The Federal Government has accepted the fact that doctors are a prickly and politically powerful bunch who can’t be ignored. It has introduced a package of reforms to overcome the continuing problems of doctors on run-off cover. “Blue sky claims” are also dealt with.

Assistant Treasurer Helen Coonan says the package addresses the affordability and safety of doctors’ professional indemnity cover. She hopes it will give the doctors the confidence to continue to practise after July 1, when the reforms kick in.

 “Doctors have been worried that the move to legally enforce contracts of insurance will expose their personal assets to awards for damages in excess of the contract limit,” she said. The announcement “will mean doctors will no longer be at risk from ‘blue sky’ claims”.

Under the reforms the Government will assume liability for amounts above the insured limit, with any payments made under the arrangement funded by the doctor’s insurer after the funds have been paid by Canberra. The scheme, which will be reviewed after three years, also means Australian taxpayers won’t be meeting the costs of negligent doctors.

Reforms aimed at cost-cutting include the Government providing subsidies to obstetricians, neurosurgeons and procedural GPs. It will fund 50% of all claims in excess of $2 million up to the level of the insured limit.

A government guarantee to NSW mutual United Medical Protection (UMP) will also keep it funded until the end of the year. The group went into provisional liquidation a year ago.

The Government has also assumed certain unfunded liabilities of medical defence organisations (MDOs) and will recoup the cost through charges on members. It will also assume liability for 100% of a claim that exceeds a specified level of cover provided by a doctor’s MDO, with the amount to be recovered by a “post-event impost” on the MDO.