Pre-medical settlement offers: 'Tis the season

As the festive season arrives along with German markets and Christmas jumpers, another annual tradition begins again in law firms all over the country: the sudden increase in pre-medical offers.

Such offers are, by their ?very definition, evidentially unsound, unsupported, incapable of accuracy, and a tactic for prematurely under-settling claims. 

Christmas gives an advantage to the offeror as, with claimants facing an expensive month, the conditions are ripe not only for under-settlement, but for under-settlement to be welcomed by the claimant with open arms. 

The law

One weapon in the festive arsenal is that the law does not support, and indeed offers safeguards to the recipients of, such offers. 

The Civil Procedures Rules (CPR), at paragraph 7.44A of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents, states: ‘In a soft tissue injury claim, an offer to settle made by either party before a fixed cost medical report has been obtained and disclosed will have no adverse costs consequences until after the report has been disclosed.’ 

Thus, recipients have security to obtain medical evidence and, even should it support a valuation approximate to the pre-medical offer, there will be no cost consequences to face. 

Rule 7.41 of the Pre-Action Protocol for Low Value Personal Injury Claims (Employers’ Liability and Public Liability) Claims offers a similar protection, and although the principle of 7.44A has yet to be incorporated into the Employers’ Liability and Public Liability Claims Pre-Action Protocol, it is commonplace to see the latter incorporate the approach of the former.

In the case of Rahmatullah Amiri v Haven Insurance Company [2014], the judge considered that pre-medical offers are not to be condoned and that making such offers encourages fraud and does not ensure people receive fair compensation. 

The judge also referred back to the overriding objective as per the CPR, saying the principle is ‘not to settle cases quickly and at a lower cost’, but to ‘deal with cases justly at proportionate costs’. It is, in my experience, rarely disproportionate to obtain basic medical evidence. 

The industry 

In its voluntary code of conduct, the Association of British Insurers suggests that where there is a low value injury claim, insurers ‘may’ offer to settle a claim without evidence. This seems contrary to its own policy on making offers, which states that ‘all offers should be fair and reasonable and based on appropriate evidence’. Without evidence to allow a proper quantification of a claim, it inevitably follows that it cannot be fair or reasonable. 

The Association of Personal Injury Lawyers (APIL), in its response to the MedCo Framework review and Insurance Fraud Taskforce, supports a complete ban on pre-medical offers. APIL considered that offers of settlement before any medical evidence has been obtained were ‘grossly’ unjust, could cause under-settlement of claims, and could not be an accurate quantification. 

This is before even considering that such offers, in creating an environment of ‘easy money’, allow and encourage fraudulent claims to be settled without appropriate scrutiny and consideration.

Although APIL suggests this be ‘at least’ for road traffic accident cases, APIL’s position should be applied to all case types.

The government

The judge in Amiri v Haven noted that the government has also spoken against the practice of pre-medical offers, with a particular focus on insurers improving practices to address fraudulent or exaggerated claims. 

The House of Commons Transport Select Committee ?on whiplash claims stated: ‘Although it may make economic sense for an individual insurance firm to settle a claim without medical evidence or to pay out even if fraud or exaggeration is suspected, the industry as a whole is damaged, and motorists pick up the bill in the form of higher premiums. Insurers must immediately put their house in order and end practices which encourage fraud and exaggeration.’

It is to be hoped that the day of the pre-medical offer may soon be done, given the lack of support for them on (almost) all fronts. Until then, for recipients and their solicitors, clear advice remains paramount; should the recipient find their injuries persist, there is no recourse once an offer is accepted. 

A pre-medical offer is for life, not just for Christmas; accepting the same may cause more ?‘Oh no’ than ‘Ho ho ho’.

Chris Neale is a litigation executive at Bott & Co @bottandco www.bottonline.co.uk