Working party produces first fruits of its labours
8 May 2014
Following the challenge of giving evidence to the Transport Select Committee in June last year on the cost of insurance set against the backdrop of whiplash claims, it was clear to me that there were a couple of key areas that the Committee continued to be troubled by and which needed to be addressed, namely:
the problem of fraudulent exaggeration in whiplash claims; and
the quality of the medical evidence served in whiplash claims
In an effort to address those issues and the concerns around whiplash claims generally, the Ministry of Justice formed a working party in January this year. That group have now produced draft rules for the consideration of key stakeholders and the wider industry and the MoJ have now issued their consultation on the drafts. Clearly there was pressure on the working party to produce something before the summer recess which might explain why the rules are still something of a work in progress. The government’s aim is to have the initial rules agreed by 4 July and implemented by October and there is more hard work to be done if those deadlines are to be met. It seems to me that these are the key issues for insurers to consider:
The definition of which claims are to be included in the new process
After discussion, the definition proposed by the working party for claims to be included is as follows:
“Soft tissue injury claim means a claim brought by an occupant of a motor vehicle where the significant physical injury caused is a soft tissue injury and includes claims where there is a minor psychological injury secondary in significance to the physical injury”
If this definition is adopted then it is worth noting that it would capture most personal injury claims that are brought following a collision. It is also reassuring to note that this definition would provide for a number of claims for psychological injury to be captured by the process. Over the last 18 months we have seen an increased incidence in this type of claim and there was a concern that claimants’ solicitors would be able to avoid claims being captured by the scheme by adding a psychological component to the claim.
Does it go far enough however? Pedestrian claims will be excluded and there is a still a danger that the current definition will only lead to arguments about what constitutes “minor” and “secondary”. A more straightforward approach might be for the process to simply apply to all low value motor claims. One can imagine certain claimant lawyers already looking at ways to evade the scheme.
Tackling vested interests
With ABS structures now common place and many claimant personal injury practices having a connection to a medical reporting organisation, it is essential that the working party devises a way of ensuring the impartiality and independence of the expert. To cover the position where a claimant (or rather his lawyer) chooses to obtain a report via an MRO, the rules as drafted state that where a report is “obtained via an intermediary such as a medical reporting organisation, the report is obtained via an intermediary in which neither the claimant nor the defendant has any direct or indirect financial interest”. Thought has sensibly been given already to potential abuses of this type of approach, as in its consultation the Government says that it wants to ensure that reciprocal arrangements cannot be set up to avoid the proposed ban on vested interests. It is also considering limiting the use of particular medical agencies to a specified percentage of the caseload of a user of those services, or imposing a requirement upon them to use the available medical agencies in rotation. Clearly more thought needs to be given to the best long term solution for fully protecting the independence of the medical expert.
As if to highlight the importance of their work in this area, the working party will have no doubt noted the recent news of the GMC’s decision to suspend a general practitioner after he provided an “obviously dishonest” medical report for a family member without carrying out an examination. If the rules are implemented as drafted they should go some way to solving the problem, but experience teaches us that any new rules need to cover all eventualities and perhaps the scope of the definition will be widened further in future.
Fixed fees for medical evidence
The suggested fixed fee structures have now been set out and they are at a level that is likely to prove palatable to all concerned. The cost of a report from a GP or a physiotherapist is fixed at £180 and one from a consultant orthopaedic surgeon is fixed at £420. Whilst that fee seems high, it does however include the cost of the expert reviewing the medical records. It is worth noting that the level of the proposed fixed fees is marginally lower than those permitted under the AMRO agreement.
Unfortunately there is nothing in the draft rules to provide guidance as to which type of expert should be selected. This will remain a decision for the claimant’s representative in the first place. Perhaps a report from a consultant orthopaedic expert might be mandatory, where a claimant has a pre-accident history adjacent to the area of injury, or where the claimant has made other claims of a similar nature?
It is also pleasing that the MoJ has pulled back from the suggestion that medical records are obtained “carte blanche” in every case and that the additional fees that might be incurred to have a GP or physiotherapist review medical records are fixed at £50, with the cost of obtaining the records limited to a maximum of £80.
A balanced view of the accident circumstances
In an attempt to crack down on the increase of motor fraud, the rules now provide for the defendant’s version of events to be submitted at Stage 2 of the RTA portal process, so as to allow the expert to comment on and have regard to both versions of events when providing his diagnosis and prognosis. Some experts had expressed concern at being asked to be the sole arbiter of the facts, but they need not worry. If on the defendant’s version of events the expert concludes that no or little injury could have been sustained, then the next step must be for the parties to proceed to a hearing so that causation can be determined by a judge.
We hope that the opportunity for the defendant’s version of events to be taken into account will apply to all claims, not just those that are admitted at stage 1 of the MOJ Process.
In an effort to deter claimants from ignoring the proposed new process and obtaining a report from outside the scheme, the draft rules provide for the claimant to forfeit the right to claim the cost of that report. Our view is that that does not go far enough and that the claimant should be precluded from relying upon that report.
The MoJ proposes a change to Part 36 of the CPR so that parties cannot make binding Part 36 offers until a “valid report” has been obtained, but also proposes to allow defendants to make valid Part 36 offers prior to a medical report where the process is not followed. We question how a defendant would know they were entitled to make such an offer until the errant report is disclosed to them.
Where a claimant attempts to subvert the process altogether, by arguing that their claim does not meet the given definition for the new process, we assume that the sanction will be similar to those that exist under established pre-action protocols, but we must wait to see whether the courts support the process when challenges are brought.
One of the aims of the reforms was to eliminate pre-med offers. The draft rules seek to do that by denying a defendant the right to invoke Part 36 until a valid report has been produced. However, defendants rarely make such offers to obtain protection under Part 36, rather the intention is to promote settlement without further expense.
The draft rules include a new “aim” which states that “…offers are made only after a medical report has been obtained from an accredited medical expert and disclosed”, however it stops short of an outright ban.
Further actions to be taken
In view of our key involvement in this area to date we will of course be responding to the consultation taking into account insurers’ interests. We would be pleased to consider any areas of concern that you might have and which we might address in our response to the consultation. The cut-off date set by the MoJ for responses is 28 May 2014. We have also indicated to the MoJ our desire to attend the proposed open meeting on whiplash reforms and we would be happy to air any concerns that you might have at that forum as well.
To read the draft rules and a letter from the minister concerned at the MoJ, Lord Faulks, outlining the details of the consultation click here
Going forwards we would like to see consideration given to extending the scheme so that it covers all low value RTA claims and it will be interesting to see whether the principle of medical panels might be transferred across EL and PL claims. For too long there has been little independence in either the appointment of medica experts in this type of claim, or perhaps in the conclusions of their reports. If more objectivity can be introduced then we see this as a worthwhile area of reform.
There is still more to come in this area in terms of the independence of the panels, the accreditation process for experts and data sharing and we will be happy to update you as we learn more.
For further information, please contact Nigel Teasdale, Partner 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.