A government commissioned report pointed out in 2003, there is usually ‘very little analysis of what the term compensation culture means, let alone proof that such a “culture” exists’. However, the absence of evidence to support a catchy phrase is not stopping the politicians using it to try and rush through massive changes to the industry whilst being lead like a toddler by the Association of British Insurers, (ABI) who stand to make huge profits by the continued peddling of this myth.
This is just one of the raft of dramatic proposals outlined by the Ministry of Justice, (MOJ) but it is one that has prompted James Thompson, the Head of Clinical Negligence at Ison Harrison, to pose the following questions to yourself: Should an insurer be able to decide a limit on the amount they will pay for the damage their policy holders cause to you or do you think this should be determined by the hundreds of year old law where reasonable losses can be recovered, subject to proof?
The Government are attempting to push these reforms through without proper consideration of the evidence, listening to counter-arguments, while at the same time, the insurance industry are effectively pulling the strings. The proposals will remove consumers’ rights of redress under tort law, which have stood in British law for centuries and once lost will be gone forever. Furthermore, the promised savings to the public are unlikely to materialise, as they failed to do with the previous reforms, and with insurance premium tax also going up, the public face having this cost passed onto them and being denied a fair and reasonable access to justice.
What Are The Personal Injury Reforms?
In summary, the main personal injury reform proposals are as follows:
- Reduce or scrap damages for soft-tissue injury claims.
- Any injuries lasting up to 6 or 9 months shall be classed as ‘minor injuries’.
- Injuries lasting longer than 6 or 9 months should have damages graded according to their duration. A minor injury shall receive £400 damages, plus £25 for psychological impact. An injury lasting 19 to 24 months will have a £3,600 tariff.
- A small claims limit has been raised initially to “at least” £5,000 and could be more, it could be £10,000. This means you will not be able to recover your costs if your claim is below this limit.
- Also being considered is an early notification of claims, ie. a claimant has 72 hours after an accident in which to seek and receive medical treatment.
The Government is currently inviting consultation on the proposals, but even that has become a contentious issue, with a January 6th 2017 deadline thought to be unreasonable, given the six-week consultation period being bisected by the Christmas and New Year period. They have already denied a request for a short extension so the matter can be properly considered.
Access to Justice
Campaign group ‘Access to Justice’ have called for more time to prepare and present their case, and have even cited the Government’s own code of practice, which states that the issues at stake should dictate the consultation period and timescales should be flexible as a result. The group claim that a 12-week consultation period is reasonable given that the scope for discussion is now far wider than the original prompt for the proposals suggested. The primary stimulus for the reforms was to reduce insurance fraud and cut insurance premiums, but it is widely felt that the scope now extends to consumers’ rights and the very future of the personal injury legal sector.
Access to Justice are currently undertaking a survey of legal firms which closes in early December, and the results of this are expected before Christmas. The results are expected to demonstrate the widespread concern being felt across the legal sector, not just over the economic impact on many legal practices, but on the fundamental right of the consumer to receive fair and qualified representation.
There are several fundamental issues within the reforms that could impact upon the general public’s right to justice and fair treatment, while there are also aspects of the reforms that pander to misconceptions within the legal and insurance industries. It is felt that the increase of the small claims limit to £5,000 will leave the majority of consumers in a position where they may be forced to represent themselves, as the likely claim reward – should they win – will be less than £5,000 and hence they can’t recover the legal costs. To make matters worse for the public and innocent victims of personal injury, particularly with road traffic accidents, they are likely to be in court facing insurance companies who have vast legal budgets and can therefore employ solicitors to represent them. Even if the public could then afford legal representation of some kind, it most likely puts them at an immediate disadvantage.
Given the widespread concerns, we surveyed a number of our key staff in the clinical negligence department at Ison Harrison, and below are the most salient points, which highlight the flaws many believe are evident in these plans, while also referencing where it is felt some of the reforms are justified.
Iain is based at our Ilkley branch and brings more than 20 years’ experience of personal injury and clinical negligence law. Iain has worked on some very high profile cases and has successfully settled individual claims running into several million pounds. Given Iain’s experience he is well-placed to consider that the Government’s reforms are an example of using “…a whopping great wrecking ball to crack a peanut”, based on the misconception that there is a “rampant compensation culture”. Iain believes that a soft tissue injury causing symptoms for six to nine months is not what you would normally class as a minor injury. For example, whiplash injuries can severely affect people with a manual job or even a partly-manual job, while elderly people with a ‘minor injury’ can be left isolated and with their lives greatly affected.
The proposed tariffs should be set by referring to the “far more accurate” Judicial College Guidelines, (already in place) according to Iain, while the £25 tariff for psychological impacts is classed as ridiculous and suggests a “lazy approach” by the Ministry of Justice. Iain believes that a properly represented claimant would often, rightfully, receive more and that this system is simply pandering to the need to prevent “have a go” claimants who have dubious injuries and motives.
Melita is a recent addition to our Leeds city centre office as a paralegal within our personal injury team, and having graduated only in 2014, Melita can see flaws in the reforms from a professional point of view, but also as a member of the public. Highlighting the serious threat to the legal industry, Melita advises that it wouldn’t be cost-effective for law firms to take on cases where minimal costs would be received, and hence much of their business would dry up. Melita does, however, understand why the reforms have been considered. She has experienced clients who have sought a claim simply to recover expenses such as policy excess and loss of earnings, even though their injuries weren’t severe, because insurers wouldn’t otherwise reimburse them. Nevertheless, the reforms are trying to lump all claims into one pot when people suffer with and are affected by injuries differently, and it is impossible to generalise with a tariff system and compare a two week
injury with one lasting six months.
The cap on psychological injuries is also classed as “outrageous” by Melita. She refers to clients who have taken a different route to work each day following a road traffic accident and the subsequent onset of travel anxiety. Given this can add half an hour extra to a commute each day very easily, £25 maximum compensation is “an insult” in such cases.
Ami is a trainee solicitor within our clinical negligence team, but is already building a strong reputation with clients for providing invaluable support and assistance both efficiently and professionally. Ami believes the proposed reforms will prevent the public’s access to justice, as claimants will be more likely to represent themselves in court.
Fixed damages of £400 would not nearly be enough to compensate somebody who broke a bone which took four months to heal, according to Ami, who also felt the same about the derisory £25 cap on psychological injury. Ami also believes it is unreasonable to expect a claimant to seek medical attention within 72 hours of an accident in many cases.
Based at our Ilkley branch, Geraldine has over 20 years’ experience working with clients on personal injury claims and now specialises in high-value claims such as brain injuries. Geraldine is adamant that the insurance industry has influenced the Government’s reforms, by perpetuating the myth of a compensation culture that is not borne out by statistics. This has led to the older generation not seeking justice when perhaps they should, so as not to play a part in this.
In line with previous comments, Geraldine believes reducing or scrapping the damages for soft tissue injuries flies in the face of Access to Justice, and that injuries causing distress or discomfort for six to nine months can’t be dismissed as ‘minor’. Geraldine also brands the £25 psychological injury limit as “utterly ridiculous”, citing the possible impact this could have on the everyday life of an elderly person, who could very quickly and easily lose all their direct contact with the outside world. Geraldine is clear in her belief that raising the small claims limit to £5,000 will virtually wipe out the personal injury arm of the legal profession, and she also believes that many claimants will simply not bother claiming in the face of such small net damages.
Geraldine does agree that there is little to be afraid of in terms of the disclosure of referral sources and in principle is not opposed to the requirement for an early notification of claims, though she does warn that it can take two weeks to get a regular GP appointment and this could put strain on already overstretched A& E departments.
Barnaby is another recent addition to Ison Harrison’s clinical negligence team, and having qualified as a solicitor in 2012, he has already built up a solid reputation for taking a client-focussed approach to many high-profile and complex clinical negligence cases. Taking this ‘client focus’ further, Barnaby comments that the proposals undermine the ordinary person’s access to justice, and he believes there is no hard evidence that the proposed reforms will ease pressure on increasing insurance premiums.
Referring to the practicalities of the reforms, Barnaby notes it can take several hours for soft tissue injuries to develop, so he believes implementing mandatory timescales for early notification of claims is unrealistic. He also believes more people will be tempted to pursue claims themselves as litigants in person. This could result in insurance companies dictating compensatory awards and having even more power over innocent injured people.
James seeks to remind everyone that the Government’s “Better Regulation Task Force” (the ‘Task Force’) report, the conclusions of which has since largely neem accepted, denied that Britain is in the grip of a compensation culture, basing itself partly on the opinion of ‘almost everyone’ who gave evidence to the enquiry and partly on the declining number of personal injury claims registered in recent years. In any event, the Task Force saw the problem as lying elsewhere than in the statistical facts. The ‘real’ problem was said to be perceptual. Allegedly, too many of us have been persuaded by media stories and the avaricious advertising of certain claims management companies that ‘large sums of money are easily accessible’. According to the Task Force, there is no objectively sound basis for such beliefs or for asserting that Britain is suffering from a ‘have a go culture’. Nonetheless, their report paradoxically concluded that an ‘urban myth’ asserting it
s existence has been widely accepted as the reality which, in turn, has inclined an unquantified minority to press speculative claims that lack merit or are spurious.
In conclusion, do you want politicians and those who stand to make staggering profits, (which they will pocket) to make changes which will rob you of your legal rights and access to justice all based upon an Urban Myth?
The Next Steps
While we await confirmation that the Government will proceed with the personal injury reforms there is time for the legal sector, and particularly that part with a direct interest in these proposals, to discuss the reforms and perhaps find possible areas of agreement, but that time is running out.
There are parts of the reforms that personal injury lawyers see a benefit to, and establishing this common ground may help going forward, in the hope that good sense prevails and widespread opposition to the main aspects of the reforms has an impact on their implementation. However, it is clear that the Government are keen to implement these proposals as soon as possible, and while there is no current timescale for this, any person currently recovering from a personal injury would be advised to very swiftly seek representation before the rules change. Of course they may not be physically or mentally ready to do so, further impacting on the wellbeing of the innocent victim, and highlighting how the primary factor of access to justice is quite simply lost in all this.
Have a word with your MP and give them your thoughts. See if they have taken the time to make themselves familiar with the facts and what is at risk or are they being lead up the garden path ignorant of what you stand to lose?
Recommended further reading:
- Office of Fair Trading, An analysis of current problems in the UK liability insurance market, June 2003, at para 10.4.
- Tackling the “Compensation Culture”. Government Response to the Better Regulation Task
- Force Report: ‘Better Routes to Redress’, November 2004. An inter-departmental ‘Ministerial Steering Group’ is responsible for considering what regulatory changes are desirable.
- Better Regulation Task Force, Better Routes to Redress, May 2004, at 11.
- W. Haltom and M. McCann, Distorting the Law. Politics, Media, and the Litigation Crisis (Chicago: University of Chicago Press, 2004).
- ibid, and Foreword titled ‘Compensation Culture: Exploding the Urban Myth’.