Contents. 04 Michael Rawlinson. 05 Gary Rodrigues. 06 Ian Harvey. 07 Chris Gibson. 08 Chris Phillips. 09 Bill Shepherd.

Transcription

1 DiseaseFutures 2009

2 Contents 04 Michael Rawlinson Industrial Disease Specialist Kings Chambers 05 Gary Rodrigues Chief Operating Officer The Cytokine Institute 06 Ian Harvey Senior Claims Manager Aviva 07 Chris Gibson Disease and Illness Unit Manager Garwyn 08 Chris Phillips Consultant Keoghs 09 Bill Shepherd Independent Disease Claims Consultant 10 Mike Klaiber Disease Claims Manager Zurich Insurance 11 Gary Fitzpatrick Partner and Head of Disease Keoghs

3 Introduction John Whittle Chief Executive, Keoghs Disease litigation has always been a dynamic area of law, and those who deal with disease claims are often asked what is the next big thing? and where are the next battles going to be fought? Claimant law firms in England and Wales have potentially heard the death knell for what would have been a lucrative income stream in pleural plaques, while at the same time some of the government initiated schemes such as the British Coal respiratory disease scheme, have drawn to a close. Nevertheless, many claimant law firms that are geared up to handle large volumes of work are hungry not only for new areas to exploit, but also to expand potential liabilities in established areas of disease litigation. While it is probable that asbestos, noise and hand-arm vibration syndrome (HAVS)-related claims will remain at the forefront, there are many areas that have the potential to grow rapidly in the coming years to form major features in the disease claims landscape. Will these be claims for other types of repetitive strain injury affecting the knees or the back? Will they be for acoustic shock, or conditions relating to toxic mould? Could wood dust-related breathing conditions which have significant parallels with mesothelioma emerge as a significant new area? Or could carcinogenic benzene in unleaded petrol a risk that has been debated for many years prove to be the next big problem area? In Disease Futures, some of the industry s leading lights provide their own predictions and conclusions giving a fascinating snapshot of what the future holds for disease litigation.

4 04 The biggest challenge will be maintaining a sensible approach to dealing with disease claims. Michael Rawlinson Industrial Disease Specialist Kings Chambers Michael acts for both claimants and defendants within his area of practice and has extensive experience of cases that have had wider significance beyond the individuals concerned. For example, he represented the insurer-defendants in both Fairchild v Glenhaven (the mesothelioma claim which has become a source of much legal analysis and development) and Rothwell & Johnston and others (the Pleural Plaques test litigation) both before the House of Lords. While it is never easy to predict with complete confidence which areas of disease litigation will grow in the future, it appears there are identifiable areas where growth in the number of claims now seems likely. One example is claims relating to wood dust exposure. While the link between this and nasal cancer was established in the mid 1960s, there has been a relative lack of awareness of the risks until fairly recently. While claim numbers are low at present, the long potential latency period of the disease coupled with the high levels of exposure and, crucially, a lack of knowing what a safe limit of exposure is, mark this out as a likely candidate for increased occurrence over the coming years. As claimants are waking up to the dangers of wood dust inhalation, it is probable that any increase in incidences of the cancer is, in turn, likely to be reflected in a higher number of compensation claims made on the back of receiving the diagnosis. In addition, because epidemiological studies have found no low threshold below which exposure is safe, it is difficult for employers to defend against claims where the affected employee can prove they were exposed to wood dust at work. Looking further into the future, the potentially cancer-causing effect of carbon nanotubes which have a wide range of potential applications including the manufacture of high-end consumer equipment such as bike frames, tennis rackets and car parts and the as yet unknown effect on human tissue of mobile phone signals could both prove to be major health issues. This is especially the case for mobile phones, as the technology has become so widely used. Ultimately, while it is important for insurers and those who handle disease claims to stay up to date with the changing backdrop, the biggest challenge will be maintaining a sensible approach to dealing with disease claims. In recent years, the media has talked a great deal about the rise of a compensation culture in the UK, but I am not convinced that such a culture exists. In my experience, those making a claim for a work-related disease typically find it a painful experience and are not doing it out of choice. That is not to say that financial motivation is not a factor in a potential claimant s decision to pursue a claim and because of this, as the economic situation worsens, there will be a short-term increase in the number of minor claims as people in tough circumstances become more inclined to seek compensation.

5 05 DNA evidence has yet to be used in a UK disease case but, given the potential savings associated with avoidance of lengthy litigation procedures, it is only a matter of time. Gary Rodrigues Chief Operating Officer The Cytokine Institute Gary is a specialist in DNA mapping techniques with more than 26 years of expertise in insurance and risk management across environmental, health, safety and toxic tort issues. Litigation is an expensive process and, in the arena of work-related diseases, uncertainty as to the cause of a claimant s illness is usually at the root of contested claims. Many industrial diseases have long latency periods it can often be many years after exposure before symptoms develop and this time delay adds to the difficulties of establishing a cause. In the United States, a recently developed DNA mapping technique MSDS1 is increasingly being used to remove this uncertainty. The technique can determine with a high degree of certainty whether a person has experienced a harmful level of exposure to a particular toxic agent. For a disputed disease claim, this ability will often clarify whether or not the employer is responsible, settling the case without the need for further litigation. In some cases, DNA evidence can benefit the claimant and in others it can work in favour of the defendant. In one case for example, a large US-based insurer proved that one of its clients a tyre manufacturer had not exposed an employee to a harmful amount of benzene and avoided a payout. On the other hand, we are currently working with several claimants representatives to help determine whether or not their conditions can be attributed to potentially toxic agents, ranging from mould in some cases to benzene and hexavalent chromium in others. Currently, a lot of work is being done to increase the database of toxic substances and their DNA signatures, so that exposure can be tested for a greater number of toxic compounds. As with any developing technology though, there are limitations. For instance, the technique is currently unable to identify the specific cause of an illness where a person is exposed to a wide variety of unknown harmful compounds, known as a toxic soup. The technique is also as yet unable to give information on the timeframe of exposure to toxic substances. DNA evidence has yet to be used in a UK disease case but, given the potential savings associated with avoidance of lengthy litigation procedures, it is only a matter of time. The only real barrier to the technique being adopted is the initial cost of carrying out the analytical work and testing. We re already seeing dramatic cost reductions, though, due to technological advancements and enhancements, as well as the ongoing expansion of the MSDS1 signature database to include additional chemicals and toxic agents.

6 06 As cost reduction climbs the agenda, we will see a continued change towards a more process-driven approach. Ian Harvey Senior Claims Manager Aviva Ian manages Aviva s Environmental team, looking after the strategy in relation to the firm s exposure to long and short tail liabilities. He started his career at General Accident s City Office and prior to moving to Aviva he managed a team handling major risks within property and liability markets for Commercial Union. It is important that insurers keep up to date with the latest scientific and medical studies on emerging diseases, to ensure that potential future claims are on the radar. Studies into the effects of mobile phones, for example, are published almost twice a year although they haven t yet provided any compelling evidence of a negative health impact. For this reason, there is currently no significant claims activity in this area. The majority of people in the UK use mobile phones regularly and ownership is still increasing. As a result, insurers will keep a very close watch on any advances in knowledge. We could see a growing number of claims in the more immediate future of passive smoking, and a lot of epidemiological research has been carried out to look into the risks associated with the inhalation of second-hand smoke. While smoking was banned in indoor public spaces in 2007, diseases caused by passive smoke potentially have long latency periods and the number of claims relating to exposure before the ban is likely to increase. So far only three or four noteworthy claims have materialised and, while none of these has ultimately produced significant judgments, I understand that there may have been some out-of-court settlements. As awareness among potential claimants grows, there is a real possibility that the number of claims will increase. In terms of insurers strategies for handling current claims, as cost reduction climbs the agenda we will see a continued change towards a more process-driven approach. Traditionally, the assumption has been that all disease claims must be dealt with individually. Of course, long-tail claims such as those for asbestos-related diseases or any claims where there are complex arguments to be undertaken will always require the detailed attention of a legal specialist. There are also, however, a large number of claims that can be tackled with a formula-driven approach and identifying and separating these out can generate significant savings for insurers.

7 07 Currently, an overwhelming majority of the claims we receive come from claims farmers and trade unions. Chris Gibson Disease and Illness Unit Manager Garwyn Chris has more than 35 years experience in handling disease claims and has held managerial positions at Iron Trades Employers Insurance Association Limited (now Chester Street) and QBE. He then worked briefly for Capita Insurance Services before joining Garwyn in While the health impact of mobile phone radiation and carbon nanotubes has attracted much media attention recently, we won t necessarily see major growth in these areas in the next few years. The links between mobile phone radiation and certain brain tumours suggested by earlier studies have subsequently been shown to be much weaker than first thought. As far as carbon nanotubes are concerned, the potential of some types to have the same effect on human tissue as asbestos is an interesting finding, but we are still a long way off seeing any significant claims activity. It is more likely that the growth areas in coming years will be business as usual claims those that are already commonly seen by insurers. We expect to see an increase in the number of these claims against employers now that we have moved into an economic slowdown, resulting from rising levels of unemployment. Current employees are often reluctant to rock the boat at their workplace, but when jobs are lost these claims come out of the woodwork. The increases will also be actively driven by claims farmers and trade unions. Currently, an overwhelming majority of the claims we receive are from these sources. As insurers begin to feel the pinch of the recession, there is talk of a considerable move towards process-driven claims handling. This is a risky strategy however, as formulas that identify which claims will by-pass the normal level of scrutiny will soon be recognised and exploited by claimant law firms hungry for high success rates. There is also the risk that more fraudulent claims will slip through the net. Every disease claim is different and, while it might appear more expensive in the short term, they have to be dealt with on their own merits by proactive, focused and experienced claim adjusters. Otherwise, the rise in numbers of successful claims and the potential rise in damages and costs on the back of process-driven claims handling could easily outweigh any initial savings.

8 08 Increased publicity and improved diagnostic techniques mean that asbestos-related conditions are being identified earlier. Chris Phillips Consultant Keoghs Chris has over 25 years of experience defending occupational disease claims including a number of notable House of Lords cases, most recently in the pleural plaques arena. He is one of the industry s best known disease litigation experts and regularly gives talks on the subject of occupational disease litigation and the need to find solutions to the constant advances in this area of law. Mesothelioma accounted for 2,056 deaths in 2006 alone and, according to the latest figures from the Health and Safety Executive (HSE), the rate at which new cases are diagnosed is set to peak much later than previously expected. The average cost of individual claims is also climbing a typical mesothelioma claim can already cost an insurer in excess of 200,000 and there is every chance that this will continue to rise in coming years. Increased publicity and improved diagnostic techniques mean that asbestos-related conditions are being identified earlier this is creating a trend towards younger claimants, which is also driving up the cost of claims. Another area that is likely to see a major influx of claims in the near future is noise-induced deafness. The Control of Noise at Work Regulations 2005 came into force for all industry sectors in 2006, with the exception of the music and entertainment sectors, where they came into force in However, the demands made by the regulations that employees should be given information and training on hearing loss if the noise level is above 80 decibels (db) and be provided with hearing protection for levels above 85 db are going to be very difficult to enforce. Typical noise levels inside concert venues and nightclubs far exceed this, but it is impractical for bar staff to wear hearing protection. Overall, by lowering the threshold, it is estimated that an additional 1.6 million workers are being exposed to noise levels now considered dangerous, and this has significantly increased the pool of potential claimants. Also on the horizon is an upturn in claims for stress-related illness. The decision in a recent Court of Appeal case Dickens v O2 has given a green light to claimants by relaxing the regulations established in an earlier case. This will be exacerbated by the onset of the recession as, in an effort to save costs, businesses pile more and more work on fewer employees. There is a risk in each of these areas that the worsening economic climate and the abundance of aggressive claimant law firms will open the floodgates to large numbers of claims. It is therefore vital that insurers and their lawyers continue to play an active role in the litigation process and are prepared to question precedents at the highest level.

9 09 It is vital that insurers are aware of developments in litigation that could change the risks faced by those they insure. Bill Shepherd Independent Disease Claims Consultant As a qualified solicitor, Bill was Senior Legal Counsel and Group Head of Claims for Imperial Chemical Industries Plc and responsible for the management of legacy issues, including ICI s disease legacy portfolio. Bill left ICI following its acquisition by Akzo Nobel and is acting as a consultant in the field of legacy disease management. Expert opinion is divided on how soon we will see asbestos-related claims reach a peak and begin to fall in numbers, but estimates predict that this will not happen until around 2015 or possibly much later, according to more recent research. Beyond that point, the number of asbestos claims will begin to diminish, and claims for asbestos-related lung cancer, mesothelioma and asbestosis will gradually become less common. It is doubtful however, whether this will cause any drop in the overall volume of disease claims, as other areas will most likely grow to fill the gap. It is important not to assume that the transformation we have seen from the industrial Britain of 50 years ago to the service-based economy we have today will mean fewer disease claims. The fact is that disease litigation is a very dynamic area and it is probable that as claims for diseases associated with heavy industry such as vibration white finger (VWF) and asbestosrelated conditions become less common, other claims will take their place. This will be driven by claimant law firms, which are constantly looking for new areas in which to generate claims. It is very difficult to make predictions about exactly what the makeup of this new claims landscape will be, as there are many technologies and working practices that we have only been exposed to for a relatively short period of time. Regular use of mobile phones, for example, or office workers spending all day in front of their computer screens, are relatively recent phenomena, and there is no way to determine what their long-term effects will be. While it is hard to imagine another claims area arising on the same scale as asbestos, there is still the potential for mass tort actions to arise that could prove very costly to the insurance industry. The most important point, though, is that disease claims are not going to go away and neither will the need to defend them. For this reason, it is vital that insurers are aware of developments in litigation that could change the risks faced by those they insure.

10 10 Allowing compensation for a symptomless condition is contrary to long established basic principles of law. Mike Klaiber Disease Claims Manager Zurich Insurance Mike has almost 40 years experience in the insurance industry and he joined Eagle Star now Zurich 11 years ago. He specialises in disease claims and sits on a number of market working groups including the Association of British Insurers (ABI) Tracing Service Working Group and attends Department for Work and Pensions (DWP) Review Body meetings alongside the ABI. The recent decision by the Scottish Parliament to pay compensation to those diagnosed with pleural plaques has set a dangerous precedent in the handling of disease claims. Allowing compensation for a symptomless condition is contrary to long established basic principles of law in Scotland and England & Wales, where it has always been necessary to show that actionable harm has been caused by exposure. The imbalance created by the decision will not only generate discontent among those diagnosed with plaques outside Scotland, but it will also create a situation where claimants will be desperate to raise proceedings in Scotland if at all possible. The new Scottish Act also brings the strong risk of unintended consequences. It opens up the possibility of challenge from other special interest groups to be compensated for the anxiety caused by the potential development of a future disease. Some expect that the law in England and Wales will be reviewed in light of the Scottish decision. Insurers are watching developments closely, as a change in the current law could be very costly for businesses and the insurance industry. The Scottish Government s intention to bring in legislation to compensate asymptomatic pleural plaques is now being challenged by a group of insurers by Judicial Review in the Scottish courts. Another important decision in the disease arena came recently with the High Court s ruling on the policy trigger for Employers Liability claims. The original argument centred on the fact that many EL policies state that an employer is liable to pay compensation if injury is sustained during the period of employment. Some argued that, in the case of mesothelioma, the injury is not sustained at the time of exposure, but rather approximately ten years prior to symptoms developing. The High Court decided in November 2008 that the liability lies with the insurer of the company that employed the injured party at the time of exposure, regardless of the exact wording of the policy. There is currently an appeal in progress to reverse this decision, and the result of this will be eagerly anticipated by the industry. Reversing the current High Court ruling would undoubtedly leave a large number of mesothelioma sufferers unable to claim compensation. Ultimately, the industry has a responsibility to help those who have acquired diseases at work and insurers take this very seriously, working hard to ensure that legitimate claims are indemnified fairly and compensation is paid as quickly as possible.

11 11 There is a tendency to view process and technical expertise as two competing forces, whereas the opposite is in fact true. Gary Fitzpatrick Partner and Head of Disease Keoghs Gary is head of Keoghs Disease team and his particular expertise lies in defending disease claims on behalf of large insurance clients and commercial organisations. He has dealt with a number of floodgate scenarios and has achieved several notable discontinuances. He sits on the Disease Special Interest Group of the Forum of Insurance Lawyers (FOIL) and regularly conducts disease-related training sessions. Some market commentators have predicted a steady decline in the incidence of disease claims, as one particular legacy of the UK s heavy industrial past wanes. It is our belief, however, that the overall volume of disease-related claims is unlikely to decrease for many years, if at all. The reasons for this are twofold. Firstly, as described elsewhere in Disease Futures, there are many emerging claims areas that have the potential to grow significantly. It is difficult to predict with any clarity what these new hotspots will be, but there is little doubt that at least one will appear. Secondly, as some of their historic cash cow diseases start to decline, claimant law firms will use improving medical knowledge to continue to capture and pursue claims in these areas, some of which may have previously been borderline in terms of liability. Lung disease claims, for example, were forecast to peak in 2014/15, but current trends now indicate that the peak is unlikely to occur until 2020/21 at the earliest. Traditional disease claims handling methods cannot endure in this scenario. Challenged to improve efficiency and reduce handling costs across their businesses, insurers and their law firms need to consider new ways of dealing with disease claims. So what options do insurers have? Appointing lawyers with the best technical expertise and a proven track record is still fundamental. But it s also important to challenge the outdated views that all disease claims are unique and that they need to be handled entirely by an experienced litigator. It is fair to say that some firms may have exploited this perception over the years to leverage premium fees. Disease litigation is one of the last bastions where process-driven methodologies have yet to be fully embraced. Indeed, there is a tendency to view process and technical expertise as two competing forces, whereas the opposite is in fact true. Keoghs now has perhaps the strongest disease team in the market in terms of technical ability. Yet we leverage these skills using the tried and tested, team-based, process-driven way of working that has proven so successful across our business. This ensures that the right technical resources are applied at the right time in each claim s lifecycle. Highly experienced specialists still identify issues, set strategies and are involved at all the key decision points, but they are backed up by replicable workflows, a sophisticated case management system and a strong support team. The result? Cycle times are reducing, levels of damages and costs are being contained more effectively and we are seeing an increasing number of cases discontinued. In addition, we have been able to develop alternative pricing structures for disease claims handling that reflect the level of standardisation that we have proven is possible in this area. UK businesses and their insurers will face major financial risks from disease liabilities for the foreseeable future, so improving the cost effectiveness of claims resolution is vital. The perception that disease claims cannot be process-driven will therefore have to change.

12 Keoghs provides pre-litigation, litigation and post-litigation services to numerous insurers, insurance-related organisations and self-insured companies. The firm has experienced sustained growth in recent years, with annual revenue now exceeding 29million and staff numbers surpassing 670. Keoghs disease team has doubled in size in the last 12 months. It now contains some of the most experienced specialist lawyers in the industry, with a wealth of expertise across a broad spectrum of disease-related claims. For further information on Keoghs capabilities in this area contact Gary Fitzpatrick on or gfitzpatrick@keoghs.co.uk. Keoghs LLP 2 The Parklands, Bolton BL6 4SE Tel: Compton Court, Harry Weston Road, Binley Business Park, Coventry CV3 2SU Tel: September 2009