ACC has been given a judicial kicking for demanding claimants sign an unlawful form gathering private information or face their claims being cut off.
Two decisions released from the district court say ACC should not have told two clients they must sign the consent forms or lose their compensation.
A lawyer specialising in ACC work said there were huge ramifications for the corporation.
"This is wholesale collection of information that they had no right to," Dunedin lawyer Peter Sara said. Because ACC had insisted clients sign such a "catch-all" form, it had been "hoist by their own petard" because hundreds of thousands of people could, in theory, now withdraw their consent.
All clients were told they must sign the consent forms, known as ACC 167 but that assertion had now been deemed incompatible with the corporation's own laws, he said.
The two test cases were heard by Judge Grant Powell, who upheld both appeals and awarded costs against ACC.
One case involved Dunedin ACC client Denise Powell and the other a client suffering from a traumatic brain injury.
The judge said ACC had acted dogmatically and made unfounded claims that it had the authority to demand clients sign consent forms giving it widespread access to information about them.
Even a "casual glance" at the consent form showed its authority to collect information was far more extensive than ACC law provided for, the judge said.
The consent forms were condemned by ACC clients and lobby groups as they enabled the corporation to go on medical history "fishing expeditions" to try to find reasons to cut off clients' claims.
Powell said he realised the decision would have "serious ramifications" for ACC and it was important a new consent form compatible with its own laws was developed as soon as possible.
He said, given ACC's 167 form had gone far beyond its legislated authority to gather private information, it had been reasonable for the appellants to refuse to sign it.
Sara said it was possible ACC might appeal the decision but, if it was genuine in its recent pronouncements about wanting to restore trust, it should accept it.
He said it had stuck in his craw that, for several years, he had to advise clients who did not want to sign the form to do so because they did not have the resources to fight ACC over the issue and, if they did, their claims would be cut off. "I've had some extremely distressed clients who've been forced to sign something they did not want to sign and it turns out now that they didn't have to."
ACC said yesterday the consent form remained useable and was not illegal.
The court found ACC could not decline entitlements simply because a client declined to sign the consent form.
However, the court had upheld its right to collect medical and other records that were or might be relevant to a claim, ACC said.
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