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Compensation Culture - Just a Media ‘Claim’?

About The Author

Emily Clements (Former Team Member)

Emily is a Durham University Law graduate due to start as a paralegal in the London Banking & Finance Department of a Silver Circle firm in October 2014, and currently has her targets set on qualifying as a solicitor.

Firstly, we must ask ourselves what is this ‘Compensation Culture’, in which so many newspapers believe our society to be engulfed. The premise is that within the UK we have developed a public perception that for every accident that results in an injury, somebody else must be at fault, and therefore ‘where there’s blame, there’s a claim’. There is a growing impression that compensation can routinely and unjustifiably be received, without the proper application of the legal principles, i.e. a finding of a duty of care, negligence and causation. This belief then encourages a lack of personal responsibility and an appetite for litigation wherever possible.

The media have fully subscribed to this idea that the UK is becoming more and more like the US in their overzealous pursuance of litigation, and has enjoyed escalating stories to make attention-grabbing tabloid headlines. Stories have ranged in their farcicalness, but all share the common feature of involving small, seemingly blameless, incidents of personal injury, resulting in a disproportionately large payout of compensation to the ‘victim’. In the summer of 2011, a school pupil was awarded nearly £6,000 in compensation after having burnt his hand on spilt custard during his lunch break. Having been bumped into by a fellow pupil, he suffered a small splash and minor injury.

Worryingly, last summer we saw a series of claims brought by members of the Police Force for personal injuries incurred during performance of their duties. A case reported in November 2013 involved a Merseyside police community support officer who sued a landowner after she tripped over a 3ft wooden fence on his land, when investigating a break-in. Similarly, in July 2013 a case was reported in which a policewoman sued a grandmother after having been injured by her runaway goat. In both cases, it is important to note that the respective police forces to which each woman belonged were not supportive of their employee’s claims. Whilst these may appear to be isolated unfortunate incidents, the figures suggest otherwise. According to the Telegraph’s November article (above) “Up to 2,000 police officers win compensation claims for injuries every year worth millions of pounds.” As a result of this negative publicity, Home Secretary Theresa May felt compelled to make comment, criticising police officers for making ‘frivolous’ claims and consequently undermining the public’s confidence in the police. There is evident concern that these members of the police have displayed a bad attitude and that this could lead to some people being reluctant to call the police for the fear of being sued. Theresa May promised to work with the Police Federation to try to prevent growth in the number of such claims.

With stories like this in mind, many commentators believe the misreporting by the media has fueled the public perception of a compensation culture. Lord Dyson has criticised the media’s obsession that we are heading towards a US style litigation culture. He used the MacDonald’s coffee cases to exemplify his point. Dyson speaks about the US case of Liebeck v McDonald’s Restaurants P.T.S., Inc., No. D-202 CV-93-02419, 1995, in which a customer successful sued McDonald’s for being burnt by their hot coffee. He argues primarily that the presentation of the case by the media was far removed from its true facts. In order to spark a reaction the media trivialised the story by suggesting minimal injury and stupidity of the customer herself, when in reality the customer had suffered third degree burns and litigation only came about after a refusal of her request for modest reimbursement for medical costs. (Interestingly, there is another similar case being brought against McDonald’s now.) Lord Dyson then compares the case with Bogle & Ors v McDonald’s Restaurants Ltd. [2002] EWHC 490 (QB)in the UK, in which the claimants sued for the same kind of injury resulting from overheated coffee, but failed universally. Critically, Lord Dyson highlighted the media’s lack of reporting on this case. Whilst this judgement could have dispelled rumours of our US-style compensation culture, the media instead chose to continue their ream of articles based on small silly decisions to provoke the belief that any claimant bringing almost any claim can win.

Another case reported by the media that appeared to make yet more of a mockery of the system, was that of a teaching assistant who was awarded £800,000 for her finger and elbow injury after tripping over a wheelchair strap. However, whilst this headline may shock (as I am sure the Daily Mail intended it to), in reality the victim has since been diagnosed with ‘reflex sympathetic dystrophy’ and now finds herself dependent on the care of her husband, as she suffers constant pain and restricted movement. Dr Kevin Williams writing in the Journal of Personal Injury Law has articulated the consequence of such skewed reporting and the dominance it has over public perception:

The fact that there may be no objective proof that we live in an increasingly 'blame and sue' society is beside the point when an 'urban myth' to the contrary is said to have taken hold. Thus, whatever the actual likelihood of being the target of litigation, many increasingly believe themselves to be at heightened risk of being unfairly sued.

Nevertheless, whilst we can dismiss some of negative media attention as merely fabrication of the truth, some of the shocking statistics which result from it cannot be ignored; “The number of bodily injury claims received by insurers increased by 72% from 2002 to 2010.” The volume of whiplash claims in the UK surpasses any other European Country. Even though the number of car accidents has fallen in the past 5 years, whiplash claims have risen by a third. Conveniently, for claimants, whiplash is difficult to diagnose or disprove. It seems inherently likely that media coverage has had an impact on these figures. Fortunately, in the last week we have seen evidence that the Ministry of Justice is working to improve this situation with plans to introduce RTA medical panels this year. These panels will ensure proper medical assessment of all small claims under £5,000, in addition to whiplash claims. The hope is that this will stamp out fraudulent or exaggerated claims.

So what has the media been basing their ‘compensation culture’ story on? In recent years we have seen an increase in aggressive marketing tactics including TV advertisements promoting ‘no win no fee’ arrangements and cold calling; all feeding the ‘have a go’ compensation culture. Furthermore, there are practices within the field of personal injury which, until recently, have meant that the claimant can have very little to lose, even if they bring an unmeritorious claim. Claimants could, and usually did, take out after-the-event (ATE) insurance when their case first began. This meant that if the claimant lost their case, the insurance company would pay out for his legal costs, such as solicitor’s fees. As a result, claimants and solicitors would have very little interest in controlling their costs.

Another problem is that of ‘referral fees’, where a claimant’s details are sold on to the highest bidder. For example, a claims management company or an insurance company would sell details to a law firm, who would then pursue the claimant because they knew the potential for high costs; or in other words, a high fee for them. These practices have both contributed to the compensation culture, which has resulted in higher insurance premiums, local authorities demanding larger legal budgets, increased taxes, overly restrictive health, and safety regulations for businesses and schools who constantly fear the threat of litigation. Worryingly, the excessive costs have also encouraged likely innocent defendants to settle claims outside of court because they perceive it as cheaper than going through court.

Other countries have far more efficient regimes for regulating costs in these cases, including fixed costs in the interests of proportionality. The Jackson Reforms, which were realised in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (effective as of April 2013) have sought to reform litigation. Referral fees are now banned, and the cost of ATE insurance that used to be routinely recoverable from the losing party  is no longer available. Consequently, law firms are required to take a greater interest in the individual merit of a case and whether a case is worth pursuing at all, since costs are less certain.

Despite these changes which should drive down costs and discourage the ‘have a go’ culture which has emerged, whether the government and legal system have done enough to counteract the powerful media perception is still uncertain. I fear that, in the immediate future at least, we are unlikely to see any reduction in dramatised news stories about the “paper cut to the finger, which resulted in a £2million payout, allowing the claimant to retire early”.

Further Reading

The Telegraph, April 2013, 'Thousands of Police Officers Claim Compensation for Injuries'

The Lawyer Article, June 2012, 'ATE insurance special report: What's the damage?'

The Law Society Gazette, January 2014, ‘MoJ confirms plans for medical whiplash panels’

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Tagged: Personal Injury, Tort Law

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