The future of whiplash claims handling
It’s been a busy couple of weeks for everyone concerned with the future of motor bodily injury claims handling. The MoJ responded to its whiplash consultation, the Transport Select Committee (TSC) challenged that response and made a further request for evidence, and last week there was a parliamentary debate in Westminster Hall.
With a slightly clearer picture of the future changes, now would seem a good time to reflect on the impact of those changes and the shape of the new handling landscape into 2014 and beyond. The key issues concern:
- The introduction of independent medical panels,
- A phasing out of pre-med offers,
- The retention of the existing small claims track limit, and
- The steps to be taken against fraudulent claims.
Independent Medical Panels
The proposal for independent medical panels stems from the government’s acceptance that the number of claims for whiplash is currently too high and that a proportion of those claims are either fraudulent or exaggerated. The aim is to introduce more rigorous medical assessment into the claims process, thereby providing a more secure diagnosis of whiplash. The expected benefits of the new measure are that:
- Claims volumes will drop as claimants who currently pursue claims without suffering a genuine whiplash injury will be dissuaded from doing so.
- The number of successful claims will reduce as more claims ought to be rejected by the new medical evidence process.
- Of the claims that do proceed, there will be less exaggeration of symptoms or damages claimed and therefore presumably shorter prognosis periods and settlement levels.
Whilst that all sounds like good news, how will the government ensure that this is achieved, and are these aims realistic? Perhaps they are. Does the government have an idea in mind of what the actual number of whiplash claims should look like or the average settlement level? If so, they are not saying.
How will it work in practice?
The clues from the last couple of weeks have helped piece together a view of what the future may look like. The consultation response refers to a proposed model for reforming the whiplash medical reporting system put forward by the majority of the industry. In the parliamentary debate, new justice minister Shailesh Vara referred to experts having access to better accident information and medical records, robust examination techniques and to the potential use of standardised report forms. Further, the TSC have re-emphasised the measures they see as essential, including the review of medical records and attendance on a medical practitioner immediately after an accident.
The proposed model for reforming the whiplash medical reporting system was put forward by the industry through the ABI, FOIL, AMRO and MASS, with the notable exception of APIL. The proposed solutions include:
Creation of a new central body: to address the perceived lack of accountability for those providing reports. It would be run by an independent board with cross-industry representation and would be self-funding. Its powers would include accrediting experts, reviewing and auditing their performance data and suspending or removing accreditation where necessary.
Capturing electronic data/MI: this will be based on the reports the experts have written so as to be able to compare experts and their conclusions. There were mixed views however over the benefit of a standardised form of report.
A framework to ensure independence: to ensure that medical experts and agencies do not have any financial interest in the outcome of the claim, but there was no consensus as to how that would be achieved and what the impact would be upon solicitors owning in-house medical reporting organisations.
Introduction of a fixed costs regime: there was agreement that such a regime, with price assessed at the appropriate level would help to remove the financial incentive to provide a report with a particular conclusion. Fixed costs also avoid unnecessary arguments over cost of reports in low value claims.
There was clear agreement that doctors must be paid regardless of the outcome. Given the proposed increased training, the new accreditation system, the creation of the independent body, the additional information for experts to review, and the more thorough examinations envisaged, it is clear that the standard cost of a medical report is likely to rise. If the claim is successful then the increased costs would be passed on to the defendant whereas if the claimant is unsuccessful then he will have to bear the costs directly or through any ATE provider.
In our view, the hopefully limited additional costs will be regarded as acceptable both when set against the number of cases proceeding and where the benefit is tighter control over the processes, which should result in more objective reporting.
Central and independent accreditation: the medical experts would have to have a certain level of clinical experience and a working knowledge of up to date recognised research in the relevant medical area. It would of course be helpful if the experts are aware of the engineering research into vehicles and car safety through the likes of Thatcham. There is though also recognition that one cannot expect the medical practitioners to become judge and jury in terms of deciding whether or not any injury could have occurred. They can only give their objective view on whether or not a diagnosis is made out based on the evidence presented to them.
When will the examination take place and what will experts receive?
The suggestion from the consensus paper is that in its response to a CNF the defendant will have the opportunity to put forward an alternative version of how the accident occurred even where liability is admitted. The defendant could if necessary attach details on the accident mechanics such as the invoice for repairs to the vehicle or any relevant photographs.
The claimant would have to wait for the CNF response before instructing a medical expert and therefore it is likely that the examination would take place at least four to six weeks post-accident. This would seem more sensible than the timing of some of the current reports compiled at a very early stage which are of reduced value as a result.
The TSC remains keen for medical records to be reviewed in every case but this betrays a lack of appreciation of the time it can take to obtain the records and the occasionally arduous task of reviewing them. There would also be a significant increase in lifecycles and medical practitioner costs. The compromise suggestion is that they should be reviewed where the prognosis is more than nine months or where the defendant feels it necessary for another reason, thus the defendant would have to accept the increased costs and lifecycle of the claim by requesting that access to records. It will be interesting to see how the claimant lobby feel about that suggestion.
The TSC also still seems to be pressing for the claimant to attend upon a medical practitioner shortly after an accident to verify it through a contemporaneous record of the injury. However we believe that would surely lead to an increased burden upon GPs, A&E units and walk-in centres, and that there would also be an increased cost of the claim itself given the recoverability of NHS charges.
The Alternative Position
As mentioned above, APIL felt unable to sign up to the consensus paper despite being involved in the negotiations. Mr Vara has made it clear that the government intends to press on with the establishment of independent medical panels, involving stakeholders. We expect the government will want to drive the consensus paper forwards. Mr Vara says that he is already working at a pace, is actively considering a timetable, and expects the panels to be up and running next year. APIL risk being side-lined if they maintain their previous line.
The recent debate also allowed the opposition to find a voice on these issues through shadow justice minister, Andy Slaughter. Previously a claimant injury lawyer, he claimed that independent medical panels would not make a dramatic difference and that the same objective of having reliable, robust and testing medical reports could be achieved through registers of medical practitioners who are accredited as independent. He has of course overlooked that independence should already be guaranteed under the current CPR 35 where experts must state that the report is written for the court, rather than the defendant or the claimant, and through the GMC which regulates medical practitioners.
Such a simplistic view from Mr Slaughter does not take into account the commercial drivers currently at play. Suppliers of claims monitor solicitors to ensure conversion rates are high and they do not want to use medical experts or agencies who affect those conversion rates. Commission may also be paid and the current process means that everyone involved has an interest in a positive medical report being supplied. It is therefore the commercial drivers behind the whole process that need to be broken down, not simply bland statements about independence. Mr Slaughter has described the creation of independent medical panels as a sledgehammer to crack a nut, however perhaps he does not appreciate the size, strength and complexity of this particular nut. In our view the government are right to recognise that the current safeguards have proved inadequate in providing sufficiently objective reporting.
Whilst the detail of the new system remains uncertain, the real positive at the present time is that almost all of the industry including insurers, lawyers and medical agencies, but most importantly the government (as well as the TSC scrutinising them) agree upon the need for change. Provided they all continue to engage in the process we can ensure that the improvements remove the commercial drivers at play and leave us with a system that is fit for purpose and capable of providing objective reports to set criteria in which all parties can have confidence.
Assuming the good work on the robustness of medical reporting continues the days of pre-med offers may be numbered. A number of factors point in this direction:
- The government has specifically said that they want insurers to end pre-med offers and are considering a rule to ensure that an examination and report are completed before a claim can proceed.
- The TSC has asked further what work is being done to explore how such a rule could be introduced and see the practice as providing a clear incentive to make fraudulent claims.
- The opposition through Mr Slaughter also seek a ban on unsolicited approaches from insurers without the benefit of medical evidence, and claimant lawyers will agree with his approach.
There does seem to be some confusion on Mr Slaughter’s part as to the difference between third party capture and pre-med offers. He suggested in the debate that third party capture is “an open invitation to fraud”, but provided that a medical report is obtained, there is nothing to suggest third party capture in itself is being condemned. The ABI are currently working to strengthen the current Code of Practice on Third Party Assistance.
It is of course the issue of fraud that underpins most of the reforms being proposed by government and in their desire to make progress on that issue they have the firm backing of the TSC.
The introduction of the independent medical panels will we think assist as, depending on the detail of how they are set up, they should result in any diagnosis of whiplash being more objectively based, and in turn it being easier to identify fraudulent claims. Knowing that a more in-depth medical process has been brought in should act as a disincentive to fraudsters as well. If the TSC are right in their view regarding pre-med offers, then the reduction or removal of the opportunity to make that type of offer will also assist in preventing fraudulent claims being settled.
The level of the SCT limit is something that many have a view on, and those views vary. If though it is right that the SCT is inherently unsuitable for fraudulent claims because of the reduced opportunity to call expert evidence and the seriousness of the allegations, then if the limit were increased those claims would probably not be allocated to the SCT anyway. To the extent that they were allocated to the SCT, the relative informality of the process and the reduced likelihood of costs sanctions being imposed would not assist insurers in obtaining the optimum result.
Another worthwhile measure proposed by government is a ban on solicitors being able to offer cash inducements to bring claims. It intends to consider that issue with the Solicitors Regulation Authority. The measure has the support of APIL and MASS as presumably a view is taken that their members are not involved in it.
The government remains keen that insurers should share fraud data with claimant lawyers, such as the Insurance Fraud Register. It believes that this, coupled with higher obligations on claimant lawyers to check the veracity of claims, will also assist in the battle against fraud. Insurers understandably remain concerned about sharing their data in this way and the use that it will be put to if they do so, including the possibility of claimant lawyers using it to identify other potential claimants. The ABI have said recently that they expect to make a public announcement on data sharing by the end of the year.
Outside these developments, but sitting alongside them, and clearly relevant, is the recently concluded consultation by the Law Commission on whether to include fraud by victims of personal injury within its 12th programme of reform. In view of the interest in this area from the government and the TSC among others, we would not be surprised if the Commission decided to include this issue within their next programme of reform.
It is too early to make predictions on fraud because of the many challenges it poses, but we see room for optimism that there is now the will to tackle the issue seriously, to a greater extent than it has been possible to do so previously.
Outside the medical reporting arena it is worth a look at what other issues remain, and which have been put to bed (at least for the moment).
It seems that any increase to the small claims track limit has been put on ice. Mr Slaughter argued in the parliamentary debate that the government should allow another three to five years to give itself time for a full review of the Jackson reforms before looking at the matter again. Mr Vara accepted that time should be allowed for the current reforms to bed in before further reform such as this was undertaken, though he continued to say that an increase was something which the government may wish to consider in due course. One thing the government wish to see before looking again at this area is the Competition Commission report on the private motor insurance market. The next General Election is in May 2015 and there may now be too little time left for the government to significantly increase the limit before then.
Disappointingly, limitation is also likely to stay where it is for whiplash claims. Whilst the government accepted that creating a specific RTA personal injury limitation period would be possible, it also felt that doing so would make claims for other limitation law changes in other special cases harder to resist, would increase the number of cases in the short term, and would potentially frontload costs into a shorter period and so have negative cost implications.
The government has confirmed that it wishes to improve the provision of data relating to whiplash claims in order to enable future debates to be based on real evidence and that this further data will come through insurers, legal representatives and the Claims Portal company. The detail of the proposals is awaited.
In summary, the government will wish to see whether the changes resulting from LASPO and the introduction of independent medical panels result in a reduction in the volume and cost of whiplash claims. If not, there remains the wider debate as to whether the benefit of payments of compensation for minor injuries outweighs the increased cost of insurance premiums. Ultimately, if people wish to see premiums come down, there could be a higher threshold for compensation. Indeed, Mr Slaughter referred in the debate to the Australian model of “whole person impairment” before compensation can be paid (without much enthusiasm for it, it has to be said). At the very least, in our view we are moving to the stage at which there ought to be a debate as to whether the level of general damages for whiplash and other low value personal injury claims have become excessive and are now unaffordable.
In the meantime, we see the path of reform in this area as unstoppable. In our view, we will indeed see the introduction of independent medical panels next year, though much work and negotiation will be needed to secure worthwhile terms of reference, in which we will be arguing insurers’ corner. This reform in turn is likely to lead to a lower diagnosis rate for whiplash, though by what extent remains something that will have to await experience. Insurers should see some reduction in both the number and the claimed value of whiplash claims, though again the extent of the reductions can only be guesswork, but is likely to be significant, we think. The small claims track limit will have to be accepted for now, it seems. There is a momentum building in the battle against fraud, and while some of the measures to be adopted here require careful thought, the changes made when set against the background of the Jackson reforms are likely to prove worthwhile in that campaign.
For further information contact Nigel Teasdale on 01772 554264
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.