Whiplash claim reforms – are you ready?
On 20 December 2018 the Civil Liability Act 2018 received Royal Assent. The provisions of this Act have not yet come into force but promise to have a significant impact upon the area of personal injury claims arising out of road traffic accidents.
The Act is geared up to tackle whiplash claims and seeks to limit damages and costs for those claims. The general view has been that whiplash claims are spiralling in England and Wales and, as such there has been pressure for reform which reduces sums being paid to Claimants.
Section 1(2) of the Act defines a whiplash injury as; ‘…a sprain, strain, tear, rupture or lesser damage of a muscle, tendon or ligament in the neck, back or shoulder, or…an injury of soft tissue associated with a muscle, tendon or ligament in the neck, back or shoulder’. It excludes an injury which is soft tissue but is connected to another injury which is not defined as a whiplash injury under the Act . An individual’s injury can only fall within the definition for the purposes of the Act if they are the driver or a passenger in a motor vehicle and travelling on a road or other public place in England and Wales. The definition excludes motorcycles, also excluded are pedestrians, cyclists and horse riders. It is likely that most minor injuries arising out of road traffic accidents will fall within this definition.
Section 3 of the Act gives powers to the Lord Chancellor to set limits on what a Claimant would receive for a whiplash injury with a duration ‘…not exceed[ing], or…not likely to exceed, two years, or would not have exceeded, or would not be likely to exceed, two years but for the claimant’s failure to take reasonable steps to mitigate its effect’. Early indications are that the tariffs are likely to allow for significantly lower awards in comparison to the guidance provided by the Judicial College which is what is generally relied upon at the moment. For example a 3-6 month whiplash injury is likely to attract an award of £450 under the new tariff, whereas the current JC Guidelines give a value of between £2,150-£3,810. Whilst the tariff is likely to provide certainty to all parties, and reduce sums being paid out to Claimants by insurers and self-insuring companies, there are fears that it will lead to an overall under-compensating of claims.
It is not a part of the Act itself but part of the overall package of reforms is a change to the small claims limit which, coupled with the above adjustments to the compensation for whiplash claims, will have a huge impact on the area. As things stand the small claims track applies to claims where the value of damages does not exceed £10,000 and where damages being claimed for pain, suffering and loss of amenity (PSLA) do not exceed £1,000. This means that the small claims track is currently the correct track for exceptionally minor injury claims only (current Judicial College Guidelines provide that minor injuries lasting up to 28 days attract awards of up to £1,200 with those of up to 7 days attracting an award of up to £600) with the vast majority exceeding the £1,000 threshold for PSLA and being allocated to the fast track and benefitting from the higher fixed costs provisions under the Civil Procedure Rules.
Under the new proposals, the limit for PSLA within the small claims track is to be increased to £5,000 for road traffic claims where you are the driver or passenger in a vehicle and £2,000 for employers and public liability claims. The limit for a pedestrian, horse rider, cyclist or motor cyclist (classified as ‘vulnerable road users’) who is involved in an accident on the road will remain at £1,000. On the small claims track there will only be a small amount of fixed costs available for solicitors which will not come close to matching those which can be recovered on the fast track under the current rules. With this squeeze on costs, a large number of firms are likely to pull out of the area as it will not be cost effective to undertake the work.
This in turn is likely to mean that a number of Claimants will choose not to bring a claim – due to the reduced awards and need to incur the experts fees and court fees themselves – or will do so without the assistance of solicitors as a litigant in person. This, in itself, raises questions about access to justice for a Claimant. In addition, whilst it is suggested that the changes will lead to a reduction in claims overall and a release of court time, with a likely increase in the number of cases being handled by litigants in person with little or no knowledge of legal procedure, each individual case is likely to take up more court and defence time so there are question marks over whether court time will actually be saved.
The view amongst many lawyers is that with the reduction in costs being recoverable in PI claims it is likely that Claims Management Companies (CMCs) will fill the gap if firms drop out of the market . It is a general view that CMCs do not have the same level of expertise and that it may lead to under compensation and a low grade service for Claimants. There is some concern around claims that start out as low value but develop into higher value claims as they require additional work and recognition by the solicitor. Given the low level of costs that are recoverable for solicitors, it is perhaps inevitable that less time will be taken on individual cases which could lead to a failure to recognise a higher value case when it comes along.
The proposed changes to the small claims track leaves an odd situation which provides different limits for different types of claims. For example an employee who is hit by a company vehicle in the company yard is less likely to benefit from legal assistance than if he had been hit by a vehicle on a public road or a footpath. The distinctions are likely to cause some confusion initially as Claimants will have to clearly indicate the type of claim and the expected award for PSLA to allow the court to correctly allocate the claim. It does beg the question as to whether a litigant in person who wants to pursue a claim would understand the distinction between cases when taking the step to issue court proceedings.
As part of reforms for road traffic accidents, a new MOJ claims portal is to be created to allow Claimants to submit their claims. This is being put together in conjunction with the MIB and is a strictly online portal. Currently it is not believed that the online portal will be ready and in place for the proposed implementation of the Act in April 2020 but even setting that aside there are some concerns about it. Whilst computers and the internet are part and parcel of most people’s daily lives, there are still those who do not have access or the knowhow to use it. A strictly online portal does potentially prevent Claimants who are unable to use or access the internet from being able to submit a claim without assistance .
Under the current MOJ Portal for Road Traffic Claims the rules are clear on what occurs when liability is denied by an insurer – namely that the matter will drop out of the portal and be dealt with outside of it with the option of issuing court proceedings if required – there is nothing to indicate whether the new portal will have a similar process in place. In addition any rules in place will have to be simple as they have to be understood and followed by litigants in person who will have little or no knowledge of how the legal process works.
Whilst the Act is due to come into force in April 2020, after having been delayed already, there is a suggestion that it will be delayed further whilst ongoing issues are ironed out. A number of interested parties from both sides of the fence are still discussing the changes and the provisions may themselves change in the interim. Even if changes are made which limit the impact of the Act, it is clear that the impact is going to be huge on the area with the full consequences unlikely to be realised until some time after the provisions have come into force.
Civil Liability Act 2018 (www.legislation.gov.uk/ukpga/2018/29/contents/enacted)
Law Society Gazette (8 July 2019) ‘Collision Course’ (www.lawgazette.co.uk/features/collision-course/5070881.article)