A no-fault approach to medical error: a New Zealand perspective

Introduction

In short, medical (or clinical) negligence occurs when a healthcare practitioner performs an action—or fails to act—in a way that falls below the standard expected of a healthcare professional, resulting in an undesired adverse health outcome experienced by the patient (1-4). Medical negligence is a subset of the broader term medical error, which encompasses a range of clinical mistakes, including negligence (4).

Interestingly, there is a lack of standardised nomenclature regarding the use of the terms ‘medical negligence’ and ‘medical error’, and thus their usage in the literature raises two important considerations. Firstly, the phrasing of these terms often suggests that responsibility lies solely with doctors, thereby overlooking the involvement of other healthcare professionals. However, closer analysis of the literature reveals that the use of these terms is, in practice, are far more inclusive; researchers commonly apply them to a broad spectrum of practitioners across various specialties and professional roles within health care teams (5-7). Secondly, it remains unclear whether a distinct difference exists between the terms. Several papers use the terms ‘medical error’ and ‘medical negligence’ interchangeably (1,2). Accordingly, for the purposes of this paper, these terms will be used interchangeably to denote the same underlying concept. Furthermore, in line with other literature, the applicability of such terms in our paper also extends beyond just doctors and encompasses a broader range of roles within health care teams. This approach is consistent with the interpretation of New Zealand’s no-fault compensation scheme and its associated regulatory frameworks, which are discussed later in this paper.

There are multiple instances in which a clinical mistake could lead to medical negligence, such as misdiagnosing the patient’s disease, prescribing the incorrect medications or wrong dose, and mistakes during surgical procedures (7). Such medical mistakes often arise from a combination of intrinsic and extrinsic factors. Intrinsic factors are those related to the individual clinician, such as deficiencies in clinical knowledge or skills, inappropriate clinical judgement or physical and mental fatigue that can lead to misdiagnosis (8). In contrast, extrinsic factors are external to the clinician and typically stem from broader systemic or organisational issues, such as excessive workload, inadequate staffing, poor supervision, or inefficient processes (8).

Medical errors place a significant economic burden on a country’s healthcare system. As some commentators aptly put it: “every pound spent on clinical negligence is a pound that cannot be spent on care” (9). This highlights the importance of establishing a medical injury compensation system that enhances utility and promotes social welfare by upholding patients’ rights. Such a system should also encourage clinicians to adhere to core competencies and best practices, thereby minimising the potential of adverse healthcare events arising from clinical negligence. Moreover, it must ensure that when medical errors do occur, there are robust mechanisms in place to hold healthcare practitioners accountable and implement preventive measures to avoid future occurrences. New Zealand’s no-fault personal injury insurance scheme, known as the Accident Compensation Corporation (ACC) and currently governed by the Accident Compensation Act 2001, exemplifies such an approach. Transitioning from an adversarial clinical negligence system to a no-fault compensation model is often seen as a fairer, more efficient, and compassionate approach. It shifts the focus from litigation to timely compensation and patient safety. However, debate continues over whether such models truly improve injury compensation policy. Key concerns include the transparency of surrounding the Act’s interpretation and application and whether the regime genuinely upholds patient safety. This commentary critically reviews New Zealand’s no-fault scheme for medical errors, examining the arguments for and against adopting similar systems elsewhere.

Background into New Zealand’s no-fault scheme

Fully implemented in 1974 after the enactment of the old Accident Compensation Act 1972, the New Zealand ACC scheme perhaps represented one the most innovative and revolutionary system to deal with injury arising from adverse healthcare events. Under this legal regime, the New Zealand government provides no-fault insurance cover to all New Zealand residents, and visitors to New Zealand, who suffer personal injuries caused by medical treatment. In return, the ACC scheme abolishes an injured person’s right to sue for compensation through the courts, except in certain special circumstances. This legislation is unique to itself, and New Zealand remains one of the only countries in the world with a well-established, comprehensive no-fault compensation scheme (10,11).

Prior to the introduction of the Accident Compensation scheme, the primary mechanism in which aggrieved patients could seek compensation for accidental and adverse medical harm was through a negligence action in tort law. The patient (‘plaintiff’) would receive compensation if their harm was caused by the medical practitioner (‘defendant’), who breached their ‘duty of care’ putting the plaintiff at foreseeable risk of suffering. The legal process of establishing that a duty of care existed between a patient and a doctor is analogous to the tort-based liability system currently in force in some countries, such as the United States.

Under the current regime, anyone who suffers a treatment-related injury caused by any registered healthcare professional, not only by a doctor, is generally eligible to receive injury cover and compensation. This applies as long as the injury was wholly or substantially caused by the treatment itself, or if the injury is a typical or necessary part of the treatment process. With a few exceptions, compensation under New Zealand’s treatment injury scheme requires only a connection between the medical treatment and the injury—not proof of negligence. This no-fault system prioritises patient support and rehabilitation over blame. Unlike the tort model, which focuses on fault and liability, the state assumes responsibility, aiming to support patient recovery instead of requiring patients to go through litigation to seek redress against individual healthcare professionals.

While the ACC scheme bars legal proceedings for personal injuries that fall within its coverage, the act does not prohibit individuals from seeking exemplary damages through civil litigation. This means that a person can still sue a healthcare professional for exemplary damages, even if the injury itself is covered by ACC. Exemplary damages are not awarded to compensate the injured party but rather to punish and deter particularly egregious conduct (12). However, patients who have suffered personal injury rarely pursue claims for exemplary damages due to the high legal threshold required to succeed. Proving such claims demands evidence of intentional or recklessly indifferent behaviour, which is difficult to establish. Additionally, the complexity of the legal process, including the need to hire lawyers and medical experts, makes this a costly and daunting path for most patients. As a result, seeking exemplary damages is typically only considered as the last option and when the harm suffered is substantial enough to justify the effort and expense.

New Zealand’s no-fault approach to medical treatment injuries has raised concerns about whether it might undermine public trust in the healthcare system. While the system prioritises patient welfare over assigning blame, it is essential to ensure fair and just accountability for healthcare professionals who fail to meet their responsibilities. To support this, there are several mechanisms through which aggrieved patients can seek redress and appropriate remedies against such clinician. Although each regulatory authority (or council) such as the New Zealand Medical Council or the Nursing Council of New Zealand acts as the official regulator responsible for maintaining the register of its own recognized professionals, it does, however, not act as a primary complaints body. It does not have the direct authority to investigate patient complaints or impose disciplinary action. Instead, decisions to suspend or remove healthcare professionals from the register usually result from findings by other bodies, such as the Health and Disability Commissioner (HDC), the Human Rights Review Tribunal (HRRT), or the Health Practitioners Disciplinary Tribunal (HPDT). Each of these agencies holds a distinct role, and typically, initiating proceedings under one agency does not prevent patients from pursuing their cases under the jurisdictions of different agencies.

The HDC is often the first point of contact for patients seeking redress against any healthcare practitioner. As an independent health ombudsman, the HDC enforces the Code of Health and Disability Services Consumers’ Rights, part of the 1994 Health and Disability Commissioner Act. This code sets out 10 key rights to ensure patients are treated with respect, dignity, and fairness. It covers areas such as informed consent, professional standards of care, and participation in medical research. These rights apply to all healthcare providers—not just doctors, but also nurses, allied health professionals, and other health professions involved in patient care.

When the HDC finds a breach of patient rights, cases may be referred to the HRRT or the HPDT. The HRRT addresses violations of human rights, privacy, and HDC codes, and can award remedies such as financial compensation for emotional harm or loss of dignity. The HPDT, a disciplinary body for health practitioners, handles cases of serious professional misconduct, especially where informal resolution is inappropriate. These mechanisms allow patients to seek redress and hold practitioners accountable, even when they are not liable for injury-related damages. While sanctions are not aimed at compensating victims, they promote patient rights and improve healthcare standards. Sanctions may include restrictions on practice, written apologies, or, in severe cases, fines, suspension and cancellation of registration. Nevertheless, in exceptional cases, criminal proceedings by the police (or other government appointed prosecuting authority) can also be initiated in situations where a death is allegedly caused by negligent conduct, leading to the potential prosecution for murder or manslaughter.

Is a no-fault scheme a robust system for dealing with medical errors including medical/clinical negligence?

There remains uncertainty over whether the introduction and implementation of a no-fault scheme for medical injuries, including those resulting from negligent conduct by healthcare professionals, has had any meaningful impact on healthcare practice and ethics in New Zealand.

As previously mentioned, New Zealand’s no-fault compensation scheme separates accountability from compensation. New Zealand’s no-fault system, unlike a tort-based system, is less punitive in nature and aims to promote and protect patient’s rights. Proponents of a no-fault liability scheme would argue that such a scheme is favourable for society as more injured patients receive compensation and have improved outcomes from comprehensive injury coverage provided by the state, which ultimately reduces downstream healthcare costs by ensuring injured patients receive timely rehabilitative support, preventing complications and prolonged reliance on social services (13). Furthermore, patient safety is unlikely to be significantly compromised under a no-fault system, as the greatest threat to patient safety typically stems from a small minority of poorly performing clinicians while the majority are well-trained, altruistic and competent (14). As a result, under this notion, the occurrence of most medical errors is more likely to reflect broader systemic issues rather than isolated individual mistakes and thus addressing these through a systems-based approach is more effective. By avoiding costly and time-consuming litigation, the resources saved can instead be reallocated towards identifying and resolving these underlying system-wide problems, ultimately improving the quality and safety of healthcare delivery.

While the focus of a no-fault compensation scheme is on addressing systemic failures rather than assigning individual blame, there is no guarantee that this systems-based approach will maintain or improve current standards of clinician competency. Perhaps, one of the most common critiques of a no-fault injury scheme is that, by removing personal accountability, they may fail to incentivise safer medical practices. Unlike tort-based systems, where the threat of litigation can act as a deterrent against negligent behaviour, no-fault models offer no such individual consequences; raising concerns that substandard medical conduct may go unchecked in the absence of legal repercussions.

A recent study done by Zabinski and Black found strong evidence that tort liability can reduce the incidence of negligent behaviour (15). They found that in American states that had implemented medical liability damage caps, there was an increase in certain non-fatal adverse patient safety events across multiple patient safety indicators (15). Their findings suggest that the increase in adverse events may be attributed to reduced financial liability from lawsuit caps, leading to lower investment in patient safety (15). This supports the conclusion that greater liability pressure can result in improved healthcare quality. Given that the purpose of an adversarial tort legal system is not to protect but rather to compensate, if the core objective is to deter careless conduct by relying on the threat of legal consequences, an adversarial-based compensation scheme would be more preferable. However, adopting such a regime appears counter-productive to patient safety because it incentivises healthcare professionals to practice defensive medicine.

Defensive medicine happens when clinicians make medical decisions mainly to protect themselves from being sued, rather than to benefit the patient. This can include ordering extra tests, seeking multiple specialist opinions, prescribing more medications than necessary, or referring patients for additional procedures (16). Some clinicians may even avoid performing high-risk treatments or caring for very ill patients altogether (16). These actions are undertaken to ensure the medical record is thorough and accurately reflects that the clinician fulfilled all expected responsibilities, serving as documentation in the event of any future allegations of negligence. However, while this might reduce the healthcare practitioner legal risk, it often comes at a cost to the patients’: patients’ can go through unnecessary—and sometimes risky—procedures without relevance to their illnesses. Moreover, clinicians may feel frustrated or burnt out from constantly practicing with legal fears in mind instead of focusing fully on patient care.

In an ideal world, the regime for addressing medical-negligence incidents would be one that maximises the welfare of injured patients by ensuring prompt access to treatment and rehabilitation services for those who suffer medical injuries, or at the very least minimising the risk of future adverse health outcomes. The key is to have a system and culture that values integrity as then it would empower healthcare professionals to make ethical choices when performing medical procedures and adequately address the patient’s needs following medical injury; such an emphasis can be achieved through a no-fault regime. This approach benefits both society and individual patients as it ensures open communication between patients and medical professionals resulting in faster rehabilitation access for the injured as well as fostering a no-blame culture that incentivises the disclosure of adverse healthcare events, which ultimately helps in preventing further healthcare-related harm from occurring. Importantly, research has found no evidence that patient safety in New Zealand’s no-fault scheme is any lower than in jurisdictions that rely on tort-based compensation, a testament to the robustness and effectiveness of the no-fault approach (14).

While the no-fault scheme is often praised for providing comprehensive coverage to all individuals injured by medical treatment, regardless of fault, its actual implementation is less generous than it might initially seem. According to the ACC—the statutory entity charged with administering New Zealand’s no-fault compensation scheme around 37% of medical treatment injury claims are declined for various reasons (17). Considering that over one-third of treatment injury claims are declined, it is conceivable that there is growing public discontent with the current system. This dissatisfaction arises because the promise of a no-fault approach to compensation, which is meant to provide valid restoration to all injured individuals, seems incompatible with its inherent purpose of being enacted.

Because ACC receives a fixed budget from central government and with the number of people needing support continues to rise, it has increasingly relied on the ambiguity of its governing legislation to deny treatment injury claims (18). By interpreting key terms narrowly or demanding overly stringent proof, ACC can refuse entitlement in borderline cases and thereby curb its own expenditure. This opportunistic application of imprecise statutory language not only shifts the burden back onto injured individuals but also undermines the scheme’s founding principle of accessible, fair compensation (18). Over time, such practices threaten the overall functionality of the no-fault system by eroding public trust, discouraging genuine claimants, and creating a patchwork of inconsistent outcomes that run counter to ACC’s mandate of no-fault, equitable and universal compensation. Consequently, as victims are barred by law from seeking personal remedies through the tort-based system, it ultimately leaves them without recourse and often forced to rely on overburdened social support services for their injuries.

Conclusions

New Zealand’s no-fault compensation scheme for medical injuries is a unique and progressive model that allows patients to receive compensation without going through costly and lengthy legal proceedings. By making the state responsible for compensation, the system reduces the burden on individuals and encourages a more supportive approach to care. However, despite its strengths, the scheme has weaknesses. The inconsistent denial of valid claims by the administering body shows a need for more transparency, fairness, and accessibility.

Acknowledgments

None.

Footnote

Provenance and Peer Review: This article was commissioned by the editorial office, Journal of Hospital Management and Health Policy. The article has undergone external peer review.

Peer Review File: Available at https://jhmhp.amegroups.com/article/view/10.21037/jhmhp-25-44/prf

Funding: None.

Conflicts of Interest: The author has completed the ICMJE uniform disclosure form (available at https://jhmhp.amegroups.com/article/view/10.21037/jhmhp-25-44/coif). The author has no conflicts of interest to declare.

Ethical Statement: The author is accountable for all aspects of the work in ensuring that questions related to the accuracy or integrity of any part of the work are appropriately investigated and resolved.

Open Access Statement: This is an Open Access article distributed in accordance with the Creative Commons Attribution-NonCommercial-NoDerivs 4.0 International License (CC BY-NC-ND 4.0), which permits the non-commercial replication and distribution of the article with the strict proviso that no changes or edits are made and the original work is properly cited (including links to both the formal publication through the relevant DOI and the license). See: https://creativecommons.org/licenses/by-nc-nd/4.0/.

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