Date:

Guide to draft protocols for low value EL, PL & RTA

Back in January 2012, the Government announced that the current RTA portal scheme for low value claims up to £10,000 would be extended to EL, PL and motor claims with a value up to £25,000.  The MoJ then issued a call for evidence on how the Pre-Action Protocol, the portal and costs regime should be modified to accommodate the extension. Only now has the detail started to emerge with the Civil Procedure Rule Committee releasing the draft Pre-Action Protocols together with a short consultation closing on 23 November which seeks views on whether those Protocols are workable and whether they can be improved in any way.

Some aspects of the draft Protocols, which are the result of Government policy decisions, are not open for adjustment. They are:

(i)     the schedule of costs to be used in conjunction with the Protocols (Professor Fenn is currently updating his work on this).

(ii)    the exclusion of certain claims from the scope of the Pre-Action Protocols; and

(iii)   the response periods within Stage 1 of the Protocols.

This update highlights the key provisions of the amended RTA Protocol and the new EL/PL Protocol and looks at the challenges ahead before implementation in April 2013.

RTA Protocol

Increase of Protocol upper limit to £25,000 – this is the key change to the existing Protocol. The upper limit of £25,000 will apply to accidents occurring on or after 6 April 2013 and it will remain at £10,000 for accidents before that date.

Costs sanctions - there is a new warning in the Preamble that the court is able to impose costs sanctions when the Protocol is not followed.

Mandatory use of the portal and email - use of the portal is now mandatory where the Protocol requires information to be sent to a party. There is also a new requirement that all written communications not required by the Protocol are to be sent by email, for example in relation to a claim for hire charges being dealt with outside the Protocol.

Stage 1 - fixed costs – end of the £400 club - the time for payment of Stage 1 fixed costs has changed. Instead of having to pay within 10 days of the liability response, payment will now be within 10 days after receiving the Stage 2 Settlement Pack.

Stage 2 - medical records and photographs – the claimant must now disclose with the medical report any medical records which the medical expert considers relevant. However, it is expected that in claims under £10,000 the medical expert will not need to see any medical records. In addition, relevant photographs of the claimant’s injuries should also be disclosed.

Stage 2 - subsequent medical reports - the wording has changed slightly to emphasise that any subsequent medical report must be “justified” and there is an additional justification for a further report where “the claimant has not recovered as expected in the original prognosis”.

Stage 2 - non-medical expert reports – there is now provision for a non-medical expert report where it is reasonably required to value the claim.

Stage 2- witness statements – a new provision states that witness statements will not be required in most cases but statements may be provided where reasonably required to value the claim.

EL / PL Protocol

Types of claims included - an EL or PL accident occurring on or after 1 April 2013 or in an EL disease claim where no letter of claim has been sent to the defendant before 1 April 2013.

Types of claims excluded - the Protocol does not apply to:

  • PL disease claims;
  • PL claims where the defendant is an individual (not including a defendant who is sued in the name of their business or in their capacity as an office holder);
  • claims where the defendant is insolvent and there is no identifiable insurer;
  • a disease claim where there is more than one defendant;
  • claims for damages in relation to harm, abuse or neglect of or by children, young people and vulnerable adults;
  • clinical negligence claim;
  • mesothelioma claims.

Stage 1 – Claim Notification Form (CNF) - the claimant must send the CNF to the defendant’s insurer and Defendant Only CNF to the defendant. If the insurer is not known or there is no insurance, the CNF must be sent to the defendant. However, the claimant must make a reasonable attempt to identify the insurer. In an EL claim, the claimant must carry out a search through the Employers’ Liability Tracing Office. In a disease claim, the CNF should be sent to the last insurer on risk for the material period of employment. If the CNF or Defendant Only CNF cannot be sent to the defendant via the portal, it must be sent via first class post.

Response – acknowledgment - the defendant must send an electronic acknowledgment the day after receipt of the CNF. If the claimant has sent the CNF to the defendant direct, the defendant must send an electronic acknowledgment to the claimant the day after its receipt and send the CNF to the insurer at the same time. The insurer must then send an electronic acknowledgment to the claimant the day after its receipt from the defendant.

Response – liability decision - the response period in an EL claim is 30 days from deemed service of the CNF, and in a PL claim, 40 days. The number of days is a reference to business days and so practically speaking, the periods are 6 and 8 weeks respectively.

Contributory negligence - where there is an admission of liability but the defendant alleges any degree of contributory negligence the claim will drop out of the Protocol.

Experts’ reports and medical records – the provisions for the obtaining of medical and non-medical evidence are the same as under the RTA Protocol, save that there is no suggestion that in claims under £10,000 the medical expert will not need to see any medical records.

Interim payments – where a claim is valued at more than £10,000 the claimant may request more than one interim payment. This provision is not available in the RTA Protocol.

Success fees – there is provision for payment of success fees in disease claims where a CFA was entered into before 1 April 2013 or in the case of a CCFA advocacy or litigation services were provided under the agreement in connection with the claim before 1 April 2013. Unlike EL and PL accident claims where there can be no claim for a success fee as the reforms in relation to recoverable success fees come into force on the same day as these changes, as in disease claims these reforms only impact by reference to the date of the letter of claim. There will therefore be some EL disease claims where though the letter of claim is sent after 1 April 2013, the CFA/CCFA will have incepted in relation to the claim prior to that date, so as to entitle that claimant to a success fee recoverable from the defendant.

Lost earnings – in an EL claim, the defendant must provide earnings details to verify any claim for loss of earnings within 20 days of the date of the admission.

Comment

Motor

On the motor side, the £400 club has long been a concern for insurers who will welcome this amendment. Not only should it allay concern over fraudulent claims brought solely to obtain Stage 1 costs but it should also encourage claimants to move more quickly to Stage 2.

We are surprised however, how few changes are proposed to the RTA Protocol notwithstanding the issues which have emerged since the Protocol started. Even with claims valued up to £10,000 there have been concerns about the lack of provision for defendants to either question experts or obtain their own medical evidence. This has been compounded by the reversion to a position where there is no obligation to nominate proposed experts.

The amended Protocol does now provide for the review and disclosure of medical records but the other issues have not been addressed. It may be that further progress can be made in this regard when we eventually see the whiplash consultation which is expected to consider the introduction of independent medical panels.

EL/PL

On the EL/ PL side, there has been much anticipation over the response period for a liability decision. At six and eight weeks, this represents roughly half of the three month period available to insurers under the current Personal Injury Pre-Action Protocol. This is a key period in which to decide whether there is a defence on primary liability, worthwhile allegations of contributory negligence, or potential fraud. Quicker investigation processes will be required and desk top enquiries may become the normal approach unless an early decision is made to allow the case to drop out of the Protocol allowing more time to investigate the aspect that has caused the claim to come out.

An additional factor to be considered when the Protocol commences, is that at the same time, legislation (an amendment to s.47 Health & Safety at Work Act 1974 via the Enterprise and Regulatory Reform Bill) is also due to come into force. This proposal is designed to ensure that defendants will only be liable for civil damages in EL and PL claims which are governed by the current regulatory health and safety regime if they can be shown to have acted negligently, and while this will lead to certain additional claims becoming defensible, this may result in further investigations being required to obtain evidence showing implementation of a safe system of work. If it is believed that any case of this type could now be defended on this basis, then that would be good reason for that claim to leave the portal process.

Disease

Experience suggests that few letters of claim in disease matters currently contain sufficient information for an adequate investigation of all coverage and liability issues within the existing standard protocol period. It seems likely there will be many claims immediately exiting this new process under a para 6.14(4) notice (inadequate mandatory information in the CNF). Issues of breach of duty, limitation and causation are all interwoven in disease claims and do not sit easily within the envisaged process. Insurers are well advised to steer away from "blanket admissions" in disease claims where there is always a need to consider precisely what is being admitted and how that might impact on causation. How can limitation be properly considered without access to medical records and a medical report outlining the development of the condition? Many disease claims will be excluded as they involve more than one potential Defendant. There may be reasonable grounds for arguing the same should in practice apply to all long tail disease claims by insurers allowing them to exit from these new proposed processes.

Unprecedented change

This consultation emphasises that the Government remains committed to these reforms being in place for April which is now under five months away. The portal processes may take some time after April to be fully implemented in terms of case numbers both with the larger motor claims and with EL and PL, as the participants to the new processes complete their own thought and process development.

Ultimately, the picture is still not complete without knowing what is being proposed in terms of portal costs, pre-litigation fixed costs and the rumoured fast track fixed costs. Insurers and those policyholders who will be directly involved in the Protocol process need this outstanding data to be able to decide on a strategic and case specific approach in response. They will want to know their costs liability for allowing claims to stay within the Protocol, and to what extent that exposure will be greater if they are allowed to drop out of the Protocol.

The time for claimants and insurers to finalise strategic consideration is going to be very short when all the detail becomes apparent. DWF already has significant experience in the operation of the current RTA Protocol and is available to provide support and training both on a practical and strategic level. We will update further as additional information becomes available during this time of unprecedented change.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Simon Denyer

Partner

I am the Strategic Legal Development Partner within the Insurance team.

Sectors

Nigel Teasdale

Partner - Head of Motor, Fraud, Costs and Claimant Teams

I am Head of the Motor, Fraud, Costs and Claimant teams at DWF and am responsible for the operational delivery of those teams. My background is in dealing with motor claims, particularly large loss.

Sectors