Response of the Law Society of England and Wales to the Ministry of Justice call for evidence on personal injury claims arising from package holidays and related matters November 2017 The Law Society 2017 Page 1 of 10
PREFACE 1 The Law Society of England and Wales ("The Society") is the professional body for the solicitors' profession in England and Wales, representing over 170,000 registered legal practitioners. The Society represents the profession to parliament, government and regulatory bodies, and has a public interest in the reform of the law. 2 The Society represents both claimant and defendant solicitors. Views on these consultation proposals were sought from members, specialist practitioners, and the Society's Civil Justice Committee. 3 The Society welcomes the opportunity to respond to this call for evidence on personal injury claims arising from package holidays. We have responded to questions within the call for evidence document, and have also commented on the issues raised more widely in so far as they affect our members and victims of holiday sickness abroad. 4 The following document is annexed to this paper: Annex A: The Society s guidance on claiming compensation for holiday sickness claims, July 2017. EXECUTIVE SUMMARY Introduction 5 The Society supports the Government s intention to clamp down on fraudulent holiday sickness claims. However, we believe that any reform of holiday sickness claims should maintain access to justice for those with genuine cases, and they should receive fair and just compensation. 6 We condemn unauthorised and unethical claims management activity in this area, and call for a ban on cold calling for all personal injury cases. 7 We support the principle of fixed recoverable costs (FRCs) for simple, low value and straightforward holiday sickness claims if the costs and accompanying legal process is workable. We do not believe that a one-size-fits-all approach for FRCs is appropriate, and high value, complex and group claims should be excluded. 8 If a system of FRCs is introduced, we suggest some minor amendments to the Pre- Action Protocol, and we believe that any reform in this area should be undertaken in an evidenced and robust manner. Response to call for evidence i) The problem of an apparent substantial increase in the number of low value personal injury (PI) claims for gastric illness (GI) arising from package holidays, many of which appear to be unmeritorious. 9 The Society welcomes the Government s move to clamp down on fraudulent gastric illness claims, and to bring to task those who seek to profit from the pursuit of bogus or exaggerated claims. However, we believe that any reform in this area should continue to ensure that those with genuine claims are able to access justice and receive fair compensation. The Law Society 2017 Page 2 of 10
10 We recognise the significance of the 1992 Package Travel Regulations towards the reported increase in these claims, given that they have allowed holidaymakers to bring claims against their tour operator in the UK although the illness occurred overseas. We do not condone unethical activity by claims management companies (CMCs) which has recently been shown in the media, such as touting or so called claims clinics. 11 We support a ban on cold calling for personal injury claims to protect consumers and prevent unscrupulous operators from bringing unmeritorious claims. Under Solicitors Regulation Authority (SRA) rules, solicitors are already prohibited from doing this. The latest Claims Management Regulation Annual Report states that a substantial increase in the numbers of CMCs engaging in this area from mid-2016, as well as a marked upturn of marketing in the press, on radio, online and via social media. 1 We welcome the report s focus on tackling unauthorised CMC activity, and we are pleased that they intend to continue their compliance and enforcement activity next year. 12 We published consumer guidance on claiming compensation for holiday sickness claims in July 2017 (Annex A). Within the guidance, we emphasise that making a false claim can result in a criminal conviction, while setting out a legal path for those who have been genuinely harmed on holiday to obtain compensation. Indeed, there has recently been a criminal conviction with custodial sentences in October 2017. We also remind holidaymakers that they can contact their tour operator directly without using a CMC, and emphasise the role that insurers play here; if they are concerned that a claim may be fraudulent, then it should be investigated accordingly. ii) Action the Government proposes to take to control legal costs by extending fixed recoverable costs (FRCs) to low value PI claims arising from package holidays. 13 The Society supports the principle of FRCs for low value and straightforward gastric illness claims, as they can bring helpful certainty for both sides in litigation and avoid protracted disputes about the level of costs. However, we do not believe that they should apply in complex, high value claims (including serious harm), or when a large group of people have been harmed in the same incident. 14 A one-size-fits-all approach of FRCs could hinder access to justice and prevent ill people receiving the compensation that they deserve. If FRCs are applied, there needs to be a streamlined accompanying process with realistic costs attached and controlled behaviour on both sides. If this does not happen, some claimants may find that they cannot access the specialist advice they need, and low FRCs could mean that some of these cases are not taken up in the first place. This could lead to an increase in Litigants in Person as an unintended consequence. 15 If FRCs are introduced for these claims, we believe that costs should be fixed at a reasonable level to reflect the work undertaken by solicitors. A significant proportion of these cases are complex and have logistical issues, with many requiring expert evidence to establish causation. There is commonly a need for input from local lawyers and foreign lay and expert witnesses, which compounds the complexity of many of these claims. As such, FRCs should be calculated at a proportionate level to allow specialists to continue undertaking this work. 1 Ministry of Justice Claims Management Regulation Annual Report 2016/17, pg. 32: https://www.gov.uk/government/publications/claims-management-regulator-annual-report-2016-to- 2017 The Law Society 2017 Page 3 of 10
16 The Society supports the suggestion by the Ministry of Justice (MoJ) that PL, rather than RTA, rates should be adopted if a system of FRCs is put in place for these claims. Holiday sickness claims require a similar amount of evidence and preparation to other PL claims; therefore, a RTA banding would seem inappropriate. iii) Amendments to Pre-Action Protocol for Low Value Personal Injury (Employers Liability and Public Liability) Claims (EL/PL PAP). 17 If the Government decides to adopt FRCs for holiday sickness claims, the Society suggests the following amendment to the above pre-action protocol, in addition to what is set out in the consultation document: In relation to Q 1(c), we suggest that the following is added to paragraph 4.3(7): in so far that this protocol should apply to claims in respect of gastric illnesses suffered whilst on a package holiday overseas. 18 We note that the call for evidence document discusses the Pre-Action Protocol in the context of what is understood to be current industry practice when dealing with such claims at the pre-action stage. 2 We would be pleased to assist the MoJ to identify specialist practitioners who would be able to offer their expertise on how these claims currently proceed, as the MoJ s current level of understanding is unclear from the call for evidence. 19 We suggest that the amendments to the Pre-Action Protocol should have effect to all new claims which have arisen after the amendments come into force. This should facilitate a smooth transition for any amendments. iv) Issues that we are asking the Civil Justice Council to consider in relation to package holiday low value PI claims and other low value PI claims more generally. 20 We are aware that the Civil Justice Council has just concluded its recommendation on a bespoke FRC scheme for noise induced hearing loss cases, and we note its intention to form a similar working group for lower value clinical negligence cases. Personal injury has been a hotbed of reform in recent years, and we believe that, if Civil Justice Council decides to examine holiday sickness claims, it should do so in an evidenced way with other personal injury reforms in mind. 21 The Society opposes any conception of a compensation culture in personal injury claims, as often suggested by reported increases in certain types of claim. Recent statistics from the MoJ show that unspecified money claims for personal injury was down 4% between April and June 2017; 3 we believe that any reform in this area should be evidenced by robust data. We support the common law right to compensation for injuries caused by the negligence of others, including in holiday sickness claims where illness can be quite severe. Cases can often require specialist medical evidence, and any procedural change to these claims should account for the provision of expert advice. 2 Ministry of Justice A call for evidence on personal injury claims arising from package holidays and related matters, 13 October 2017, pg. 4: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/652419/gastric-illnesscall-for-evidence.pdf 3 Ministry of Justice Civil Justice Statistics Quarterly, England and Wales, April to June 2017 (provisional), 7 September 2017, pg. 1: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/642636/civil-justicestatistics-quarterly-apr-jun-2017.pdf The Law Society 2017 Page 4 of 10
22 It will be important to consider the number of wrongly defended holiday sickness claims, and how we can best support solicitors when identifying genuine claims. The SRA guidance on holiday sickness claims reports that they are currently investigating more than a dozen firms, including on issues relating to CMCs and referral fees. 4 We are pleased that they set out the potential risks to solicitors when taking up a holiday sickness case to eliminate those which are not genuine. 5 v) A call for further evidence including data. 23 We note that Association of British Travel Agents (ABTA) members have reported an average increase of more than 500% in personal injury cases relating to holiday sickness since 2013. 6 A major claimant firm reported to us that their data shows that package travel regulated illness cases have only increased by 6% in the past four years; therefore, there is clearly disagreement over this point. Lord Justice Jackson cites a small data set in his July report on fixed recoverable costs, demonstrating the disparity between damages and agreed costs. 7 The Society does not hold any further data, but we suggest that the MoJ obtains a strong evidenced data-set before implementing any reform in this area. FOR FURTHER INFORMATION Kate Fairhurst Policy Adviser - Civil Justice kate.fairhurst@lawsociety.org.uk 020 7320 9559 4 Solicitors Regulation Authority warning notice, Holiday sickness claims, 6 September 2017: https://www.sra.org.uk/solicitors/code-of-conduct/guidance/warning-notices/holiday-sickness-claims-- Warning-notice.page 5 Ibid. 6 ABTA letter to the Secretary of State for Justice, Stop Sickness Scams, 21 June 2017: https://abta.com/tips-and-latest/abta-campaigns/holiday-sickness/letter-to-the-secretary-of-state-forjustice 7 Rt Hon Lord Justice Jackson, Review of Civil Litigation Costs: Supplemental Report Fixed Recoverable Costs, July 2017, pg.40-41: https://www.judiciary.gov.uk/wpcontent/uploads/2017/07/fixed-recoverable-costs-supplemental-report-online-2-1.pdf The Law Society 2017 Page 5 of 10
Annex A Briefing for consumers: Claiming Compensation for Holiday Sickness Aim of this briefing: - Provide advice for consumers who suffer genuine sickness while abroad -Welcome government measures to tackle holiday sickness fraud - Differentiate our members from the claims companies Background for journalists: On 9 July the Ministry of Justice announced measures to tackle fraudulent sickness claims. Fraudulent claims of food poisoning by holidaymakers which lead to heavy payouts to those who've made false or exaggerated claims could result in British tourists paying higher package holiday prices. Tour operators that sell holidays abroad are not currently covered by a system of fixed recoverable costs that operates for small personal injury claims in England and Wales. This means legal costs are not capped on claims for foreign holidays. As a result, for tour operators, hotels and restaurants the cost of challenging these holiday sickness claims in the courts is very high despite the relatively modest sums involved. The claims are usually worth about 2000 and are hard to defend - the burden of proof is low (balance of probabilities), and if a consumer says they have a bad stomach for a few days, it is hard to refute. So, most hotels and their insurance firms simply pay out as it is less expensive than going to court. And those costs are passed on to other holiday makers. Now the Ministry of Justice says it wants to close this 'loophole' limiting legal costs travel firms have to pay out for holiday sickness claims by including them in the fixed costs regime. Those with genuine claims will still be able to sue for damages, it said. The Law Society 2017 Page 6 of 10
If the Government is successful in extending the fixed recoverable costs scheme to overseas holidays then tour operators will instead pay an agreed, set sum depending on the value of the claim. Applying a system of fixed recoverable costs to cover claims arising abroad will mean payouts for tour operators will be subject to stricter controls with more predictable costs to tour operators. People making claims will also know what they will recover in the event of successful claim Claims companies will then have to consider whether the margins are enough to continue to operate in the sector. The MoJ will also ask the Civil Justice Council to look at the rules around low value personal injury claims to reduce incentives to bring meritless claims. The Foreign Office website advice is now warning travellers that it s a criminal offence to make false claims, and the Ministry of Justice has said that UK holidaymakers who are found guilty of making a fraudulent claim face up to three years in jail. Law Society statement Law Society president Joe Egan said: There has been a growing number of reports that some companies are actively encouraging people who have been on holidays abroad to make claims for sickness when no illness has occurred. "We welcome the decisive action the government has taken on this issue. Fraudulent claims should be stamped on and claims companies who seek to profit from bogus or exaggerated claims must be brought to tasks. The Law Society 2017 Page 7 of 10
"We support the principle of fixed costs for straightforward, low value claims, such as holiday sickness claims. Fixed recoverable costs are already in place for domestic low-level personal injury claims and provide some certainty for both sides in litigation and avoid protracted disputes about the level of costs. "However, in clamping down on dodgy business practices ministers should be careful not penalise people with genuine or more complex claims. Fixed costs should not apply in certain circumstances - for example in complex, high value claims where people have been seriously harmed, or where a large group of people have been made ill or harmed in the same incident. That's because a one size fits all approach would prevent people seriously harmed from getting fair compensation. This would raise significant questions about people's ability to access justice." Cold calling The practice of cold calling used by some claims management companies should be banned. The Law Society has called for a complete ban on cold calling for personal injury claims. Such a ban is essential to protect consumers and prevent unscrupulous operators from finding a way around existing rules. Joe Egan added: "Cold calling is universally detested and cold calls are widely regarded as intrusive. Some pressurise people to make personal injury claims. In the worst cases, callers encourage people to claim for accidents where no injury has occurred. Touts operating in holiday resorts are no different. The government should clamp down on cold callers who seek to profit from bogus or exaggerated claims." Solicitors have long been banned from making unsolicited texts and calls, but it is clear that data for cold calls is mined, sold and re-sold by a variety of organisations across the personal injury sector. The Law Society 2017 Page 8 of 10
Guidance for consumers Some claims companies are actively encouraging people who have been on holidays abroad to make claims for sickness when no illness has occurred. The practice is apparently fuelled by unscrupulous touts operating in holiday resorts. The Foreign Office website advice warns travellers that it s a criminal offence to make false claims and the Ministry of Justice has said that UK holidaymakers who are found guilty of making a fraudulent claim face up to three years in jail. If you do have a genuine claim for sickness you should contact your tour operator directly without using a claims management company. If you aren t sure how to make a claim, you can get free, impartial advice from consumer organisations, such as citizens advice or there is information on the Which? website. If you have suffered a genuine illness and you make a successful claim without using a claims management company, you will keep the compensation yourself. If you have been seriously ill while on holiday, or suffered serious injury, it is advisable to seek advice from a solicitor specialising in personal injury. Choosing a specialist solicitor ensures a high level of service and expertise, plus guaranteed consumer protection. All solicitors are highly trained and subject to strict regulation to ensure that they deliver the best service to their clients. The public are also protected by solicitors' mandatory professional indemnity insurance and the Solicitors' Compensation Fund. Consumers have every right to expect such guarantees. Claims companies offer nothing like these protections to those seeking legal help and this is confusing for consumers. A claims management company is required to adhere to strict rules when dealing with consumers. They must not: approach you in person The Law Society 2017 Page 9 of 10
use any form of high-pressure selling such as asking for on-the-spot decisions send you emails or texts (unless you ve agreed to receive them) make marketing calls if you have told them that you don t want to receive them or if you ve registered your number with the Telephone Preference Service Finding a list of solicitors is easy using the Law Society helpline or website. Call 020 7320 5650 or visit our Find a Solicitor website to start your search. If you have been seriously ill while on holiday and are seeking advice from a solicitor it is always sensible to do some preparation ahead of any meeting. Think carefully about the details of your case - the more preparation you do before the meeting, the more you'll get out of it. Make a list of the main points you want to make or the questions you want to ask. Gather any paperwork that might be relevant and put it in some kind of order, so you can refer to it quickly. This will make it quicker and easier for your solicitor to understand your circumstances and give you proper advice. The Law Society 2017 Page 10 of 10