bulletin
New process for low value injury claims arising out of RTAs - an update
23 December 2009
In October we told you about the government’s proposals in
relation to a new process for low value personal injury claims, in
our bulletin 'New process for low value injury claims
arising out of RTAs'.
In anticipation of an April 2010 implementation (a deadline the
government appears determined to meet), we discuss the latest
developments below.
Implementation
Though delays have been rumoured, the latest information we have
is that the government will ensure implementation on 6 April.
It is not clear when draft rules will be published though, with
detail still to be finalised, it seems that these are unlikely to
become available before the new year.
Outstanding issues
A number of issues are causing ongoing debate, in
particular:
- The wording of admissions
- The applicability of Part 36 or equivalent rules
- Interim payments
- Rules in relation to small claims leaving the process.
Failure to beat an offer – cost penalties
Rather than relying upon Part 36, the process will include rules
in relation to the implications of offers. The relevant test will
be whether the claimant equals or betters his own offer. There will
be no discretion for the Judge to depart from this strict rule and
the Court of Appeal decision of Carver v BAA (which sets
out a broader test of ‘benefit’ in relation to Part 36) will have
no application.
If a claimant does equal or better his offer at a Stage 3
hearing then he will be entitled to an award of interest of up to
10% on both Stage 3 costs and damages.
Interim payments
The interim payment process set out within the original
government proposals will also be modified. Where a payment is due
and a claimant seeks a sum above £1,000.00, a defendant may put a
counter offer before an application is made. This increases the
prospects of keeping a claim within the process.
Small claims
The process does not cater for small claims (claims where
injuries are valued at less than £1,000). However, those that are
initially valued above the small claims limit and so enter the
process at Stage 1 may subsequently be shown to be of lower value
and so exit the process at a later stage. In such cases, Stage 1
costs will not be recoverable.
With Stage 1 costs fixed at £400, this may result in a
significant windfall to claimants who enjoy very limited costs
recovery under the small claims track. The rule also has the
potential to be abused, with the potential for claimants to adopt
high estimates at the outset of a claim so as to secure additional
costs.
Fraud
Claims will exit the process when fraud is alleged, which is, of
course, appropriate. However, where fraud is under investigation,
it may be self defeating to make such an allegation, particularly
as the rules will require supporting evidence to be supplied.
The practical answer to this difficulty will be to bring claims
out of the process on other grounds, for example by refusing a
response on liability, or alleging issues of causation or
contributory negligence.
Processes
Insurers and defendants should be prepared to implement the new
claims process on 6 April 2010, with arrangements to monitor both
workflow on individual cases and overall workflow to ensure time
limits are met and backlogs do not develop.
Much may rest on the efficiency of ancillary processes. Payments
of costs and damages, for example, must be received by the
claimant’s representatives within 10 days. Such time limits may
require many insurers to streamline payment systems.
Processes should also be in place to identify and escalate any
attempt to abuse the process, such as securing additional costs by
over-valuing a small claim.
Give & take
While the new process is not without potential pitfalls, its
overall impact is likely to be reduced spend both on insurers own
legal costs (internal and outsourced) and on claimant costs.
Insurers who adapt to the process and prepare for its
implementation will be best placed to take advantage of this
opportunity, and we will continue to work with our own clients to
ensure that savings are maximised.
talk to us
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The content of this bulletin is provided for the purposes of
general interest and information. It contains only brief summaries
of aspects of the subject matter and does not provide comprehensive
statements of the law. It does not constitute legal advice and does
not provide a substitute for it.