The law of unintended consequences

Under the pre-Jackson costs regime, the frequency and cost of whiplash claims spiralled out of control, creating a ‘feeding frenzy’ for claims management companies and lawyers alike. The higher claims payments rendered the cost of motor insurance prohibitive for many.

Having published its response to the consultation on whiplash reform, ‘Reducing the number and costs of whiplash claims’, in October 2013, the Ministry of Justice turned its attention to reforming the medico-legal reporting process in whiplash injury cases.

By regulating those who can prepare the report, the evidence at their disposal and what they are paid, the whiplash reform programme is designed to create an “improved, robust system for medical evidence which will deter unnecessary or speculative claims”.

Whiplash reform

• Phase 1: fixed-cost medical reports

Phase 1 of the whiplash reform programme came into force for all new portal claims from 1 October 2014. This fixed the cost of initial medical reports in ‘soft tissue injury’ claims. While this is not a new concept, as the cross-industry medical reporting organisation (MRO) agreement has already fixed the cost of reports in approximately 70 per cent of whiplash claims, the costs are now lower, being set at £180 plus VAT. Treating experts are prohibited from producing medico-legal reports.

• Phase 2: independence and accreditation

This phase will strengthen the independence of the reporting, banning solicitors from commissioning reports from MROs or experts with whom they are linked financially.

From 6 April 2015, MROs and experts wishing to produce medico-legal reports in soft tissue injury claims will also have to register with MedCo – the not-for-profit cross-industry organisation set up to administer the new regime. Solicitors will commission reports using the MedCo IT hub, which will return a random selection of MROs and/or experts to choose from, thus instilling further independence in the process.

Later this year, the issue of quality will be addressed as all MROs and experts registered with MedCo will have to complete an accreditation process. This is likely to involve mandatory training on the latest research in soft tissue injuries, and a system of peer review and audit, underpinned by management information to identify any results that are outside of the expected parameters in terms of diagnosis, prognosis and referral for rehabilitation.

Unintended consequences

Although the reforms are very welcome, claims must fit the definition of ‘soft tissue injury’. According to the low-value protocol, this means “a claim brought by an occupant of a motor vehicle where the significant physical injury caused is a soft tissue injury and includes claims where there is a minor psychological injury secondary in significance to the physical injury.”

So, the definition doesn’t only apply to neck injuries, but excludes injuries to cyclists and pedestrians. Similarly, claims which are presented principally as psychological/psychiatric injuries are outside of the new rules.

While some solicitors with their own MRO might ‘major’ on the psychological component so as to commission a report from their own MRO and at a rate they choose, most will play it with a straight bat. Those looking to circumvent the new rules may choose to move into other volume claims areas such as noise induced hearing loss (NIHL), often described as ‘the new whiplash’.

The real concern is over rehabilitation. The new rules on whiplash do not extend to rehabilitation provision. So, in theory, solicitors with their own MRO could commission physiotherapy and/or cognitive behavioural therapy (CBT) from their own provider as soon as they are instructed, and before any medico-legal examination.

Hopefully, independent and accredited experts will be trained to give proper and due consideration to the claimant’s rehabilitation needs and the reasonableness of any treatment already obtained.

Cautious optimism

The whiplash reform programme has already brought much-needed change within a very short timeframe. This has only been achieved by stakeholders across the industry working collaboratively together. Provided the rules of accreditation are sufficiently robust, and experts are given the tools to challenge long-established industry norms regarding diagnosis, prognosis and rehabilitation for whiplash claims, the frequency and cost of claims should fall, to the benefit of buyers of motor insurance. SJ

Peter Allchorne is a partner at DAC Beachcroft and a member of the Forum of Insurance Lawyers (FOIL) motor sector focus team