Claim Farming and the WCRA

Law Practices acting for claimants are now required to complete and provide a law practice certificate confirming they have not engaged in claim farming.

Claim farming is the term given to various practices that have been increasing over the last few years in the personal injury law space. At their core, claim farming practices attempt to induce or otherwise convince an injured person to start a personal injury claim. This will generally take the form of personally contacting a potential claimant in an attempt to persuade them to commence a claim. Specialised businesses known as 'claim farmers' have also started to emerge. These businesses tend to take a fee in exchange for providing contact details for potential claimants to law firms.

However, following the commencement of the Personal Injuries Proceedings and Other Legislation Amendment Act 2022 (Qld) on 31 October 2022, new offence provisions have been added to, inter alia, the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (WCRA) which seek to reduce and combat the practice of claim farming.

The provisions make it an offence to:

1. Give or receive any consideration for referring a claimant or potential claimant; and
2. Personally approach or contact (including by mail, telephone, email or other forms of electronic communication) a potential claimant to induce or convince them to make a claim.

Law Practice Certificates

Law practices that act for claimants are now required to complete and provide a law practice certificate (LPC) at certain stages of statutory and common law claims, confirming that they have not engaged in claim farming or contravened the provisions. The LPC must be signed by the supervising principal and verified by statutory declaration.

Law practices are required to give LPCs at various stages throughout a claim.

Focusing on the WCRA, at an overview, a law practice must give an LPC when:

1. A law practice is retained to act in relation to a worker’s claim for compensation and provides a direction to pay compensation to an account held by the law practice. If the direction to pay is not accompanied by an LPC, the insurer must request an LPC from the law practice, which must be provided with 7 days. See section 325J of the WCRA. Further, unless the law practice has previously provided an LPC with a direction to pay as mentioned above, the LPC must be provided within 7 days of the payment of any lump sum compensation. See section 325J of the WCRA.
2. A Notice of Claim for Damages (NOCD) under section 275 of WCRA is given. The NOCD must be accompanied by an LPC. See section 275(7A) of the WCRA.
3. An NOCD is provided, and is not accompanied by an LPC, and compliance is waived or deemed. The LPC must be provided within month of waiver of compliance. See section 325K of the WCRA.
4. A law practice is retained after the issue of the NOCD. The LPC must be given within one month after the practice is retained. See section 325I of the WCRA.
5. A claim is finalised by acceptance of an offer or a judgment is given. The LPC must be given within 7 days thereafter. See section 325L of the WCRA.
6. A law practice sells all or part of the business to another law practice before an application for compensation or NOCD has been given. An LPC must be given before the claimant is referred to the new law practice. If the new practice does not receive the LPC it must notify the insurer. See section 325M of the WCRA.

A summary list of requirements regarding the giving of LPCs published by the Office of Industrial Relations can be found here.

The requirements are not retrospective. The provisions came into effect from 31 October 2022, and will apply to the next triggering step taken on or after that date.

Reporting Non-Compliance

The regulator tasked with ensuring compliance for the WCRA provisions is the Workers Compensation Regulator at the Office of Industrial Relations (OIR). All insurers, and by virtue the lawyers that represent them, are required to report any actual or believed contravention of the new claim farming provisions to the OIR.

Insurers are required to report every contravention of the new provisions, including:

1. When a law practice fails to provide an LPC as required;
2. Provision of an LPC that appears to be misleading or false in a material way;
3. Giving or receiving compensation or consideration for claim referrals; and
4. Approaching or making contact with a potential claimant to induce or convince them to commence a personal injury claim.

The OIR website advises that insurers are required to notify the Workers’ Compensation Regulator of non-compliances with the requirement to provide an LPC within 7 business days of the due date. The reports must be made to the OIR using the standard portal, which can be found here.

To report a contravention of the new WCRA provisions, the following information will need to be provided when utilising the above-mentioned portal:

1. Name of relevant insurer and contact details;
2. Details of the law practice that contravened the new provisions, along with contact details;
3. Name, date of birth and relevant claim number for the worker/claimant/plaintiff;
4. What kind of contravention is being reported; and
5. Details supporting the contravention (such as due dates for the LPC, received dates of the LPC (if applicable), relevant section contravened, along with any documentation supporting the contravention and/or the insurers obligation to follow-up etc.).

These new provisions aim to tackle the growing issues relating to claim farming, and bring about quite severe consequences to those law practices that do not comply. Insurers play a key role in reporting any contraventions of the new provisions, in turn ensuring their successful implementation and enforcement.