''In the past I've never felt I had any issues at all dealing with my disabilities,'' Ms McCann, of Glen Alpine, said. ''I've always been a happy person.''

But all that has changed since Ms McCann has come under pressure to convert her settlement, which provides for lifetime care, to an $11 million lump sum payment. Three others who received a similar compensation deal paid by NSW Treasury also have been asked to commute ongoing payments to lump sums.

Treasury has paid out $61.5 million over 25 years for the care of nine people still covered by the compensation scheme and unspecified extra sums for three people no longer covered.

Ms McCann, who had a baby last July, refused the lump sum offer on the grounds that one-off payments have a history of proving inadequate, and are a headache for novice investors.

Since her refusal the once harmonious relationship with her insurance company, Allianz Australia, which manages the scheme for the NSW Treasury, has hit rock bottom as the company applies tough new criteria to her expense claims.

Treasury is taking her to court over a dispute about her entitled hours of domestic help.

An Allianz senior executive, Allen Marinovich, told Ms McCann in a meeting in November they were ''working under very specific constraints from Treasury'' and there had been ''big changes,'' according to signed minutes of the meeting.

But a spokesman for Treasury yesterday denied there had been a change to their approach, or that there were "specific cost pressures on the scheme".

Another quadriplegic accident victim, Mark Harford, 50, of Erina, said since his refusal of a $6 million lump sum, claims that had been approved for 25 years for herbal medicines were being knocked back by Allianz. He was now required to get advance approval for cab fares or to pay for batteries for equipment. His claim for an electric toothbrush had been refused.

''I feel selfish sometimes when I make these claims and others with disabilities get nothing,'' Mr Harford said. ''What drives me is it's my legal entitlement. It's too valuable for me ever to have done anything wrong; my claims have been professionally managed.''

A spokesman for Allianz said that in a small number of cases, claims had been more carefully monitored and had failed the "reasonableness test".

Ms McCann and Mr Harford were among 12 people to benefit from a pioneering government scheme introduced in the mid-1980s, which provided lifetime care for people catastrophically injured through no fault of their own in vehicle accidents.

Under structured settlements, approved by the Supreme Court, the accident victims received an advance payment - in Ms McCann's case $450,000 - and a guarantee the GIO would pay upon receipt of invoices expenses for domestic and nursing care, reasonable hospital and medical costs, and necessary equipment.

It was closed to new people after a few years. After the GIO was privatised in 1992, liabilities for the settlements ended up with the NSW Self Insurance Corporation, which is part of Treasury.

A government spokesman said the offer to convert to lump sums was made to ''allow these claimants an opportunity to have greater autonomy and management of their future medical needs and lifestyle requirements''.

Only those deemed capable of managing their own affairs were approached, and they were required to obtain independent legal and financial advice. No one had taken up the offer.

Andrew Stone, a barrister and the NSW Bar Association's representative on the Motor Accidents Council, said the only reason Treasury would back lump sums would be ''to save money''.

He said lump sum payments were never enough for recipients because of inherent flaws in the way they were calculated. While some people invested their lump sum sensibly, ''others misspend the money, are prevailed upon by family and friends for loans, or fail to make enough financial return to cover future costs''.

Ms McCann's lawyer, Timothy Kelly, said ''the squeeze is being put on; they're making life difficult when hitherto there were no problems. It's odd a Labor government would pick on people like these to make savings.''

Compared with people born with severe disabilities who receive no compensation, and to other para- and quadriplegics, those on structured settlements have been luckier.

When Ms McCann, who worked as a part-time receptionist for 10 years, unexpectedly fell pregnant, the insurance company agreed to pay for 24-hour nanny care.

Ms McCann said she had been tempted by the offer of the $11 million lump sum. ''The freedom was tempting. You don't have to ask for approval to do things all the time. But it was too risky, especially for my daughter.''