Personal injury reforms

In 2016 the MOJ issued its consultation on reforming the soft tissue injury claims process. Today, the MOJ announced Part 1 of its response to the…

Introduction

On 17 November 2016 the Ministry of Justice (MOJ) issued its consultation on reforming the soft tissue injury claims process. This was a wide ranging consultation which closed on 06 January 2017. Today, the MOJ announced Part 1 of its response to that consultation.

The response

The MOJ have confirmed that Part 1 of its response to the consultation will see the following measures introduced:

  1. A tariff of fixed compensation for PSLA for whiplash claims with a duration of 0-24 months;
  2. An ability for the judiciary to decrease the tariff in the event of contributory negligence or to increase the tariff by up to 20% in exceptional circumstances;
  3. A ban on offering and requesting pre-med offers;
  4. An increase to the small claims track (“SCT”) in RTA personal injury claims to £5,000; and
  5. An increase to the SCT in all other personal injury claims to £2,000.

As alluded to previously, measures 1, 2, and 3 will require primary legislation and the government has announced the Prisons and Courts Reform Bill which will be the vehicle for bringing in the necessary legislative change. Measures 4 and 5 are a simple rule change by way of a statutory instrument.

The remaining issues will be dealt with in Part 2 which will be released in due course and will cover:

  • Implementation of the recommendations from the Insurance fraud Taskforce;
  • Credit hire;
  • Early notification of claims;
  • Rehabilitation;
  • Recoverability of disbursements; and
  • Introduction of a Barème type system.

The tariff award

As set out above, as opposed to an outright ban on cash compensation for PSLA in minor whiplash claims, the government is shortly to introduce legislation to make the necessary changes to apply a tariff for PSLA in RTA soft tissue injury claims. The Tariff will be as per the below table and will apply to whiplash and minor psychological claims:

Injury Duration (months) 2015 average payment for PSLA (industry data) (£) Judicial College Guidelines (13th edition) (£) New tariff amounts (£) Saving (£)
0-3 1,750 Up to 2,050 225 1,525 – 1,825
4-6 2,150 2,050 – 3,630 450 1,700 – 3,180
7-9 2,600 2,050 - 3,630 765 1,835 – 2,865
10-12 3,100 2,050 – 3,630 1,190 1,910 – 2,440
13-15 3,500 3,630 – 6,600 1,820 1,680 – 4,780
16-18 3,950 3,630 – 6,600 2,660 1,290 – 3,940
19-24 4,500 3,630 – 6,600 3,725 775 – 2,875

The MOJ has confirmed that it will continue to favour the prognosis model which allows a claimant to seek treatment and medical opinion at the most appropriate time. It is confirmed that MedCo will continue to have a role in the tariff system.

The MOJ has also confirmed that the judiciary will have the ability to reduce a tariff award in instances of contributory negligence and to increase a tariff award by up to 20% in the event of exceptional circumstances. The Judiciary will be left with discretion to determine what counts as an exceptional circumstance that warrants an uplift.

There will also be an outright ban on making, soliciting, and accepting an offer of settlement without first having obtained medical evidence in support of the injury. There will be no exceptions to this ban and it is anticipated that the Prisons and Courts Reform Bill will include details of how this ban will be enforced by regulators.

The SCT

The MOJ has announced that it will increase the SCT in personal injury claims as per the below:

Claim class Old SCT limit (£) New SCT limit (£)
RTA 1,000 5,000
All other injury claims 1,000 2,000

The MOJ recognises the need to develop mechanisms to assist Litigants in Person to bring their claim directly due to the rise in the SCT. They will be working with Claims Portal Limited and MedCo to look for the best way forward and will release their views in due course.

The MOJ hasn’t commented on whether there will be amendments to fixed recoverable costs in SCT claims following this decision and more information is awaited.

Comments

Whilst the fine detail in relation to these reforms is awaited, the timing of the announcements indicates that the government remains focused on delivering reform in a sector where costs are seen to have spiralled out of control. These reforms will undoubtedly benefit compensators but are likely to have additional operational impacts in terms of claims and service delivery. We will continue to liaise with Government over further developments and as soon as the detail becomes clear we will provide updates with a view to assisting compensators in their preparation for these reforms

Can we help?

We will be maintaining a watching brief and will report back to clients as soon as there is any further detail. In the meantime, should you wish to discuss this in more detail, please do not hesitate to get in touch

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