MoJ intent to stand by MedCo
A few months ago the MoJ announced that it would begin its review of MedCo earlier than anticipated. The announcement was wrongly interpreted by some as evidence of the MoJ losing faith in MedCo, only a few months after it had gone live. However, those attending the ABI’s “Next steps in tackling the compensation culture” event last Tuesday were left in no doubt that the MoJ would be standing by MedCo and was not about to cut and run. Taking part in a panel Q & A at that event, MoJ Deputy Director for Civil Justice, Richard Mason, stated that MedCo was “shining a light” on practices in the market and disagreed that MedCo had been implemented too soon, saying that there had been an urgent need to address the issues that had led to MedCo coming into being.
The time to respond to the MoJ’s Call for Evidence ended on 4 September and DWF were one of those to respond. We look in this article at some of the key aspects of our response and the need to tackle the wider issues in the claims space.
Claims numbers continue to surge
The ABI’s event came a few weeks after the release of the Portal MI for July 2015, which as predicted by many, saw the number of RTA CNFs calculated on a rolling 12 month basis reach pre-LASPO levels. Many at the event wondered what was driving these claims numbers and whether they would continue to rise over the coming months. Since the ABI event, the Portal MI for September has been made available and shows that the cumulative figure for RTA claims stands at 884,000 over the 12 months up to the end of August, and the annual increase now stands at 10.5% on the same, previous 12 month period.
So what is driving these numbers? Revealing the results of an ABI commissioned survey on cold calling, ABI Director James Dalton revealed that 83% of those surveyed had at one time been contacted by a CMC about making a personal injury claim, with nearly half of those people having been contacted in the last week before the poll was carried out. Four in five people felt that it was unacceptable for them to be contacted by a CMC without their permission. The cold calling practices currently being witnessed in the industry was something that all the panellists felt was unacceptable and agreed that those carrying out cold calling were having a detrimental effect on the way that the wider insurance industry was being perceived by the public; the impact of their behaviours was being felt beyond the “claims industry”.
Tackling the issues facing MedCo
The behaviours of some MROs in response both to the MoJ’s formulation of the search offer and the statement of financial links is a microcosm of the behaviours in the wider claims market place and provides further proof, if it were needed, that there is a need to tackle the behaviours driving the compensation culture. It was clear that the MoJ has faith in MedCo and believes that MedCo will succeed in bringing independence to the commissioning of medical evidence and, in due course, will improve the quality of reports.
Echoing the views expressed by Richard Mason, at the same ABI event MedCo Chair Lorraine Rogerson said that there was a need to keep faith with MedCo. Rogerson stated that MedCo had received reports of “rogue elements” and cited this as evidence that MedCo was having a positive influence. Indeed, from the many stories that were exchanged by those that attended the MoJ hosted roundtable meetings in August, that did not come as a surprise, but for MedCo to realise its full potential it is clear that more needs to be done to support it and ensure that the government’s goals of bringing independence to the commissioning of medical evidence are met.
Responding to the MoJ MedCo Framework Review – Call for Evidence, DWF have expressed the view that there are a number of key actions that need to be taken to tackle the behaviours that are undermining the government’s aim of bringing genuine independence to the medical reporting supply chain. Some of our recommendations include:
The introduction of a choice of Tier 1MROs in a search result to cut out the problem of multiple registrations
The need to tackle “hub and spoke” arrangements which amount to little more than invisible subcontracting and undermine the randomised selection of MROs
A widening of the definition of “financial links”
A need to address non-LASPO compliant business practices
But even if the MoJ were to accept and incorporate all of these ideas, they are unlikely to have the desired impact unless steps are also taken to formally regulate MROs. Whilst it is arguable whether it was foreseeable that the market would respond as it did to the establishing of MedCo, the practices came into existence in spite of MROs having to comply with MedCo’s qualifying criteria, user agreement, and ethics policy; and in the knowledge that MedCo had the power to carry out an audit of an MROs compliance.
It seems that the stakes are now such that the only response is to formally regulate MROs, so that a failure to comply in the future might be met with a fine or other penalty which is more likely to have effect. One solution could be to bring MROs under the jurisdiction of the MoJ’s Claims Management Regulator.
Tackling the wider issues in the RTA claims space
It seems clear that there is still too much money in the personal injury claims system, which is driving dubious practices by CMCs and others and encouraging fraudulent claims. Although we have presented a number of ideas in our consultation response, another issue which we believe should be addressed is the need to introduce independence into the rehab supply chain. As things stand, a claimant solicitor is not allowed to be linked financially to the medical expert selected directly on a MedCo search result, nor to a selected MRO, but can still be linked to the rehab agency/rehab provider.
As claimant law firms look to replace revenue lost elsewhere, they are inevitably seeking other profit streams. Some claimant organisations which own rehab providers, agencies and/or MROs are increasing their revenue by increasing the number of referrals made for rehabilitation, both for physiotherapy and CBT, to saturation levels.
There have also been instances of fraud in this arena both in terms of false invoicing of treatment costs as well as claimants not attending for treatment, yet a charge still being made for it. The position is sometimes complicated by virtue of the fact that the offer of treatment has often been made (and accepted), even before the medical expert has been instructed.
To discourage these types of behaviours, we believe that it would be sensible to give consideration to breaking the financial links between those operating in the rehab supply chain and those instructing them. Rehabilitation should be underpinned by the ethos of independence to ensure the treatment is both needed and wanted.
There is a natural affinity between the increased independence which has been introduced for the selection of medical experts through MedCo, and that required to achieve the appropriate level of independence in relation to rehabilitation. In their work to update the Rehab Code, the IUA have considered how independence could best be achieved and it will be interesting to see what their solution is, but whatever it may be, the rehab processes could be supported by MedCo’s systems of audit and accreditation, and we believe this could easily be adapted to suit the rehab arena. Once MedCo has completed the auditing of tier 1 MROs and the accreditation of experts, which is scheduled for January 2016, that might perhaps prove to be a good opportunity to consider how MedCo might tackle the issue.
Other ideas and initiatives
In his address at the ABI event, Ageas CEO Andy Watson, suggested that there was a need for further reform from reducing limitation in whiplash claims, reducing levels of awards in those cases, and reducing the level of costs. A sliding scale of costs, payable at a level that was dependant upon how soon after the accident the claim was brought, could be one possible solution, he suggested. Widening his theme to the issues within the credit hire market, he suggested that one of the unforeseen consequences of the CMA’s failure to act, was to almost give CHO practices a “seal of approval”.
We have also previously indicated our concern at the ever increasing level of general damages for minor whiplash claims and we think efforts to rein in those damages and reduce the value of a whiplash claim as a commodity would be a step in the right direction. However, with the new Judicial College Guidelines coming out very shortly, we do not anticipate welcome news.
It is clear that, at a time when CMC reported turnover levels have almost returned to pre-LASPO levels and at a time when reports of CMC adverse practices are being widely reported in the national press, there is a need to look at the way that CMCs operate and the Chancellor’s announcement in his Budget that a fundamental review of CMCs would be carried out was timely and we look forward to hearing about progress on that review shortly.
The Insurance Fraud Taskforce is to hold a further stakeholder roundtable event on 23 September, when attendees will consider the first half of the Taskforce’s potential recommendations (a second event in October will consider the remainder). Given that the Taskforce established a specific, cross industry personal injury workstream working party to look at the issue of fraud in that area, it is likely that the Taskforce will have received some ideas from that group to tackle some of the issues. We look forward with interest to seeing what they may be, as well as the Taskforce’s recommendations generally, in the near future.
For more information or to obtain a copy of DWF’s response to the MoJ’s Call for Evidence, please contact Marcus Davies on 0161 603 5148, or by email 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.