Mace v Justice and Forensic Health Network; The Geo Group Australia Pty Ltd v AAI Limited t/as Vero Insurance

1. [1]

   By his tutor, his mother Ms Kathy Mace, Mr Shayne Mace brought claims in negligence against Justice and Forensic Health Network, the State and The Geo Group Australia Pty Ltd, for injuries which he had suffered in March 2010, while an inmate at Parklea Correctional Centre. Mr Mace’s claims were settled on terms approved by Harrison J on 17 December 2015. Geo now pursues a cross-claim against its insurer, AAI Limited trading as Vero Insurance with whom it had entered a “Medical Malpractice Civil Liability Insurance Policy”, under which it made a claim in May 2012, in respect of Mr Mace’s claim.

2. [2]

   In issue is whether Geo’s claim falls within the terms of the policy, Vero contending that the insuring clause of the policy had not been triggered by its claim.

3. [3]

   There was no issue as to the circumstances in which Mr Mace came to be in custody, on remand, in March 2010 at Parklea, which Geo then operated, or how he came to injure himself there on 7 March 2010. Geo operated the Centre under an agreement it had entered with the Commissioner of Corrective Services whereby, amongst other things, it had contracted to provide the services of psychologists, counsellors and custodial staff at the Centre. It was Justice Health which provided medical services for inmates held in custody there, through the medical and nursing staff which it employed.

4. [4]

   While at the Centre, Mr Mace received such nursing services, initially upon arrival and subsequently, when he received doses of methadone. Whether the evidence established that he had, or ought to have received, the services of either the counsellors or the psychologists Geo employed there, was in issue.

5. [5]

   Vero’s case was that Mr Mace had been medically assessed by Justice Health staff and that he had not requested any healthcare services from Geo, nor had he been provided with such services. The only interactions between Mr Mace and Geo having been on an operational/correctional basis, Geo’s claim could not trigger the insuring clause of the policy. His claim was, in the result, concerned with the quality of the non-medical correctional services he had been provided. To the extent it had any liability to him, it was for Geo’s failure, in its capacity as operator of the facility, to refer him to Justice Health for medical intervention, or otherwise to take measures to prevent him from coming to self harm.

6. [6]

   For reasons which follow, I am satisfied that Vero’s contentions cannot be accepted and that Geo’s case must succeed.

Mr Mace’s claims

1. [7]

   By his further amended statement of claim, Mr Mace pleaded against Geo, the third defendant:

2. [8]

   There was no evidence that during the time that Mr Mace was on remand at Parklea from Wednesday, 3 to Sunday, 7 March, he received any services from either the psychologists or the counsellors employed by Geo. Properly understood, his complaint was that he should have received such services, both on admission and subsequently, it being thereby that Geo identified inmates who were at risk of self harm and took steps to manage that risk.

The nature of Geo’s duty of care to Mr Mace

1. [9]

   Mr Mace’s Corrective Services file, to which GEO had access in 2010 when Mr Mace was transferred to Parklea, recorded that on the previous occasion he had been in custody in 2008, he had committed a serious act of self harm, for which he had been hospitalised. He was then identified to have been diagnosed and treated for schizophrenia.

2. [10]

   He was not, however, assessed as posing a risk of self harm, either on admission on 3 March 2010 at Parklea, or before he injured himself there on 7 March.

3. [11]

   Before being transferred to Parklea in 2010, Mr Mace had been placed in protective custody (SMAP), because he was fearful of other inmates. He remained in such custody at Parklea. Mr Mace advised on admission at Parklea that he suffered schizophrenia and that he was being treated with two identified drugs for that condition, but he was not provided with that medication. He was, however, identified as being on the methadone program and was provided with that drug at Parklea by Justice Health.

4. [12]

   There was no issue that Geo owed Mr Mace a duty of care. Vero accepted that Geo’s obligation to refer Mr Mace to the psychologists and counsellors who it employed at Parklea, when he was admitted into custody at Parklea, could have arisen either from its contractual obligations, or from the systems it had put in place for the management of inmates at the Centre.

5. [13]

   Vero's case was, however, that it was the result of failures on the part of the corrective services staff Geo employed at Parklea, to refer Mr Mace to either the psychologists or the counsellors on its staff there, which, in truth, lay at the heart of his claim. It contended that those failures were not ones which fell within the insurance policy, they being failures in Geo’s operation of the Centre, not in the provision of counselling and psychological services to Mr Mace.

What was insured?

1. [14]

   The insurance policy was a “Medical Malpractice Civil Liability Insurance Policy for Healthcare Establishments”. The Insuring Clause (at page 7) provided:

2. [15]

   There was no issue that Mr Mace’s statement of claim fell within the definition of the word “Claim” in the policy, but whether it was a claim “resulting from” Geo’s conduct of the insured “Health Care Services”, was in issue.

3. [16]

   “Healthcare Services” was defined in the definitions to mean “the healthcare services described in the Schedule, and no other, of the Policyholder”.

4. [17]

   The Schedule specified the “Healthcare Services” to be provided to be “[t]he provision of medical services and treatment including services and treatment provided by psychologists and counsellors.”

5. [18]

   The policy included an “Aggregation of Claims and Fidelity Claims” clause which included the provision that “[a]ll claims arising out of, based upon, attributable to or in respect of a single act, error or omission or series of acts, errors or omissions consequent upon or attributable to one source or original cause shall be considered to be a single Claim and shall attract one Excess” (at page 7).

6. [19]

   The policy also included specified extensions, including in respect of claims “resulting from any dishonest, fraudulent, criminal or malicious act or omission, including but not limited to Medicare Benefits Fraud, by any employee occurring or committed in connection with the Healthcare Services” (page 9) and those resulting from “the rendering of or failure to render first aid and assistance in an emergency situation or accident”, with a specified exception not here relevant (see page 11).

7. [20]

   While it was also common ground that claims that Healthcare Services which ought to have provided to inmates like Mr Mace, but were not, could also come within the policy, 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 for Geo, that is, the psychologists and counsellors it engaged to provide those services. That submission was supported by the “Professional Indemnity Insurance Proposal Form” which Geo had provided to it.

8. [21]

   In the Proposal Form, Geo was identified to be the name of the proposer; the professional services it provided were identified to be “Primary healthcare with limited minor surgery under local anaesthetic only”; the number of full-time and part-time “qualified/technical” and “administrative/other staff” were identified; turnover payable by clients was specified; as were amounts paid to subcontractors. Other Professional Indemnity Insurance in force, as well as potential risks and claims, were also disclosed.

9. [22]

   The percentage of activities conducted by Geo in specified areas was there identified to be “Primary healthcare, psychological and counsellor services in correctional facilities”, identified to be 85%, with drug/alcohol dependence specified to be 10% and psychiatric 5%. Employees identified in the ‘Professional Indemnity Supplementary Proposal For Medical centres and day surgeries” were physicians, dentists, licensed interns, registered nurses, enrolled nurses, clerical assistants, subcontracted psychologists, counsellor employees, doctors and dentists.

10. [23]

    Contrary to Vero’s case, it is thus difficult to see that the terms of the Proposal Form supports a construction of the policy as being confined to the acts and omissions of those who actually provided the medical, psychological and counselling services Geo was obliged to provide to inmates at Parklea, which fell within the definition of “healthcare services” in the policy.

11. [24]

    Such a construction would, in any event, require the words of the policy itself to be overlooked.

12. [25]

    The policy specifies that what is insured is not claims about the acts and omissions of those who provided the defined healthcare services, but rather claims made against Geo and notified to Vero which “result from the conduct” of the specified services. Consistent with the policy’s focus on claims arising from the conduct of those services, the proposal form which Vero devised sought information about those who might be involved in the conduct of those services. That was a wider group than the professionals who actually provided the specified services themselves.

13. [26]

    True it is that Mr Mace’s complaint was about Geo’s management of the operation of the Centre. That operation was not, however, confined to the provision of custodial services. Both by its contractual obligations and the systems it devised to meet those obligations, Geo had to provide inmates the professional services of psychologists and counsellors. Their services were provided, amongst other things, in order to identify and manage inmates who were at risk of self harm while in custody at the Centre, in order that Geo could meet both its contractual obligations and its duty of care to inmates.

14. [27]

    Mr Mace claimed that he was such a person and that Geo had negligently failed to provide him with those services, as it ought to have done. That, I am satisfied, is a claim resulting from Geo’s conduct of the Healthcare Services the subject of the policy.

15. [28]

    That conclusion is supported by the documents which govern Geo’s contractual obligations to provide those services to inmates at Parklea and the evidence as to the systems it put in place, in order to satisfy those obligations.

16. [29]

    Under its agreement with the Commissioner, Geo was engaged to perform the Services specified in the contract, in accordance with specified “Operating Specifications” (clause 2.1).

17. [30]

    “Services” is defined in clause 1.1 of the agreement to mean “the services to be performed by the Operator in respect of the operation of the Correctional Centre and the safe custody and welfare of the Inmates as specified in the Tender Response.” The “Tender Response” was defined to mean “the document comprising Schedule 14, Annexure B”.

18. [31]

    “Operating Specifications” was defined in clause 1.1 of the agreement to mean “the objectives and performance standards in relation to the operations of the Correctional Centre and performance of the Services set out in Schedule 14, Annexure A”.

19. [32]

    Clause 4 Compliance with Tender of the agreement also imposed an express obligation on Geo to comply with the terms of the tender, in addition to performing any other agreed obligations, subject to inconsistencies with the agreement, in which event the agreement prevailed (clause 4(b)).

20. [33]

    The agreed obligations were specified in clause 5 “Obligations of Operator” of the agreement. They included Geo’s completion of tasks agreed in a transition plan (clause 5.2); employment of staff and compliance with an approved staff deployment plan (clause 5.6); and providing the specified services, while complying with documents there specified, including the “Correctional Centre Operating Manuals” (clause 5.1). Clause 20 imposed obligations as to the preparation, approval and variation of those manuals.

21. [34]

    By clause 15 “Health Services” of the agreement, Geo was also obliged to facilitate the provision of Health Services by Justice Health, including by ways there specified. “Health Services” was defined in clause 1.1 to mean “those health, medical and dental services provide by Justice Health at the Correctional Centre”. Clause 15(d) also noted that the Commissioner and Geo were party to the Health Services (Tripartite) Deed, which, it was acknowledged, “may vary the terms of this Agreement in relation to the conduct of the Health Services”.

22. [35]

    In the tender response documents, Geo dealt with a range of matters it had been required to address in its tender and also identified a transition strategy for when it took over operation of the Centre. At the time of tender it was already the operator of the Junee Correctional Centre and also indicated in its tender that it would use the documents in operation there, to provide a Security Strategy and Security manual, prior to handover. What was contained in these documents was expressly dealt with in relevant respects in the agreement and Tripartite deed, which the parties later entered.

23. [36]

    In its response in the tender documents to the requirement to provide evidence and information as to ensuring a safe environment, Geo confirmed that it would provide effective strategies to reduce the incidence of self harm and suicide. It also provided detailed explanations as to what those strategies would include and how they would be managed and implemented, including by risk assessment and case management, beginning with “a battery of initial assessment, induction and screening activities” for inmates. Those involved in those processes were identified to include “Healthcare staff” and “Psychological services staff”, in what was identified to be “a resource intensive period”.

24. [37]

    The “Reception, Screening and Induction of Inmates Transition Strategy” indicated Geo’s confidence that it was able to assume responsibility for the reception, screening and induction function at the Centre and that it would agree with Justice Health, in principle roles and responsibilities. The need to “ensure inmate’s health safety and welfare by gathering relevant information and assessing potential risk upon entry into the correctional environment” was also there identified, as was the need for a profile of the inmate’s social, educational, alcohol and other drug use, physical and mental health background and status to facilitate initial case planning”.

25. [38]

    In the tender Geo also identified various assumptions which it had made about the health services Justice Health would provide at Parklea, as part of the reception process, including as to medical screening by Justice Health staff. The formal assessment tools which were identified to be used in the initial three day induction program included “Clinical, psychological and mental health status”, using psychological tests determined by a Departmental committee.

26. [39]

    The management of inmates identified to be at risk was dealt with in part 22.1.22 of the tender. The risks of this aspect of the transition being ineffectively managed were there identified and so, prior to handover, Geo undertook to understand the role played by Justice Health in current arrangements at the Centre and to agree in principle roles and responsibilities, for when management arrangements migrated to those it proposed. It also accepted that it would “positively identify all at risk inmates on a continual basis leading up to handover” and on handover would take formal responsibility for their management, maintaining existing arrangements until operational stability was maintained.

27. [40]

    The applicable Departmental polices were also identified in the tender. Geo’s response was based on its Junee procedures. Management of at risk offenders was identified to require a significant healthcare element, requiring the involvement of Justice Health staff, which was to act as the “healthcare department” at Parklea. Geo intended to agree the procedures, protocols, interfaces and resources with Justice Health prior to handover.

28. [41]

    It was also proposed that all newly arrived inmates were to be automatically identified as being at risk and re-assessment was to occur at specified intervals. The tender also contemplated that the proposed risk assessment of inmates would be performed by a member “of the healthcare team” (page 11). At page 7 it was indicated that:

29. [42]

    Vero relied on this to submit that it was Justice Health, not Geo, which was responsible for identifying at risk inmates on entry to Parklea.

30. [43]

    The Tripartite Deed, however, took up various matters dealt with in the tender documents. The Deed dealt expressly with the facilitation of the health services which Geo had agreed that Justice Health would provide at the Centre. They were specified in Schedule 1 to the Deed to be in respect of General Health, Mental Health, Drug and Alcohol Services, Health Promotion, Infection Control and Training.

31. [44]

    What may not be overlooked, in resolving what here lies in issue, is that this Schedule expressly excluded in clause 8, from the services Justice Health was to provide, psychological services, drug or alcohol counselling and any other service Geo was engaged to provide under the operating agreement. As to mental health, Schedule 1 to the deed also provided that Justice Health will “(a) assist the Operator in the management of Inmates who are at risk of self harm or suicide, including referral for ongoing treatment services”.

32. [45]

    These provisions of the Tripartite Deed confirm that what was finally agreed was that it was Geo which would identify and manage inmates at risk of self harm, with Justice Health’s assistance, contrary to what it had proposed in its tender.

33. [46]

    Consistently with what the Tripartite Deed provided for, the “Operating Specifications” appearing in Schedule 14 of the Deed, include specifications as to operator management and operations. Clause 1.1.1 identifies a duty of care which both the Department of Corrective Services and Geo owe inmates and staff, “to prevent injury” arising from identified things, including “self harm”. There specific service requirements which Geo was obliged to provide include:

34. [47]

    The operating specification for “offender management and operations”, made express provision for reception, screening and induction of inmates. It required Geo to provide a program for inmates received at Parklea which complied with Departmental policies and procedures and ensured (at clause 1.3.4(3)) that:

35. [48]

    This specification also required Geo to provide a system for ensuring the health safety and welfare of all new receptions into the Centre by means specified in clause 1.3.4(4):

36. [49]

    The operating specifications also dealt at clause 1.20 with “Management of Special Needs Inmates”, there identified to include remand inmates; those with intellectual or other disabilities; those at risk of self harm; and those suffering a mental illness. These specifications all applied to Mr Mace.

37. [50]

    Geo was obliged to ensure that their needs were catered for at the Centre by means specified in clause 1.20.4, including by:

38. [51]

    For those at risk of self harm Geo was obliged by clause 1.20.4(12) manage and address the needs of inmates at risk of deliberate self harm by:

39. [52]

    In the case of mental illness Geo was obliged by clause 1.20.4(15) manage and address inmate needs by:

40. [53]

    The operating specifications also dealt expressly with the management of those at risk of harming themselves, commencing with risk assessment. That was identified in clause 1.22 to be the “basis of a management plan for the care of the offender” It was there stated:

41. [54]

    By that specification Geo was also obliged under clause 1.22.4(1) to develop and implement a protocol for the identification, assessment and management of offenders at risk of self harm, which set out procedures defining its duty of care and ensuring the highest quality of response by, amongst other things:

42. [55]

    The operating specifications also dealt with “Offender Services and Programs”, clause 1.44.2 requiring Geo to have a screening and induction program and to assess immediate risks and needs on entry, including:

43. [56]

    In the result, it is apparent that what was finally agreed between the Commissioner and Geo required it to assess, identify and manage inmates at risk of self harm in custody when they entered Parklea. On the evidence it employed psychologists and counsellors to meet those obligations.

44. [57]

    There was no issue that Geo was contractually obliged to provide a reception, screening and induction program, which was to commence within the first two hours of an inmate’s arrival and ran in stages over the following 14 days. Vero relied on clause 22.1.3 Reception, Screening and Induction of Trainees of the tender response document to submit that this involved not only a medical screening by Justice Health, but also a suicide and self harm risk assessment undertaken by Justice Health. As I have already explained, however, the tender documents gave way to the terms of the agreement and tripartite deed which the parties later entered and which imposed the relevant obligations on Geo.

45. [58]

    The evidence of the operation of Geo’s reception system at the time that Mr Mace was injured came from Mr Jones, a correctional manager and Ms Azzopardi, a psychologist.

46. [59]

    Ms Azzopardi’s contract of employment, which she entered in December 2009 was in evidence, as was that of a counsellor. Consistently with Geo’s obligations under the operating agreement and Tripartite Deed, her position description specified that her duties and responsibilities included:

47. [60]

    The counsellor’s position description included duties and responsibilities of:

48. [61]

    In his affidavit Mr Jones said that he had reviewed Geo’s records, which revealed that Mr Mace had been first classified SMAP on 28 February at MRRC. It was then standard practice for that classification to remain in force for six months, but on transfer to another facility, it was reviewed. That occurred on his arrival at Parklea. It was not due to be reassessed until 27 August.

49. [62]

    Mr Jones also said that the standard “Incoming Escort Checklist” was completed for Mr Mace, by reference to the Offender Integrated Management system (OIMS), a computerised data base recording relevant data, including alerts and comments and that:

50. [63]

    In his oral evidence Mr Jones said that at the time of Mr Mace’s arrival, Parklea was still in transition from being managed by Corrective Services, to being managed by Geo. Some Junee policies were then in operation. Initial case management envisaged that initial case planning and classification would be completed within three business days of the inmate’s arrival. Geo’s psychologists and counsellors were also involved in classification.

51. [64]

    Mr Jones said that on arrival the Checklist would be used by staff in reception, to ensure that the inmate was placed in the correct area. He explained that inmates identified to be at risk of serious mental illness, or self harm were referred to Geo psychologists and Justice Health staff. Alerts for medications such as methadone were also recorded and passed on to Justice Health, but not all medications were there noted. Health assessments were conducted by Justice Health on the first day of arrival and psychologists and councillors reviewed all inmates the following day. Each inmate also had a separate case management team.

52. [65]

    Mr Jones also said that a reception committee was eventually established at Parklea, on which psychologists had a role. He was not sure if psychologists were meeting with every inmate prior to the establishment of that committee, but he also explained that risk assessment was also carried out on an ongoing, daily basis by Justice Health and correctional officers.

53. [66]

    In her affidavit Ms Azzopardi said that:

54. [67]

    Ms Azzopardi also said that while the standard list of questions was not finalised until after March 2010, based on her experience, standard practice of psychologists as at March 2010 at the reception meetings was to ask inmates questions about self harm, any history of mental issues, current mood and prescribed medications. She could not recall, however, whether she had been present at the reception meeting with Mr Mace.

55. [68]

    In her cross-examination, Ms Azzopardi said that in March 2010 there were psychologists and counsellors employed at Parklea, who she identified; that it was her usual practice to take notes when interviewing inmates; that they remained on the inmate’s case management file, not the Justice Health file; that she could not recall having been involved in an induction or counselling session with Mr Mace; and that she could not remember having met him, or having seen his medical or psychological file. She also agreed that the ways that she could have come to see an inmate included as the result of referral from the inmate, a correctional officer or Justice Heath, another psychologist or counsellor. Ms Azzopardi also agreed that psychologists had a role in the reception committee established after March 2010.

56. [69]

    Ms Azzopardi also agreed that it was possible that psychologists only became involved in the inmate receptions and induction process, after the reception committee was established. If that be correct, it would seem to have involved a breach of Geo’s contractual obligations, earlier discussed.

57. [70]

    There was no evidence of a record evidencing that Mr Mace had been assessed, as Geo was obliged to assess him, when he entered the centre for risks of self harm and as a result of his mental illness. It was not only contractually obliged to devise the procedures earlier discussed for such assessments to be undertaken by its psychologists and the management of any risks thereby identified, but also to implement them.

58. [71]

    Mr Mace’s file recorded that he had been medically assessed by Justice Health as Geo’s procedures envisaged and that he was receiving methadone and medication for depression and psychosis, but they do not evidence that he was assessed by Geo for his current risk of self harm, as it was obliged to do.

Geo’s claim is covered by the policy

1. [72]

   When it tendered for the conduct of the operation of Parklea, Geo recognised that as operator, it would owe inmates such as Mr Mace a duty of care. It sought to address that duty, as well as the contractual obligations it later entered, by the procedures it devised. They involved firstly, assessment of inmates by the psychologists and counsellors it employed on entry to the Centre and subsequently, by management of any risks identified. Thereby Geo set out to meet both its duty of care and its contractual obligations to identify and manage the risks which the inmates posed, including the risk of self harm.

2. [73]

   Geo obtained insurance cover from Vero, for claims resulting from the conduct of the Healthcare Services specified in the insurance policy, namely 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 both acts and omissions in the conduct of those services and treatments.

3. [74]

   Vero’s case was, in essence, that a claim about Geo’s failure to have one of its psychologists or counsellors assess the risks which Mr Mace presented, on his admission to the Centre, was not something which occurred in the conduct of those services. It submitted that Mr Mace’s real complaint was that in the four days that he had been an inmate at Parklea, Geo had failed to recognise that he was displaying symptoms of acute mental illness and failed to refer him for treatment. That, it said, was not something for which it had insured Geo.

4. [75]

   That submission may not be accepted. Geo not only had a duty to Mr Mace, it was contractually obliged not only to have on its staff psychologists and counsellors able to assess inmates to determine whether they presented risks of self harm or mental illness, but to have them actually undertake such assessments, by the systems it had devised to ensure that occurred. It was also then contractually obliged to address the risks so identified in relation to particular inmates, including Mr Mace. Such assessments were amongst the healthcare services it had employed psychologists and counsellors to provide to inmates, as was the treatment which that staff then provided to inmates so identified.

5. [76]

   An insurance policy such as this has to be interpreted to give it a business like interpretation, as discussed in McCann v Switzerland Insurance Australia Ltd (200) 203 CLR 579 at 589 at [22]. That requires attention to be paid to the language which the parties have used in their agreement, the commercial circumstances which the document addresses and the objects it is intended to secure. Vero contended that the background circumstances established that the parties’ objective intention was to insure Geo “for misadventures in the actual provision of healthcare services”. That was not, however, what was insured. Approaching the objective intention of the policy in this way, what was insured was for “misadventures in the conduct of the healthcare services” Geo provided inmates at the Centre.

6. [77]

   In order to trigger the policy there must be a causal connection between a claim and the conduct of the insured healthcare services Geo provided at the Centre. While undoubtedly there must be “a common sense evaluation of the causal chain” as discussed by Kirby P in Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452 at 463G; QBE Insurance Ltd v Nguyen [2008] SASC 138 at [151], what cannot be overlooked is the words used in the particular policy. Here the phrase used in the insuring clause is claims “resulting from”, not the “actual provision” of the insured services to a particular inmate, but from the “conduct” of those services. It follows 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, by failing to provide him with the services of its psychologists.

7. [78]

   The insured services were conducted by Geo in order that the risks which inmates posed at the Centre were assessed by the psychologists it employed on the inmate’s arrival, so that they could be managed in appropriate ways, including by the provision of further services to the inmate by its psychologists and counsellors. The services were so conducted in order that Geo could address the risks in respect of which Geo owed inmates a duty of care and in order to need its contractual obligations. Mr Mace’s claims against Geo were concerned with its failure to undertake such an assessment and to provide him with such further services. That was a claim “resulting from” its “conduct” of the insured “Healthcare Services”.

8. [79]

   In the result Geo’s case must succeed.

9. [80]

   The parties should file the orders which reflect these conclusions within 7 days.

10. [81]

    The usual order as to costs is that they follow the event. In this case that is an order in favour of Geo. I will hear the parties if they seek any departure from the usual order.