18 May 2015Print This Post

CJC calls for extension of fixed costs to fight fraud

CJC: Impact of Jackson and other reforms “overstated”

 

The Civil Justice Council (CJC) has called for the extension of fixed recoverable costs to help in the fight against personal injury fraud.

In its response to the Insurance Task Force interim report, the CJC said extending fixed costs would “reduce litigation costs and indirectly reduce incentives to commit insurance fraud”.

The CJC said the impact of the Jackson and other reforms, such as the ban on referral fees had “contributed to measures” to combat insurance fraud.

“However, this effect can be overstated, and the danger is that the impression is given that the reforms were designed for that purpose, when in fact the reforms were to reduce the number of claims and litigation costs in legitimate claims.”

The CJC also called for caps to be imposed on the proportion of damages claims management companies (CMCs) can take from clients in fees.

“CMCs are not regulated in the amount they can deduct from a consumer’s compensation and there is a risk that this creates an environment in which consumers are pressurised into presenting claims which may be false, for a perceived mutual benefit to the consumer and the CMC.

“In contrast, solicitors acting for consumers under conditional fee agreements or damages-based agreements are restricted in the amount they can deduct, by caps applicable under the relevant regulations.”

The CJC recommended that “similar caps” should be considered for charges made by CMCs.

The council noted that the askCUE initiative, which will require claimant lawyers using the RTA portal to check clients’ claims records from 1 June 2015, only applies to claims where an injury is sustained

“RTA fraud is not confined to claims for injury, so consideration should be given to how this initiative could be extended to cover all RTA damages claims.”

The CJC said it would like to see further evidence as to the effect of introducing Qualified One-way Costs Shifting (QOCS) in personal injury claims.

“The basis for introducing QOCS was as a means of protecting legitimate claimants from the risk of adverse costs and therefore to remove the need for them to buy insurance (ATE insurance) against that risk.

“To address the risk of fraudulent claims, the implementing rules included an exemption where the claimant was found to have been ‘fundamentally dishonest’.

“This was a new concept in drafting terms and to date there have been only a handful of cases where the courts have had to consider its application.

“It also appears that many personal injury claimants continue to buy ATE insurance: the reasons for this trend, the very cost which QOCS was designed to prevent, need to be understood.”

The CJC added that the theft and misuse of personal data appeared to be a growing problem and may require “legislative and regulatory” responses.

“Sale of personal data for commercial gain is an area of growing concern and one where the powers of the regulators are either inadequate or poorly enforced.

“Another possible area for reform is how the regulatory bodies work together, and what their role might be in preventing fraudulent practices.”

By Nick Hilborne

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One Response to “CJC calls for extension of fixed costs to fight fraud”

  1. “The basis for introducing QOCS was as a means of protecting legitimate claimants from the risk of adverse costs and therefore to remove the need for them to buy insurance (ATE insurance) against that risk”

    WHAT ABOUT THE CLAIMANTS DISBURSEMENTS?

  2. Paul Hurley on May 18th, 2015 at 12:48 pm

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