MoJ Push Forward With PI Reforms

In the much awaited government consultation, published today, in response to George Osborne’s 2015 Autumn Statement, it has become apparent that the government will push ahead with the proposed reforms sooner than expected.

Raising The Small Claims Limit For PI Claims

In the consultation, the Ministry of Justice (MoJ) claim that the limit for PI claims in the small claims track has not been increased since 1991 and is out of step with the limit in place for all other small claims, which is set at £10,000.

It also claims that raising the small claims limit for RTA related PI claims would mean that legal costs would no longer be recoverable, thus reducing the costs of these claims and meeting the government’s objectives to disincentivise ‘minor, exaggerated and fraudulent claims’.

However, the government has indicated that it is still undecided about whether to raise the limit for all PI claims or simply for RTA related PI claims, although it has said that raising it for all PI claims is its preference. This would bring into scope a wider range of cases including EL/PL claims as well as low level clinical negligence claims.

The consultation states:

‘Raising the small claims limit for all PI claims would be consistent with the government’s aims to disincentivise minor, exaggerated and fraudulent claims and remove unnecessary costs from the claims process’.

However, a number of EL and PL claims, as well as clinical negligence claims will be unaffected by this as they are generally more complicated than low value RTA related soft tissue injury claims, especially where causation and liability are in question.

Scrapping Damages For Soft Tissue Injuries

The government's position on the second element of George Osborne’s proposals, a ban on PSLA for whiplash, appears vaguer. The consultation proposes both scrapping damages for ‘minor’ injuries and introducing a fixed tariff system for all RTA related soft tissue injury claims that last longer than 6 months.

The MoJ state:

‘There needs to be a method for developing the necessary increments which is linked to the increasing seriousness of the injuries suffered. The government is of the view that this is best done in three month increments for an injury duration of greater than six months and not more than 18 month, and a further six month increment for injuries of a duration of up to two years. This allows for an even progression up the scale dependent on the severity of the injury’.

The following tables are taken from the consultation and provide further detail on the tariff:

The amount of compensation available under the new system increases in a series of fixed increments – although for minor injuries i.e. those with a duration of 0-6 months, the amount of compensation may be £0 if the option to remove PSLA from minor claims is pursued.

The MoJ says it is also considering an exceptionality provision, which would provide the judiciary with the ability, upon application, to apply an uplift to the amount payable to a claimant by up to 20% in exceptional cases where the injury duration is more than six months.

Other Provisions

In addition to this, other measures have been added, such as banning offers to settle RTA related soft tissue injury claims without medical evidence – with all claims having to obtain a report from a MedCo-accredited medical expert to receive compensation.

Although EL/PL claims were identified as a category of claim which may also benefit from such a ban:

‘This, however, is with the possible exception of some EL/PL claims where anecdotal evidence indicates that claimants following a slip or trip incident can be subject to such offers from supermarkets or local authorities. The reason they do this is again related to cost: it is currently often cheaper to settle a claim than investigate it and many major retailers have budgets set aside to settle claims speedily. The arguments set out above relating to settlement driving claims could also be made here, although the numbers involved are significantly lower’.

The government say that this would address the concern that the use of pre-medical offers by insurers are encouraging minor, or even fraudulent claims to be made, especially if an insurer gets a reputation for settling rather than investigating claims.

Claimant Community Response

The introduction of a fixed tariff system for more serious injuries is expected to net defendant insurers at least £52m a year, while they can expect a net saving of £63m from the increase in the small claims limit.

Law Society president Robert Bourns has been reported as saying that ‘the government’s proposals will completely undermine the right of ordinary people to receive full and proper compensation from those that have injured them – often seriously – through negligence. This five-fold increase will stop people getting the legal advice they need in order to bring claims for the compensation they are entitled to in law. People may be tempted to try to bring claims themselves without expert advice. This will clog up the court system creating a David and Goliath situation where people recovering from their injuries act as litigants in person without legal advice…’.^[i]

The MoJ address some of the criticisms by stating:

‘Raising the small claims limit to cover PSLA claims of at least £5,000 will not preclude claimants from engaging legal representation, but would mean that they would in future be responsible for paying for their own legal costs if they choose to seek legal representation. 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’.

The claimant campaign group A2J has said that these reforms could lead to redundancies of up to 60,000 people due to clients being frightened off bringing claims and case volumes plummeting as a result. [ii]

This consultation will run until 6 January 2017 and a response will be published by Friday 7 April 2017.

The full publication can be accessed here.