Calculating medical compensation claims can be complex, as payouts depend on injury severity and life impact. These cases often involve significant financial consequences, such as lost income and medical expenses. Seeking advice from experienced compensation lawyers is essential to manage the process and secure fair compensation.
How to calculate medical negligence compensation in Victoria
In Victoria, medical negligence compensation is governed by the Wrongs Act 1958. To calculate compensation, the court considers:
- Past economic loss (lost wages, superannuation, lost employment opportunities)
- Future economic loss (estimated future income and earning capacity loss)
- Past medical costs (including previous hospital, GP and specialist expenses)
- Future medical and rehabilitation costs (ongoing treatment, medication and support services)
- Non-economic loss (pain, suffering, emotional distress and reduced quality of life)
- Care and assistance (costs of care from family members or professionals)
- Legal costs and disbursements (lawyer fees, expert reports and court filing fees)
Each of these is assessed individually and must be supported by medical evidence, financial records, and expert opinion. Some components, like general damages for pain and suffering, are capped in Victoria and require the injury to meet a “significant injury” threshold under the Wrongs Act 1958.
Is there a maximum amount of compensation that can be claimed for medical negligence in Victoria?
The court applies statutory caps and thresholds to these damages. For instance, the maximum amount for compensation for non-economic loss if capped at $759,510 as of 1 July 2025. Additionally, a “significant injury” must be established to claim non-economic damages. It’s essential to consult with experienced legal professionals to understand the complexities of medical negligence claims and ensure appropriate compensation.
Certain components of a medical negligence claim, are assessed based on the individual circumstances of the claimant, including the severity of the injury, the impact on the claimant’s life, and the need for ongoing care and treatment.
It’s important to note that the total compensation amount is calculated based on several factors, including lost wages, previous medical bills, ongoing rehabilitation costs, personal impacts (such as anxiety and stress) and legal fees and disbursements.
Each case is unique, and compensation is determined on an individual basis, rather than an ‘average payout’. Payouts in Australia can range from a few thousand dollars through to over a million dollars.
Given the complexity of medical negligence cases and the statutory caps and thresholds that apply, it’s advisable to consult with experienced compensation lawyers to understand your entitlements and manage the claims process effectively.
How a medical compensation payment may look
Tom, a 45-year old warehouse worker, underwent routine surgery but developed a serious post-operative infection that went undiagnosed by his medical practitioner. As a result of the delay in treatment, Tom suffered physical injuries resulting in permanent mobility issues and could no longer return to that type of physical work. He brought a medical negligence claim with the help of a medical negligence team of compensation lawyers.
His total compensation was calculated based on several key areas. He received $320,000.00 for lost past and future earnings, reflecting his reduced employment opportunities. An additional $35,000.00 covered previous medical expenses and $40,000.00 for ongoing treatment, rehabilitation and surgery. Tom was also awarded $260,000.00 in non-economic loss damages (also known as pain & suffering or general damages) to compensation for his chronic pain, anxiety (psychiatric injury) and reduced quality of life. A further $15,000.00 was included for home care and domestic assistance provided gratuitously by family members.
His legal fees and disbursements, such as medical reports and expert evidence, were also covered as part of the settlement. Tom’s case shows how compensation is tailored to reflect a plaintiff’s unique circumstances.
How to establish a medical negligence claim in Victoria
A medical negligence claim is a type of personal injury claim made when a healthcare provider breaches their duty of care, causing harm. To establish a valid claim, you must prove that the provider acted negligently and that this negligence directly caused your injury. These claims often require expert medical evidence and legal advice to support your case. A medical negligence lawyer can assess your circumstances and guide you through the process.
Types of medical negligence claims
Medical negligence can occur in various ways, including misdiagnosis, delayed diagnosis, surgical errors and incorrect medication or treatment. Claims can also arise from psychiatric or psychological harm caused by negligent care.
In more severe cases, permanent impairment or disability may result, leading to long-term medical needs and financial burden. Victims can claim both economic losses and non-economic damages such as pain and suffering. Payouts vary widely depending on the nature and impact of the injury.
Medical reports and medical evidence – how they support your claim
Medical reports and evidence are key components of any medical negligence or public liability claim. Under personal injury law, they help prove that a medical professional’s actions caused your physical or psychological injuries.
These records document medical appointments, treatment costs, rehabilitation needs and ongoing pain. They also support claims for future care, lost future earnings and the financial impact on family members. Your compensation amount is calculated based on several factors, and substantial medical evidence helps ensure informed decisions and fair outcomes.
Severity of an injury, impact on life and other variables
In medical negligence claims, compensation reflects both the severity and impact of the injury on a person’s life and their economic losses. The severity of injury, such as permanent disability or chronic pain, affects non-economic damages like pain and suffering. This is assessed independently from economic loss and influences the overall compensation amount.
Economic losses vary widely based on personal circumstances. For example, a high earner who can no longer work due to injury may claim substantial past and future wage losses, reflecting their prior income and career trajectory. In contrast, someone not employed at the time of injury may receive little or no compensation for lost wages, but may still be compensated for medical costs, rehabilitation, and non-economic impacts like emotional distress.
Other variables include age, employment prospects and whether the injury affects the ability to perform household duties or care for family members. Courts consider all these factors to tailor compensation fairly, ensuring it matches the individual’s unique situation.
Variations in medical negligence compensation across Australia
Medical negligence laws and compensation limits vary depending on the state or territory where the injury occurred. Each jurisdiction has its own legislation governing personal injury claims, including medical negligence.
Victoria
Under the Wrongs Act 1958, specifically caps non-economic loss (pain and suffering), with a maximum payout set by law. Economic losses, such as medical costs and lost wages, are generally uncapped.
New South Wales
Based on the Civil Liability Act 2002, there are caps for general damages for non-economic loss, but at a different amount. Thresholds for serious injury assessments may also vary.
Queensland
Queensland applies the Civil Liability Act 2003, which sets caps and guidelines for calculating damages in medical negligence claims.
Given these variations, consulting with a lawyer familiar with state-specific laws is crucial to understanding your rights and entitlements in a medical negligence claim.
How is whole person impairment calculated in Victoria?
In Victoria, whole person impairment or WPI measures the permanent impact of an injury on overall health and function. Once the condition has stabilised, usually after 12 months, a qualified medical practitioner assesses the injury following the AMA Guides. They assign a percentage rating reflecting the impairment’s severity.
This rating helps determine compensation amounts under the legislation. To claim non-economic loss, a minimum WPI of 5% for physical injuries or 10% for psychiatric injuries is needed. WPI is essential for medical negligence claims. Consulting a specialist lawyer is recommended for guidance.
Injury stabilisation and WPI
Injury stabilisation occurs when an injury has healed enough that no significant improvement (or further worsening) is expected. At this stage, doctors evaluate the lasting effects of the injury. WPI is a percentage rating that reflects the permanent loss of function in the body after injury stabilisation. WPI helps determine disability levels and compensation by measuring how much the injury impacts a person’s overall functional abilities.
Other important considerations when calculating medical negligence payouts
Other important considerations when calculating medical negligence payouts include the broader financial, legal, and social impacts the compensation may have on the claimant’s circumstances.
Tax Obligations
Compensation for personal injury is generally not taxable in Australia. However, if the money earns interest once invested, that interest may be taxed. Payments attributed to lost income could also be assessable, depending on how the payout is structured.
Centrelink
A medical negligence payout may impact Centrelink entitlements. If the compensation includes lost earnings, Centrelink may apply a “compensation preclusion period” during which the person is ineligible for payments. The length of this period depends on a specific formula.
Superannuation
If an injury results in total and permanent disability, a claim may be made through super funds. Any super payout may also carry tax implications depending on the individual’s age and withdrawal method.
WorkCover
If the injury occurred in a workplace context, WorkCover may be the primary scheme for compensation. In cases where both WorkCover and medical negligence claims apply, the payments must be coordinated to prevent duplication or overcompensation.
Veterans’ Affairs (DVA)
Compensation payments may affect existing DVA pensions or entitlements for Veterans. If a significant payout is received, the Department of Veterans Affairs should be notified, as this could change the veteran’s eligibility for ongoing benefits.
Family Tax Benefit (FTB)
A medical negligence settlement could affect Family Tax Benefit payments if it alters the claimant’s income or financial situation. This may result in a reduction or reassessment of benefit amounts under the income test rules.
Medicare or Private Health Insurance
Before a compensation payout is finalised, Medicare or a Private Health Insurer may require repayment of benefits it has previously covered for the injury. A Notice of Past Benefits is typically required to calculate and settle any recovery amount owed.
Public Trustee or Court Orders
If the injured person is a minor or lacks legal capacity, courts may order the compensation to be held in trust, usually managed by the Senior Masters Office of the Supreme Court of Victoria. This ensures the funds are protected and used appropriately for the individual’s benefit.
Every situation is different, and it’s wise to seek financial advice as well as legal advice when you are calculating how much compensation you may be eligible for – and how much of it you will receive.
Need help calculating medical negligence compensation in Australia?
Understanding how medical negligence compensation is calculated can be complex, especially with factors like loss of income, future care needs and legal obligations. You don’t have to do it alone; there is help available to secure the compensation you deserve. If you’ve been affected by medical negligence, speak to one of our skilled and compassionate medical negligence lawyers to get accurate advice tailored to your situation.