Steven Snowden QC and Adam Taylor discuss the government’s proposals for the future of soft tissue claims and small personal injuries claims
Yesterday the government published its proposals for the reform of whiplash claims. The proposals build on earlier governmental reforms aimed at tackling the problem of “minor, exaggerated and fraudulent” RTA whiplash claims, such as the fixed cost medical reports provided for by CPR rule 45.29I(2A). The government cites statistics that 90% of RTA personal injury claims are neck, back, or whiplash claims. The end goal of the proposals is to provide a benefit to motorists, reducing their insurance premiums by restricting whiplash claims.
As of November 2015, the government had originally intended to remove PSLA entirely for minor whiplash claims and raise the PI small claims limit (within which, broadly speaking, legal costs are not recoverable) to £5,000. These plans have now been partially compromised. We summarise the new proposals below, with our specific comments in italics addressing likely issues:
The introduction of a tariff for general damages in RTA-related whiplash claims. There are to be 7 brackets, from 0-3 months (£225) to 19-24 months (£3,725). The tariff is based upon a “prognosis approach”.
The suggestion of a tariff scheme is a retreat by the government from its suggestion to remove PSLA compensation altogether from “minor” whiplash claims. However, the tariffs suggested are considerably lower than the current brackets in the Judicial College Guidelines. Given that compensation appears to be fixed by whichever tariff applies, it is unclear whether the MOJ Stage 3 procedure, whereby the parties often argue over small amounts of whiplash PSLA, can survive the introduction of the tariff system.
The definition of “whiplash” claims is yet to be clarified by the government. It appears that the government has accepted representations that “whiplash” should be limited to a smaller class of injuries than the existing Pre-Action Protocol (Low Value PI Claims in RTAs) definition which includes all soft tissue injuries. “Whiplash” will include minor psychological issues such as travel anxiety and shock, but not cases of formal psychiatric injury.
The scope of the entire scheme of reforms is still fundamentally unclear, given that no definition of “whiplash” has yet been provided. This creates difficulties for claimant and defendant firms, as well as insurers, looking to safeguard against the future reforms. However, it appears that the government will favour a limited definition in keeping with the common public understanding of whiplash, given that section 61 of the Prisons and Courts Bill (the implementing statute) states that ” ‘whiplash injury’ means an injury, or set of injuries, of the neck or the neck and upper torso that is of a description specified in regulations made by the Lord Chancellor”. When the final definition is forthcoming, it may well create satellite litigation as parties attempt to force their case inside or outside the definition to benefit from the tariffs.
There will be a judicial discretion to uplift the PSLA tariff by up to 20% in an “exceptional” case.
Here too, the government has not provided a clear definition. Moreover, unlike “whiplash”, the government intends to leave the definition of “exceptional” to the courts. Satellite litigation is therefore to be expected. Examples of “exceptional” provided within the consultation process included (a) where fraud, fundamental dishonesty or low velocity impact is alleged, (b) where liability is disputed, (c) where the individual’s loss of amenity is higher than usual (avid sports players, for example), and (d) where the victim is elderly, has a disability and their ability to live independently is hampered. To those who are accustomed to assessing general damages depending on loss of amenity, factors (c) and (d) will be familiar. But the relevance of (a) and (b) is not clear, unless it is suggested that the if the defendant argues fraud and fails, or unnecessarily disputes liability and loses on that issue, the claimant’s tariff damages for PSLA should be higher – in which case there will be a tariff damages penalty to be paid by a defendant for taking a bad point. That is something of a departure from the current common law.
The small claims track limit for PI claims will be raised to £2,000, but that for “RTA related claims” the small claims limit will be £5,000.
This would be a major change to the nature of RTA litigation. It will significantly limit the recoverability of costs in many RTA cases that would have fallen under the fast track. Claimant solicitor firms and the more junior civil barristers will be especially affected.
It is not clear whether the RTA £5,000 limit applies to all RTA claims or just RTA claims involving whiplash. It appears that the government may intend the former, because in the section relating to a prohibition on settlement offers (see below), it does specifically refer to RTA whiplash claims.
As to the £5,000 limit is greater than the top tariff proposed for whiplash, there may be some (24 month+) whiplash cases remaining within the small claims track which do not have a fixed tariff. It remains to be seen whether the Judicial College Guideline will be used to fill this gap and whether this is problematic. For example, the first post-24 month bracket in the JCGs has a range of £6,600 to £11,500, well above the £3,725 upper tariff proposed and above the proposed £5,000 limit for the small claims track.
There will be further consideration of how to help litigants in person whose cases will fall in the increased small claims track limit, and of the possible regulation / reform of McKenzie Friends and claims management companies.
The fear is that the courts will be swamped by a rise in litigants in person, or that unregulated claims management companies or paid “McKenzie Friends” will move into the market of representing claimants in low value claims where those claimants cannot avail themselves of BTE. It remains to be seen whether solicitors will be able to develop business models to act for claimants in such cases where costs will not be recoverable, or whether the Bar will be able to develop direct access arrangements to allow claimants in such cases to seek one-off, cost-effective advice or representation at key points.
There will be a complete ban on soliciting and making offers to settle in RTA whiplash cases prior to medical evidence being obtained.
The concept of prohibiting the parties to litigation from making offers to settle is a controversial one, and the government may find the legality of this “lock-in” proposal open to challenge.
We feel that despite the concessions this is still a wholesale change to the nature of low value RTA litigation. Solicitors and insurers will need to watch for further developments closely over the coming months, particularly in relation to the forthcoming “whiplash” definition as the Prisons and Courts Bill passes through parliament and draft regulations are proposed. It may be that if more whiplash claims become small claims with reduced PSLA rates, reduction of litigation is a less likely result than the reduction of costs recovery. It may be that more RTA claims have to be prepared more summarily (ie. more cost-effectively) than would have happened on the fast track.
The government has proposed a 1 October 2018 date for implementation, but the tariff proposals will be introduced as part of the Prisons and Courts Bill. It is not clear whether their effect will be prospective or retrospective, or whether it will relate to the date of injury or the date of commencing a claim.