Mace v Justice and Forensic Health Network; The GEO Group Australia Pty Ltd v AAI Limited t/as Vero Insurance [2016] NSWSC 803

A recent case highlights the need for health care providers to understand their medical malpractice and civil liability policy terms and conditions.

The facts

Mr Shayne Mace was taken on remand to Parklea Correctional Centre (Parklea) and was an inmate there from 3 March 2010 to 7 March 2010. The statement of claim alleged that while at Parklea, Mr Mace was displaying and/or expressing signs of acute mental illness, and on 7 March 2010 he threw himself from a landing in 5C Block of Parklea. He landed on his upper back and neck, was transported to Westmead Hospital by ambulance where he underwent a craniotomy to evacuate an extradural haematoma on 9 March 2010. Mr Mace, by his tutor Mrs Kathy Mace (his mother), brought claims in negligence against Justice & Forensic Health Network (Justice Health), the State of NSW and the Geo Group Australia Pty Limited (Geo) for these injuries. Geo was the entity which operated Parklea under an agreement it entered with the Commissioner of Corrective Services. Mr Mace’s claims were settled in December 2015.

Geo pursued a crossclaim against its insurer AAI Limited t/as Vero Insurance (Vero). Geo was insured under a “Medical Malpractice Civil Liability Insurance Policy” (Policy), and Geo made a claim under that Policy in May 2012 in respect of Mr Mace’s claim.

The insurance issues

The Court considered whether or not Geo’s claim fell within the terms of the Policy. Geo had contracted to provide the services of psychologists, counsellors and custodial staff at Parklea. Justice Health provided medical services for inmates and Mr Mace had received nursing services from Justice Health nursing staff while he was at Parklea. The question arose whether Mr Mace ought to have received the services of the counsellors or the psychologists that Geo employed at Parklea, so as to trigger the Policy.

The insuring clause of the Vero policy provided:

“The Insurer will indemnify the Insured against civil liability for compensation and the claimant’s costs and expenses in respect of any Claim or Claims first made against the Insured and notified to the Insurer during the Period of Insurance resulting from the conduct of the Health Care Services.” (our emphasis)

Health Care Services were defined as the “provision of medical services and treatment including services and treatment provided by psychologists and counsellors”. Those services involved inmate assessment. The Policy extended to claims concerning acts and also omissions in the conduct of those services and treatments.

There was no evidence during the time Mr Mace was on remand at Parklea from Wednesday, 3 March to Sunday, 7 March 2010 that he received any services from either the psychologists or the counsellors employed by Geo. Mr Mace’s complaint was that he should have received such services both on admission and subsequently, as this would have identified him as an inmate at risk of self-harm, and Geo would take steps to manage that risk. Vero argued that it was a result of the failures on the part of the corrective services staff that Geo employed at Parklea to refer Mr Mace to the psychologists or the counsellors. Vero contended that those failures were not failures which fell within the Policy, because they were failures in Geo’s operation of the centre, not in the provision of counselling and psychological services to Mr Mace.  Vero’s position was that the Policy only covered the acts and omissions of those who had actually supplied the services falling within the definition of health care services. This definition included services by psychologists and counsellors.

Contractual obligations

Geo was required by its contractual obligations to assess, identify and manage inmates at risk of self-harm in custody when they entered Parklea. Geo employed psychologists and counsellors to meet those obligations. There was no evidence that Mr Mace had been assessed for risk of self-harm when he entered Parklea, as Geo was obliged to do. Geo was not only contractually obliged to devise procedures for such assessments to be undertaken by its psychologists, but it was obliged to manage any risks identified and implement the management plan.

Vero’s position

The Court characterised Vero’s case, in essence, to be that Geo’s failure to have a psychologist or counsellor assess the risks of self-harm to Mr Mace was not something which occurred in the conduct of health care services. Vero submitted that failing to recognise the plaintiff was displaying symptoms of acute mental illness and failing to refer Mr Mace for treatment was not something for which it had insured Geo, because this was not something which occurred in the conduct of medical services. This was a failure of operational services, not medical services.

The decision

The Court did not accept Vero’s position. Geo owed a duty of care to Mr Mace and also was contractually obliged to provide staff psychologists and counsellors to assess inmates, to determine whether they presented risks of self-harm or mental illness. Geo was further contractually obliged to address the risks identified in those assessments of inmates, including Mr Mace.

The Court took the view that what was insured involved more than what occurred during the provision of the services of a particular psychologist or counsellor to a particular inmate. It included claims which resulted from how Geo conducted the provision of such services. In Mr Mace’s case, this was by failing to provide him with the services of its psychologists. Mr Mace’s claims against Geo were concerned with its failure to undertake a risk assessment and to manage his risk of self-harm. In the language of the insuring clause, that was a claim “resulting from” its “conduct” of the insured “Health Care Services”.

In this way, the Court found that the Vero Policy covered the failure of Geo to assess and manage Mr Mace’s risk of self-harm.  The Court found that the requirement to assess and manage the risk of self-harm was not a medical service which was the responsibility of Justice Health to provide. Geo’s omission was characterised as misadventure in the conduct of the health care services rather than a misadventure in the actual provision of health care services, so that the Policy cover applied. The case is the subject of an appeal to the NSW Court of Appeal.