Personal injury

Civil Liability Act 2018: where are we now?

The government’s plans to implement the whiplash reform programme have been delayed again – this time until April 2021.

About the author: William Balfry FCILEx is Senior Associate in the Complex Motor Team at DWF LLP Liverpool and a member of the Forum of Insurance Lawyers Motor Sector Focus Team.

As I am sure practitioners in personal injury will know, there have been significant delays with the whiplash reform project. In February this year, we heard that the reforms were to be delayed until August 2020, but the Covid-19 crisis led to the announcement from the Ministry of Justice (MoJ) that the reforms were to be put off until April 2021 at the earliest.

It is hoped that this more significant delay can lead to a resolution of the problems that remain with the project. This is an opportune moment to go through where we are with the reforms and look at what work is still to be done and at the potential effects on the personal injury (PI) sector in general.

The Motor Insurers' Bureau (MIB) build on the whiplash portal, nattily named Official Injury Claim, is the one complete part of the project which has gone to schedule. The MIB, which was commissioned to put the case management system together, has user-tested and then demonstrated, in various workshops and meetings, how the process will work, albeit without the rules to sit alongside it.

The rules themselves, and the pre-action protocol and tariff remain outstanding, however, and there are still significant obstacles to overcome by April 2021, given that the industry is now focusing on the disruption caused by the Covid-19 crisis.

What have we been able to glean from the various workshops that have been held by the MIB and other organisations, which may give us some insight into how the low-value claims arena will look when finally bedded in? What started out as a project which would benefit the insurance industry in terms of lower costs and easier settlement of claims is now, it would be fair to say, causing concern on both sides of the fence. Alternative Dispute Resolution (ADR) is absent from the process, as is rehabilitation. In an about-turn, access to justice concerns have led to the small claims increase for children being scrapped. The fixed damages tariff will still operate, however, so unless such claims are allocated to the fast track, irrespective of value, there is still the potential for many child claims to fall into the small claims track. Rumours are rife that the proposed doubling of the Employers’ Liability and Public Liability (EL/ PL) small claims limit to £2,000 is to be scrapped, with the Association of British Insurers supporting the Association of Personal Injury Lawyers, on this occasion, in a rare cross-industry alliance. The limit is likely to remain at £1,000.

Let us look at the original plans for the reforms, and compare these to what we know has changed and to what the consequences may be - unintended or not - for the low-value PI sector.

The original plans

Back in 2015, the original plans of the then Prime Minister David Cameron and the then Chancellor George Osbourne were simply to ban whiplash claims. The Civil Liability Bill was introduced into the Lords in March 2018 and entered the Commons in June 2018. However, the reforms had been presented as part of the Prisons and Courts Bill, which fell by the wayside when the then Prime Minister, Theresa May, called the ill-timed snap election back in May 2017.

Part 1 and Part 2 of the Civil Liability Bill, dealing with whiplash and the discount rate respectively, were finally published on 20 March 2018. The original implementation date intended was April 2019, so we have already slipped 16 months from this date to the then-current August 2020 position.

By the time the bill was revisited, the proposed tariff was updated and increased by 4–5%, presumably to take into account the time lag. The committee stage of the bill introduced some changes, including forcing the definition of whiplash into the bill itself, presumably as a safety valve to stop amendments to the definition without parliament being involved. If the bill could be amended from a Statutory Instrument alone, that would not require parliamentary debate.

At this point, ADR and rehabilitation were still in focus; however, both have left the room since. Minor claims were another bone of contention, as were claims presented by those classed as vulnerable road users.

The current plans

On 27 February 2020, it was announced that the reforms would be delayed to August 2020 (now, of course, April 2021). However, some policy decisions were aired that give insight into how the system will look when it finally gets put into place. It was confirmed that ADR would not form part of the process; the original plan being to have ADR for liability disputed cases that would be binding on the insurer but not the claimant.

The only route for a liability dispute now would be the court process, which is already clogged up with 'time to hearing' in all tracks increasing across the board, including the small claims track. How would the court system cope with an increased number of litigants in person?

It was also confirmed that minor claims would not be subject to the small claims limit rise, and would presumably be cost bearing even if under the current £1,000 limit. It will be interesting to see if infant claim numbers increase as a proportion of claims overall (with more infant passengers encouraged to claim) as they have suddenly become cost bearing.

After the ministerial statement came another MIB whiplash seminar in the first week of March, this perhaps giving more information about how the claims system will work in practice than the statement itself. This was attended by practitioners from both sides of the divide. Surprisingly, if liability was disputed - either in part or in full - the claim would go straight to court prior to obtaining any medical evidence. Unless these sorts of cases are given their own speedy resolution, current cycle times mean that it could take a year to reach a small claims hearing. It is highly likely that insurers will continue to fund representation for their insured, meaning that litigants in person will be up against a barrister or advocate.

Questions about causation, medicals and rehabilitation

  • Will insurers then be able to get a second bite at the cherry by disputing causation?
  • How will that first medical go 12–18 months down the line?
  • Is there not a greater risk, with such a late first examination, that a claimant will present still suffering with minor niggles leading to an 18–24-month prognosis or even be over the 24–month threshold and out of the process altogether?

In terms of causation, if it is disputed the remedy appears to be for the claimant to liaise with the compensator by e-mail or phone; however, it is hard to see how this will work in a practical manner. If the claimant contacts the insurer and cannot persuade them to change their mind on causation, who will then fund the medical report? Presumably, the claimant.

There were no clues on rehabilitation in terms of who funds it, or who arranges it and how.

Second medical reports

The situation with second medical reports was also vague. The claimant would have to agree on the first report, and then seemingly await confirmation from the compensator that they would agree to fund the second one.

  • Some compensators may decide to refuse second medicals, what happens then?
  • Would the second medical, which is often not a fixed price and can cost up to £1,000 if, say, a psychological report, then have to be funded by the claimant?
  • How many will proceed when, under the tariff, compensation is so much lower than it had been pre-reforms? It may be the case that the industry itself sorts out the second report problem:
  • At that point, does a case become profitable again for a solicitor to run? A second medical gives a much greater chance of the case exiting the process as it does not fit within the tariff, and even within it a conditional fee agreement taking 25% of damages would return nearly £1,000 in costs at the top end £3,910 tariff settlement for up to 24 months.

Of course, if a claim exits on other injuries and/or exceeds the 24-month prognosis, it must start again in the existing MoJ portal. One supposes an admission made in one portal will be binding in the other or satellite litigation will prevail.

The so-called 'tariff plus' situation

​Talking of other injuries, there is still no guidance on how the so-called 'tariff plus' situation will work where there are whiplash injuries within the tariff and then other injuries, say to a claimant’s ankle or knee, on top of this.

  • Would the tariff value be taken for the former, and then would the JC Guidelines amount for the latter be added on?

From what we can tell, judges have not been given training on this point yet and, given that the judiciary are generally not happy with the tariff being imposed on them, they are likely to be generous. It could take years to get to a binding decision from the Court of Appeal on what is the correct way to value claims.

Now, of course, we have the further delay until April 2021. This is sensible for a number of reasons. Solicitors and insurers, for the most part, work remotely. Practically, training staff on a new portal system and updated rules - not to mention the judiciary and public - was not deemed possible, and it is pleasing that a swift decision has been made by the MoJ.

What will the impact be on the industry and for practitioners?

We are very much in crystal-ball territory. In terms of the impact the reforms will have on practitioners, there is the prospect that they will cause major redundancies and the closure of practices in the claimant road traffic accident (RTA) low-value claims area. The defendant side may not be affected as badly should insurers continue to fund defences and representation, which is far from certain.

Litigants in person are likely to bring their own challenges to insurance staff, and outsourcing may become more prevalent in terms of case handling. Claimant practices may switch to different areas of PI such as EL/PL if the limit does not rise, or even into linked areas such as professional negligence claims aiming at undersettled RTA cases.

Credit hire remains profitable but vulnerable to the next set of reforms. As part of Sir Rupert Jackson’s expansion of fixed costs to £100,000 as a result of his review of civil litigation costs, costs will be fixed for fast track cases over £10,000 damages and another route to standard basis costs closed.

We are likely to see a consolidated market as some players leave the industry altogether. The new deadline may allow the increase in fixed costs to come in at the same time as the whiplash reforms.

The now twin concerns of Brexit and coronavirus may yet have a profound effect on the timelines necessary for the reforms to come in for April 2021, with much ministerial time taken up, understandably, on these vital issues for government and economy.

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