What Is a No-Fault Compensation Scheme and Should Hong Kong Adopt One for Medical Injuries?

Disclaimer: This article provides general information only and does not constitute legal advice. For advice specific to your circumstances, consult a Hong Kong solicitor.

In February 2025, the Hong Kong Hospital Authority (HA) reported 79 reportable adverse medical events for the 2023-24 financial year, a figure that has remained stubbornly consistent over the past five years. Each of these events — from retained instruments post-surgery to wrong-site operations — triggers a familiar pattern: the patient or family must prove negligence in court to secure compensation. This fault-based litigation pathway, governed by common law principles of tort, imposes a burden of proof that many injured patients cannot meet. The average medical negligence claim in the Court of First Instance takes 3 to 5 years to reach trial, according to the Judiciary’s 2023 Annual Report. Against this backdrop, the question of whether Hong Kong should adopt a no-fault compensation scheme for medical injuries has moved from academic debate to a matter of policy urgency. The New Zealand model, the Swedish patient insurance system, and the Taiwanese birth injury scheme each offer a different template. This article examines what a no-fault scheme is, how it operates in comparator jurisdictions, and the legal and practical obstacles to its adoption in Hong Kong.

What a No-Fault Compensation Scheme Is

A no-fault compensation scheme is a statutory mechanism that provides financial compensation to individuals who suffer injury from a specified activity or event, without requiring the claimant to prove that any party was negligent or at fault. The legislation defines the compensable event, the injury threshold, and the scale of benefits. The claimant must show only that the injury occurred and that it falls within the scheme’s scope.

The Core Design Features

The scheme replaces the tort system for the covered category of injuries. The claimant gives up the right to sue in court in exchange for a guaranteed but typically lower level of compensation. The scheme is funded by a levy, a government appropriation, or a combination of both. In the medical context, the scheme may be funded by the HA, private hospitals, or a dedicated insurance pool.

The legislation sets a fixed tariff for specific injuries. For example, permanent nerve damage from a spinal injection may attract a fixed sum of HK$500,000. Loss of a limb may attract HK$1.2 million. These figures are not negotiable and do not account for pain and suffering in the same manner as a court award. The scheme may also cover economic loss, such as loss of earnings and medical expenses, but usually within a statutory cap.

The Key Difference from Tort Litigation

Under the current fault-based system, the plaintiff must prove, on a balance of probabilities, that the healthcare provider breached a duty of care and that this breach caused the injury. This requires expert evidence on the standard of care, which is costly and difficult to obtain. In Hong Kong, the cost of a medical negligence trial in the Court of First Instance can exceed HK$1 million in legal fees alone, as noted in the 2022 Report of the Working Group on Medical Malpractice and Litigation.

A no-fault scheme eliminates the need to prove breach of duty. The claimant must only establish causation: that the medical procedure caused the injury. This lowers the evidentiary bar significantly. The trade-off is that the claimant accepts a fixed tariff rather than a court-assessed award that could be higher if the defendant’s conduct was particularly egregious.

How Comparator Jurisdictions Operate

Three jurisdictions offer distinct models that Hong Kong policymakers have studied. Each model reflects different legal traditions, funding arrangements, and political compromises.

New Zealand: The Comprehensive Model

New Zealand’s Accident Compensation Corporation (ACC) scheme, established under the Accident Compensation Act 2001, covers all personal injuries, including medical injuries, on a no-fault basis. The scheme is funded by levies on employers, employees, motor vehicle owners, and the government. The claimant cannot sue for damages for covered injuries.

The scheme covers “treatment injury” — injury caused by medical treatment, as opposed to the underlying condition. The injury must not be a necessary part of the treatment. The scheme pays for treatment costs, loss of earnings (up to 80% of pre-injury income, capped at approximately NZD 130,000 per year as of 2024), and lump sums for permanent impairment (up to NZD 150,000 for a 100% impairment rating).

The ACC model is comprehensive but expensive. In the 2022-23 financial year, the ACC collected NZD 7.8 billion in levies and paid NZD 6.9 billion in claims. The scheme has been criticized for its high administrative costs and for providing inadequate compensation for catastrophic injuries.

Sweden: The Patient Insurance Model

Sweden’s Patient Injury Act 1996 operates a no-fault scheme funded by a levy on county councils (the public healthcare providers) and private insurers. The scheme covers injuries that are “avoidable” in the sense that they could have been prevented by a different procedure or by better execution of the same procedure.

The Swedish scheme pays for medical expenses, loss of income (up to a cap), and pain and suffering based on a fixed tariff. The compensation is lower than a Swedish court would award in a negligence case, but the process is faster and less adversarial. The average claim processing time is 6 to 12 months, compared to 2 to 4 years for a court case.

The Swedish model has been cited by the Hong Kong Medical Association as a potential template because it preserves the patient’s right to sue if the injury falls outside the scheme’s scope. However, the scheme’s “avoidability” test introduces a quasi-fault element that some critics argue defeats the purpose of a no-fault approach.

Taiwan: The Targeted Birth Injury Scheme

Taiwan’s Birth Injury Compensation Scheme, established under the Medical Care Act in 2012, covers only birth-related injuries — specifically, neonatal hypoxic-ischemic encephalopathy, brachial plexus injury, and other specified conditions. The scheme is funded by a government appropriation and a levy on obstetricians.

The scheme pays a fixed sum of NT$1.5 million (approximately HK$380,000) for a confirmed birth injury. The claimant must prove that the injury occurred during the birthing process and that it meets the statutory definition. The scheme does not cover other types of medical injury.

The Taiwan model is narrow in scope but has been effective in stabilizing the obstetric insurance market. Before the scheme, obstetricians faced rapidly rising malpractice premiums, which threatened the availability of obstetric services. The scheme has been credited with reducing the number of medical malpractice lawsuits by 30% in the first five years of operation, according to a 2018 study published in the Journal of the Formosan Medical Association.

The Case for Adoption in Hong Kong

Proponents of a no-fault scheme for medical injuries in Hong Kong point to three main arguments: reducing litigation costs, improving patient access to compensation, and stabilizing the medical malpractice insurance market.

Reducing the Burden on the Courts

The Judiciary’s 2023 Annual Report recorded 87 medical negligence cases filed in the Court of First Instance, with an average time to disposal of 1,021 days. These cases consume disproportionate judicial resources because of the complexity of expert evidence and the number of interlocutory applications. A no-fault scheme would divert the majority of these cases out of the court system, freeing up judicial time for other civil and criminal matters.

The HA currently self-insures for medical malpractice claims. In the 2022-23 financial year, the HA set aside HK$450 million for legal fees and settlements related to medical negligence claims, according to its annual report. A no-fault scheme could reduce this expenditure by eliminating the cost of litigation, although the scheme would require its own administrative infrastructure.

Improving Access for Injured Patients

The Hong Kong Law Reform Commission’s 2018 Report on Medical Malpractice and Litigation noted that fewer than 10% of patients who suffer a reportable adverse medical event ever file a claim. The primary barriers are the cost of legal representation, the difficulty of obtaining expert evidence, and the emotional toll of adversarial litigation. A no-fault scheme would remove these barriers by providing a straightforward administrative process.

The scheme would also benefit patients whose injuries are caused by systemic failures rather than individual negligence. For example, a patient who contracts a hospital-acquired infection due to understaffing may have no claim under the fault-based system because proving that a specific staff member breached a duty of care is difficult. A no-fault scheme would compensate such patients on the basis that the injury occurred within the healthcare system.

Stabilizing the Insurance Market

Private hospitals and individual practitioners in Hong Kong have reported rising malpractice insurance premiums. The Hong Kong Medical Association’s 2023 survey found that premiums for obstetricians had increased by 40% over the previous three years. A targeted no-fault scheme for high-risk specialties, similar to the Taiwan model, could stabilize these premiums by capping the exposure of insurers.

The Obstacles to Adoption

Despite the arguments in favour, significant obstacles remain. These include the cost of the scheme, the political difficulty of removing the right to sue, and the challenge of defining the compensable event.

The Cost of a Comprehensive Scheme

A New Zealand-style comprehensive scheme would require a substantial and ongoing source of funding. The HA’s total annual budget for 2024-25 is HK$95 billion. A levy of even 1% on the HA budget would yield only HK$950 million, which is likely insufficient to fund a scheme covering all HA patients, let alone private patients.

The HA’s 2023-24 annual report recorded 2.1 million inpatient discharges and 8.5 million outpatient attendances. If the scheme paid an average of HK$200,000 per compensable event and the injury rate was 0.1% of admissions, the annual cost would be HK$420 million for inpatient events alone. This does not include administrative costs, which typically account for 10-15% of scheme expenditure in comparator jurisdictions.

The Constitutional and Political Hurdles

Removing the right to sue for medical negligence would require legislative amendment and may raise constitutional questions under the Basic Law. Article 35 guarantees Hong Kong residents the right to access the courts. A no-fault scheme that bars court access for a specific category of claim would need to be justified as a proportionate restriction on this right.

The political dynamics are equally challenging. The Hong Kong Bar Association and the Law Society have historically opposed schemes that remove the right to sue, arguing that they undermine the deterrent effect of tort law. Patient advocacy groups, on the other hand, have criticized the current system as inaccessible and have called for reform. A compromise may be a hybrid scheme that preserves the right to sue for catastrophic injuries while channelling smaller claims into the no-fault pathway.

Defining the Compensable Event

The most difficult design question is what counts as a compensable medical injury. The New Zealand “treatment injury” test excludes injuries that are a necessary part of treatment, such as the side effects of chemotherapy. The Swedish “avoidability” test requires an assessment of whether a different procedure would have prevented the injury. Both tests require medical judgment and generate disputes.

In Hong Kong, the definition would need to account for the standard of care in public versus private hospitals, the availability of resources, and the patient’s underlying condition. A poorly drafted definition could lead to a flood of claims for expected complications, overwhelming the scheme and driving up costs.

Actionable Takeaways

1. No-fault compensation schemes replace tort litigation with an administrative process that compensates injury without requiring proof of negligence.
2. The New Zealand, Swedish, and Taiwanese models each offer different funding structures and injury definitions that Hong Kong policymakers can study as templates.
3. The primary obstacles to adoption in Hong Kong are the cost of funding the scheme, the constitutional and political difficulty of removing the right to sue, and the challenge of defining the compensable event.
4. A targeted scheme for high-risk specialties such as obstetrics, modelled on Taiwan’s birth injury scheme, may be the most politically viable first step.
5. Any legislative proposal for a no-fault scheme must include a clear funding mechanism, a statutory cap on compensation, and a definition of compensable injury that excludes expected complications of treatment.