Queensland’s first successful claim farming prosecution: what the $1 million fine means.
On 7 February 2023, a Brisbane Magistrate convicted Accident Management Solutions Pty Ltd (AMS) on 94 counts of receiving consideration for claim referrals, and fined the company a total of $1,005,000. It was the first successful claim farming prosecution in Queensland, and the first in Australia under legislation of this kind. The company had already entered liquidation in June 2022. The conviction was recorded anyway.
The Motor Accident Insurance Commission (MAIC), which brought the prosecution, described the outcome as a warning to others in the industry. The more instructive question is what claim farming actually is, why it was banned, and what the current enforcement position looks like.
What claim farming is and why it is illegal.
Claim farming is the practice of cold-calling people, typically after a road accident, to encourage or pressure them into making a personal injury claim, and then selling or referring that claim to a law firm or claims management company in exchange for a fee. The person being called has not sought legal advice. They may not have decided whether to make a claim at all. The “farmer” profits from the referral regardless of whether a claim is appropriate or succeeds.
The conduct harms genuine claimants in several ways. Referral fees inflate the cost of running claims, which ultimately flows through to compulsory third party (CTP) insurance premiums. Victims who are steered into making claims by cold-callers, rather than by their own informed decision to seek advice, may end up with arrangements that do not serve their interests. And the aggressive tactics used by claim farmers, including repeated unsolicited calls and the use of personal information obtained without consent, represent a straightforward invasion of privacy.
Queensland banned claim farming through a sequence of legislative amendments. The Motor Accident Insurance Act 1994 (Qld) was amended in December 2019 to prohibit receiving consideration for CTP claim referrals. The Personal Injuries Proceedings Act 2002 (Qld) (PIPA) and the Workers’ Compensation and Rehabilitation Act 2003 (Qld) were subsequently amended in June 2022 to mirror those prohibitions across all Queensland personal injury schemes. The offences in PIPA carry penalties that made the AMS prosecution possible.
The AMS prosecution in detail.
MAIC charged AMS in May 2022 with 94 counts of receiving consideration for claim referrals or potential claim referrals, and one count of contravening an information requirement. The charges related to conduct between the 2019 legislative amendments and the company’s entry into liquidation.
Magistrate Peter Saggers convicted AMS on all 94 claim farming counts and the information requirement count, imposing fines of $1,000,000 and $5,000 respectively. All convictions were recorded. The fact that AMS was in liquidation did not prevent the prosecution from proceeding or the convictions from being entered. MAIC stated publicly that it continued the prosecution to promote awareness of the unlawfulness of claim farming and to signal that enforcement would follow conduct of this kind.
Since 2019, MAIC has reported that over 1.5 million Queenslanders were targeted by claim farmers using the personal information of people involved in road accidents. The legislative changes and the AMS prosecution represent the enforcement response to that scale of conduct.
The current position.
Claim farming is now prohibited across all three major Queensland personal injury schemes: CTP claims under the Motor Accident Insurance Act 1994 (Qld), general personal injury claims under PIPA, and workers’ compensation claims under the Workers’ Compensation and Rehabilitation Act 2003 (Qld). The prohibition applies to receiving any consideration, directly or indirectly, for referring or introducing a person to a lawyer or claims manager in connection with a potential claim.
The AMS conviction established that MAIC will prosecute, that the courts will convict, and that liquidation of the offending entity is not a shield against criminal consequences. Whether that deters future operators in this space remains a question for enforcement over time, but the legal framework is now clear and the enforcement precedent has been set.
For anyone who has been contacted by a claim farmer, the conduct can be reported to MAIC. For anyone who received legal advice through what turned out to be a referral arrangement, the independence and quality of that advice is worth reviewing with a lawyer of your own choosing.
If you would like to discuss your matter, you can book a consultation or call (07) 5554 6116.
