Leave lawyers in

Royal & Sun Alliance has launched a rehabilitation pilot to get injured parties back to work and strip the lawyers out the rehabilitation process, so says Steve Maddock, its technical claims director. Around 40p in every pound goes to lawyers, and claimants see none of the money. It is all about how to use the money more effectively (Post Magazine, 6 April 2006).

A few days later, on 11 April 2006, an article appeared in Insurance Today, in which Highway stated that it had shown that case management-led rehabilitation can lead to earlier settlements and increased accuracy on reserving, by helping clients return to pre-accident employment or to consider practical alternatives. 'Our trial has highlighted that rehabilitation works,' said the spokesperson for Highway.

Now, I believe that these two seemingly unconnected press releases tell us much of what we need to know about why rehabilitation in personal injury claims is not delivering at ground level. It's quite simple. Rehabilitation works best when there is collaboration between the parties and, for there to be collaboration, there needs to be trust. The Rehabilitation Code did a lot to engender trust and, for a while, it seemed that trust was building on both sides. My personal experience now, and this is reinforced from talking with numerous claimant solicitors, is that this trust has all but disappeared, and I am sorry to say that the majority of claimant lawyers no longer trust insurers and their legal advisers when it comes to rehabilitation.

Mutual distrust

So how did this situation come to pass? Well, for a start, constant press releases, such as the first one above, do not help. It has long been a beef of mine that some, and I stress that it is only some, insurers have unashamedly used rehabilitation as a weapon to score political points. Rehabilitation was used by insurers, for instance, to try and persuade the DCA to increase the small claims limit. The message coming out from the insurance industry to the government was 'forget compensation in small claims and focus entirely on rehabilitation'. The belief being that this would appeal to the government for obvious reasons.

Now, RSA has put out a press release deliberately linking rehabilitation with solicitors' costs and a thinly disguised call for regime change. It is not difficult to be cynical about the insurers' aims and intentions. Is it seriously about rehabilitation, or is it a thinly veiled device to capture claims and eliminate solicitors from the process? I fancy that rehabilitation is, once again, being used as political football. Of course, insurers have every right to campaign for an increase in the small claims limit or for regime change, for that matter, but it is just plain humbug to bring rehabilitation into these other arguments. Claimant lawyers may appear daft at times, but they're not, generally speaking; they see through these comments and initiatives as little more than a cynical attempt to use rehabilitation as a weapon in an altogether different battle. It is a universal truth that it takes years to build up trust and five minutes to destroy it.

At the centre of the claim

Insurers have also come up with another slogan that links rehabilitation with regime change. I have heard it many times, in various meetings. They want to put the claimant at the centre of the claim. Apart from insulting claimant lawyers by the implication that we are only concerned by our fees, how do the words 'stripping the lawyers out of the process' put the claimant at the centre of the claim? It doesn't; it just leaves them potentially disadvantaged and vulnerable to an obvious conflict of interest. No, it does not put the claimant at the centre of the claim, it puts costs at the centre of the claim. Now, as I said earlier, insurers have every right to campaign for regime change '“ personally, I disagree with them, but of course they are entitled to put their point of view. What I strongly disagree with though is insurers dressing these arguments up and raising a smokescreen that the claimant will get a better deal, with rehabilitation being put at the centre of the claim. I am afraid that claimant lawyers and, much more importantly, claimants themselves will just not believe this. That's why I found the press release from Highway so interesting. 'Earlier settlements, increased accuracy on reserving and helping claimants to return to work earlier.' No mention of increased quality of life or making a difference in the early days after an accident by removing stress and unnecessary burden on the injured claimant; no, 'it helps us to reserve more accurately and get the claimant back to work sooner' and, by implication, save money. At the same time Steve Maddock at RSA asks us to trust insurers to divert the savings made from bypassing lawyers into rehabilitation.

But it's not only what the insurers say that militates against trust being set up, but also how they act in individual claims that often gives the game away. It is disappointing, but perhaps inevitable, that this conflict should arise over rehabilitation in personal injury cases. Both sides look at rehabilitation from very different perspectives. When I look at my client's rehabilitation needs, I want to see him receive a package that will address all aspects of his suddenly altered life, but all too often the impression I am left with is that insurers are only looking at how they can get the claimant back to work and how they can reduce the eventual size of the claim. This manifests itself in two ways. First, all too often, insurers pull the plug on consensual rehabilitation when it becomes apparent, or even likely, that there will be no saving in the eventual value of a claim, even when quality of life is clearly being improved. Secondly, it is often the case that insurers refuse to fund rehabilitation when there is a serious chance that the claim will fail on liability. Surely, there has to be swings and roundabouts if trust is to be built up?

Missing an opportunity

I genuinely feel that a golden opportunity will be missed if this continues; I am the first to accept that the current system is not perfect and that it can be improved upon. I firmly believe that the best rehabilitation results are achieved when the claimant is free from worry as to whether he will recover part or all of his outlay on rehabilitation. In short, rehabilitation works best outside the litigation system, but not at any cost. When insurers abuse the Rehabilitation Code in obtaining an immediate needs assessment (INA) and ignoring its recommendations, and then make a Part 36 Offer on the back of a report intended only ever for rehabilitation purposes, they do the insurance industry a disservice. Furthermore, claimant lawyers will make a note of what has happened, and ensure that they do not fall into the same
trap again. As soon as a claimant lawyer sees that an insurer is using rehabilitation in an adversarial way, he will switch off from collaboration and decide to go it alone.

So, having bemoaned the problems which exist, are there any solutions? Well, first of all, I believe there is no point trying to run before we can walk. Trust has all but disappeared and it needs to be rebuilt before any radical steps can be taken. Senior insurance staff need to ensure that the rehabilitation message reaches the ground level of claims handlers, because it hasn't. Insurers must stop treating rehabilitation as something to invoke when it suits them and ignoring it when it doesn't fit. It has to be swings and roundabouts; too many insurers use rehabilitation selectively or tactically. Only the other day I agreed to use a rehabilitation company, well-known and well-respected, but chosen by the insurers. It was a leap of faith I thought; good for me, but both my client and I were let down. A good INA report was produced by the assessor, although, it has to be said, it was very vocationally based because, I fear, the rehabilitation provider was expected by the insurer to deal primarily with vocational matters. That aside, the insurer decided that it would only accept some, not all, of the recommendations contained in the INA genuine needs, others, such as a taxi account to enable the claimant to attend hospital appointments and social engagements, were denied on the ground that there were potential indemnity problems. That is not good enough, I'm afraid. If an insurer picks and chooses which recommendations they will accept, don't be surprised if the claimant's lawyer calls a halt to the whole thing and goes it alone and makes an application for an interim payment.

Re-building lost trust

So, first of all, before we can make any progress, we need to rebuild this lost trust. Insurers need to look afresh at what they are trying to achieve with rehabilitation. They talk a good game at the top, but don't always deliver in practice. The RSA scheme to screen for rehabilitation needs at the outset is a good one, in principle, but would I trust them to implement all the claimant's rehabilitation needs if the claimant lawyer was stripped out of the process? No, and nor would any right-minded person. If an insurer currently picks and chooses which recommendations to implement, when a lawyer is representing the claimant, why would it be any different without lawyers?

I accept the insurers' argument that a cheaper and more efficient system, particularly in small claims, needs to be explored, but a system without solicitors places vulnerable clients in an obvious conflict of interest situation. Insurers are a long way from having the public's trust to handle personal injury claims fairly and equitably in the absence of legal representation and there is absolutely no reason to believe that any savings in legal costs would be transferred into rehabilitation. Contrary to what they are saying, it is often the insurance industry which places barriers in the way of rehabilitation. They promote a soft and fluffy image, but does anyone really believe that savings on legal costs would be channelled into additional rehabilitation for injured claimants rather than lining the pockets of shareholders? So, for all the fine words about the need for change, both with regard to the way in which rehabilitation is delivered under the existing court system and under any new regime, what I and my claimant lawyer colleagues will be looking for will be actions, not rhetoric.

Rehabilitation is too important to use as a political football and if both sides get their acts together, there is no reason why the necessary trust cannot be rebuilt. If this results in savings to insurers, and a better quality of life for injured claimants, then that is to be applauded. In 30 years of personal injury practice, I have never once come across a client who would rather have had more serious and limiting injuries in return for extra compensation.