Another influential report from the TSC likely to affect handling of future injury claims
4 July 2014
The role of a select committee at the House of Commons is to critically examine the work of Government, and at the same time it can exercise influence as to how a Government department’s reform agenda is carried out. This is how it is currently with the on-going work of the Transport Select Committee which in overseeing the reforms being carried out by the MoJ in relation to problems raised by whiplash claims, has seen its past recommendations often being accepted by Mr Grayling and his team at the Ministry. It was before this Committee and as part of this process that DWF partner and Head of Motor, Nigel Teasdale, gave evidence last year. In its latest report issued today on the cost of motor insurance, the TSC come out in favour of changes which if implemented would impact on the claims handling process for all types of injury claim.
Summary of recommendations
In summary, the key changes seen as important by the TSC which would affect all types of injury claims include the striking out of whole of claims which are fundamentally dishonest; the establishment of independent medical panels for whiplash claims which can then be capable of being rolled out to all injury claims; a ban on solicitors offering inducements to potential clients to bring claims; a move to prevent claimant lawyers obtaining unnecessary psychological reports in claims; and a ban on pre-med offers.
If this were an end of term school report the Government ought to be quite satisfied. The Committee praises its commitment to tackling the issues, albeit taking the credit for putting them on the political agenda and opening up debate in the first place.
Future political consensus?
The report recognises that we are now 10 months away from the next General Election and that time is short. Indeed it warns of a concern that some measures are being tackled too hastily and without consideration of alternatives. Like all select committees it has cross-party representation, and there are signs here of a consensus developing across the political spectrum that work to achieve reform in these areas needs to continue, whatever Government is in place after next May. The report concludes with a warning that work on the issues must continue beyond the 2015 election and with greater co-ordination between Government departments to avoid losing momentum and a re-emergence of the problem.
Strike out of dishonest or exaggerated claims
The Committee broadly supports the introduction of measures by the MoJ to strike out the entire claim where there has been fundamental dishonesty but warns against hasty legislation to avoid unintended consequences. We can see that the report was finalised late last month before the introduction of the new clause 45 into the Criminal Justice and Courts Bill dealing with this issue. We expected some opposition to the bill and indeed this occurred in the House of Lords during the second reading of the Bill on Monday. The debate in the Lords also showed an understanding of some of the complexities of this proposed reform of the law after Summers v Fairclough, and it will be worth keeping a close eye on developments.
Independent medical panels
Perhaps of most importance in this area is that there is support from the TSC for the MoJ’s preferred position of genuine independence for the medical report-writing process. The Government will be reassured that the Committee endorses their proposals to ensure that MROs should be prohibited from providing reports for claims being pursued by solicitors belonging to the same business structure.
The Committee accepts the point which we have made previously, that if independent panels are shown to work in practice for whiplash claims, why not introduce them for all types of injury claim?
Whilst welcoming the Government’s desire to move quickly on establishing the panels, the Committee expresses concern at the short amount of time allowed for comments on the changes to the rules and protocols, and the Government’s haste generally given the detailed matters to be decided. They therefore recommend a consultation on comprehensive proposals for how the panels will work with a view to introducing the new system by next Easter, by this suggesting to the MoJ that it has time to give more thought to the plans, as well as it being possible to have the reform in place before the election.
It will be interesting to see whether the Government takes this on board, as only yesterday the MoJ provided an update on its recent consultation saying that it had received and considered over 150 submissions and will publish a response summarising stakeholders’ comments and their effect on the draft rules before the summer recess on 22 July. They maintain they are still looking towards an overall autumn implementation timetable.
The Committee supports the Government’s aim to ban solicitors from offering inducements to bring a claim such as cash or tablet computers. This follows the Advertising Standards Authority’s decision to require changes to the adverts from Hampson Hughes offering upfront cash inducements (although the firm continues this practice albeit presumably with clearer terms and conditions). Presumably the intended ban will be wide enough to cover the Hampson Hughes approach in its current format even though in reality it is little more than an agreement to apply for an interim payment if the right circumstances arise.
Claims for psychological damage
It is encouraging that the Committee has picked up on the need to take action against the recent practice of some lawyers obtaining unnecessary psychological reports, usually because of the advantage to the lawyers themselves from doing so. The Committee recommends that the Government press the solicitors’ regulator, the SRA, to “stop some solicitors from playing the system to maximise their income from unnecessary medical reports”. It will be interesting to see the response in this area both from the MoJ and the SRA, but prompt action will be needed by the current Government if a result is to be achieved by next May and in the meantime insurers will need to continue with their own strategies in response to this practice.
This aspect is also relevant to the question of whether to extend the current scope of the medical panels to other types of injury beyond soft tissue whiplash, including in particular, psychological damage. Our own response to the MoJ consultation suggested that the new process should apply to “all injury claims that arise out of a road traffic accident up to a value of £10,000”, a definition which would include those cases where there is a psychological element, rather than the current proposed definition which could lead to ambiguity.
Pre-medical offers and limitation
The Committee is firmly of the view that inadvertently, fraudulent and exaggerated claims have been encouraged by the practice of making pre-medical offers and they strongly agree with the Government’s intention to prohibit them. The Committee wants them banned.
But alongside this and in response to claims-farming concerns about the submission of a claim following an accident say 2 years previously, the Committee maintains that either the limitation period for bringing whiplash claims should be reduced or firmer contemporaneous evidence of the injury should be required. While they accept that the Government has not yet been persuaded about a potential reduction in the limitation period at least for some types of claim, it is interesting to note though that on Tuesday in a written response to a question about reducing the limitation period, Justice Minister Shailesh Vara did not explicitly dismiss the idea noting that whilst the recommendation was not taken forward in July 2013 “the Government remains committed to cutting the cost of whiplash and is willing to consider proposals that will achieve that aim.”
Other recommendations from the TSC report include:
The Committee says that they see the value of IFED in the fight against fraud and that they expect insurers to continue to fund IFED in the long-term, and recommend that Government oversee the funding to ensure that the unit has a long term future. Note no suggestion of any Government money though.
Lastly, the committee recognises the start that has been made to improve data sharing between insurers and solicitors and also accepts that it is important to get the scheme right, by doing so suggesting an appreciation that the issue isn’t as straightforward as they had thought when issuing their previous report.
There may be differing views among insurers as to the value in this latest report from the TSC, as while there are positive signs that the Committee’s future vision of claims handling issues in this area shows understanding, there will remain concern as to its dogmatic approach to pre-med offers. It would be unreasonable to deny though that the Committee has been influential in these areas during the current Parliament, and we should therefore expect that this latest report will again be taken seriously at the MoJ. We would expect the MoJ to be emboldened in its approach to areas where there is agreement between the Committee and Government such as on independent panels and response to exaggerated claims, as well as there being an effect in potential areas of additional reform such as in response to the current tendency on the part of some claimant lawyers to obtain psychological evidence far too frequently, or perhaps some reconsideration of the limitation period at least for certain types of injury claim.
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.