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MedCo comes under review

In June, the MoJ published a statement on the MedCo website highlighting its concerns about a number of behaviours in the MRO market that have the potential to undermine the Government’s policy objectives and threaten public confidence in MedCo. The MoJ indicated that whilst MedCo had the tools necessary to tackle these issues, it would also carry out a review of how the system is working.

A month later and sooner than expected, the MoJ announced a “Framework Review” of MedCo and issued a call for evidence about a number of issues, including the qualifying criteria for MROs, the search offer, the statement of financial links and whether further reforms are needed to support the way that MedCo operates. MedCo director and DWF Head of Motor, Nigel Teasdale looks at these issues and why the MoJ is reviewing them now.

The areas under review

In the first ten weeks of operation of MedCo, a total of 114,800 searches were carried out; 106,000 searches in selection of MROs and 8,800 searches of direct experts. Most of these searches will have been completed satisfactorily but over the past few months the MoJ has identified a number of behaviours that it believes need to be addressed if MedCo is to effectively provide randomly selected, independent experts.

The aim of the Framework Review is to address these issues and the MoJ has highlighted what it sees as the three key components of the process that should ensure independence and randomisation in the selection of experts and MROs. These are:

  • the search offer;

  • the statement of direct financial links; and

  • the qualifying criteria for MROs

To be clear, these three key components were defined by MoJ policy decisions taken in March, just before MedCo went live, which MedCo was required to implement, rather than these aspects being affected by decisions taken by MedCo.

As we highlighted in our recent update, some MROs have been attempting to play the system by registering with MedCo multiple times, thus increasing the chances of those MROs appearing in any given search result. Seemingly these behaviours have emerged in response to the MoJ’s decision to design the search offer in the way that it has, as those users wanting to instruct an MRO are presented with a choice of seven MROs in total; one tier 1 MRO and six tier 2 MROs. By acting in this way, the search offer is undermined as randomness is diminished.

Similarly, the MoJ’s policy decision on searches has seen the emergence of what the MoJ was referring to as the “Qualitas business model”, where ostensibly unconnected MROs share instructions, enabling those organisations to potentially subvert the rules on financial independence as well as raising issues over choice and data handling.

The MoJ made it clear in its June statement that the system was neither designed nor intended to permit these types of behaviours. Whilst the MoJ indicated at that stage that it believed that MedCo had the tools to tackle these behaviours, the MoJ’s decision to carry out an early review is welcome and should supplement the audit work that MedCo is currently carrying out to ensure there has not been a breach either of MedCo’s Agreements or its Ethics Policy.

Stakeholders urged to provide evidence of how MedCo is working

Reiterating its commitment to greater independence in the way that medical evidence in support of whiplash claims is obtained, the MoJ has issued a Call for Evidence from stakeholders on the operation of the MedCo portal and seeks views on the following:

  • whether the current operation of the MedCo Portal meets the Government’s objective of enhancing the independence of medical reporting;

  • the effectiveness of the qualifying criteria for MROs, which are intended to ensure that MROs are robust well run organisations with the opportunity to compete at the right level within the MedCo system;

  • the mix and number of MROs that appear in the search results, in light of the Government’s objective to minimise undue impact on the market whilst ensuring the choice provided is not so wide as to negate the objective of introducing independence;

  • whether the financial links declaration, which is part of the current MedCo user agreement, achieves the Government’s intention of enhancing independence, including whether the current definitions need to be extended to address other types of unhealthy relationships between organisations operating in this sector; and

  • the experience of MedCo users to date with a view to improving the service offered to users.

In addition, the MoJ has been holding a series of stakeholder meetings that are taking place in London, Birmingham and Manchester. The outcome of those will feed into people’s responses and the thoughts of the MoJ.

Making changes to tackle the issues MedCo faces

As we see it, the most obvious way of preventing MROs making multiple registrations with MedCo would be for the MoJ to change the qualifying criteria for MROs, even though it is something that MedCo has already indicated it intends to tackle by way of audit. The current qualifying criteria refer to a “disincentive” to shell companies being formed but maybe had the MoJ known then what it knows now, it might have extended the wording into an outright ban.

As things currently stand, only tier 1 MROs have to demonstrate a minimum of two years trading history in order to be accredited and to comply with minimum service standards. Again that might be an area that the MoJ feels can be tightened so that claimant representatives can be reassured on quality in the MRO environment, doing away with some fears over the much quoted “MRO above a kebab shop”.

If the MoJ were minded to change the configuration of the search offer, it would have to proceed with caution. The MoJ decided against a “cab rank” approach to expert selection in devising the search offer but still wanted to bring independence to the selection of MROs and direct experts.  The MoJ therefore had to tread a careful path between not restricting choice to such an extent that it could be argued that its solution amounted to a restraint of trade, but at the same time not offering so wide a choice of MROs and direct experts so that a familiar name would be likely to appear in any search and so would be selected. Any review of the search offer would no doubt need to continue to have regard to these two factors. However, a common complaint about the system as it currently stands is that whilst there is a choice of seven MROs, only one of those is tier 1. The tier 1 companies argue that there should be an element of choice within tier 1 to enable them to legitimately compete for market share based on the quality of their offering. It would so happen that if the number of tier 1s were increased from one to two, the share of instructions taken by tier 1 MROs would be likely to increase incrementally as well, no doubt to the satisfaction of the tier 1s.

There is also an opportunity to strengthen the statement on direct financial links, and perhaps now having experienced the world of MROs, the MoJ might be looking again at links between spouses and family members

The Call for Evidence closes on 4 September and the MoJ has indicated that it will consider the evidence it receives alongside MI from MedCo and other available data to assess what changes are required. We would be happy to work with clients on their responses.

Contact

For further information, please contact Nigel Teasdale, Partner on +44 (0)1772 554264.

By Nigel Teasdale

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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.

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