It is over two years since the civil justice reforms came into effect and they have now had some time to bed in. We continue our review of the impact of the civil justice reforms with analysis of the transport sector. Nerys Parry take a look at how the transport sector has reacted to the changes and what is likely to happen next.

Time to take stock

The transport sector has been the sector most affected by the changes to road traffic and soft tissue injury claims. These claims were the first to undergo reform and have certainly received the lion’s share of focus. Since 2010, we have seen the introduction and extension of the claims portal and fixed fees, the abolition of referral fees, and an end to recoverability of additional liabilities.

In October 2014, fixed fees were introduced for expert reports, and in April 2015, the new MedCo portal for commissioning medical evidence in road traffic soft tissue injury claims went live.

While the RTA portal has affected motor claims received by bus, coach and logistics companies, the EL/PL portal has also affected rail, and to an extent, shipping claims. So, what have we learned so far?

Initial observations

  • General damages awards have increased
  • Claimant costs and disbursements have decreased, reducing the overall cost of claim
  • Lifecycles are showing signs of reducing
  • Claims for rehabilitation and treatment have increased
  • Claimant negotiation tactics in the main have become more aggressive
  • Continued behaviours of some claimant firms to try and defy the changing rules

Compensation values continue to rise ahead of inflation as the bi-annual release of successive JC guidelines increase the brackets for each level of damage and in the last edition also included the 10% uplift on general damages. 

The extension of the fixed fee regime has reduced the level of recoverable costs. With greater judicial scrutiny of expert disbursements, the overall claims cost has reduced despite the increase in damages awards. The hands on approach taken by the court in relation to the use of experts has had an impact on the way that low velocity impact claims are approached, an issue often associated with bus, coach and logistics claims.

Claims received by rail operators for slips, trips and other injuries whilst on board or on platforms have benefitted from the reforms to the extent that the claims process is now more prescriptive and predictable than before. However, those claims presented via the newer El/PL portal are experiencing problems similar to those first experienced by the RTA portal; inadequate and incomplete claims notification forms. Around 50% of the claims notification forms received are inadequately completed to the point that there is no alternative but to reject the claims or request additional information. Often, the additional information is not provided, meaning that the claims fall out of the portal and proceed under the pre-action protocol, with claims for increased claimant costs. As with RTA claims, it is important to be robust in challenging these behaviours, maintaining a record and reporting to the behaviours committee as appropriate.

Since the changes have driven down claimant costs, we have noticed an increase across the sector in referrals to rehabilitation, particularly physiotherapy. We are seeing an increasing number of claimants present pro-forma invoices before treatment has been undertaken, with claimant solicitors asking for compensation of the treatment as if it had already been received and the cost incurred. In most cases, unless it is clear that the claimant would genuinely benefit from early treatment, these claims are resisted. Claimant solicitors are asked to present the claim for rehabilitation once treatment is complete, on the grounds that damages can be more accurately assessed once the effect that the treatment has had on the prognosis is better appreciated.

Whilst in theory greater and better use of rehabilitation to assist recovery is a positive, this renewed claimant sector interest in rehabilitation has raised concerns - from additional sessions that were not received to entire rehabilitation treatments being fictitious. Greater scrutiny is needed to ensure that disingenuous treatment claims are resisted.

Encouragingly, it is clear that the sector is not being deterred by the new qualified one way costs shifting regime from fighting appropriate cases. The risk of being unable to recover costs if a claim is successfully defeated is offset by the abolition of recoverability of additional liabilities and we find that clients are more than happy to take that risk in the right cases, and as a consequence, are defending more. This is especially true for corporate services who are now more easily able to justify fighting the cases that their account holders which to challenge.

What to watch

Since the changes have driven down costs for claimant representatives, we have noticed some emerging trends in strategy and behaviour. Some claimant representatives continue to submit uncapped invoices for expert fees, although do not challenge it when payment of the capped fee is presented.

The reduction in referral fees and costs has led to an increased reliance on data mining to gather claims. However, the quality of the data is questionable and data is often sold to a number of companies. This casts doubt over the credibility of the claims presented and extra vigilance is needed to challenge these claims.

We are experiencing an increase in bus and coach claims which inevitably involve multiple claimants, increasing the number of fixed fees costs payable for a single accident. It could be speculated that this increase is a result of targeted efforts to increase profitability.

Some claimant representatives have been observed adopting far more aggressive approaches to negotiations, putting forward extremely high offers to try and maximise awards. Whilst some use this to simply gain momentum and quickly revert to a more realistic footing once counter offers are made, some claimant firms are using these unusually high expectations to force matters into more profitable litigation. The good news is that defendants who make realistic and sensible Part 36 offers can insulate themselves against some of the risks created by these claimant strategies.

The changes have also meant that defendant behaviours have changed since the introduction of fixed recoverable costs. The introduction of fixed recoverable costs and the ban on the recoverability of additional liabilities has enabled more accurate risk assessment. The likely cost of taking a matter to trial has reduced and it has become easier to accurately reserve. As such there are more opportunities to defend cases that might otherwise have been settled on a purely economic basis. More accurate reserving also enables insurers to better assess their overall risk.

Defendants are also now able to put forward their own version of events to the medical expert in cases where liability is denied. What we are seeing is that whilst claimant solicitors tend to disregard requests initially, defendants are able to refer back to this request once medical evidence is available and use non-conformance as a negotiating tool.

What’s ahead?

The focus on fraud continues with the creation of a fraud task force, set up to consider the prevalence and cost of fraud across all lines of insurance. The task force intends to put forward recommendations for ways to reduce the volume and cost of fraud and reduce premiums.

In addition, the Criminal Justice and Courts Act 2015 came into force on 13 April 2015, placing an obligation on courts to dismiss claims for personal injury found to be fundamentally dishonest.

Together with the anticipated progress of the MedCo portal, the number of fraudulent and grossly exaggerated claims should continue to fall. However, as we have seen, this will continue to affect claimant behaviour and strategy. We are looking at much reduced costs in claims but increased damages and a much more assertive claimant industry than ever before. There is more of an appetite to issue proceedings and with reduced costs, economics are considered now more than ever. Defensive claims handling with sensible Part 36 offers made early to offset claimant strategies mean that one way or another claims can be settled quicker and in greater amounts, albeit that damages may be slightly higher to ensure that the opportunities to costs build are eliminated in the context of the overall claims saving. It is clear that defendants cannot afford to be passive in their approach to inappropriate claimant strategies.

It is likely that we will continue to see an increase in claims for other types of subjective conditions such as psychological injury or chronic pain, as we are seeing (and reporting) in other sectors and that we may also see claimant representatives turning their attention to other means of making their money