Key changes ahead on fraudulent injury claims
9 June 2014
It’s not usually on a Saturday that Government makes an announcement of another potentially significant reform affecting the handling of all types of injury claims, but that’s what took place this last weekend, 7 June.
Only last Thursday, 5 June, the Law Commission announced that they had decided not to include the issue of fraud by victims of personal injury in its 12th programme of reform. The reason given was that it had heard from Government that it was still considering its position on the issue, and that the Law Commission had regarded Government support as essential for the reform to be included in its reform programme.
MoJ on fraud
Only two days later, we hear that the MoJ has in fact made up its mind. Rather than leave the matter for a lengthy period while the Law Commission processes are gone through, the Government intend to take the initiative as part of its work to reduce the costs of motor insurance. The reform will though apply to all types of injury claim, and not just to motor. It was not a proposed reform announced in the Queen’s Speech last Wednesday, 4 June, even though other proposals from the MoJ were.
The reform will, we anticipate, require primary legislation, so parliamentary time will be needed, and while some opposition may be heard in parliament, the plan must be to have the law on the statute book by the time of the General Election in May, at the latest.
“Fundamental dishonesty” again
The change in the law is intended to be that where a claim is found to be “fundamentally dishonest”, it will be dismissed in its entirety, rather than only the part of the claim which has been found to be so, being dismissed. Presumably this is intended to send out a clear message, and to seek to dissuade dishonest claims from being made.
Fundamental dishonesty is of course the same phraseology which has been used in the CPR since last April in relation to QOCS, at 44.16. A claimant will already lose QOCS protection from having to pay a defendant’s costs if his or her injury claim is found to be fundamentally dishonest. The proposed new reform will though take the position much further. After the reform, if a claim is a fundamentally dishonest one, not only (as now) will the claimant be paying defence costs, but also the whole claim itself will stand dismissed so no damages will be recovered either.
How will fundamental dishonesty be defined?
We know already of course that fundamental dishonesty is not defined in the CPR, and is being left to case law to develop. The first lower court judgment in Gosling v Screwfix from a judge at Cambridge County Court has only been partially reported on, but it seems was given on 29 April. It will be recalled that in that case fundamental dishonesty was held to be dishonesty which went to the whole or a substantial part of the claim, and that the dishonesty of Mr Gosling who was found to have been dishonest to the extent of 50% of the claim, was sufficient to be fundamental, so justifying him losing his QOCS protection.
We need to await the view of the Court of Appeal on what fundamental dishonesty means, or indeed, to see whether a definition of it is attempted in the legislation itself. Gosling has at least started the ball rolling on that.
The detail of the new law
The detail of the new law will be essential, and it will need to be carefully drafted to meet the MoJ’s aims. The announcement from Saturday refers to the fact that the new law would apply unless it would cause substantial injustice to do so. This could have been borrowed from a similar expression in the law of the Republic of Ireland. Whatever phraseology is used should ensure that the law is left in a position which meets the Government’s aims of achieving a true reform whereby fraudsters are genuinely discouraged in their efforts, while allowing genuine claimants to recover damages as now.
This change in the law should improve the law from its current unsatisfactory state after Summers v Fairclough, and should incentivise insurers in taking a firm line against the fraudster.
Ban on inducements
It had been highlighted previously that the senior civil servant at the MoJ, Robert Wright, was concerned on behalf of his department that while CMCs could no longer offer inducements to claimants to bring claims, lawyers still could, and indeed were doing so, offering cash or iPads, even with the extension of the fixed recoverable costs system. It was also announced on Saturday that Government are to come forwards with a ban. It will be interesting to see the detail of this and whether it will be wide enough to cover lawyers who offer “part of your damages up-front” as an inducement. The need is seen to head off compensation culture concerns.
And the announcement went on to cover existing work in this area, with the reforms expected to be introduced this year. Firstly, to establish the independence of the medical report writing process together with the fixed costs of the report. Secondly, and presumably at the same time, to introduce new rules to restrict pre-med offers. As we say, work is of course on-going in those areas already.
For further information, please contact Simon Denyer, Strategic Legal Development Partner, on 0161 604 1551.
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.