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The Lord Young review of health and safety and the compensation culture
Response from Thompsons Solicitors
We describe ourselves as the UK's most experienced personal injury law firm. We have a network of offices across the UK, including in the separate legal jurisdictions of Scotland and Northern Ireland.
Since 1921 Thompsons has only ever acted for the victims of injury, never for employers or insurance companies. At any one time, the firm will be running over 70,000 claims.
The firm participates regularly in government consultations on legislative issues.
We start from the terms of reference set out in the letter to potential respondees:
“To investigate and report back to the Prime Minister on the rise of the compensation culture over the last decade coupled with the current low standing that health and safety legislation now enjoys and to suggest solutions.”
There may be a tabloid driven section of a compensation culture but all the evidence points the other way. We would suggest the key is to tackle the perception, put out facts and smother the myths.
What evidence is there against a compensation culture?
The Better Regulation Task Force concluded, in “Better Routes to Redress” (2004) that there was no compensation culture.
Business intelligence gathering organisation Datamonitor published “UK Personal Injury Litigation: The Compensation Culture Myth Exploded” (2002).
In these straitened times, to save on costs, it is, we suggest, essential that the Young review studies the BRTF report. The BRTF’s brief was surprisingly similar to that assigned to Lord Young by the Prime Minister.
The BRTF concluded that the compensation culture was a myth, but it was the perception of its existence that impacts on behaviour and imposes burdens on organisations. We agree with that conclusion.
Lord Young has already pointed out the absurdity of many myths that abound - from toothpicks being unavailable in restaurants to pancake racers having to walk in wet weather. We welcome Lord Young having highlighted what are, in anyone’s eyes, clearly misinterpretations of the law.
Unfortunately the examples Lord Young has highlighted and many other examples, have been exploited or indeed, on occasions, made up by the media to maintain a favourite theme.
“Health and Safety chiefs ban candy floss sticks” (Click Liverpool 30 May 2010)
“Now pin the tail on the donkey falls victim to health and safety fears” (Daily Mail 10 May)
“Ridiculous compensation culture claims and pay-outs burden on tourist attractions” (Daily Mail 26 April 2010)
“Clown cannot wear giant shoes due to health and safety” (Daily Telegraph 23 April 2009)
The overall statistics
At the time of the BRTF report, accident claims had been static for four years and had fallen by 9.5% in 2004.
Thompsons statistics show a fall in the number of union personal injury claims. We are unable to name the unions due to confidentiality but can provide the following figures:
Union 1 – 9,848 claims in 2002/3 fell to 7,977 in 2009/10 – a drop of 19%
Union 2 – 5,509 claims in 2002/3 fell to 3,592 in 2009/10 – a drop of 35%
Union 3 – 758 claims in 2002/3 fell to 604 in 2009/10 – a drop of 20%
Union 4 – 741 claims in 2002/3 fell to 473 in 2009/10 – a drop of 36%
Over the last decade the numbers of union-backed personal injury claims have fallen and the overall number of employers liability claims (union and non-union) have fallen.
Government statistics from the Compensation Recovery Unit (CRU) of the DWP show that employer liability claims have fallen 69% from 2000/01 to 2009/10 – from 219,183 in 2000/1 to 78,744 in 2009/10.
We have very extensive statistics on numbers and types of compensation claims over time and, if it would be helpful to the review, we would be happy to share that information. We have co-operated in this way with previous similar government reviews.
The statistics broken down
If the Young review is looking at real personal injury claims – ones that resulted in formal claims for compensation recorded with the CRU (as all claims must be) rather than the myths reported in the tabloids – then it is important that it studies the personal injury market and the breakdown between RTA, employer liability and other personal injury (PI) claims.
Datamonitor’s 2002 report noted that, according to Labour Force Statistics, there were 1.05 million accidents in the workplace in Britain in 2001.
It estimated that 40% of those or 400,000 could have resulted in a personal injury claim. Yet only 137,000 workplace injury claims were made, representing just 32.8% of the potential number of claims.
CRU figures show that the number of claims have fallen for all types of case since 2000/1 except RTA cases:
• Clinical negligence – 10,901 claims in 2000/1 fell to 10,308 in 2009/10 – a drop of 5%
• Public liability – 95,883 claims in 2000/1 fell to 91,025 in 2009/10 – a drop of 5%
• Employers liability – see above – a drop of 64%
• Other claims – 3,120 claims in 2000/1 fell to 2,806 in 2009/10 – a drop of 10%
The exception to this trend are Road Traffic Accident (RTA) cases. They have risen significantly.
In 2007 Datamonitor said the increase in motor claims was “a worrying trend given that motor personal injury claims are among the most expensive claims insurers can face”.
That trend has continued such that motor claims have increased from 401,757 in 2000/1 to 674,997 in 2009/10 – a 68% rise.
The statistics - conclusion
What these figures show is that there is no compensation culture. In fact in all PI case types the case numbers have fallen and in many cases dramatically. If there is an issue with increased claims it is only in relation to road traffic claims. Any consideration of increased claims should be confined to RTA cases only. All other types of claim have fallen, particularly workplace injury cases which have fallen by more than any other type of claim.
Why the increase in road traffic accident cases when all other claims have fallen?
RTA cases are 70% of the PI market.
In our view the increase is due to the activities of claims management firms, accident exchange firms and insurance company third party capture units who have been actively generating claims by approaching injured people directly.
A report by Charles River Associates (CRA) commissioned by the Legal Services Board to assess the impact of referral fees on the legal services market showed that success rates for RTA cases have remained constant and very high, at over 90%.
This indicates that insurers are accepting that these claims are valid and paying compensation accordingly.
Third party capture
If someone is involved in an accident they will usually report it to their insurance company. The insurance company takes the driver’s name and the names of any passengers. They then encourage the driver to make a claim. They also contact the passengers and encourage them to make a personal injury claim.
The passenger may not have thought of doing so until being contacted by the insurance company.
Ironically the insurance industry is fuelling an increase in PI claims.
The trade unions and Thompsons have provided the FSA with many examples of the worst behaviour by the insurance industry in its attempts to capture claims before a potential claimant contacts, or even thinks of contacting, their union or a law firm for independent advice.
A recent code of practice on third party capture published by the Association of British Insurers is, in our view, wholly inadequate to prevent this insurance company behaviour.
We would be happy to supply all that we have given to the FSA to Lord Young’s review.
• We would propose that, and hope this will be an attractive proposition for Lord Young, the FSA or its successor body bans third party capture by insurance companies.
Claims management firms/ accident exchange firms
The BRTF concluded that it was not possible to legislate against people’s perceptions. It did however start the important debate about the role of compensation claims firms - which eventually led to their regulation in the Compensation Act 2006.
But even with regulation, the existence of claims firms and the marketing techniques they use – day time TV ads, random text messages encouraging recipients to claim for their accident, and even accident management companies which exchange vehicles that have been damaged but also have a claims management arm – continue to fuel the myth that obtaining compensation is easy.
We have complained to the Claims Management Regulator about the use of text messaging and are encouraged that the Ministry of Justice is going to investigate the firms doing the texting.
• In our view compensation claims management firms are fuelled by referral fees and should be banned from charging them.
Reforms to the civil litigation process
Reforms to date
Lord Young indicates that he intends to examine the litigation process in personal injury compensation claims.
The PI claims process has been undergoing constant reform in recent years. We suggest, to save duplication, departmental time and money, that Lord Young refers back to those recent reviews and reforms.
As a result of the reforms we now have in PI cases:
• Fixed recoverable success fees in employer liability cases.
• Fixed costs in road traffic accidents (70% of PI claims); and
• A new faster Claims Process for road traffic accidents
The new claims process in RTA cases is bedding in but appears already to be having a dramatically dampening effect on time taken and costs incurred.
If we are to avoid duplication and additional cost for government we suggest that rather than have another review of civil litigation processes we need to learn from the new Claims Process.
The new Claims Process specifically deals with RTA cases and was introduced just weeks ago on 30 April 2010.
The Jackson review
There has been a recent extensive review of civil litigation by Jackson LJ. The government’s response to that review is awaited.
We made submissions to the review which included case examples, statistics and practical examples from our extensive experience.
We fear that the consequences of implementing the Jackson review, in part or in full, are likely to impact hardest on the most vulnerable and distort the PI market to no positive end.
We welcome the coalition’s commitment to the most vulnerable in our society and are sure that this kind of adverse impact on access to justice is something Lord Young would wish to avoid.
Jackson makes several key recommendations and below we list them and what we believe will be their impact:
• Consumers no longer able to recover the cost of After the Event (ATE) insurance. Impact: deductions from damages if consumer takes out ATE and wins. If ATE not taken out, no fund to pay for disbursements in unsuccessful claims.
• Ban on referral fees whether paid in cash or by discounted or free legal services. Impact: reduced support for the not for profit sector who were not exempted from the proposed ban.
• Success fees to come out of client damages. Impact: Up to 25% reduction in damages in addition to the deductions due to non recovery of any ATE premiums.
• Fixed costs for fast track personal injury claims. Impact: Limit to what lawyers will be prepared to do leading to corners being cut at the expense of injury victims.
• A green light for contingency fees. Impact: Lawyer takes part of client’s compensation which marks a move to US style litigation funding.
• Not having to pay defendants’ costs in lost cases. Impact: only partial offset of inability to recover ATE premiums.
• 10% increase in general damages. Impact: Not clear how to be calculated, will not offset the financial losses consumers will suffer from the above proposals and insurers say it will lead to premium increases.
We would be happy to send you our responses to the various consultations and reviews that introduced the current systems, and to the Jackson review.
Health and safety legislation
The review’s terms of reference refers to the “low standing” of health and safety legislation. We wonder what evidence there is that health and safety legislation is in low standing.
In 2008, Andrew Selous MP – the then shadow work and pensions minister – told a conference of trade unionists, lawyers and the families of people killed at work that health and safety was the bottom line and that “traditionally it has cross party support”.
The Health and Safety (Offences) Bill 2007, which increased penalties for safety offences, had all party support and received royal assent in October 2008.
We wonder what has changed to result in the view that health and safety laws are in “low standing”.
The reality is that it is the inadequate enforcement of health and safety legislation, the under resourcing of the Health and Safety Executive, the insufficient numbers of inspectors and the too few prosecutions of employers that leads to thousands of people continuing to be injured and killed at work.
But health and safety legislation does protect millions every day from being injured or killed at work. Deaths at work, though still unacceptably high at 151 in the last year are at an all time low.
The HSE’s recent analysis of the number of accidents reported under RIDDOR show that the number of major injuries fell in all main industry sectors except for food, drink and tobacco manufacture and public services (up 3-4%). Rates fell, by 15% in construction and 8% in the rest of manufacturing, but rose by 6% in food, drink and tobacco manufacture.
And unionised workplaces are recognised as being safer workplaces.
The Young review should aim to debunk the myths about health and safety legislation and instead examine what measures will give working people greater protection.
We would support:
• Directors duties: changing the law so that there is “a positive duty on all company directors to take all reasonable steps to ensure health and safety in all aspects of the company’s activities”. This would implement the 2009 recommendation of the Work and Pensions Select Committee for binding health and safety duties for senior managers and company directors.
• Linking fines for health and safety breaches with turnover. The Sentencing Guidelines Council failed to take that approach in relation to the Corporate Manslaughter and Corporate Homicide Act. Instead it went for a minimum fine of £500,000 which will close down some small businesses and be peanuts to large companies. Allowing the courts to levy a penalty based on 5-25% of turnover and proper use of Remedial Orders would have been a proper deterrent.
• Ring fencing the HSE’s budget so that inspector levels can at least be brought up to pre-2004 levels.
Are compensation culture and health and safety legislation the real issues?
We are surprised by the Young review terms of reference. David Cameron indicated in his Policy Exchange speech last December that he had asked Lord Young to look at:
• Protection for Good Samaritans – protection for people acting “in good faith”.
• Small, local and voluntary groups – exemption from regulatory burdens
• The Civil Liability Act – is it necessary to define civil liability for negligence in statute?
If a major concern is to give further protection to schools and teachers involved in desirable activities with children such as school trips and to others involved in adventure activities with children then it is surprising that the terms of reference are so general.
Thompsons has many experts in the law of negligence and how it applies. We would be happy to meet with the review team to discuss the law in this area.
We set out below our views on the specific points above.
“Desirable activities” and “good faith” actions?
Section 1 of the Compensation Act 2006 allows a court to have “regard” in determining negligence, as to whether their finding would “prevent a desirable activity being undertaken at all, to a particular extent or in a particular way.”
There is little authority from the courts on this yet but we are aware of at least two County Court cases where the Act has been considered. In our view the provisions of the Common Law and the common sense of the Judiciary in this country have ensured desirable activities and good faith activities are already fully protected by the law. Again the issue is one of perception.
We do not think that “acting in good faith” is any more useful a definition than “desirable activity”. We do not see any positive impact for injury victims or those organising activities from changing the term.
We are concerned to ensure that the issues of village fetes, pancake races and the provision of toothpicks in restaurants are not mixed up with a very different issue, that of employers’ liability cases.
The employment relationship is significantly different from most. It is different from the experience of victims of road traffic accidents or indeed the dangers faced by members of the public in restaurants, shops and elsewhere.
The relationship between an employer and an employee is a specific economic relationship and we find it difficult to see how, in law, it would be possible to decide that some employers are within the regulations and some are not.
“Not for profit” or “voluntary” are not useful definitions or dividing lines because they would catch much of the public sector.
“Small” companies are also a poor basis for exclusion. Small firms have among the worst health and safety records.
Can it be right that a bad employer who neglects the welfare of their employees gets a competitive advantage over good employers who do ensure that their employees are safe at work?
It is right to encourage entrepreneurship, but it must be responsible and accountable entrepreneurship and competition must be fair.
All employers should have the same responsibilities.
The definition of a good Samaritan is someone who voluntarily helps others in difficulty. This of course includes employees. We have read in the press, particularly after the review was announced, of police officers not rescuing drowning children because of “health and safety”. This could equally apply to fire fighters and even nurses, but it’s not true – or it’s a distortion of the law if it’s perceived to be the case.
It has been suggested that emergency workers should be excluded from health and safety laws because they are "paid for doing a job that involves risk".
The issue here is one of perception and education. Health and safety laws, are not the problem. A proper understanding of what health and safety laws demand in these situations would mean that the “problem” would not exist.
One of the leading cases in this area of law is King v Sussex Ambulance Trust  ICR 1413. In this case the ambulance service's duty to its employee was balanced with the duty of care owed to its patients. The claim for compensation was rejected by the Court.
The claimant employee was required to carry a patient down a narrow twisting staircase which carried with it a foreseeable risk of injury. The task was not an emergency but was urgent. The Court of Appeal held that there was no breach of the Manual Handling Regulations 1992 as the duty was to reduce risk, not necessarily to eliminate it. It was a question of what was reasonably practicable.
The only alternative way to remove the patient from his home would have been by using the fire brigade to take out the window and remove the patient through the window. The Court did not consider that reasonable.
In common law when determining the reasonableness of the Defendant's conduct the court must balance the risk against the utility of the action. The essential premise is that an ambulance person may have to accept a greater degree of risk than one who is employed to move inanimate objects. What is reasonable in these circumstances has to be evaluated with regard to the social utility of the operation, a public authority's duties to the public and that person in general.
Giving judgment Hale LJ (as she then was) said in relation to fire-fighters, police officers, ambulance technicians and others whose occupations in the public service are inherently dangerous:
“Such public servants accept the risks which are inherent in their work, but not the risks which the exercise of reasonable care on the part of those who owe them a duty of care could avoid. An employer owes his employees a duty to take reasonable care to provide safe equipment and a safe system of work, which includes assessing the tasks to be undertaken, training in how to perform those tasks as safely as possible, and supervision in performing them.”
Later she said:
“If a removal firm cannot remove furniture from a house without exposing its employees to unacceptable risk, then it can and should refuse to do the job. The ambulance service cannot and should not do that. But that does not mean that they can expose their employees to unacceptable risks. They have the same duty to be efficient and up-to-date and careful of their employees’ safety as anyone else. It does mean that what is reasonable may have to be judged in the light of the service’s duties to the public and the resources available to it to perform those duties . . ..”
It is clear, therefore, that the law fully takes into account the fact that emergency service workers are paid to accept risk. The suggestion that the law somehow prevents them from taking risks is a myth exacerbated by the media when it runs health and safety stories not based on realities. It is also an insult to the emergency service workers who every day put themselves at risk and who save countless lives by doing so.
Thompsons acted in the case of Paul Metcalf, the fire fighter who drowned in 1999 trying to rescue a teenager who had got into difficulties in an isolated lake near Bury.
Despite the boy being under the water for at least 30 minutes, and none of the attempted rescuers ever seeing him, fire fighters attempted a search and rescue.
There had been no training in water rescue, no risk assessment of water incidents and no dangers highlighted. The first rescuers on the scene had no proper equipment.
Any risk assessment would have warned that hypothermia sets in very quickly and risks the life of the rescuer.
Retained fire fighter Paul Metcalf was ordered into the cold waters of the lake with nothing but a heavy rope tied around his waist. He thought he was rescuing a young boy. Training would have told him that before he took the first steps the teenager would have been dead for some time and that the incident was a body recovery.
Frantic efforts to locate the teenager ended with Paul Metcalf dying in the cold waters. Two of his fellow officers who tried to save him also got into difficulties.
Within six months of the death fire fighters at Greater Manchester Fire Authority, and across the country, had water policies, risk assessment, training, buoyancy aids, floating ropes, throw ropes and inflatable hoses.
The judge in the prosecution of the Fire Authority said the equipment cost “next to nothing” and if Manchester Fire Authority had had it then Paul Metcalf would not have died.
Paul’s death has led to every fire fighter in this country being safer in these situations.
This is the reality, not a myth
We do not think it is acceptable to put workers’ lives at risk simply to deal with a false perception about the law on the issue of taking risks.
Perhaps, rather than reducing the protection that health and safety legislation provides, the government should support the public information campaign pursued by the HSE in its “myth of the month”.
It might initiate national and regional newspaper adverts, films on YouTube and social networking sites to:
1. Reassure the public that there is no need to fear health and safety regulations.
2. Explain what the regulations really say and how they protect people.
3. Set out what people’s rights to sue for compensation actually are.
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