Low-value road traffic accident claims “are not so complex that claimants routinely require legal representation to pursue them”, the government has argued – and suggested that claims management companies and paid McKenzie Friends could help instead.
The detail of the personal injury reforms proposed this morning also shows that the government is thinking about even more radical changes in the future, such as a European-style points system for calculating the seriousness of injuries and level of compensation.
The consultation paper from the Ministry of Justice (MoJ) said it would prefer to raise the small claims limit for all minor soft-tissue injuries, rather than just RTAs, pointing out that complicated claims could still be move to another track if the court deemed it appropriate. It even asks whether it should go higher than the planned £5,000.
“Raising the limit for a specific type of PI claim would create greater uncertainty as this would create multiple procedural thresholds and systems for dealing with PI claims, many of which are similar in nature irrespective of the original source of the accident (i.e. a broken leg is a broken leg no matter if the fracture is the result of tripping or from a minor RTA).”
The MoJ noted that “lawyers are often not used for such claims in many other European jurisdictions”. Claimants would not be precluded from using lawyers but would have to pay their own legal costs.
“The government is of the view that there is increasingly more information available to claimants to take forward claims without necessarily needing to seek legal representation. For example, guidance for litigants in person and for making small claims has been published by both the Civil Justice Council and the Bar Council…
“The government would argue that these low-value PI claims are in general no more complex than the other types of claim routinely dealt with in the small claims court, and this would be particularly the case if taken in conjunction with the new fixed compensation tariff scheme.”
The consultation asked for views on whether it would be helpful to otherwise unrepresented litigants if claims management companies and paid McKenzie Friends were on hand. “These types of organisation can offer services to claimants whilst operating with lower overheads than many PI lawyers,” it said.
The consultation said there was “too great a financial incentive to make claims”, along with a “strong disincentive” for insurers to contest them – the aim was to tackle both sides. “The number of RTA related personal injury claims remains more than 50% higher than 10 years ago. This is despite extensive improvements in vehicle safety and a decline in the number of reported accidents.”
The reforms would not affect compensation for other items of loss such as vehicle damage, loss of earnings and/or cost of any treatment required.
The MoJ plans to use the definition of a soft tissue injury claim applied by MedCo and define ‘minor’ as symptoms that last up to six months.
It put forward two possible approaches to claims where the injury lasted longer than that – a ‘diagnosis approach’ after that time (if the government removes compensation for pain, suffering and loss of amenity (PSLA) from minor claims altogether), or a ‘prognosis approach’ before then.
This would mean that claimants who have an injury duration of six months or less “would not be delayed from seeking the necessary medical evidence to support their claim… In addition, introducing a requirement to have a medical examination at a specific time is likely to have a positive impact in tackling the issue of claims being brought at the end of the limitation period, often without medical evidence…
“The difficulty with this approach arises from the potential for pressure to be applied to inflate prognosis periods to just beyond the period defined as covering ‘minor’ road traffic related soft-tissue injury claims.”
Though originally it was going to remove general damages entirely, the MoJ acknowledged the “considerable concern and debate amongst some stakeholders” about such a step and so put forward an alternative of capped damages.
Drawing on the Judicial College Guidelines – which indicate that compensation for PSLA for minor RTA-related soft-tissue injury claims should start at £200 – the government proposed that the fixed sum for minor claims should be set at £400 (or £425 if a claim also contains a psychological element).
For claims of more than six months, it put forward a tariff of damages depending on the duration of the injury, ranging from £700 where it was seven to nine months, to £3,500 for 19-24 months. The figures would be higher (£740 and £3,600) where there was a psychological injury element.
The government is also considering whether to give judges the power to apply a 20% uplift in exceptional cases.
The changes to damages and banning pre-medical offers would require primary legislation, which the MoJ said that, subject to the consultation, it would aim to introduce as soon as possible. The small claims limit can be increased by the Civil Procedure Rule Committee.
The consultation paper also seeks views on other related issues. Two arise from the Insurance Fraud Taskforce’s report at the start of this year: whether to introduce a mandatory requirement for referral sources to be included on the claims notification form, and whether the qualified one-way costs shifting rules should be amended so that a claimant is required to seek the court’s permission to discontinue less than 28 days before trial.
The MoJ also asked about models to control credit hire costs, and whether a system of early notification of claims should be introduced. This could “help deter late claims which are arguably the claims most likely to be exaggerated and the ones in which most evidential difficulties may arise”. However, it recognised that the impact on the NHS – if this came with a requirement to seek early medical attention – needed consideration.
On rehabilitation, the MoJ highlighted concerns that some solicitors were referring all their work to their own rehabilitation providers.
“It has also become common for solicitors and insurers to have contracts with private rehabilitation organisations to provide their clients with rehabilitation following a personal injury. Anecdotal evidence has been put forward to indicate that such relationships are being exploited to exaggerate the rehabilitation needed in order to increase the profit from the claim.”
The consultation put forward a range of possible reforms: introducing rehabilitation vouchers; ensuring all rehabilitation is arranged and paid for by the defendant; ending compensation payments towards rehabilitation in low-value claims; expanding MedCo to include rehabilitation; and introducing fixed recoverable damages for rehabilitation treatment.
It also asked whether the government should explore the further option of restricting the recoverability of disbursements, such as for medical reports, and whether it should consider introducing a ‘Barème’ system seen in Europe.
“This is a way of categorising the injuries suffered (often alongside other evidence such as the level of damage to the vehicle or the speed of the crash) using a scale with points awarded which equate to differing degrees of injury/incapacity. The ‘points’ award is then used to cost the damages paid to the injured claimant.”