Friday, 27 January 2012

It’s time for a holistic approach to NHS Trusts and PI advertising

Last week Andrew Bridgen, the Tory MP for North West Leicestershire, put down an early day motion attacking the prevalence of advertisements for personal injury lawyers in hospital waiting rooms.

“The Prime Minister talks about slaying the ‘health and safety monster’, but we’re feeding the monster and it’s going to get bigger,” said Bridgen. His comments were echoed by Simon Burns, the Health Minister, who told The Times he would be writing to Sir David Nicholson, chief executive of the NHS, about the ads. As Burns put it: “Patients should be able to focus on getting better, without having to be hounded by lawyers or adverts displayed in A&E departments. I will ask David Nicholson to write to hospitals to remind them it is not acceptable to display these adverts.”

Years ago, when I was a young solicitor, I recall another lawyer who took a robust view of advertising his firm’s services in hospitals. He was in the habit of visiting hospitals and not merely advertising his services, but removing any ads which promoted rivals. Back then, his conduct, unblushing as it was, seemed almost amusing, but times have changed. Our personal injury system has mutated into one which is rife with ingrained failure, not least when it comes to hospital ads for PI lawyers.

In fact, Department of Health guidelines prohibit the advertising of PI services in hospitals. A number of NHS trusts routinely ignore the ban, for a simple financial incentive: they may be paid up to £85,000 a year to feature the ads, or given donations of equipment and uniforms. In the cash-strapped years of the early 21st century, the trusts’ willingness to continue advertising lawyers’ services and the availability of no win, no fee claims is understandable, but their concomitant bargain with the devil is not so palatable: the firms advertising promise not to sue hospitals which carry their adverts. Instead, the tacit, or perhaps even express, understanding is that firms will seek compensation from anyone else in the chain of liability. This, in turn, can only feed the perceived compensation culture.

The Solicitors’ Code of Conduct contains provisions as to what law firms can and can’t advertise. Naturally, those firms who continue to target hospitals will comply with the Code. However, by way of a radical alternative, consider the situation in at one stage in Australia: there, advertisements for PI work were banned per se.

Here, it seems once again that the momentum which seeks to reduce the excesses of the PI market is in danger of not being fully thought out. Messrs Bridgen and Burns may (laudably enough) lament practices among various NHS trusts and seek to change them, but have they considered the impact of the Alternative Business Structure (ABS) regime in this sector? It’s all well and good to end the practice of lawyers advertising PI services in hospitals, but what is to stop a claims management company, set up under an ABS to employ PI lawyers, from doing exactly the same thing?

I welcome a ban of hospital advertising for PI claims, but unless it is approached in an intelligent, holistic manner, loopholes will remain.

Wednesday, 18 January 2012

Technology is not a panacea for whiplash claims

Last week a press release from ‘pay-as-you-drive telematics-based car insurer Coverbox’ landed in my inbox. Its first line gave me pause for thought:
Technology which can measure the level of impact in traffic accidents – and help determine the likelihood of whiplash injuries – is already installed in thousands of vehicles insured by pay-as-you-drive telematics-based car insurers.
The press release was issued on behalf of Coverbox, a company at the vanguard of what is known as ‘telematics insurance technology’ because it installs equipment in vehicles which track their every move. As Coverbox’s managing director, Johan van de Merwe, puts it: “When a driver takes out an insurance policy with a telematics insurer, we install a small box which records the distance the vehicle covers, and charge accordingly. But the equipment also records many more parameters – including acceleration, deceleration, speed, and so on – which helps us determine driving standards.”
According to van de Merwe, telematics insurance is of more benefit to careful drivers because of the accuracy of the information about driver behaviour acquired by Coverbox. This, in turn, “allows us to be far more discerning in terms of who we insure”.
That’s all well and good – so far as it goes. Insurers need to be certain of their technology and, moreover, to remember its limitations. But it seems doubtful that they do so when they contend that telematics insurance can assist in determining the extent of whiplash injuries. This was argued by van de Merwe in the Coverbox press release as follows: “Telematic insurers can also use the equipment to measure the magnitude of an impact ... [this] can serve as a very useful guide in distinguishing claims needing investigation from those where a high probability of whiplash exists.”
Really? I am not so sure. There is a massive amount of hype about whiplash and a bandwagon of ever louder import which maintains that it doesn’t even exist. As I have previously written, members of the Association of British Insurers (ABI) have started using software privately dubbed as a ‘whiplash lie detector test’ to expose what the ABI believes are almost always bogus claims. This, despite the cutting edge research and findings of a clinical psychologist such as Dr Jannie van der Merwe to the effect that even if physically verifiable trauma does not accompany whiplash, it is no less debilitating for its sufferer.
Indeed, from my perspective as a solicitor, it is hard to imagine quite how anyone would maintain that whiplash is a fiction. My practice has seen many clients whose experience of whiplash is every bit as real as the accident that caused it. They are in genuine pain and have every right to claim for compensation. I cannot, therefore, but be concerned when I read of what seems to be a technology-based approach to determining whiplash claims. The whole point about pain is that it is subjective. Symptoms will vary from person to person. Each person’s physiology is different, too. What has happened to age-old principle, in tort law, that one must take one’s victim as one finds him?
My worry, if something like telematics insurance is taken too far, is that we will forget the human dimension. Insurers may not always like it but the people they insure are just that – people. They need to be treated as such.
I am delighted to be chairing a conference on May 15 at the Grange City Hotel on Cooper’s Row, London that will explore these and other issues. Dr Van de Merwe is one of the speakers; who knows, perhaps the other van de Merwe (Coverbox’s MD) will be in the audience. I hope so. There are many issues surrounding whiplash and the wider ranging the debate, the better. Ultimately, we should all be pulling together to create a system which compensates its insured victims fairly – and acknowledges that there is more to an injury than the visceral evidence of a broken bone.
Whiplash: The Evidence takes place on May 15 at the Grange City Hotel, 8-14 Cooper’s Row, London EC3N 2BQ. Registration starts at 08.45. Contact John via for more information. 

Wednesday, 11 January 2012

Claimants should be free to bring claims as they see fit

The second reading of the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) took place at the tail end of last year. It was accompanied by a number of amendments, tabled by members of the House of Lords. One especially is very welcome: that which seeks to prevent insurers approaching claimants directly.

Lords Thomas of Gresford, Clement-Jones, Carlile of Berriew and Phillips of Sudbury proposed the amendments, which were reported in The Law Society Gazette at the beginning of December. They seek to stop the practice known as 'third party capture', which usually happens in road traffic accident (RTA) cases but could also extend to other scenarios, for example a claim relating to an injury in the workplace.

In a case of third party capture, an insurance company representing the individual who caused a victim's injuries contacts the injured party directly. The injured party is not legally represented, but the insurer goes ahead and settles the claim regardless. Typical incentives to ensure speedy settlement will be phrases like 'If you agree this figure now, I'll have it transferred to your bank account later today' and 'Of course, you're entitled to go and see a solicitor - but we all know how much time they take up, so perhaps you'd like to come to an agreement now so that you can get on with your life?'

Such settlement is intended to be full and final. There's nothing to be done about it once it's been made, and guess what: it's never for the maximum amount that could have been claimed. The whole point of third party capture is to under-settle claims, to the insurer's benefit and to the claimant's detriment.

I do not object to an individual actively choosing to deal with the other side's insurers. If a person makes this decision willingly, that is a matter for them. But what goes on at present is wrong: it is another example of the dysfunction which abounds in the personal injury sector. Indeed, my worry is that the Lords' amendments (to clause 55 of LASPO) do not go far enough. Here's the new clause 55, as proposed by the four Lords:
Third party's insurance company

(1) A third party's insurance company may not solicit a claimant who has a cause of action for personal injuries against its policy holder, to settle that cause of action where to the knowledge of the insurance company, the claimant is legally represented.

(2) A third party's insurance company may not make an offer to settle in circumstances not prohibited by subsection (1), unless-

(a) it has obtained adequate medical evidence of the personal injury and has disclosed it to the claimant; and

(b) the claimant is advised when the offer is made of his right to obtain legal advice; and

(c) the offer is in full and final settlement of the cause of action.

(3) Any settlement made in breach of subsections (1) and (2) shall be void. 

Look carefully at the words italicised above. I suggest that these be deleted; likewise, that paragraph (2) (c) is removed. The reasons for these amendments respectively are, on the one hand, that the claimant is even more vulnerable where he or she is not legally represented. Insurers often contact claimants before they have legal representation: it is well known in the insurance industry that the quicker you can contact a claimant following an accident, the more likely you are to be successful in capturing that client prior to them taking legal advice.

On the other hand, I propose the deletion of the full and final settlement clause to ensure that the existing legal position is not interfered with. Paradoxically, the Lords, by inserting clause (2) (c), create the inference that a settlement made is valid. I believe clients should be able to reopen a claim at the moment where an insurer has inappropriately settled the case direct.

Some who have reached agreements directly with insurers to settle claims feel cheated and desperate to do something about it after the event, but more often people are simply unaware.  As a practice, third party capture is plainly wrong, but those of us who wish to do something about it must be vigilant and ensure that the Lords' amendments, welcome as they are, cover all the bases.

Thursday, 5 January 2012

Accident victims should be entitled to instruct the solicitor of their choice

Picture the scene. You’ve been injured a mile from your house in a road accident. Fortunately, your injury isn’t life-threatening. However, it’s still painful and upsetting – perhaps a broken leg, or a badly damaged arm. The accident wasn’t your fault and, naturally enough, you’d like to make a claim for compensation. With a sigh of relief – for everyone knows that lawyers can cost a small fortune – you remember that your standard household policy also provides legal expenses insurance (LEI). Once back home, you dig out the policy and make a claim.
So far, so good. But then, a little later, you receive word from the insurance company that a firm of solicitors you’ve never heard of has been appointed to handle your claim. Worse, they’re at the other end of the country. They won’t be rushing down to see you to take instructions. If you want to go and see them, fine, but it’s hardly practical. You’ll have to accept that your relationship with them will be entirely over the phone and via correspondence.
You might not mind this, but many people do – especially if their accident isn’t straightforward. In such cases, local knowledge can be vital, but even if it isn’t the fact is that when people go through the trauma of an accident they often like to know the solicitor who handles their claim (or, at least, be able to get to know him or her). Their case, then, takes on a human dimension, rather than appearing as a statistic on a conveyor belt.
Regrettably, what ought to be a basic human right – to instruct the solicitor of one’s choice – is not as straightforward as it should be in Britain. A European Council directive (Directive 87/344, to be precise) provides that insurance contracts providing LEI should allow the insured a lawyer of their choice “from the moment that he has the right to claim from his insurer under the policy”. The Directive was tested in the European Court of Justice (ECJ) some two years ago, via the case of Austrian citizen Erhard Eschig (ECJ Case C-199/08). Eschig instructed the law firm Salpius Rechtsanwalts GmbH to represent him in several financial misselling claims. He sought confirmation from his insurer, Uniqa, that his legal costs would be met. Uniqa refused, stating that ‘mass claims’ (Eschig’s was one of many) would only be covered if handled by law firms on its panel.
Eschig complained. He challenged Uniqa, and the ECJ upheld his claim. It ruled that Uniqa’s purported limitation of the policy to mass claims was in breach of Directive 87/344.
As with so many European Directives, uncertainty as to their application in Britain prevails – irrespective of Mr Eschig’s claim. Here, the relevant law is contained in The Insurance Companies (Legal Expenses Insurance) Regulations 1990, which state:
6.—(1) Where under a legal expenses insurance contract recourse is had to a lawyer (or other person having such qualifications as may be necessary) to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer (or other person).
(2) The insured shall also be free to choose a lawyer (or other person having such qualifications as may be necessary) to serve his interests whenever a conflict of interests arises.
(3) The above rights shall be expressly recognised in the policy.
That seems crystal clear, but the practical reality is different. As many of us engaged in solicitor panel work know, insurers habitually work with panels of law firms, farming out work to their chosen panel where a key component in their choice is price. Claims will routinely be handled by lawyers who live and work miles from the victim’s abode or place where the accident occurred. Moreover, the Regulations stipulate that the freedom of choice arises in connection with “any inquiry or proceedings” – in other words, only when litigation is formally being contemplated. This is not in the spirit of Directive 87/344, which is not so restrictive.
The freedom of choice to instruct a solicitor is a basic human right. It’s a bit like supporting a football club. Some people may decry the fact that I choose to go and watch Chelsea (and after the home defeat by Aston Villa over the festive period, I lamented my decision, too) but no one can stop me from supporting the team of my choice. Similarly, no one should be able to prevent an accident victim instructing the solicitor with whom he or she feels most comfortable. If that’s the family firm, or the high street sole practitioner who’s been in the town for years, then so be it. The small print in LEI should have nothing to do with basic freedom of choice.