The UK has been dubbed as ‘the whiplash capital of the world’, but Amanda Stevens, group head of legal practice at Hudgell Solicitors, points out that she is not alone in having little confidence in the new measures contained in the Prisons and Courts Bill aimed at tackling fraud.
What are the key measures relating to whiplash and PI claims/compensation proposed in the Bill?
The Prisons and Courts Bill, LNB News 23/02/2017 74 seeks to replace the current assessment of damages for the pain, suffering and loss of amenity award for road traffic accident (RTA) related whiplash and accompanying minor psychological disorder with a tariff based award where symptoms last no more than two years.
Judicial discretion can override the tariff in exceptional circumstances but not by more than plus or minus 20% of the tariff sum. Furthermore, the Bill aims to ban pre-medical report settlements of compensation.
What problems with the existing law/system are these measures seeking to address?
The government has claimed the UK is the ‘whiplash capital of the world’. It has a long-held view that there is a ‘compensation culture’ leading to excessive and unnecessary, as well as sometimes fraudulent, claims and compensation payments for soft tissue injuries to the neck contributing to higher motor insurance premiums.
The government also believes the cost of dealing with such claims is out of all proportion to any genuine injury suffered.
The Bill also seeks to address the practice whereby it is claimed anecdotally that up to 10% (in excess of £50,000) RTA claims per annum are settled without medical evidence because insurers say it is not commercially viable to contest them due to increased legal costs that would become payable. Government sees this process as encouraging minor or fraudulent claims.
To what extent do you think the new measures are practical and capable of being effectively implemented and enforced?
I am not alone in having little confidence in the new measures tackling fraud. The number of such claims has not been proven. Indeed, the Transport Select Committee published extensive findings in 2013 concluding:
There is no authoritative data publicly available about the prevalence of fraudulent or exaggerated claims for whiplash injuries and no consensus about what constitutes fraud. Estimates of the percentage of claims which were fraudulent ranged from 0.1% to over 60%.”
As H. James Harrington said:
If you can’t measure something you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”
Similarly, I have little personal confidence that the promised reduction of £40 on annual car insurance premiums will materialise. The Institute & Faculty of Actuaries has previously concluded that measures to reduce whiplash claims ‘while material and favourable, may not necessarily lead to any material reduction in premiums’. Since the reforms were announced, the Lord Chancellor has also announced cuts to the discount rate which are going to leave insurers reaching to adjust their books yet again.
I feel more optimistic about the prospects of success of the ban on pre-medical offers, although the draft Bill is at pains to point out that breaches will have to be monitored and enforced by regulators but breaches will not make a person guilty of an offence, do not give rise to a right of action for breach of statutory duty, nor do they make an agreement to settle the whiplash claim in question void or unenforceable.
In your opinion, do the provisions contained in the Bill go far enough, or does more need to be done? For instance, proposals to reform other PI claims, such as those in the workplace, appear to have been dropped.
The answer to this question depends on whether one accepts the government propositions around fraud, unmeritorious claims and the compensation system accounting for unacceptable levels of insurance premium.
Personally I would not advocate widening the ambit of claim types affected until the impact of these reforms has been seen in practice.
The government consultation also included questions designed to facilitate further reforms in the areas of credit hire, rehabilitation and recoverability of disbursements, eg cost of medical reports as well as reducing the limitation period and amendment to qualified one way costs shifting so the court’s permission would be required to discontinue less than 28 days pre-trial.
The industry stakeholders have a long history of providing their own solutions—sometimes brokered through mediation—to reach workable solutions in many areas of injury claims, and I personally would not be seeking further legislative reform in the areas identified at this time.
What are the implications for practitioners and those advising in this area? What steps should they be taking in preparation and how should they be advising clients?
The Bill still awaits a date for a second reading in the House of Commons, so a long parliamentary journey lies ahead.
The Ministry of Justice has, however, announced that the reforms will not be implemented before 1 October 2018 due to other overlapping areas of reform currently under debate, such as the raising of the small claims limit which has to be approved by the Civil Procedure Rule Committee.
It is not yet known how transitional arrangements will apply either—for example, will the reforms affect all new claims arising after a certain date?
A number of claimant practitioners have been advocating PR to attract more new claims now which could be processed under the current rules where there is a more generous allowance for pain and suffering, rather than leaving claimants to begin actions closer to the limitation period.
Some law firms are announcing investment in new IT platforms to process claims more speedily, as current operating margins will be put under extreme pressure in the new model if Rules are passed in addition to the Bill resulting in transfer of most of these claims to the small claims court. Others are predicting redundancies, while some predict a rise in the number of people offering to act as McKenzie friends.
One thing is certain—current pricing models and processes will need to be examined and adjusted carefully if reliable legal assistance is to continue to be available to the public for these types of injury claim.
Amanda Stevens is experienced in handling cases for clients pursuing small, moderate and large injury claims. In recent years she has specialised in claims involving more complex injury and clinical negligence cases where injuries have been severe or long lasting. Amanda has a long track record in leading on campaigns for law reform and regularly speaks to press, politicians and the judiciary on topics on the law reform agenda. In 2016 she was appointed as a Deputy Master in the Queen’s Bench Division of the High Court. She is past president of the Association of Personal Injury Lawyers.
Interviewed by Kate Beaumont. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.