Federal workplace insurer Comcare has been rocked by the loss of one of its biggest customers as the ACT Government moves on Thursday to take its 20,000 public servants out of the troubled scheme.
The territory's government has lost patience with Comcare after being hit with a premium bill approaching $100 million and is exasperated at the pace of reform to a scheme that can allow public servants to sit at home for decades, in some cases, while being paid generous compensation benefits.
It is nearly two years since a review of the scheme urged sweeping reform to cut down on dubious claims for psychological injuries, payouts for dodgy therapies, doctor shopping and decades-long compensation sagas.
The departure of one of Comcare's fourth-largest premium payer will intensify the insurer's woes with Australian Public Service departments increasingly unhappy with the price of membership of the scheme and the outcomes it achieves.
No-one from senior management at the Comcare agency was available on Wednesday to discuss the ACT's decision, a spokeswoman said.
The ACT will walk away after seeing its insurance premiums skyrocket 180 per cent in nine years – to $97 million for 2014-2015 – and after repeatedly and publicly expressing frustration over delays in getting its injured public servants back to their jobs.
The territory's Employment Minister Mick Gentleman said the ACT Government now believes it can get better results for reduced expenditure by going it alone, probably with a commercial insurer underwriting the venture.
But it will have to continue paying Comcare for years or even decades to support some of the 540 territory public servants who are off work, claiming compensation and who may never return.
Comcare has turned its financial performance around, from a nadir of a $687 million deficit in 2011-2012, to a surplus of $54 million in 2013-2014, but the improvement has been underpinned by sharp increases in the premiums charged to government departments to cover their public servants.
The Canberra Times understands that some departmental chiefs are now close to open revolt against the system, after having their appeals against spiralling Comcare premiums knocked-back and struggling to find the money from dwindling budgets.
Mr Gentlemen said on Wednesday that his government's move was not a reflection on the quality of staff or management at the Comcare agency but that the federal workers' compo laws were no longer right for the ACT.
The minister said the ACT wanted to design a new compensation system that put money into getting public servants back to work instead of paying them to stay at home.
"Rather than saying it's not working, we believe there's a better way of doing it for the ACT and that's the road we've decided to go down," Mr Gentleman said.
"The Comcare system is quite burdensome, not only for claimants but for their employers as well.
"The focus we want to see is recovery and rehabilitation for our staff and getting them back to the workplace.
"The studies show that if you get people back to work earlier, their lives are better in the long run."
A new system would put time limits on payments for medical treatment and allow workers to step outside the scheme and sue the government in court for lump sum compensation.
But in a move that has infuriated lawyers when suggested in other areas, there will be no compensation for non-economic loss, commonly known as "pain and suffering".
Mr Gentleman said the process of consulting with workers and unions on the design of the new system had begun.
"We certainly don't want to take rights away," he said.
"We've got a framework which we want to go ahead with.
"We really want to engage with workers' representatives and we've started that today, we advised them today that we want to make sure the final elements of this are things that they want as well."
Federal Employment Minister Eric Abetz, whose consent is needed for the ACT's exit from Comcare, said on Wednesday that the departure was a matter for the territory government but warned that it would not get off the hook for lengthy ongoing claims.
"This is ultimately a matter for the ACT Government to determine if they are to exit Comcare," Senator Abetz said.
There will be issues of pre-existing claims that will need to be sorted, but the Comcare Scheme will continue as before."