The 2013 Ministry of Justice Reforms: A Practical Guide for Clients Garwyn Group

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1 The 2013 Ministry of Justice Reforms: A Practical Guide for Clients Garwyn Group 1

2 What are the reforms? The Ministry of Justice Reforms are an interlocking package of measures designed to accelerate the personal injury claims process and restore some proportionality to legal costs. Since the previous major reforms introduced by Lord Woolf in 1999, legal costs have escalated in real terms and the 2013 changes, recommended by Lord Jackson, address this problem by introducing a framework of fixed costs for cases which are handled within a revised set of rules ( the protocol ). The reforms cover the majority of Employers and Public Liability claims for injury in England and Wales and apply to accidents on or after 31 July 2013 plus disease claims made against a single employer on or after 31 July 2013, up to a claimed value of 25,000 plus costs. Claims that fall within the new protocol will be notified through an electronic "portal", which acts as an interface between claimant and defendant unless the claim exits the protocol for any reason. Claims that remain within the portal process attract significantly lower legal costs than at present. However, if the defendant breaches any of the key deadlines, the claim leaves the process and the defendant faces higher costs. What are the new timescales? The claims process is divided into three stages investigation, negotiation and (if necessary) litigation. Stage 1 investigation The claimant s solicitor sending a Claim Notification Form (CNF) which must be acknowledged within 1 working day, after which the defendant must respond on liability within 30 working days on EL claims, and 40 on PL claims. At the end of Stage 1, the claim remains within the portal only if the defendant admits liability in full Stage 2 negotiation The claimant submits medical evidence and an offer to accept a certain sum in settlement, and the parties then have 35 working days to agree settlement Stage 3 litigation If there is no agreement at the end of Stage 2, the defendant pays its final offer to the claimant and the claimant then has the option of commencing court proceedings to seek higher damages 2

3 Strict deadlines also apply to other aspects of the process, including disclosure of information and payments. What are the implications? The key to capitalising on these reforms is efficient and accurate information gathering processes and working in close partnership with their insurers. Those able to do so are likely to benefit from lower claims spend than organisations whose procedures are less efficient, hindering insurers ability to meet the stringent deadlines. The best result of all is still a successful denial of liability. This relies upon good evidence, and the earlier the company can gather such evidence, the sooner the insurer can make a decision, confident of its merits. What should my company do to prepare? 1. Good, early investigation The best time to gather evidence relating to an accident is early, while memories and evidence are still fresh. A good investigation will consider the following: Record the facts Collate documentation Obtain witness statements Take photographs Avoid speculation, and be careful to distinguish between what a witness actually knows and what they are speculating or guessing about. If in doubt about second hand testimony, take care to record that John Smith says that.. This will avoid that report later being construed as fact rather than opinion or hearsay We include at the end of this guide a list of the standard documentation that your insurers are required to disclose if they intend to contest liability to any extent. The greater the amount of helpful documentation available, the greater the chances of success Documentation alone is never sufficient. Record the names and home addresses of witnesses, write down what they have to say in their own words, and ensure that they sign and date it. Again, keep to the facts and avoid speculation or hearsay. Don t worry about putting statements in legal format. We will consider them when preparing our case strategy and if a defence is a possibility, we will interview the witness ourselves during our investigation and prepare a statement which fulfils court requirements Photographs of the scene, ideally with a digital date and time stamp, especially if the scene may subsequently change or to capture a fluid situation. Similarly, ensure that any relevant CCTV footage is safely preserved Preserve for inspection Any material item that may be significant, for example a piece of equipment that was being used at the time, or protective clothing that was being worn When the investigation is complete, either ensure that the evidence is collated in a central archive for easy retrieval in the event of a claim or if required by your insurers send it to them to hold in readiness for a claim being made. If we are acting for your insurer, send it to us. 3

4 2. Consider whether to register on the portal If you have conventional EL and PL insurance, with a low-level deductible, or with no deductible at all, there is no need for you to register on the portal. Claimant solicitors will be able to find out who your EL insurers are through a central database, and send CNF s directly to them. Solicitors pursuing PL claims are obliged to make reasonable enquiries to find out who your insurers are before sending the CNF. They may write to you asking you to tell them who your insurers are. Any such letter should be passed to us and we will contact the solicitors to tell them where to send the CNF within the portal. For self-insured organisations or those with high deductibles, we recommend placing a prominent note on the Contact Us page of your company website, stating Please send EL/PL Portal claims to Garwyn Group D This will enable any solicitor reviewing the defendant s website to find out immediately where portal claims should be sent. If you are self-insured, or have EL or PL cover which carries a deductible of 25,000 or more, it is possible to arrange for your company s name to appear on the portal when solicitors make a search for your company. However, any CNF that they send to your company through the portal will automatically come to our portal inbox. You do not need to register on the portal for this to happen we simply need a signed consent from you, and we will arrange with Claims Portal Ltd for this automatic divert to happen. Please contact us if you would like this system put in place for your organisation 3. Plan for responding to new claims Within the new process, claimant's solicitors will be able to identify EL insurers from a central database and are required to send a claim to them directly through the portal. They are also required to send a CNF to the defendant directly. Transmission of the CNF through the portal to your insurers is instant, and it is likely that in most cases, insurers will know about an EL claim before their policyholder does. If solicitors cannot identify a defendant s insurers or claims handlers, they are required to send a defendant-only version of the CNF to the defendant s registered office by post. This is identical to a standard CNF except for the heading, which confirms that no other party has been notified. Where Garwyn handle EL and PL claims for your organisation, and you receive a CNF in the post, it should be scanned and sent by to for our immediate attention. You should send an acknowledgement to the solicitors shown on the CNF, but the should say only that you acknowledge receipt and that you have passed it to your insurers. We recommend that our clients familiarise themselves with the Defendant-Only Public Liability CNF, a copy of which can be found here: 4

5 What happens after a claim is passed to insurers? When we receive a CNF through the portal, we will firstly check whether you have previously sent us details of the accident. If not, we will initially contact you by telephone to obtain as much information as possible, and if circumstances are unclear or it appears that a defence may be available, we will arrange for a site investigation to take place. The condensed timescales mean that it is absolutely vital that we work together to ensure that site investigations are effective and can be completed in one visit. When we attend, it is important that: We are able to inspect the accident location We are able to obtain all relevant documents, and any other evidence such as CCTV footage We are able to interview all witnesses Should we encounter delay, our ability to respond within the portal timescale will be compromised. The new protocol allows no scope to seek an extension of time from the claimant's solicitors. Liability and Contributory Negligence If it is clear that liability needs to be admitted, and you and/or your insurers are in agreement, we will do so, in order to keep the claim within the portal and take advantage of the reduced costs. If you fund the claims and authorise recommendations on liability and value, it is very important to have a decision maker who can respond quickly, with a deputy to cover for absences. To make arguments of contributory negligence worthwhile, defendants must be confident that the likely discount from damages exceeds the additional costs that will be incurred as a result of the claim leaving the portal. Where your insurers fund the outcome, we will liaise with them to decide whether arguments of contributory negligence are prudent, and keep you informed. If your claims are self funded, we will set out the options clearly for you, explaining which course of action is expected to yield the best financial outcome. 5

6 Earnings details In EL cases, it is vital that we receive earnings details for the claimant as soon as possible, for two reasons: 1. We are required to disclose the earnings information to the claimant s solicitors within 20 days of an admission of liability, or the claim exits the portal. 2. Earnings information helps us to assess the potential value of the claim at an early stage. This will assist when considering whether to argue contributory negligence. We may also decide that the claim should leave the portal in any event, due to its value or complexity. Earnings information should take the standard form of gross, net, additions, tax, NI and other deductions, for the 13 weeks prior to the employee s accident or start of their absence period, plus the same information for the period of the absence. Valuation and Negotiation Stage 2 is initiated by the claimant s solicitors sending the defendant a medical report, together with a schedule of loss and the claimant s offer to settle. If you have an input in the claims settlement decisions, it is once again vital that you have in place a responsive system allowing you to consider recommendations we make on valuation, and provide decisions within the similarly tight timescales of Stage 2. Payments When payments of damages or costs are required within the portal process there is a deadline, usually 10 working days, for the claimant s solicitors to receive the payment a cheque in the post doesn t count! If payment is not received within the required period, the claimant s solicitors can elect to remove the claim from the portal. In this new regime, the standard process should be electronic bank transfer of funds (BACS) for faster delivery and guaranteed receipt. Insurers are adapting their processes, as are we, to be sufficiently responsive to meet short payment deadlines. If you currently fund payments by individual request, we recommend that you consider establishing a claims fund from which we can draw payments, or alternatively ensure that your own internal processes cater for BACS payments to be made. Where we hold claims funds, we have developed a process through which appropriate authority to make payments is rapidly obtained and the transaction made, in order to ensure that the deadline is met. It turn, it is vital that funds are replenished promptly by insurers or self-funding clients. If we have insufficient funds available, we will be unable to make payments, and claims will exit the portal as a consequence. 6

7 In Summary Overall, we see the changes as representing a restoration of balance in personal injury cases. However, the changes come with challenges, and to take full advantage of the new regime defendants will need to operate responsive systems and make decisions quickly. Through careful planning and a considerable investment of resources, we have developed systems and processes which will allow us to maximise the savings available to our clients within the new regime. That, however, is only half the battle. We now need our clients to be ready, and in most cases we anticipate that relatively small changes in procedures and communication methods will be sufficient. By adopting procedures outlined in this document, clients can help us to help them optimise their EL and PL claims exposure within the new regime. If you would like more information, please speak to your Garwyn account manager, or contact Bruce Kilby

8 Portal Claims Document Checklist Document Please tick Details if not available Available Not available please explain why (attach copy) Accident book entry Accident Investigation Report First aider report Surgery record Foreman/supervisor report Safety representatives accident report RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations) report to HSE Other communications between defendants and HSE Minutes of Health and Safety Committee meeting(s) where accident/matter considered Report to DSS Pre-accident Risk Assessment Post-accident Re-Assessment Training Records If machinery involved, inspection and maintenance records 8

9 For further information please contact: Bruce Kilby Client Service Manager