The following article from Fasken Martineau DuMoulin LLP provides a very helpful summary of the what the judgment really means from both a UK insurance industry perspective and possible local impacts.

https://www.fasken.com/en/knowledge/2020/09/25-beyond-the-media-hype-what-does-the-uk-fca

Fasken Martineau DuMoulin LLP originally published this analysis on their web site.

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https://beale-law.com/publications/1020-insurers-how-to-avoid-your-policy-avoidance-decision-being-overturned-by-the-court.php

Beale and Co published this story on their web site.

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In a welcome clarification, the Government will extend the MedCo system to cover all injury claims related to road traffic accidents under £5,000, with the existing fixed recoverable costs regime applying to those initial reports for non-soft tissue injury too.

The outcome provides continued encouragement that the intended implementation date of April 2020 for the whiplash reforms, including the new portal system, remains in place.

Summary

The consultation relates to the whiplash reform programme introduced by the Civil Liability Act and expected secondary legislation increasing the small claims track limit for road traffic accidents to £5,000. After seeking the opinions of medical experts, medical reporting organisations (MROs), legal representatives and insurers, the Government has concluded that:

• The existing MedCo system for obtaining reports for soft-tissue injury claims will be extended to cover initial medical reports for all RTA related personal injury claims under £5,000
• Initial medical reports for non-soft tissue personal injury claims can be provided by General Practitioners and Accident and Emergency (A&E) consultants only
• The existing fixed recoverable costs regime for soft-tissue injury medical reports will apply to all initial RTA related non-soft tissue injury medical reports for claims under £5,000
• To protect unrepresented claimants, new qualifying criteria and standard service level agreements will be developed for medical reporting organisations (MROs) and experts

Expansion of MedCo

The Government has elected to widen MedCo’s remit so that all initial medical reports for RTA-related PI claims in the small claims track are dealt with using that system. This extension received 74% support amongst those who responded to the proposal.

The extension of MedCo was identified as providing consistency with the existing system and also more user-friendly then alternatives, given expected increases in the number of unrepresented claimants.

Claimant representatives suggested that additional funding should be made available to ensure that medical reports for unrepresented claimants are always free of charge. As we have noted previously, the position of possible fee remissions remains unclear, and has not been addressed in greater detail in the response.

Reports for non-tissue injury claims under £5,000

It has been clarified that medical reports obtained for non-tissue injury claims (whether or not accompanied by a soft tissue injury) will be provided by GPs and A&E consultants only.

Responses in the consultation noted “their experience and training made them more suitable to provide these reports.”

Broadening the types of medical experts registered on MedCo

Presently, doctors, consultants and surgeons registered with the General Medical Council and physiotherapists registered with the Health and Care Professions Council can be accredited by MedCo to provide medical reports for soft tissue injury claims.

The consultation sought clarification on whether other types of specialists, such as dentists, ear, nose and throat specialists and psychologists should be accredited by MedCo to provide medical reports for road traffic injuries, in light of the proposed inclusion of non-tissue injuries.

In response, the Government has made clear that it will not be adding additional specialists to the MedCo process for the purposes of providing initial medical reports. The identification of the need for such a report was likely to be “difficult for unrepresented claimants“, and that the recruitment and accreditation of such specialists in any event would be time-consuming, and not cost-effective.

However, the Government did note that it “may be worthwhile adding such specialists to MedCo for the purposes of sourcing additional recommended reports.” This will be considered with the MedCo board and stakeholders at a later date.

A significant number of respondents (87%) also made clear their objection to an extension of the types of experts allowed to provide medical reports for soft tissues injury claims, to include chiropractors and osteopaths. Common objections noted their classification as complementary therapy providers, and that their experience was not at “sufficient a level to support their addition” nor would “the market support their inclusion“

Fixed costs medical reports

The Government has decided it is appropriate for the fixed recoverable costs regime to be extended to RTA related non-soft tissue injury claims within the increased small claims track.

The current level of £180 plus VAT will be applied, providing “certainty to both claimants and to those providing reports“.

This conclusion was reached despite objections from insurers and defendant representatives that the amount should be lowered, particularly for those claims which will fall within the whiplash tariff; objections from claimant representatives also argued that non-soft tissue injuries were more complex, and thus the cost should be higher.

This fee cap will be reviewed following the full implementation of the whiplash reform programme in April 2020.

In addition, having not agreed that further specialists can complete initial medical reports, the Government determined that there should be no extension of the fixed recoverable costs regime beyond those currently set for additional reports provided by Orthopaedic Surgeons and A&E Consultants.

Once again, this situation will be kept under review when the reforms have been fully introduced.

Options for obtaining medical reports for unrepresented claimants

The initial consultation proposed retaining “the current MedCo model of providing a randomised list of medical report providers, but with proportionate and necessary changes to meet the specific requirements of unrepresented claimants“.

The Government has confirmed that this retention may require changes to the qualifying criteria for MedCo to enable the proper service of the needs of unrepresented claimants. The details will be published prior to April 2020 to allow stakeholders to determine whether or not they wish to opt-in to the service for unrepresented claimants.

The responses from MROs and directly instructed experts (DMEs) suggest that there will be “sufficient operational capacity to support the assumed volume of unrepresented claimants“. There was also heavy support for the introduction of standardised service level agreements for MROs and DMEs dealing with unrepresented claimants to provide additional consumer protection.

A link to the full Government response can be found here

Credit to Clyde and Co for the original article.

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On 15 July, Gauke announced that the rate would rise from -0.75% to -0.25% on 5 August.

In a 77-page report dated 25 June 2019, the Government Actuary’s Department had recommended that the rate be set at 0.25%.

Responding to the government actuary as part of yesterday’s announcement, Gauke referred to the department’s analysis as “a starting point for my determination rather than an end point”.

Disagreement

In a letter to Gauke, Clarke calculated that a rate of 0.25% would have a 50:50 likelihood of overcompensating and under-compensating the average claimant.

The Lord Chancellor regarded this 50:50 split as an unacceptable compromise. As an example, he highlighted that it would give claimants only a 65% chance of receiving 90% compensation.

Gauke noted: “I consider this to give rise to too great a risk that the representative claimant will be under-compensated, or under-compensated by more than 10%”.

It was decided that claimant outcomes should be more heavily weighted towards over-compensation, consequently pushing the Ogden rate below the recommended 0.25%.

Gauke did concede that the decision “involves making a series of assumptions and judgements in considering the evidence and economic variables that apply” but insisted he should “build in further prudence” in “order to recognise that in any individual case one or more of those baseline assumptions may not apply”.

Credit to Insurance Age for the original article

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The Ministry of Justice (MoJ) has confirmed the government will delay its whiplash reform measures from 1 April 2019 to April 2020. The news was delivered in an MoJ response to the Justice Select Committee’s report on Small Claims Limit for Personal Injury.

In its response the MoJ wrote: “The government is acutely aware that the proposed approach will fundamentally transform how whiplash claims are handled and that any concerns around access to justice have to be addressed promptly.

“There will need to be extensive user testing in order to ensure that the system is easy to use for all user groups and that the guidance is clear.”

The MoJ noted that it was crucial the reforms, and implementation of the online portal, was “done right rather than quickly”. Adding: “This is why the government is now proposing for the platform to be ready for large-scale testing by October 2019 with the view to implementing the whiplash measures, including the rise in the small claims limit to £5,000, fully in April 2020.”

Reaction from stakeholders

The Association of British Insurers stated it was pleased that the MoJ “remains committed” to the changes. James Dalton, director of general insurance policy commented:

“Getting the implementation of these reforms right is absolutely critical if the system is to deliver fairer outcomes for claimants and millions of motorists so it is sensible to delay implementation until April 2020.”
Andrew Twambley, spokesperson for Access to Justice (A2J) also welcomed the delay but also criticised the overall changes:

“Creating, testing and implementing new user-friendly technology to deal with injury claims is enormously complex, and the government’s IT track record is dreadful,” said Twambley. “Ministers have yet to explain why a computer, built and administered by insurers, is better for injured people than a legal professional who is 100% on the side of that injured person”. “The MoJ has again ducked this question in its response to the Select Committee.”

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Peers defeated a proposed amendment from a former lord chief justice, the crossbencher Lord Woolf (Harry Woolf), to remove tariffs for limiting damages in the Civil Liability Bill. The vote, which followed more than two hours of debate, was won by the government by 218 to 205.

The vote at the report stage in the Lords will be a bitter pill to swallow for campaigners who had pinned their hopes on the upper house putting pressure on the government to amend its plans. It is now unclear what, if any, further efforts can be made to have the legislation further redrawn, as it moves onto the House of Commons.

The government did make one concession, pledging to bring forward at third reading an amendment to require the lord chancellor to consult the lord chief justice before setting or amending the tariff.

Full article on the Law Gazette – https://www.lawgazette.co.uk/news/civil-liability-bill-government-secures-crucial-win-by-just-13-votes/5066460.article

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Call for written submissions

The Committee invites written submissions of no more than 3,000 words in length addressing the following questions:

• The definition of whiplash and the prevalence of RTA-related whiplash claims
• Whether or not fraudulent whiplash claims represent a significant problem and, if so, whether the proposed reforms would tackle this effectively
• The provisions in Part 5 of the Bill introducing a tariff to regulate damages for RTA-related whiplash claims, with an uplift in exceptional circumstances; and banning the settlement of claims without medical evidence.
• The impact of raising the small claims limit to £5,000 for RTA-related whiplash claims, and of raising the small claims limit to £2,000 for personal injury claims more generally, taking account of the planned move towards online court procedures
• The role of claims management companies in respect of these matters.

The Committee has already taken oral evidence on this topic from the Association of Personal Injury Lawyers and the Association of British Insurers, on 7 February 2017.

Government’s consultation on RTA-soft tissue injuries

Submissions previously made to the Government’s consultation on RTA-soft tissue injuries can be sent to the Committee for information (the Committee cannot accept material prepared for other purposes as formal evidence but can refer to previously published material in its report), or alternatively fresh submissions can be made through the Committee’s evidence portal for this inquiry.

The Committee intends to hold one oral evidence session following receipt of written submissions, before preparing a report on the subject.

Original article can be found on the Parliament.uk website – http://www.parliament.uk/business/committees/committees-a-z/commons-select/justice-committee/news-parliament-20151/personal-injury-whiplash-and-the-small-claims-limits-inquiry-launch-16-17/

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One of the reasons given for the delay is the vote for the UK to leave the European Union, which has meant that the Ministry of Justice has been distracted by other issues.

Difficult solution

However, according to David Williams, technical director at Axa Insurance, another reason is that one of the two original proposals was too difficult to find a possible solution for.

“One was very straight forward, which was to increase the small claims limit to £5,000,” Williams explained. “But trying to reduce the number of whiplash claims by passing legislation that could potentially prevent other genuinely injured people from getting general damages is a massive and complicated can of worms.”

Meanwhile, Andrew Twambley, spokesperson for Access to Justice, said the decision to put the reforms on hold was “great news for the injured public”.

“Prior to 13 October the Association of British Insurers and the insurance industry were on a mountain of power, whereas the power now has been shifted,” he argued. “There’s now an equal playing field and more of an appetite by both sides to get together, collaborate and sort it out.”

His view that it is now up to the interested parties to work collaboratively and provide a solution was echoed by players in the insurance industry.

“It’s a great opportunity for insurers and the claimant lobby to, rather than just being abusive to each other, come up with something which would achieve what the government is seeking to do that all parties could agree on,” Williams stated.

Pushing for change

Graeme Trudgill, executive director at the British Insurance Brokers’ Association, noted that the broker trade body shared the insurers’ concerns and would continue to push for change.

“The big cost on motor insurance due to something like whiplash means that we are seeing motor rates that are quite high and we’ve seen some quite significant increases over the last three to six months,” Trudgill continued.

“That’s always a difficult one to explain away to a customer, so we want fairer pricing and competitive rates for customers. We also don’t like fraud.”

Matt Munro, chief executive officer of broker iGo4, said that whiplash claims were an issue for brokers as well as insurers, but highlighted that the reforms originally proposed were too widespread. He argued that there needed to be a balance between “eliminating fraudulent, aggressive claims and the rights of those that have been injured”.

“Something needs to change because there’s still a lot of unhelpful and unneeded activity being done by claims management companies, which will create spurious claims and fraud,” he continued. “There definitely needs to be some type of reform, but it must be focused on the right things.”

Moving forward

One solution that has been aired previously, and clearly remains at the forefront of the experts’ thinking, is to reduce the period of time after an accident that a person can make an injury claim. The aim would be to stop claims management companies from contacting people about accidents that happened years before.

In addition, Townend pointed out that the compensation culture also needed to be tackled, citing the example of organised criminal gangs staging accidents and “putting people in harm’s way”.

“This really is about the consumer and everybody thinks whiplash is a victimless crime, but it’s not,” Townend concluded.

“We’re calling for the consultation to be issued, because then all stakeholders will have the opportunity to put forward their solution to the problem.”

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