Calling Time on the Compensation Culture
Published 8 July 2015
Under the pre-Jackson regime, the frequency and cost of whiplash claims spiralled out of control, creating a 'feeding frenzy' for claims management companies and lawyers alike. Out of kilter with the rest of the continent, this has resulted in the UK claiming the unenviable title of 'whiplash capital of Europe'. More significantly, higher claims payments have rendered the cost of motor insurance prohibitive for many.
The MOJ published its response to the consultation on whiplash reform in October 2013, targeting the very heart of the whiplash claims process – the medical reporting process.
By regulating those who can prepare the report, the evidence at their disposal and what they are paid, the reform programme is designed to weed out unmeritorious claims and dissuade the 'have a go' claimant. The end goal is to reduce both the frequency and cost of whiplash claims.
Phase 1 of the reform programme was introduced on 1 October 2014, capping the cost of initial medical reports at £180. To promote independence in medical reporting, treating experts are prohibited from producing medico-legal reports. And for the first time, where there is a dispute as to the mechanism of an accident the defendant is entitled to put forward an alternative version of events, and the medical expert must give it due consideration. Finally, the use of 'pre-med' offers (those made without the consideration of medical evidence) has been restricted. Part 36 offers made before receipt of medical evidence will not afford the usual costs protection until such time as a fixed costs medical report is served.
Phase 2, which came into force on 6 April 2015, further strengthens the independence of the reporting process, banning solicitors from commissioning reports from medical reporting organisations (MROs) or experts with whom they are linked financially. MROs and experts wishing to produce medico-legal reports in 'soft tissue injury' claims must register with MedCo – the not-for-profit organisation set up to administer the new regime. As part of the registration process, MROs and experts who choose to register direct must meet certain qualifying criteria, sign up to a user agreement and pay a fee. Solicitors must commission reports using the MedCo IT hub which returns a random selection of MROs or experts to choose from.
Before the end of the year, all MROs and experts registered with MedCo will have to complete an accreditation process. This is likely to involve mandatory training on the latest research in soft tissue injuries and a basic understanding of bio-mechanics, as well as a system of peer review and audit.
As part of the accreditation process, MedCo will collate management information on medical reporting outcomes, focusing on trends in relation to diagnosis, prognosis and treatment recommendations, to identify experts whose findings are out of kilter with their peers. This will provide a much needed quality assurance stamp to the medical reporting process, provided that there are robust sanctions for persistent non-compliance or under-performance. In essence, for there to be a sea change, MedCo must show its teeth where necessary.
Whilst it is early days, the initial signs are positive and it is anticipated that most commissioning solicitors and MROs will play it with a straight bat. Those looking to circumvent the new rules may move into other volume claims areas such as Noise Induced Hearing Loss (NIHL), often described as 'the new whiplash'.
One concern relates to the provision of rehabilitation, which is not covered by the new rules. In theory, solicitors could commission physiotherapy and/or CBT treatment from their own provider as soon as they are instructed (and prior to any medico-legal examination), though it is hoped that accreditation will add the necessary scrutiny to such behaviours.
Overall, the whiplash reform programme is welcome and has already brought much needed change within a short timeframe. This has only been made possible by stakeholders across the industry working collaboratively. Looking ahead to accreditation from 1 January 2016, provided experts are given the tools to challenge long-established industry norms the industry should be confident that the frequency and cost of claims should fall, to the benefit of all consumers of motor insurance.
Peter Allchorne is a Partner in the Motor Claims Team at international law firm DAC Beachcroft.
This article was first published in Personal Injury Update Law Journal, May 2015.