Sonya Ghanem gave birth to what she says was a healthy baby boy on July 13, however just 57 minutes after he was born, he died after he was mistakenly given nitrous oxide (often known as ‘happy gas’) instead of oxygen.
In June another child born in the same hospital was left with brain damage and remains in hospital fighting for its life.
Now however the grieving mother has been told she is unlikely to be able to claim compensation unless she can prove she has suffered a psychiatric illness as a result of the death, reports Nine News.
"I think it's a great defect in our law that our Compensation to Relatives Act doesn't have any provision for bereavement damages," Professor of law at the University of Sydney, Barbara McDonald told SMH.
"It is a really important gap in our law that we should remedy."
Health Minister Jillian Skinner has said the state government would "consider how best to continue to provide support to both families in the future, including the provision of monetary payments".
"(Payments) could be considered without the need for formal litigation", she added.