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Low Value RTA PI claims

This guide is based on the law of England and Wales. It was last updated on 31st March 2011. A streamlined process for dealing with low value road traffic accident personal injury claims worth...

This guide is based on the law of England and Wales. It was last updated on 31st March 2011.

A streamlined process for dealing with low value road traffic accident personal injury claims worth between £1000 and £10,000 came into force on 30th April 2010.

The Ministry of Justice (MoJ) is now consulting on extending the scheme to include higher value RTA PI claims of up to £25,000 or £50,000 and whether to apply a similar approach to public liability and employers’ liability claims.

The RTI PI scheme applies fixed recoverable costs and a fixed success fee to each of three stages of the litigation process. These must be paid promptly - within ten working days of the relevant stage being completed.

There are also provisions intended to prevent the parties from dragging out the litigation, although there is still some scope for delay around obtaining medical reports. Insurers, however, must respond to claims within a strict 15-day time limit which cannot be extended.

The scheme is supported by a claims portal, which provides a secure medium for the electronic transfer of information between parties at the various stages of the process. The portal also monitors whether mandatory information has been fully provided and remind the parties of upcoming deadlines.

The new process has been in place for just under a year. Despite some teething problems with the portal, early findings suggest it is significantly speeding up the compensation process, with some claimant practitioners reporting average case lengths reducing from around twelve months to about four.

It is also having an effect on ATE (after the event) insurance premiums, which have dropped from, typically, £400 per case to under £100 per case.

Application

The streamlined process applies to all RTA personal injury claims where the accident occurs in England and Wales and which are worth between £1,000 (i.e. over the personal injury small claims limit) and £10,000.

For this purpose, the value of the claim is based on the level of general damages and special damages, excluding damage to the vehicle and hire costs. It also takes into account any deduction for failure to wear a seat belt, but not other forms of contributory negligence.

Claims worth less than £1000 and claims involving employer's liability or public liability fall outside its scope. As do claims where there are complicating factors, such as the death of the claimant or defendant or where the claimant is bankrupt or either party is a protected party (someone who lacks capacity to conduct the proceedings).

Claims which initially had a reasonable prospect of qualifying for the procedure but then turn out to be worth either less that £1000 or more than £10,000 will be taken out of the process and be dealt with under the appropriate court rules.

When a case leaves the process, it cannot rejoin and fixed recoverable costs will generally cease to apply.

Claim notification

To start the process, the claimant's solicitor must complete a claim notification form, which will be sent electronically to the defendant's insurer. A version of the form is also be sent to the defendant by first class post.

The solicitor must state in the form whether the claimant was wearing a seat belt. He may also name the person or organisation that referred the claim to him - information that it is hoped will help identify fraudulent claims.

The defendant's insurer then has 15 business days in which to respond, starting on the business day after the claims notification is sent. There is no lee-way on this time limit. During the 15 days, the claimant's solicitor must not carry out any further work.

If the insurer either denies liability altogether or fails to respond within the period, or if it admits liability but alleges contributory negligence for something other than failure to wear a seatbelt, the claim will leave the process. 

If the insurer admits liability but not the amount claimed, the wording of its response will be something like: "the insurer admits that the policyholder was negligent and caused the accident.  Some damage was caused but the insurer does not admit the nature or extent of the damage". 

This completes stage 1 of the process. Where liability is admitted, fixed recoverable costs of £400 are payable within 10 business days of the end of the 15-day period. A 12.5% success fee will also apply, but this does not become payable until the end of the next stage when the case settles. Failure to pay fixed costs will mean the case comes out of the process.

Medical evidence and the offer to settle

Once the defendant's insurer has made an admission of liability, the claimant's solicitor will obtain a medical report and check it for factual accuracy.

The procedure allows for a second medical report to be obtained from a different discipline when it is clear from the outset that this will be necessary. But a third or fourth report should only be sought on the recommendation of either of the two experts already consulted.

Special rules apply if further medical reports are necessary before the claim can proceed, for instance because a final prognosis cannot be made or ongoing treatment is needed.

There is no fixed timetable for obtaining a medical report but within 15 days of confirming its factual accuracy, the solicitor must send it to the insurer together with evidence of any special damages and the claimant's offer to settle.

If the claimant was not wearing a seatbelt, the medical report should provide enough information to calculate the appropriate deduction according to the case law and this should be included in the settlement pack.  

The insurer has 15 business days from receipt to accept or reject the offer. If the offer is rejected, the insurer must make a counter-offer using the same form, which will become a living document passing to and fro between the parties.

There then follows a further 20-day period for consideration and negotiation but if agreement cannot be reached, the matter will proceed to stage 3 to determine quantum. If, having seen the medical report, however, the insurer wishes to question or deny causation, the claim will leave the process and fixed recoverable costs will not apply.

If the time limits are not met during this stage, the claim will leave the process. But the rules allow the parties to agree extensions of time, although no extra costs will be recoverable.

If no agreement has been reached, the defendant's insurer must pay the full amount of its offer by way of interim payment. Stage 2 fixed recoverable costs of £800 will also be payable at this point. If the case settles, a 12.5% success will also apply. Again, payment must be made within 10 business days.

Quantum hearing

The third stage is the quantum hearing, where the MoJ's aim is to adopt the simplest procedure possible, while recognising that some cases will require more flexibility. Consequently, the hearing will be on paper unless the judge decides otherwise or either party requests an oral hearing. 

The application will usually be made by the claimant's solicitor, but the defendant's insurer can apply after a certain period. Each party must put forward a final offer in a sealed envelope for the judge to consider after he has reached his decision. The normal rules on Part 36 offers will apply to these offers, so that a claimant who is awarded damages less than or equal to the defendant's final offer will have to pay the defendant's fixed costs of the hearing. 

The claimant's solicitor can recover fixed fees of £250 for a paper hearing and £500 for an oral hearing. A success fee of 100% will apply but only if the claimant wins at trial. For settlements reached between the issue of the claim and the start of the trial, the success fee will be 12.5% applied to recoverable costs of £250.

Stage 3 is the only time during the process that the defendant's solicitor is subject to fixed recoverable costs – £250 for a paper hearing and £500 for an oral hearing.

Automatic interim payment

Where the initial medical report indicates that the claimant's condition is such that a fixed prognosis cannot be made or further treatment is needed, the parties should agree to stay the proceedings for the required amount of time until a further medical report can be made. During this period, no further work should be carried out.

In such circumstances, an automatic interim payment of £1000 applies, which must be paid by the insurer within 10 business days of receiving the settlement pack with the initial medical report. If the claimant seeks a higher interim payment, the reasons for this must be set out in the pack.

If the amount cannot be agreed, the case will leave the process, but the claimant may be restricted to fixed recoverable costs if, later on, the court finds his claim for a higher interim payment was unreasonable.

Expanding the scheme

Encouraged by the initial results of the RTA PI scheme, the MoJ is considering raising the upper claims limit from £10,000 to £25,000 or even £50,000. A £25,000 limit would capture about 90% of RTA PI claims: a £50,000 limit, 95%.

The proposal is included in a consultation paper on reforms to county court actions, published on 29th March 2011. The MoJ acknowledges that some modification may be required to take into account that higher-value claims tend to be more complicated.

The paper also suggests widening the scheme to cover employer's liability and public liability claims, again subject to appropriate modification.

This follows Lord Young's recommendations in his October 2010 report on health and safety law and the compensation culture "Common Sense; Common Safety". It also restores the scheme to its original scope, which was intended to include EL and PL claims.

That proposal was dropped by the then Department for Constitutional Affairs on the grounds that there were fewer such claims and they were often more complex. 

"However, in line with Lord Young’s recommendations, we now believe the time is right to expand a system similar to the RTA PI Scheme to public and employers’ liability claims, so that claims in these areas become more streamlined, cost effective and efficient," the MoJ consultation paper states.

The paper asks for views on what the claims upper limit should be and what modifications would be required. It also explores the possibility of extending a similar scheme to cover low value clinical negligence claims.

Other questions include whether there should be a fixed costs system for "fast track" cases not covered by the proposed extension.

For the present, the personal injury small claims limit will remain at £1000 so the scheme would only apply to claims above that value.

For non-personal injury claims, however, the MoJ would like to raise the current £5000 small claims limit to £15,000 or possibly even £25,000. This would mean more claims would be allocated to the small claims track where they are dealt with more quickly and informally that higher value cases.

Other general proposals include introducing automatic referral to mediation in small claims cases, "mediation awareness" sessions for higher-value cases and encouraging more actions to be issued over the internet.

The consultation closes on 30th June 2011. It was published on the same day as the Government confirmed its plans to reform civil litigation funding, including making claimants pay their ATE insurance premium and their lawyer's success fee out of their damages (See:  No win no fee reforms divide insurers).

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