There are suggestions that some accident victims are being “forced into rehab” by lawyers and claims management companies determined to “boost their own incomes”, an independent report has found.
Researchers said the spread of “proactive rehabilitation”, where law firms routinely added rehab to all their cases, raised concerns that the process was increasingly being driven by “commercial rather than medical considerations”.
In the first edition of its annual UK Medico-Legal and Insurance Market Briefing, IRN Research estimated the total value of the market for medical experts, report writing, rehabilitation and allied services at over £600m.
IRN said the use of rehabilitation in the personal injury claims process had increased in the past five years, with claimant lawyers now as likely to provide the main impetus for rehabilitation as insurers.
“Recently, proactive rehabilitation has developed, where some claimant legal firms routinely add rehabilitation on to all their cases.”
IRN said the Ministry of Justice had suggested this was because introduction of the Jackson reforms had reduced fixed recoverable costs for processing cases.
“Some have argued that this has resulted in some injured/sick individuals being forced to take rehab treatment they did not really need, with rehab being ordered by a claims company or legal firms as a way of boosting the claims payout – the legal firm will take a cut, say 25%, of the rehab costs.
“While proactive rehabilitation is not something done by all legal firms, there is a concern that rehab is increasingly being driven by commercial rather than medical considerations and this is extending into the choice of rehab provider.
“There is a temptation for lawyers and claims management companies to select the most expensive provider of rehabilitation services as a way of boosting their own incomes.”
IRN said there had been an increase in recent years in the amount of rehabilitation being used on lower-value claims, and development of the RTA portal had led claims companies to focus “more on the quality and value of claims”, meaning the low-value claims pursued were less likely to be dropped and more likely to involve rehab.
Meanwhile, IRN estimated that the fees paid by claimants for experts’ reports obtained through MedCo, the portal for medical evidence in whiplash cases, hit around £100m last year.
IRN said a report by Capital Economics, commissioned by Access to Justice, estimated that 1,735 people worked in medical reporting organisations (MROs).
Researchers said that studying the accounts of these companies suggested an average annual turnover per employee of around £150,000 to £200,000, “which would imply a total turnover of MRO companies of around £260m to £347m, with a mid-point estimate of £304m”.
IRN said the total market for medical experts, report-writing, and rehabilitation was probably worth over £600m in 2016, “having grown from over £500m in 2013”, though growth in the market had “slowed recently”.
The report found that demand for expert witnesses grew last year but said that “over a longer-term perspective”, the amount of expert witness work conducted by each expert witness, especially court appearances, may have gone down.
“It is now rare for experts to have to appear in court in low-value civil cases and it is becoming less and less likely in higher value cases, hence the drop in court appearances.”
IRN said surveys showed how court appearance fees had declined from 2013 to 2015 and the hourly rate for reports had risen only slightly over the years 2011 to 2015.