Speed Medical loses MedCo challenge
Speed Medical has failed in its attempt to judicially review the MoJ’s decision to randomise selection of MROs in the MedCo search function. At a “rolled up” hearing last week (11 December), Mr Justice Cranston concluded that the Secretary of State's decision to configure the search offer in the way his Department did, did not intefere with competition and was not irrational.
The way that the search offer is currently configured means that a Tier 1 firm appears once on every 14 occasions, 14 being the current number of registered Tier 1 MROs. Speed had argued that that meant that the number of instructions they might receive was restricted. MedCo Director and DWF Head of Motor, Nigel Teasdale looks at the judgment and what it might mean for MedCo’s immediate future.
The configuration of the search offer
Speed Medical Examination Services Ltd (a Tier 1 MRO) had argued that the MoJ’s decision to configure the search offer the way that it did was irrational and acted to limit competition in the MRO market place. Whereas before they could be instructed by any law firm looking to obtain a medical expert, they could now only expect to receive a share of instructions that was dependent upon how many other Tier 1 MROs there were.
They were not seeking to review MedCo as a concept and supported the concepts of Accreditation, Audit, Independendence and Sanctions
Their application to bring a judicial review was refused on paper by Mr Justice Leggatt earlier in the year. They renewed their application for permission before Mr Justice Cranston, sitting in the Queen’s Bench Division on 11 December, arguing that the decision of the Secretary of State for Justice had acted irrationally and in breach of competition law.
On the question of rationality
According to Cranston J, the challenge to the rationality of the Secretary’s decision “never gets off the ground “. In arriving at this conclusion, the Judge outlined the lengthy and extensive consultation process with stakeholders, going back to 2012, and which emanated out of the government’s concern about the rising cost of motor insurance. That consultation process led the government to conclude that, to reduce the cost of motor insurance and in order to better tackle fraud, it needed to focus on tackling the rise of whiplash claims. That conclusion then led in turn to it looking at the way that medical reports are commissioned and the perceived lack of independence between the medical expert and the solicitors requesting the report. Cranston J concluded that the extensive consultation process involved those affected by the MoJ’s decision, including Speed Medical and other MROs.
Even more importantly, in addition to the consultation process, the Government was guided in its decision making by the fact that the proposal for MedCo came from within the claims industry itself; from a combination of the Association of Medical Reporting Organisations (AMRO), FOIL, the ABI and MASS. Further, the decision to go with one Tier 1 MRO and six Tier 2 MROs was based partly on a paper by AMRO in October 2014 on random allocation of MROs, and then on research in early 2015. Given the process of policy formulation that the Secretary of State had pursued before reaching the decision he had, the decision could not be said to have been an irrational one.
The Competition Law Argument
Speed sought to argue that under competition law MedCo was abusing its dominant position in the MRO market without legal justification. Mr Justice Cranston felt this was at least an arguable point (unlike the argument that the decision was irrational) but was ultimately still unsuccessful. Cranston J, following the initial view of Leggatt J to refuse permission to raise a JR, perhaps unsurprisingly held that MedCo is not an MRO and operates in a different market to the MROs and experts it regulates, rather than being in competition with them.
He held that MedCo is in fact a regulator which is operating in the public interest, by implementing a policy of the Secretary of State, with no financial or economic interest in the market it is operating in. Cranston J went on to point out that MedCo is an independent company and its directors must exercise independent judgment. The way that MedCo operates was as a result of a State brokered arrangement to implement its policy, which attracted support from a number of representative bodies including AMRO. In any event, the way that MedCo is set up meant that it is complying with the type of legal requirement, recognised under Schedule 3 to the Competition Act 1998, to be “an undertaking entrusted with the operation of services of general economic interest”.It would therefore be excluded from the need to demonstrate competition on the basis that MedCo is required to comply with a “legal requirement”.
Even if Mr Justice Cranston had found MedCo had acted to restrict competition, that was objectively justified in his view. MROs were part of the problem as conceived by the MoJ. There was rational evidence for the Secretary to arrive at the number of the number of proposed MROs which he did that should be returned within the search offer. Once that decision had been arrived at the number of MROs was then distorted by multiple registrations of MROs and Tier 1 MROs overstating their offering.
For further information about this case and about MedCo generally, please contact Nigel Teasdate on 01772 554264 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.