MRO fees capped at 25%: What defendants need to know following JXX v Archibald

This judgment of Senior Costs Judge Rowley in JXX v Archibald, concerns the fees involved when a Medical Reporting Organisation ('MRO') is used in a personal injury or clinical negligence claim to assist with the production of medical evidence.

This decision relates solely to the MRO fees in two cases, which were heard together. In each, expert medical evidence fees had been agreed between the parties, so the hearing only related to the fees claimed for MAPS (Medical and Professional Services Limited) as the MRO in JXX, and to the Premex Services Limited fees as the MRO in HLA.

The Stringer v Copley Principle

Until this case, the key decision in relation to recoverability of MRO fees was set out in the case of Stringer v Copley [2002]. Judge Cook established what has been referred to as the “Stringer Cap”.

When assessing the recoverability of fees of an MRO, he considered the activities performed in obtaining a medical report and concluded that there could be no objection to the MRO charging a fee, so long as it did not exceed what a solicitor would charge for the work. Judge Cook also described the need for the MRO to distinguish between the expert’s fee and their own charges, with their charges being sufficiently particularised to ensure they did not exceed the reasonable and proportionate cost of the solicitors doing the work.

This approach was endorsed by then Senior Costs Judge Hirst in the Claims Direct Test cases in 2003 and followed in subsequent decisions.

Present case

Judge Rowley made a number of key decisions in this judgment which can be summarised as follows:

1. MRO fees are a disbursement and not outsourced solicitors work

The test applied was (i) the nature of the work done and whether it is solicitors work and (ii) where responsibility for the work lies. Judge Rowley found that the work of MROs is largely administrative so if it was carried out by a firm of solicitors it would not be by fee earning staff and so could not properly be categorised as solicitor work. He also concluded that the responsibility for the work (the production of the medical report) lay with the expert and not the solicitor so it could not properly be said to be outsourced solicitor work.

2.  Departing from the Stringer Cap 

Having concluded that MRO fees are a disbursement, Judge Rowley found that such fees are therefore not limited by comparison to a hypothetical solicitor’s work and there is no purpose in requiring an MRO to provide a breakdown equivalent to what a solicitor would provide in a bill of costs. However, neither did the judge accept that the approach to MRO fees be to allow all or none of the fees claimed.

3. The 25% cap on recoverable mark-up

Having departed from Stringer but also refusing to accept whatever the MRO claimed, Judge Rowley imposed a new maximum recoverable mark-up in respect of MRO fees, of 25% on the expert fee. This figure was reached following considerable time reviewing evidence and submissions and considering what was reasonable.

Judge Rowley noted that the percentage uplift used by Premex was either 35% or 45% and for MAPS the mark up was 53%. It was held that for simplicity and practicality, the 25% mark up was to be applied to the whole of the expert’s invoice, to include travel time and other disbursements, not just the preparation of the report.

Impact on defendants

• The 25% cap provides defendants with a clear and straightforward basis on which to challenge MRO fees at detailed assessment. Given that Premex was charging 35%–45% and MAPS most commonly 53% (with outliers up to 104%) the practical effect is that defendants will pay materially less in costs assessed on an inter partes basis.

• Defendants are no longer burdened with the Stringer breakdown argument and having to press for sufficient breakdown of the MRO fee. The question now is simply whether the mark-up exceeds 25%.

• Defendants also instruct MROs and it is necessary to consider the application of this decision for the cost of evidence obtained by the defendant.

Conclusion

It is important to note that this judgment is a first instance decision so is not strictly binding. However, it does carry significant persuasive authority and is likely to be treated with considerable weight in detailed assessment proceedings across the jurisdiction.

The questions posed in these cases have been aired for more than two decades now, without any directly relevant High Court decisions. Judge Rowley stated on more than one occasion in his judgment that a determinative authority would be welcome in this area. It is possible that one or both parties in this case will seek to appeal so we will need to watch this space.