Streamlining traffic claims
Date: 17 July 2009
Authors: Amanda Stevens
Issue: Vol 159, Issue 7378
Categories: Features, Personal injury, Damages
For many years now there have been “preliminary discussions” among interested parties about streamlining lower value claims but the government’s consultation paper; Case Track Limits and the Claims Process for Personal Injury Claims published on 20 April 2007, resulted in a frenzy of activity from all stakeholders. The list of respondents runs to 13 pages. Some thought the issues were so complex that the Ministry of Justice (MoJ) had decided to effectively “park” them when there was still no government response a year later.
However, in July 2008 it published guiding principles for the new reforms and have subsequently hosted numerous confidential stakeholder gatherings to thrash out which will in effect be a wholly new process for resolving road traffic claims valued at up to £10,000. No one should mistake the new process as a Predictable Fees Regime Mark II as it represents a complete departure from the existing Civil Procedure Rules (CPR) process. Much training will need to be undertaken as well as technological reform between now and implementation in April 2010. This article seeks to set out the fundamentals of the new process. Three aspects remain confidential pending final consideration by stakeholders with the MoJ around issues of child claims, revised Pt 36 sanctions and the final cost matrix for the new work flow. Ministerial approval is, however, expected prior to the summer recess.
Claims falling in the new process
All road accidents following the implementation date will have to follow the process if the solicitor values them at between £1,000 and £10,000. When estimating the value of a claim no account is to be taken of credit hire or vehicle damage costs. However, claims which otherwise fall within the process without reference to the value of these two elements can be dealt with in the new process.
Claimant lawyers have expressed concern that there is a huge variety of injuries contained within the £1,000 to £10,000 bracket which makes streamlining more difficult. The Association of Personal Injury Lawyers (APIL) had recommended a £2,500 damages cap for claims to be considered under the new process. It believed that this would encompass the majority of lower value soft tissue injuries where there is a greater sense of homogeneity than claims involving more serious injury. The revised MoJ limit will mean about 70% of all accident claims handled in this country will be dealt with in the process save for when liability is not admitted by defendant insurers. The government was persuaded not to raise the small claims limit, nor indeed extend the process to non-road traffic accident claims or claims up to the value of £25,000 which had also been previously suggested by it. However, many still consider that if the reforms prove to work well there will be ministerial moves to extend the system horizontally to other types of claim.
Objectives
The government’s stated objectives for the new scheme were that the claimant would receive more prompt redress for their accident and frictional costs would be removed. No doubt the insurance lobby and that of district judges complaining of courts being clogged with low-value claims were instrumental in bringing about these changes, although obviously a system that is more efficient for claimants is a very good thing. It is a travesty that the louder consumer voice calling for reform of damages has not received such a sympathetic government ear.
Material changes?
The position can be briefly summarised as follows; Forget CPR; Both parties will correspond using standard template documents; There will be a three-stage process towards resolution; Fixed costs will be payable at the end of each stage; New timelines for responses at each stage will govern the process. Failure to keep up with the timetable will result in the claim exiting from the fixed-cost process; Both parties will have to be transparent about valuations for each loss claimed as well as the pain, suffering and loss of amenity award; The claimant will be required to make the first settlement offer; An offer must be made by the defendant within a prescribed timescale if they do not accept the claimant’s offer. This is before the claimant can issue proceedings; Subject only to any delay caused by completion of the medical evidence the whole process can be concluded in two to three months; There will be a presumption of a paper hearing by the district judge if the claim cannot be resolved between the parties using modified Pt 8 type proceedings; There will be fixed interim payments if the claim does not settle promptly; Contributory negligence arguments around seatbelt issues are to be determined by fixed deductions from damages. Any other type of contributory negligence claim will be required to exit the system into the predictable costs regime.
What will not change
Claimants should not find their award of damages is valued any less favourably than now. The only rider to this is that new Pt 36 sanctions are still being considered. It is not known what effect this might have on settlement advice to be given to claimants; Lawyers will continue to represent claimants through the process. Only qualified legal representatives are eligible to receive the new fixed costs but litigants in person can use the system if they so wish; Motor Insurers’ Bureau (MIB) untraceable claims, claims where the claimant or defendant is deceased, bankrupt or protected parties (other than children) will be excluded from the process on the grounds of complexity; Rehabilitation will still comprise a fundamental part of the new process; Claims valuation will not be undertaken by a computerised damages assessment tool as originally mooted. Current methods of valuation will apply; Admissions of liability will continue to be binding save where there is an allegation of fraud which will force the claim to exit the process; Existing methods of funding claims (BTE, CFA with ATE insurance, trade union or private client retainer) continue to be available.
What will each stage look like?
Stage one—Obtaining client’s instructions, risk assessing the claim, completing fraud, conflicts of interest and money laundering checks will continue as currently. The claimant will be sent a letter explaining the process and will be asked for data to complete a computerised notification form to be emailed to the defendant insurer. The insurer will have 15 business days in which to respond by e-mail. The MIB will, however, be allowed 30 business days to respond to claim notification. There will be no extensions of time and receipt of the response will mark the end of stage one when fixed costs will be payable.
Stage two—This focuses on valuation and resolution of the claim by negotiated agreement. The claimant will continue to obtain a medical report from their chosen expert (registered with the General Medical Council) but it is not anticipated that medical records will be needed. Multiple reports can be sought for multiple injuries or for updating evidence where there is a difficulty with prognosis. There is no fixed timetable for obtaining medical evidence but clearly it is in the claimant’s interest that this is completed as swiftly as possible. Also the claimant lawyer will get paid fixed costs as soon as the claim resolves.
Within 15 business days of the medical report being confirmed by the claimant as factually accurate their solicitor will complete a settlement pack together with receipts for special damages. The pack will include the claimant’s first offer broken down by the value sought for each head of claim. If not accepted, the insurer will add their own valuations to the template document and make a counter offer within 15 business days. The e-mail template is intended to be a “living document” passing backwards and forwards between the parties.
If the claimant cannot accept the defendant’s counter offer there is a set 20-day period for negotiation. After 20 days it is intended that no further documents will be produced and no further offers made but the case will be dispatched to court to resolve. fixed costs become payable at the end of stage two.
Stage three—The claimant solicitor will prepare a stage three settlement pack for the defendant within 15 business days of the end of stage two otherwise the defendant can take over that aspect of the claim. Once the final pack is agreed between the parties, the claim proceeds to court for final determination. The presumption is that a paper quantum valuation will be performed. The court will receive evidence of the offers made during stage two in a sealed envelope but apart from that and the settlement pack they are not to be sent any further evidence. The rationale is that all cards should have been placed firmly “on the table” in stage two so as to maximise chances of achieving settlement then.
To preserve the claimant’s human rights to a fair trial they can opt for an oral hearing if they wish. Separate fixed costs have been agreed between stakeholders for either the paper or oral hearing.
Obstacles
Throughout the consultation process the claimant lobby has expressed concerns about the viability of a new system being launched for 70% of the accident claims market which has not been piloted nor based on empirical evidence. The MoJ has instead promised regular monitoring of the process but has been reminded of the failed promises for review of predictable fees.
The new process has been “crash tested” in the minds of both parties’ representatives to try and see what an irresponsible party might do to try and break the system. Although no obvious lacunae have been identified, inventive legal minds will always seek ways of manipulating processes to achieve their own ends. The last thing injured people need is more uncertainty created by satellite litigation. However, the undesirable acts of a few must not prejudice the overwhelming needs of the majority of claimants as the new system beds down. Whilst consumers may not have been vociferous with requests for a quicker, slicker system of achieving compensation, they will surely appreciate any system which does manage to deliver on those objectives.
Closing thoughts
April 2010 will most certainly herald a new dawn for this type of litigation. At this stage we can only hope and pray that it is a bright new dawn rather than a damp or cloudy one.
Amanda Stevens is partner, head of personal injury & clinical negligence group, Charles Russell LLP and immediate past president of APIL
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