Reforming mesothelioma claims: A consultation on proposals to speed up the settlement of mesothelioma claims in England and Wales

Transcription

1 Reforming mesothelioma claims: A consultation on proposals to speed up the settlement of mesothelioma claims in England and Wales To: mesotheliomamojpolicyteam@justice.gsi.gov.uk by midnight on 2 October 2013 This response is submitted by Unite the Union. Unite is the UK s largest trade union with 1.5 million members across the private and public sectors. The union s members work in a range of industries including all manufacturing and transport sectors, financial services, print, media, construction, and local government, education, health and not for profit sectors. Unite s membership inevitably means that many of its members were exposed to asbestos and a significant proportion of those that are dying today of mesothelioma were Unite members. Unite understands the issues relating to members and their families of this tragic aspect of Britain s industrial history. We are committed to preventing injury at work and where necessary and possible to the recovery of proper compensation. Intoduction Unite has no argument with any government commitment to ensuring that mesothelioma sufferers and their families receive full compensation as quickly as possible. However, the proposals in this consultation paper will, in our view, slow claims down, result in serious under settlement of claims and leave many victims to die without compensation. 1

2 The government has made assumptions about the reasons for delay in mesothelioma claims without any attempt to understand them. It has accepted wholesale the arguments of the Association of British Insurers and others in the defendant community. The failure to involve mesothelioma sufferers and their families, asbestos support groups, trade unions and others in the claimant community and the refusal to consult on their alternative proposals, which in Unite s view shows utter contempt for victims, has resulted in proposals which demonstrate a fundamental lack of understanding of the needs of mesothelioma sufferers. Unite which has supported thousands of sick and dying members, and their loved ones, to claim compensation from the employers who negligently and wrongly exposed them to asbestos - sees no need for a mesothelima-specific pre-action protocol. In our experience, and in that of our lawyers, the current industrial disease PAP, which applies to mesothelioma, works well in conjunction with Master Whittaker s fast track procedure in the Royal Courts of Justice. The proposals in this consultation will dismantle this effective and respected system, resulting in confusion and delays. The ABI s MPAP and secure mesothelioma claims gateway (SMCG) will create an unlevel playing field which will put insurers in an advantageous position. They will deliver ownership and control of the claims process into the hands of the insurers to the detriment of mesothelioma claimants. The performance so far of the fixed cost personal injury claims portal provides some insight into whether a portal style SMCG will improve the outcome for mesothelioma claimants. It is too early to know what impact the extended claims portal is having on employer and public liability claims, but there is little evidence of it speeding up road traffic claims. The government s commissioned research by Professor Paul Fenn concluded that even for straightforward RTA whiplash claims, the portal did little to speed up the process and significantly reduced the average level of compensation paid to claimants. In Unite s view, an electronic portal will simply not cope with the complexity of mesothelioma claims. The MPAP, simply compounds our view that a mesothelioma claims portal cannot work in practice. No work has been done to address the substantial number of issues that claimant representatives attempted to raise when the DWP asbestos scheme was first raised. This shows distain for the people the government claims to want to help. Unite also opposes the introduction of fixed costs for mesothelioma claims which settle within the SMCG. In Unite s view, fixed costs will give insurers a tactical advantage at the 2

3 expense of victims, removing any incentive to settle early and putting pressure on claimant representatives to under-settle claims. Sir Rupert Jackson and the government consider that fast track personal injury cases are suitable for an FRC regime: mesothelioma cases are not fast track cases. The government accepts that disease cases are not included in the FRC regime: mesothelioma cases are disease cases. The experience of the Miners Compensation Scheme convinces Unite that a fixed costs claims process is wholly inappropriate for mesothelioma claims. It resulted in a significant reduction in the average compensation for significant numbers of claimants as a result of many claimant lawyers doing the minimum amount of work for the maximum margin of profit, as evidenced by the vastly different average settlement figures given to Parliament in June 2009: htm# Unite s priority for its members is to see maximum compensation reaching the greatest number of sufferers in the minimum time and at no cost to them or their families. We are convinced that the proposals in this consultation will deliver victims less compensation through an unnecessary system based on incorrect assumptions and flawed statistics and designed by the insurance industry to deliver substantial savings to the insurance industry. Consultation Questions: Question 1: What in your view are the benefits and disadvantages of the current DPAP for resolving mesothelioma claims quickly and fairly? While there are undoubtedly improvements that could be made to the current DPAP, Unite considers it generally beneficial for mesothelioma claims. The government and insurance industry claim that an industrial disease PAP is not suitable for mesothelioma claims. We disagree. 3

4 In order to consider the benefits, or disadvantages, of the DPAP, it is necessary to look also at the RCJ process, as the two work together. The DPAP provides the necessary flexibility in time scales that claims for people with short life expectancies require and where claims, particularly ones involving multiple defendants, are complex. This includes necessitating that the parties act with appropriate urgency, such as by provision of early disclosure by claimants and swift responses by defendants, and allowing early issue of proceedings. Defendants know that any delay in making an early and reasonable offer after notification of a claim is likely to lead to litigation and they are discouraged, through the show cause procedure which the PAP gives access to, from putting forward unmeritorious defences which can slow the process down. Indeed it is the specialist mesothelioma judges and show cause procedure a requirement by the court for the defendant to identify the evidence and legal arguments that give it a real prospect of success on issues of liability that are the major benefit of the DPAP. They speed up the settlement of cases significantly, with few needing to proceed to trial. Unite understands that the government did not examine the way this system works and the benefits it provides claimants in advance of launching this consultation. How can the MoJ accept the ABI s claim that the specialist list is over-utilised and leading to delays without first speaking to the Queen s Bench Division Masters and discussing how the system which they so expertly administer could be improved and any problems with its effective operation ameliorated? Here is a good explanation of the system from Senior Master Whitaker: In light of the court fees system, such cases must be a net contributor to the cost of the court service. It is little wonder that, without speaking to the QPD Masters, that the MoJ is unable to provide real evidence for the claim that 50% of claims take more than 12 months to settle and that non-litigated claims take almost as long to settle as litigated ones. These spurious statistics are instead based on secondary analysis by the MoJ of an interim data set provided by NIESR for a different purpose and a survey by the British Lung Foundation which gives only anecdotal evidence and had a very low response rate. 4

5 If the MoJ is convinced by this unsophisticated evidence it should conduct an analysis of the reasons for delays. Only then can it go about tackling them. In Unite s experience, and that of our lawyers, delays happen for many different reasons, including difficulties in obtaining medical records and reports and by the failure of insurance companies to respond to claims in good time, as well as by insurer denials of liability even when it should not be in dispute. Much delay was caused when cases were held in abeyance pending the trigger issue raised by the insurance industry and in relation to other test cases. And what the BLF survey describes as delays in the process are often down to the tardiness of insurers in paying compensation after it has been awarded. If a quarter of those surveyed reported having to wait over three months for their money, why doesn t the MoJ simply act to penalise insurers who delay payments, rather than seeking to implement an insurance designed claims system that will do nothing to tackle this issue? We suggest that it is the efficiency of the current system and the way it works to prevent the worst excesses of insurer bad behaviour that is behind the ABI s determination to replace it with its own, alternative mesothelioma claims process, no matter what damage this causes to claimants. Question 2: How far do you think that a new dedicated MPAP would address the problems and meet the objectives set out above? Unite does not accept that there are problems with the DPAP or the accompanying court process. No evidence is provided to back up the statistics about delays. Even if the statistics were reliable, the ABI MPAP will not resolve the issues because there has been a fundamental failure to understand, or even attempt to understand, the causes of delay. In Unite s view, the ABI MPAP will slow claims down and increase uncertainty for mesothelioma sufferers. While this is not its stated intention, we wonder if it is outcome the ABI desires because of the benefits it will provide insurers. The protocol fails to recognise the urgency of the disease and claims. Paragraph 5.3, for example, appears to require the claimant to wait almost as long as the normal 90 day PAP. There is no comparison with the Master Whitaker fast track system. 5

6 The protocol requires claimants to unilaterally disclose all statements, expert reports and relevant records. Many of these are not currently necessary. To have to include them in the letter of claim will place an unfair burden on claimants to comply and will hold up proceedings. In fact, the great many expert reports that can be generated in mesothelioma claims, including as a result of requests by defendants, could make the process entirely open-ended a great many mesothlioma sufferers will die long before their claim is concluded, often before the letter of claim is even able to be submitted. The flexibility in the current system that allows claimants to take the necessary steps at an early stage of the disease in order to be able to die secure in the knowledge that that their loved ones will be looked after financially after their death (even if the claim has not actually concluded) will be lost. This is unspeakably cruel. Requiring this level of disclosure will also provide insurers with more material with which to dispute liability, including by highlighting any innocuous inconsistencies. It is perhaps inevitable that a process drawn up by the insurance industry would confer an unfair advantage on it. The MPAP will encourage time-wasting and delaying tactics by defendants who will be secure in the knowledge the claimant has a limited life expectancy and that this behaviour can no longer be mitigated by the prospect of litigation. Question 3: What are your detailed views on the ABI s proposed MPAP at Annex B? What further issues might it address? Do you think the criteria for entering the MPAP are the appropriate ones? If not, what criteria would you suggest and why? In what circumstances, if any, should a case fall out of the MPAP? We provide our main views on the proposed MPAP in response to question 2. The MPAP will, in our view, delay claims and compound the suffering of mesothelioma sufferers and their families. Our concerns about the impact of specific provisions include: Para 1.2 Unite does not agree that the protocol establishes a reasonable process and timetable for the exchange of relevant information. Rather than the timescales reflecting a need for particular urgency, they will delay claims because of their rigidity. Mesothelioma claims are urgent and there must be provision to allow for liability issues to be dealt with 6

7 swiftly during the claimant s life, even if the claim is valued posthumously. The protocol, as drafted, is likely to frustrate this aim in the majority of cases. Para 1.3 this refers to sanctions for non-compliance but does not provide details of what these would be and when they would apply. The current DPAP and RCJ process carries with it the prospect of litigation should the defendant refuse to accept liability. It appears now that the claimant would face sanctions if, in their effort to resolve their case in their lifetime they initiate proceedings. We recognise that avoiding litigation should be the overarching aim of any claims process, but this should not be at any cost. Claimants must still have access to the RCJ process should a defendant prove intransient. Para the obligation on the claimant to disclose binding evidence creates an unfair advantage for defendants. The current process cautions against point scoring in relation to discrepancies in early evidence. Requiring unilateral disclosure will provide defendants intent on disputing liability the opportunity to pick holes in a statement. Although it is often advisable to disclose a statement as early as possible in the process, in order to speed up the claim, it should not be mandatory. Para the obligation on the claimant pre-action to provide details of all sources of exposure to asbestos is inconsistent with section 3 of the Compensation Act 2006, which entitles a mesothelioma victim to full damages from any tortfeasor responsible for a material increase in the risk of the disease. That defendant can then seek a contribution from other responsible parties. Requiring claimants to provides details of all other sources of exposure is onerous and unreasonable. Para 4.4 the requirement to provide a great number of documents before taking action, including those not in the victim s control or possession, will prevent many claims being settled within the victim s lifetime. Para 4.5 the opportunity for the tortfeasor to request clarification when unable to determine liability will provide defendants not prepared to settle with the opportunity to add to delays. There is no indication of how long the clarification process can be strung out. We are baffled as to how it is considered that this opportunity will reduce delays, when currently, in many case, a show cause hearing would swiftly dispose of liability. Para 4.6 provides a similar opportunity for the tortfeaser in relation to documents (as the documents under para 4.4 are not intended to be exhaustive. 7

8 Paras many living claimants will due in the three months for the compensator to provide a reasoned answer to the claim. It makes no sense for a protocol intended to speed up claims to build in so much time for a defendant to respond to a claim. Para 5.5 adds more time to resolve disputed aspects of the claim. Bearing in mind the spectre of sanctions for the claimant should they commence action, this provides defendants with an unfair advantage and opportunity to delay the claim. Para 5.6 adding more time if it is not reasonably possible for the compensator to complete enquiries is a potential disaster for mesothelioma sufferers who want to have their claims settled during their lifetime. It makes the protocol open-ended. A claimant will rarely have more time to give, but what choice will they have, other than to risk losing a substantial amount of their compensation in costs, when the defendant claims, after an already long investigation period, that they haven t been able to complete their enquiries? Paras questioning the medical expert per action It is not clear if 6.5 means that a claimant is not entitled to obtain expert evidence about a dependant s life expectancy without a request from the defendant. If the defendant wants to obtain such evidence, the onus is placed on the claimant to provide it, but it is not clear who will bear the costs. Para 6.6 restricting a claimant s ability or need to obtain expert evidence on breach of duty until after the period in 5.3 is unreasonable and will mean that it will not be allowed until many claimants have died. Para 7.1 provides a further 21 day delay after service of statement of employment and exposure, schedule of loss and medical report and records. Para 8.1 this demonstrates that the protocol will not be appropriate for living mesothelioma claims, since it places an expectation on such a claimant to follow the protocol, when their life expectancy is not only limited but is unpredictable. Only after the protocol has been exhausted can the claimant access the effective court process. Many claimants will have died by this time. The ABI and MoJ may still be holding to the misapprehension that median life expectancy is about two years, but this is not the case. The MPAP should tackle delays in the payment of damages, as referred to in response to Q1 and provide meaningful incentives for defendants to admit liability early on, such as by 8

9 stipulating that failure to respond to a letter of claim within 21 days will result in court proceedings. While the ABI has invested time and effort in drawing up the MPAP to the benefit of its members, we trust that the government will ensure that it takes a fully balanced view of the protocol s requirements, having regard to consultation comments from across the spectrum of interests. Question 4: To what extent do you think the proposed MPAP will result in reduced legal costs in mesothelioma claims? As it is currently drafted, it will not. The obligations on claimants are likely to result in frontloading of costs and increased costs overall. Fixed costs may cut fees for compensators, but add to the costs payable by innocent victims and their families. It should be noted that the speed and manner of the specialist QBD process already has the effect of minimising legal costs, as Senior Master Whitaker recognises. Question 5: To what extent do you think a SMCG will help achieve the Government s objective of ensuring that claims are settled quickly and fairly? It is difficult to respond to this question without more information about the SMCG. While it may provide the benefits the consultation paper refers to, it could also add to delay and increase cost. Scanning hundreds, if not thousands, of pages of the medical records of mesothelioma sufferers will be a challenge in itself. A gateway cannot of itself ensure claims are settled quickly, particularly if it is not compulsory. Unless it is compulsory, the value of the data it captures may well be reduced. It is also likely to cause confusion and ultimately delay claims further. Unite is concerned about who will govern the gateway and cannot understand how such a fundamental point is not addressed in the consultation. If the insurance industry funds the gateway then presumably it will also operate and manage it. Unite would want the gateway to be governed in much the same way as the existing claims portal is managed by Claims Portal Ltd directed equally by claimant and defendant representatives. 9

10 It is worth noting that the Claims Portal Ltd Joint Venture Agreement refers to the funding issue in this way: The parties agree that in principle the cost and management of the Portal should be financed by claimants' representatives and compensators in proportion to use by those users, but this was not practicable when setting up the Portal. The parties will therefore work towards achieving this objective (without materially increasing cost to insurers) as soon as is reasonably practicable and to ensure that decision making shall be afforded equally to the directors of A and B. The A directors are claimant representatives and B directors are insurers. Question 6: How should the SMCG work (if at all) with the MPAP and procedure in traced mesothelioma cases generally, and what features should the SMCG have in order to complement those procedures effectively and efficiently? Unless the SMCG is to be set up so as to be governed equally by claimant and defendant representatives, then it should play no role in any MPAP. In Unite s view, if the insurance industry want to set up an electronic system for keeping proper records and responding quickly and appropriately to claims then we would support it in that. But such a system should not require mesothelioma sufferers to be involved. Question 7: What do you see as the risks of a SMCG and what safeguards might be required? Data protection and safeguarding, given the sensitivity of the personal data the SMCG would hold, is paramount. Unite is concerned that the MoJ appears to have adopted the ABI s proposals for the SMCG without proper consideration of this issue. It would be entirely inappropriate for the insurance industry to control and operate the gateway without claimant representatives to have an equal role in this. Question 8: Do you agree that a fixed recoverable costs regime should be introduced to support a dedicated MPAP? If so should this apply primarily to claimant costs? Should any measures also apply to defendant costs? If so what form might they take? No. Unite opposes a fixed recoverable costs regime to support a MPAP. We do not understand why an FRC regime is being proposed since the courts are responsible for controlling costs, unless the ABI s intention is to drive down costs regardless of the impact on mesothelioma sufferers. 10

11 We refer in our introduction to the effect of fixed costs on the Miners Compensation Scheme, which saw many law firms doing as little work as possible in order to maximise their income, as well as using unqualified or junior executives to handle claims. Many claims were significantly under settled as a result. Mesothelioma cases can be extremely complex and sensitive and should be handled by experienced lawyers. Given the increase in front-loaded work that the proposed MPAP will create, the risk of firms using inexperienced staff to do this work is even greater and will inevitably result in mesothelioma sufferers being encouraged to accept low offers. While Unite would monitor closely the way its lawyers handle claims under any FRC regime, a great many mesothelioma sufferers and their families would face the same injustice as former miners did. Question 9: Which proposed design of fixed recoverable costs structure do you support? Please explain your answer. We do not support any of the FRC structures proposed. However, if there are to be FRCs, then there should be substantial variables based on a detailed consideration of the work required in different mesothelioma cases. For example, much work is generated by the number and nature of potential defendants. And as the miners scheme clearly shows there must be a strong relationship between the level of damages and fees. Different law firms obtained very different levels of damages, when the injuries and their effects are the similar. Sadly, the figures demonstrated the need for claimant representatives to be incentivised to work towards securing the correct amount of compensation. Two per cent (the figure that appears in the consultation paper) is too low to have an effect. The sort of levels that exist in the fast track fixed costs proposed by RJ and which survived the recent review and which were based on research by Professor Fenn are more appropriate (see Rule 45.29C here: ) The two per cent arises from consideration of the NIESR study, but that study was not conducted for the purpose of any FRC scheme. 11

12 Question 10: What are the key drivers of legal costs, both fixed and variable costs, and how strong are these drivers? Unite assumes that this question is intended to be specific to mesothelima claims, since the drivers of legal costs in these cases are not the same as in other types of personal injury claim. Mesothelioma cases are complex more so if there are multiple defendants and if defendants dispute liability. The more complex the case, the greater the costs. These drivers will not change if costs are fixed. Question 11: Do you have any views on what the level of fixed recoverable costs should be, in relation to your favoured design? Please explain your answer. We do not understand how the proposed levels have been determined, but Unite is opposed to fixed costs at any level. FRCs are entirely inappropriate for mesothelioma cases, for the reasons given above. If there are to be fixed costs, then any FRC regime should be subject to research and proposals being put forward in consultation with the industry, specialist practitioners and interest groups. We note that the consultation paper agrees that and FRCs should be set at a level, which accurately reflects the amount and nature of the legal work involved in managing the mesothelioma claim efficiently. Question 12: Do you agree that the fixed recoverable costs regime should apply only to cases which fall under the MPAP? Unite opposes a fixed recoverable costs regime, for the reasons given above. It follows that limiting the application of an FRC regime in any way is preferable to not limiting it. Question 13: To what extent do you think the reforms apply to small and micro businesses? Question 14: To what extent do you think the reforms might generate differential impacts (both benefits and costs) for small and micro businesses? How might any differential costs be mitigated? 12

13 Unite believes there will be no differential impacts for small and micro businesses as such organisations will have employer liability insurance. The majority of compensation claims we pursue on behalf of our members are in any case against larger employers. However, given that the MPAP is, as we say above, likely to make it more difficult for victims to pursue claims, employers generally are unlikely to experience any negative impact from the reforms. The only losers will be mesothelioma sufferers and their loved ones. Question 15: Do you agree that sections 44 and 46 of the LASPO Act 2012 should be brought into force in relation to mesothelioma claims, in the light of the proposed reforms described in this consultation, the increase in general damages and costs protection described above, and the Mesothelioma Bill? No. Unite here puts forward 3 main reasons. Firstly, we note that in his final report (launched in January 2011) Sir Rupert Jackson's fourth major recommendation was expressed on page xvii in this way: 2.4 Increase in general damages. In order to ensure that claimants are properly compensated for personal injuries, and that the damages awarded to them (which may be intended to cover future medical care) are not substantially eaten into by legal fees, I recommend as a complementary measure that awards of general damages for pain, suffering and loss of amenity be increased by 10%, and that the maximum amount of damages that lawyers may deduct for success fees be capped at 25% of damages (excluding any damages referable to future care or future losses). In the majority of cases, this should leave successful claimants no worse off than they are under the current regime... Later he says: page I am advised by Professor Paul Fenn (economist assessor) that such an increase in general damages will in the great majority of cases leave claimants no worse off. Indeed the great majority of claimants (whose claims settle early) will be better off. However it was not until later in 2011 that Professor Fenn's graphs underpinning this were made public. Please see attached. These demonstrate that among the losers are most EL claimants. (The way in which Sir Rupert can make his claims for the "great majority of cases" is based on the great number of RTA cases.) 13

14 We also have information in the consultation paper, the NIESR study and perhaps elsewhere about the specific impact on mesothelioma cases. The mean compensation for settled EL claims in the private sector was 156,600 (paragraph 19 of the consultation paper) of which some or all is vulnerable to a reduction of 25%. We also know that in practice lawyers will go for the whole 25% - they have said so. The JSB Guidelines set GDs at 50k- 90k (paragraph 74) to which 10% can be added. In this context the Ministry of Justice s assertions based on Sir Rupert s holistic view cannot stand. Clearly the victims of asbestos exposure, their widows and other family members will be substantially worse off. In the average (or mean) case the claimant will receive 7,000 (10% of 70,000) by way of additional damages, but risk losing 25% of 156,600 or 39,150, a net loss of 32,150, or approaching half of the general damages. Secondly we have considered what was said to Parliament when the decision was taken to make an exception for mesothelioma cases (among others). See Legal Aid and Sentencing of Offenders Bill Debate in the House of Lords on Wednesday April 25th 2012 at 5.15pm Lord McNally: We will review the position in due course and publish the findings of that review. Only after we have done so, and we are satisfied that the time is right to implement the provisions in Part 2 in relation to mesothelioma, will we do so we are not going to be in the business of trying to put forward some kind of whitewash scheme. We will make sure that this is a proper review and that Parliament has a proper opportunity to see the outcome.. Neither this consultation, the Mesothelioma Bill or other measures represent a proper review. Indeed, the proposals in this consultation provide just the sort of whitewash scheme that Lord McNally pledged would not be put forward. Nothing in this consultation or in the Mesothelioma Bill changes the continuing need for mesothelioma victims to be protected from LASPO. Thirdly, mesothelioma cases represent a blind test of the regime established by LASPO and related reforms. Such cases and others like insolvency claims are available to compare with those cases where recoverability of success fees and after the event insurance has gone. When the new regime in those cases has time to bed in after three to five years, we can then review its effect. We note that the 3 to 5 year period is the time frame that the MoJ has said it would conduct such a review. 2/10/2013 Howard Beckett, Director of Legal, Affiliated Services and Membership 14

15 For further information or clarifications please contact: John Usher and cc Unite House, 128 Theobalds Road, Holborn, London, WC1X 8TN To: Alpa Parmar Ministry of Justice 4:37, 102 Petty France London SW1H 9AJ By 15