance with the request.  Once a plaintiff provides such evidence a delegate, that is required by subsection 397(4) to be a different delegate to the one that applied the suspension, can determine a reinstatement of the plaintiff's right to compensation.

If the person subsequently complies with the request, their entitlement to compensation is reinstated under subsection 397(1).

Legal Proceedings and Costs

If the MRCC instigates a claim against a third party, then all associated costs are to be met by the Commonwealth.  However, if the MRCC takes over the conduct of an already existing claim, then the Commonwealth is liable to pay the costs of, or incidental to, the claim that would normally have been paid by the plaintiff, such as investigation or lodgement fees.  These costs do not extend to costs that the plaintiff incurred that are considered unreasonable for the prosecution of the claim such as excessive investigation or unreasonable travel costs.

In relation to the actual conduct of the prosecution of the claim, the MRCC is empowered by section 395 to undertake any steps deemed necessary to conclude the claim.  This can be effected by settling a claim with or without a judgement if it is before a court, and if a judgement is received in favour of the plaintiff taking any necessary steps to enforce the judgement.

Damages Awarded

Once a judgement has been passed or a settlement reached that is in favour of the plaintiff, any damages awarded are payable to the Commonwealth when the MRCC has instigated or taken over a claim.

Once the Commonwealth has received the damages a number of calculations must be made.

If the plaintiff has been paid compensation under the MRCA in relation to the relevant cause of action then the amount of that compensation (including the cost of any treatment or rehabilitation provided) is to be deducted from the damages amount.  The amount so deducted is not to include the following compensation amounts:

  • MRCA Supplement paid under section 221 or 245 of the Act; or
  • Dependant compensation under sections 242, 253 or 255 (bereavement payments and Eligible Young Person periodic payments); and
  • Any costs incidental to the claim that were paid by the Commonwealth in the prosecution of the claim.

Once these amounts have been calculated the total is to be deducted from the damages recovered.  If a positive balance remains then the balance has to be paid to the plaintiff.  However, once this balance is paid to the plaintiff, the plaintiff is not entitled to any further compensation under the MRCA until the compensation related to the cause of action pursued that would have been paid equals the balance that was paid to the plaintiff.

This is to ensure that the plaintiff is not compensated twice for the same injury, disease, death or loss, or damage to, a medical aid and that the damages recovered and paid to the plaintiff are in lieu of any compensation that would have been paid to them under the MRCA.

This would require the recall of a person's treatment card or cessation of payment for treatment costs and the person to provide evidence of treatment accessed and paid for.  The delegate will need to keep records of other compensation that would have been paid but for the receipt of damages.  This would include calculation of incapacity payments, SRDP etc until the balance of the damages is exhausted.