Press & News

15th February 2011

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VAT Tribunal Barrett, Goff and Tomlinson & The Commissioners for HMRC & The Law Society

27th January 2011

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VAT victory on personal injury medical reports

27th January 2011

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A soft tissue of lies?

6th December 2010

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Join AJAG to positively influence government policy

6th December 2010

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RTA Portal Co Ltd Directors appointed - 29 November 2010

8th November 2010

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Upheaval for PI lawyers as MoJ confirms claims process extension; Jackson imminent

3rd November 2010

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New warning about telephone scams

27th January 2011

A soft tissue of lies?


With 93% of GPs seeing patients they believe to have exaggerated injuries in
order to make a claim, Leigh Jackson asks how insurers can stem the rising
cost of whiplash cases.
The majority of insurers, especially large composites, have grown used to
eyeing their motor books with suspicion in recent years. Premium prices have
increased to at least offset ‹ if not keep pace ‹ with claims cost inflation
and the prevalence of neck injuries is becoming a primary concern.
According to 2008 research by the Association of British Insurers, 20% of
every motor premium ‹ £66 on average ‹ is paid out against whiplash claims,
totalling £1.9bn each year. Over the past two years, this issue has not
abated, with insurers seemingly more convinced that a large majority of
these injuries are at best exaggerated or at worst non-existent.
Writing in Post at the turn of the year, Laurent Matras, Groupama Insurances
managing director, drew attention to the incongruous relationship between
current road safety and whiplash frequency. "The total number of accidents
on the UK's roads is falling. We're driving safer cars. But whiplash is on
the increase," he said.
"You might think medical experts should weed out those who are faking or
exaggerating. But while the medics might be puzzled by the extent of
non-demonstrable symptoms and the ineffectiveness of rehabilitation, it is
not their job to question the extent of a patient's declared pain and
disability. In other words, and unlike in most civil disputes, whiplash
claimants can be compensated when there is no hard evidence of the extent of
their pain and suffering."
Research by fellow insurer LV last year backs up Mr Matras' concerns. The
study revealed that 93% of GPs had seen a patient between 2008 and 2010 that
they thought was exaggerating their injuries in order to make a compensation
claim.
But has there been an increase in fraudulent claims? And has the supposed
surge reached its natural peak? Andy Pagett, counter-fraud manager at
Groupama Insurances, believes the worse could be yet to come. "The surge
will definitely continue especially in the current economic climate," he
says. "Moving through 2011, the number of redundancies could put the
pressure on and really push the compensation culture further.
"This is something that we have arrived at during the last 30 to 40 years
where people feel entitled to compensation. Whiplash wasn't even a term used
in the UK until the 1980s."
An upward trend
The Groupama line on whiplash also meets with agreement from the legal
profession. Pamela Davies, director of motor fraud at Keoghs, explains. "Our
experience as lawyers shows us these sorts of cases are on the increase. We
deal with a lot of cases where the impact between the vehicles occurred at a
low speed and the contention is that the person has not been injured or has
exaggerated their injuries. The trend is certainly upward ‹ in fact, we saw
a 22% increase in low-speed impact claims in 2010."
Some insurers point to the relationship between accident management firms
and personal injury law firms as a cause for the claim increase and a reason
to be pessimistic about any decline in the near future. Martin Milliner,
technical claims director at LV, says that forthcoming legislation ‹ in the
form of the Legal Services Act and its introduction of alternative business
structures ‹ to allow more companies to provide legal advice could lead to a
further spike in whiplash claims.
"Is it possible to generate more soft tissue injury claims than we have
already have?" Mr Milliner asks. "The situation is nearing a high watermark
but before there is any sign of retreat the alternative business structures,
which will come to the fore this year, will see lawyers partnering closely
with accident and claims management companies, perhaps more than they are
today. This is bound to push up the level of whiplash claims."
Insurers agree this phenomenon needs to be tackled but many believe they are
almost powerless to stem the surging whiplash tide. Karl Helgesen, motor
claims director at Zurich Insurance UK, believes that government
intervention to help speed up claimant payments, such as the Ministry of
Justice electronic portal for motor claims, has had unintended consequences
for underwriters.
"The introduction of the MoJ process has helped in some ways, as we get
greater information up front at the point of notification. This helps us
take a tough line with claims that we suspect are fraudulent," he says.
"However, the reality is insurers are walking an economic tightrope and we
have to balance the resource for investigation against the prospects of
success."
Tony Walton, senior partner and head of Berrymans Lace Mawer's motor team,
claims insurers are now less able to tackle whiplash head on because of the
stringent timeframes imposed under the MoJ regime. "The RTA portal is
designed to get money from the insurer to the claimant quicker than ever and
it cuts out any realistic possibility of fighting on the beaches. It does
the opposite to that.
"We need to create awareness of the fact that much of the diagnosis of these
injuries is based on a presentation by an apparently plausible claimant and
there isn't any pressure to see whether the problems are as bad as they
seem."
However, others stress that insurer efforts to tackle fraudulent whiplash
should not prevent truly injured claimants from gaining compensation. Susan
Brown, director at Pro Legal, claims that technology used alongside the MoJ
reforms, is forcing some claimants to abandon their day in court.
"The number of cases where the issue of 'causation' or 'low velocity impact'
has been raised has increased significantly since the introduction of the
new rapid claim process last May," she says. "Insurers are now effectively
using this as a tool to deter genuinely injured victims who are worried
about not being believed in court and run the risk of losing indemnity from
their legal expenses insurance and becoming personally liable for costs."
While insurers concede they have limited means to tackle a rise in whiplash
claims, the same cannot be said of medical experts. With claimants relying
on medical reports detailing the extent of their injuries, it has been
argued that a more stringent line should be taken by GPs and medico-legal
reporting firms to ensure that fraudulent claims are dealt with at source.
"It would be nice to think that medical experts could do more to challenge
claimants but the general view seems to be: if a claimant says he has neck
pain, he has neck pain," says Nigel Teasdale, a partner in the motor claims
team at law firm DWF. "This is in the face of research suggesting 93% of GPs
believe patients may be exaggerating their injuries."
Mr Milliner explains that handsomely paid medical specialists are sometimes
unable to produce injury reports free of bias and are, therefore,
jeopardising their duty to the court. "One area that hasn't had much debate
is the referral fees and retrospective rebates that occur between the
medico-legal arm of the process and those instructed," he says.
"We need to look at how the medico-legal arm reacts within referral fee
structure and the rebates that come out of those fees with medico-legal
reporting." He adds: "We should be having discussions with medico-legal
firms about their fees but should also look at the conflicts that exist
between those that instruct experts and the expert's duty to the court.
"Insurers have a part to play in redesigning how injuries are assessed, who
assesses them and restoring the independence of the medico-legal process. It
can't be right that claimant law firms have a medical interest in the bodies
that are producing the reports."
Impartial assessment
Weightmans motor claims partner Charlie Jones says one way to ensure experts
are impartial is to implement a court-appointed pool system, as first mooted
by Lord Woolf as part of his access to justice reforms more than a decade
ago. "Under his original ideas, experts, including medical specialists,
would have been chosen from a pool of experts on the court register," he
says. "They would all be trained, updated regularly and need regular
assessments. Unfortunately, that could only be done at considerable
expense."
Others urge the government to do more to curb the specific issue of spurious
whiplash ‹ including a call for a detailed implementation of Lord Justice
Jackson's costs reforms. "Lord Jackson's recommendations include a number of
steps that would introduce an element of financial risk for claimants and
lawyers; this could lead to a reduction in unmeritorious claims," says David
Powell, underwriting manager at the Lloyd's Market Association.
"Almost everyone you talk to has an anecdote about a low-speed prang in a
supermarket car park that led to a frenzy of text messages, phone calls and
e-mails from claims management companies and lawyers, encouraging a claim in
search of income.
"Lord Young was referring to this activity when he made the important
differentiation between 'access to justice' and 'incitement to claim'.
Greater control and regulation of the claims farming industry could reduce
fraudulent claims, with the savings passed on to customers."
Pleas for government to take a closer look at this problem have extended to
taking a continental approach to whiplash claims. In Germany, for instance,
courts use biomechanical evidence to assess whiplash and will not
acknowledge injury where this evidence shows the collision alleged to have
caused the injury involved speeds below 10km per hour.
"This is worthy of serious consideration," Mr Powell continues. "In Germany,
the judiciary has taken a pragmatic decision to decline compensation where
an accident occurred at a very low speed, given that in most cases these
accidents will not cause an injury.
"We are talking about very minimal force, such as that generated by sitting
heavily into a chair, or heading a football. Removing these claims from the
system would undoubtedly reduce costs, fraud and waste, and we would welcome
a serious debate on this issue.
"These claims are especially problematic in the UK, where the civil law
threshold for proving soft-tissue injury is so low; a medic merely has to
confirm that their patient reported pain following an accident, and that in
their opinion the accident was the cause. Such claims are very difficult to
defend, even where it is almost certainly fraudulent, if the witness appears
credible."
However, with the German concept taking a strict non-individualistic
approach there are concerns about the effect that such a method would have
on individual cases. As Mr Jones concludes, any changes to the way whiplash
is approached must take into account that, even if many cases are
fraudulent, not all soft-tissue neck injury claimants are exaggerating their
injuries.
"The government can adopt the attitude taken in other countries," he says.
"The trouble is, in this country, there might be an outcry. Not so much from
claimants but from the other people who benefit from the business, such as
solicitors. Until you have medical evidence that can provide proof of there
being little or no damage in low-speed impact cases, there will always be
medical experts that can argue against it.
"It is different from a case of a broken arm, which is objective; this area
is very subjective. It is difficult for an expert to dispute the existence
of injury and prove otherwise. And many claimants will have genuine
injuries."
the technology solution
Motor insurer research repair centre Thatcham has been examining the issue
of car safety and whiplash claims for several years. In 2008, it began
developing Wit Kit ‹ the whiplash injury toolkit, designed to provide a
probability of neck or whiplash injury for specific scenarios involved in
certain accidents.
Andrew Miller, director of research at Thatcham, details current and new car
technology that could help prevent neck injuries in vehicle collision. "In
some higher level cars, manufacturers have installed active restraints.
Those are some of the best practices for controlling whiplash we have. We
will not see big improvements in future, they will be more incremental.
"However, the biggest revolutionary change will be active safety collision
avoidance technology, which breaks the car automatically before it strikes
another car. Volvo and others launched this in 2009, and a second version
with pedestrian avoidance technology will be launched this year on the S60.
"From our discussions with insurers, whiplash is a complex problem. If
consumers buy the best seats, ensure the seat performs well under a crash
test, and make sure an adjustable head restraint is placed in the most
appropriate position, that would ensure whiplash is unlikely to occur in low
speed impacts."