New laws to crack down on claim farming

Third parties cold-calling Queenslanders to pressure them into making compensation claims will be banned under proposed new laws.

Attorney-General and Minister for Justice Shannon Fentiman introduced a Bill to the Queensland Parliament today that proposes reforms aimed at stamping out the practice of ‘claim farming’ for personal injury or workers’ compensation claims.

“’Claim farmers’, also known as ‘claims management services’, approach individuals to coerce them into making personal injury and workers’ compensation claims and then charge a fee to ‘sell’ their claim to a legal practitioner or other claims management service providers,” Minister Fentiman said.

“This Bill will prohibit anyone from cold-calling or personally approaching another person without their consent and soliciting or inducing them to make a claim.

“The reforms will also make it an offence for anyone to pay claim farmers for the details of potential claimants, or to receive payment for a claim referral.

“It also contains obligations on legal practitioners who represent injured clients to show that they have not paid a claim farmer for the claim.”

The Bill builds on similar measures in the Motor Accident Insurance and Other Legislation Amendment Act 2019 which were enacted to stop the increasingly prevalent practice of claim farming compulsory third party claims.

The Bill will amend the Personal Injuries Proceedings Act 2002 (PIP Act) and the Workers’ Compensation and Rehabilitation Act 2003 (WCR Act) to prevent claim farming for personal injury claims and workers’ compensation claims.

Legal practitioners will also be required to treat certain additional amounts as legal costs (rather than disbursements) when determining whether the legal costs for a speculative personal injury matter exceed the statutory limit under the Legal Profession Act 2007 (LP Act).

The Bill provides Queensland’s Legal Services Commission with additional powers under the Legal Profession Act 2007 to oversee and enforce the new claim farming provisions relating to personal injury claims under the Personal Injuries Proceedings Act 2002.

Minister for Industrial Relations Grace Grace said the Queensland workers’ compensation scheme would be the first in Australia to specifically legislate against claim farming offences.

“The Workers’ Compensation Regulator will be able to investigate and prosecute claim farming offences and the Regulator and the Legal Services Commission will be able to share information with each other and the Motor Accident Insurance Commission for these purposes.,” Minister Grace said.

“This will enable enforcement bodies to effectively identify and respond to those exhibiting signs of engaging in claim farming across compensation schemes or who may be a risk of such activity.

“Ultimately, these arrangements will protect legitimate claimants, disincentivise fraudulent behaviour and promote confidence in the compensation schemes.”

The Attorney-General said the new laws strengthened previous Queensland Government action to tackle the issue.

“The 2019 restrictions were introduced to ban claim farmers from inducing injured Queenslanders to make a compulsory third party (CTP) motor vehicle insurance claim and profiting from the claim referrals,” she said.

“Since those reforms, the Motor Accident Insurance Commission has seen a decline in reported claim farming activity.

“At that time, claim farming was only known to be a problem in relation to CTP claims, but the industry has now moved to new types of personal injury claims so we’re introducing these changes to close off those markets.

“Sadly, the targets of these operators are the most vulnerable within our communities.

“And once a claim farmer has a person’s information, it may be sold to a lawyer or other claims management service provider who then handles the claim.

“These speculative claims can result in false promises, misinformation about rights and entitlements, and can impose significant costs on defendants and their insurers, potentially increasing insurance premiums.

“The new laws will break the link between claim farmers and legal practices.”

ENDS

Media contact:                      Inga Williams              0439 949 719