New government but similar approach to reform?
While no clues could be found in last month’s Queen’s Speech as to what package of reforms this government might pursue in the world of injury claims, it is fair to assume that the new Conservative government may be prepared to pursue more reform in this area, extending those introduced during the previous parliament when they were in coalition.
The last of the reforms introduced by the coalition government took effect this month. The askCUEPI search was created with a view to tackling fraudulent whiplash claims and came partly as a result of the Transport Select Committee’s enquiries into the cost of motor insurance and fraudulent whiplash claims. It is hoped that the composition of the new TSC will be announced shortly. It’s chair has not changed as Louise Ellman remains in post. She was the sole candidate and as a result will be formally appointed.
We do of course know that the new Justice secretary is Michael Gove, but apart from that change at the top, the ministerial team dealing with civil justice issues is unchanged with both Shailesh Vara in the House of Commons and Lord Faulks in the House of Lords remaining in post. Subject to Mr Gove’s own views, this is likely to lead to an approach being taken by the new MoJ team which is consistent with the progress achieved over recent years.
Runes to be read from the last Parliamentary session
Although Chris Grayling has moved on from his post, when he was Justice Secretary he made it clear that there was appetite to push through further reforms in the area of whiplash claims, as did other MoJ ministers at that time. Going beyond his prepared speech to the ABI Motor Conference in December, it was reported that Mr Grayling had stated that his department would be prepared to look at introducing minimum speeds, below which whiplash could not be claimed.
Also speaking at that conference, the then Permanent Private Secretary to the Attorney General and Conservative MP, Heather Wheeler stated that post May 2015 her party might be prepared to set in train CMA II, in order to try to make some substantial progress on credit hire, a topic also mentioned by Mr Grayling, although his suggestion was that the industry itself now needed to tackle the problem.
With Louise Ellman remaining chair of the TSC, we can expect that Committee to continue in its work looking at the cost of whiplash claims and the impact of fraud on that cost. The TSC signed off last year highlighting a number of areas of interest, including the rise of psychological injury claims and the attendant increase in medical reports from those experts that are used to document those claims. Indeed, this was an area addressed by Louise Ellman when she spoke at the Claims Magazine’s Claims Conference in March.
Some suggested areas for reform
As we see it, there are a number of further reforms needed in injury claims and, whilst we suspect that this government's focus will primarily be aimed at motor claims, there is a need for reform across the injury claims piece. Most of these proposals would not require too much work from the MoJ in our opinion.
MedCo and problems in the rehab supply chain
Claimant businesses including ABS structures are now very adept to change and as we have highlighted in a recent update, the MoJ’s attempts to bring independence to the commissioning of medical evidence has seen MROs act to protect their interests. But as one door closes, a window is prised open elsewhere. The need to maintain financial revenues lost as a result of earlier reforms, such as the reduction in MoJ Portal costs in 2013 has seen ABS structures aggressively promote rehabilitation that is commercially driven and often without concern for the claimant's best interests.
As was discussed at our recent fraud conference, the lack of independence in the rehabilitation supply chain continues to be a real issue of concern to the industry and is an area that the MoJ would be wise to address. In our view, the issue could be addressed by bringing the high function, high frequency rehab stream under the MedCo roof, once MedCo is more mature.
The lack of independence in the treatment supply chain and the lack of visibility around invoicing has led to the treatment process becoming vulnerable to fraud and in urgent need for reform. This then presents difficulties when dealing with these claims, especially where requests for interim payments are made within the MoJ Portal. Some of the issues that we are seeing include:
The request for payment of the treatment is made before the claimant has served any medical evidence.
VAT is claimed on the invoice, but there is no VAT registration number.
The invoice is dated before the treatment is set to end.
The terms of payment are 30 days, yet the invoice remains unpaid and there is no evidence of credit being extended.
There is no evidence that the treatment has in fact been carried out.
The invoice is not made payable by the claimant.
To highlight the sums at stake, we presented delegates at our conference with an invoice that had been submitted via the Portal, where the costs of each session of CBT treatment were being claimed at £250 a session with the total cost of treatment invoiced at over £4,000. Despite these large sums, no information was provided on the invoice as to which practitioners provided the treatment or when the treatment took place. The invoice was made payable to the claimant’s solicitors, who were linked to the treatment provider.
By bringing this process under the auspices of MedCo these issues could be addressed by using a similar approach to the one used to address independence in the commissioning of medical evidence, so that there is an insistence on independence between the treatment provider, the solicitor, the expert who recommends the treatment and any other agencies involved in the process.
Credit hire claims process
The level of credit hire fraud that we are seeing suggests that this is also something that needs to be addressed and that it would be sensible to explore ways of doing so that do not necessarily involve the introduction of CMA II. The issues in the market place generally stem from rogue hirers engaging in a number of practices, such as inflated invoicing, claiming for phantom hire vehicles or double charging for the same car over the same hire period for instance.
It strikes us that credit hire operators often play a critical role in the claims process, often driving and directing litigation, yet they do so without any kind of claims regulation upon them, whereas CMCs must be authorised by the Claims Management Regulator and must then abide by the Conduct of Authorised Persons Rules 2014.
To help curb some of the practices that the credit hire market is now seeing, we believe that it would be beneficial for CHOs to be subject to a regulatory regime, perhaps similar to the one governing CMCs. For instance, in conducting their business CMCs are obliged to:
Make representations to a third party that substantiate and evidence the basis of the claim, are specific to each claim and are not fraudulent, false or misleading.”
In a similar way to how the Claims Management Regulator operates, any CHO not abiding by the rules would have their authorisation suspended and where appropriate, withdrawn. Any party having a concern about the activities of a CHO would be at liberty to notify the regulator of their concern who would then be free to investigate where appropriate. It is difficult to envisage how any fair playing CHOs would not see the advantage of regulation of this kind.
The latest reform to be implemented
As from 1 June, paragraph 6.3A of the Pre-Action Protocol applies to CNFs that are submitted to the Portal. The additional process essentially forms the last part of the non-MedCo package of reforms implemented by the previous government. We believe that it is worthwhile reminding ourselves what obligations are now placed upon claimant’s solicitors by paragraph 6.3A:
(1) Before the CNF is sent to the defendant pursuant to paragraph 6.1, the claimant’s legal representative must undertake a search of askCUEPI (website at: www.askCUEPI.com) and must enter in the additional information box in the CNF the unique reference number generated by that search.
(2) Where the claimant has sent the CNF without the unique reference number required by subparagraph (1), the defendant may require the claimant to resend the CNF with the reference number inserted. The period in paragraph 6.11 or 6.13 starts from the date the CNF was sent with the unique reference number.
(3) Where the claimant has sent the CNF without the unique reference number required by subparagraph (1) and the defendant does not require the claimant to resend the CNF pursuant to subparagraph (2), the defendant must respond in accordance with paragraph 6.11 or 6.13.
There are no specific costs consequences within the Pre-Action Protocol for failing to carry out a previous claims search, although the court can of course have regard to any failure to comply with any part of the protocol when it considers the question of costs. Given that this section of the protocol has been introduced to combat fraud it is hoped that the court will treat any failure to comply with the level of seriousness it deserves.
Whilst this process has been predominantly created as a means to inform claimants’ solicitors whether their clients have made previous claims, insurers are free to check the result of any search by entering the unique reference into the MIB Services insurer check page
Insurers will have the benefit of being able to establish what the outcome of any previous claim has been and can decide whether a search of any other database might be required. Whilst askCUEPI is restricted to claims over the past five years, insurers will be able to delve further back than that if it were felt appropriate.
Hopefully, the additional databases and fraud enquiries available to insurers will mean that those claimants who intend to use this process to ‘get their stories straight’ will be caught out by the other intel that insurers have at their disposal, but the introduction of this new process will mean that some of the easy wins may no longer available as fraudsters will know what it going to be thrown at them in advance. Fraud teams may have to up their game.
Where a CNF is submitted without a unique reference number, the rules are explicit that the decision then lies with the insurer as to whether to require the claimant to resend the CNF and comply with 6.3A (1) of the protocol.
Where an insurer chooses to exercise the right to insist on the CNF having the unique reference, then when the CNF finally arrives with that reference, an insurer will have whatever reassurance there might be from having the claimant completing the process. In addition, as the “portal clock” does not start to tick until a CNF with the proper reference is supplied (see paragraph 6.3A (2)(1)) an insurer may be able to use the time it takes for the CNF to be properly submitted in order to carry out further investigations.
Some insurers may decide not to ask for the CNF to be resubmitted, relying upon their usual claim screening procedures and not disturbing the claim processes. In those circumstances, there would still be some benefit in keeping a watch on repeat offenders so as to ensure that a pattern of non-compliance does not appear. It may be strategic on the part of that firm seeking to avoid the new processes and waiting to see whether insurers take the point. However one would hope that having argued for these reforms collectively, Insurers would be keen to ensure compliance,
Where an ask CUEPI search reveals multiple previous claims it will be interesting to see how many of those claims are still presented at Stage 1. Even where a claimant is dropped by his solicitors, we anticipate that there will be plenty of appetite in the market place for other law firms to pick up those claims and press on. Presumably, data will be available on those searches that were carried out on askCUEPI, but which did not then lead to presentation of a claim.
We will continue to keep you updated of news of any reforms and industry developments as they arise.
For further information please contact Nigel Teasdale, Partner on 01772 554264 or at email@example.com
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.