The rise of rehabilitation charges – do the whiplash reforms hold the answer?

Whilst physiotherapy and rehabilitation charges would usually fall within the remit of injury claims, it is becoming increasingly common for these heads of loss to be contested in isolation. Over recent years, we have seen a rise in the number of cases which include physiotherapy or rehabilitation charges as the only real element in dispute between the parties.

Rehabilitation treatment is not necessary in all cases. Many claimants recover from minor soft tissue injuries without the need for any rehabilitation at all. However, a review of claims outcome data suggests that instances of rehabilitation have increased since the Jackson Reforms were implemented in 2013 when the fixed costs regime came into force.

One inference which can be drawn from this is that treatment charges are more commonly being used to inflate the value of claims, either in an effort to increase the basis for fixed recoverable costs calculations or in an effort to push claims into higher value brackets.
Claimants can also potentially use these contested elements of a claim to justify the commencement of court proceedings, or to stretch out claims into the next stage of fixed costs, before compromising on the amount claimed, and calculating their costs on the higher fixed costs entitlements.

The potential for misuse is also a particular concern in relation to physiotherapy and rehabilitation charges, and the relationship between claimant firms and the rehabilitation providers should not be underestimated. With there being no referral fee ban on rehabilitation, how the claimant enters the “system” is worthy of review.

Government consultation response awaited

The government’s consultation paper ‘Reforming the soft tissue injury (whiplash) claims process)’ was published on 17 November 2016, with Part 1 of its response published in February 2017. Part 2 of the response which is expected to deal with the call for evidence on related issues affecting the personal injury sector, including rehabilitation, is still awaited.

A variety of obvious areas of consideration are:

1 Use of rehabilitation vouchers

Pros Would help to avoid claimants seeking compensation purely for financial gain when they have no real intention of undertaking treatment. Should deter fraud and help prevent phantom rehabilitation claims.

Cons May be complex to administer. It is unclear what additional demands (if any) this would put upon defendants at this stage.

2 All rehabilitation being arranged and paid for by the defendant

Under this proposal, the likely approach is that a claimant would be offered a small number of approved providers to choose from, and treatment would then be arranged and paid for by the defendant.

Pros

Cons

Would potentially help speed up access to the treatment. Would avoid instances where claimants are using their own providers. Would give defendants some measure of control over treatment provision and potentially help promote claim progress/reduce claim lifecycle. Would help promote transparency. The "buying power" of the insurers would likely drive down the overall cost thus ensuring that claims spend decreases, reducing the overall costs of claims.

Administration may lead to increased resource costs for defendants.

3 No compensation payment made towards rehabilitation in low value claims

This would mean that a claimant would need to fund any rehabilitation costs themselves.

Pros

Cons

Defendants would not have to make any payments in respect of rehabilitation treatment. Would help reduce claims for ‘unnecessary’ or non-progressive treatment.

Very unlikely to be passed, particularly as the government have previously suggested that they do not intend to restrict special damages. In the unlikely event of passing, could lead to more mitigation arguments or increases in claim value where a prognosis is dependent upon treatment being carried out and the claimant is unable to fund the treatment themselves. Contrary to medical opinion that in the correct cases treatment assists.

4 MedCo to be expanded to include rehabilitation providers

Likely to function in the same manner as the current MedCo panel.

Pros	Cons
Already an existing framework so should be relatively easy to adapt. Would promote independence and impartiality and avoid claimant firms using their own preferred providers. Promote transparency and consistency in terms of fees.	Subject to practical difficulties such as identifying, compiling and approving sufficient suitable treatment providers to ensure appropriate coverage. Legislative uncertainty. Unlikely to be a solution in the short term.

5 Introducing fixed recoverable damages for rehabilitation treatment

This may be one of the more likely proposals to be implemented, particularly as it would tie in well with ‘tariffed’ whiplash awards.

Pros	Cons
Would promote fairness and consistency across the board. Should be relatively easy to implement. Would tie in with other whiplash reforms and compensation tariffs.	Would not necessarily combat the rise in rehabilitation claims. Would need to consider practical implications (e.g. whether damages would be fixed per session or by an upper limit for a course of treatment which could not be exceeded) which may give rise to challenge in ‘exceptional circumstances’.

Comment

As is evident from the above, there are pros and cons to each of the current proposals and we await Part 2 of the government’s consultation response with interest.

However, given the groundwork which has already been laid in relation to the MedCo system and the forthcoming compensation tariffs for whiplash, it seems likely that the government will opt to use these two systems – either in isolation or, more likely, in combination – to also deal with the issue of rehabilitation charges.

The claimant lobby would no doubt argue strongly against any change to the existing process as the revenue stream is significant.

Until some clarification is given in relation to the proposed approach, how do we best deal with physiotherapy and rehabilitation charges in the meantime?

As things stand, intervention offers of treatment remain a particularly viable option for defendants and can put defendants in a much more favourable position should the claimant then go on to undergo treatment from a provider of their own choice at a higher rate. Ensuring intervention offers are made early, in the appropriate terms, and are supported by evidence should the matter proceed to trial is essential to enable defendants to best protect their position.

An undoubted outcome of the greater use of intervention letters, a key asset for an insurer, is the likely greater challenge to the content and technical compliance of the intervention letters by the claimant market.

Read other items in Motor Brief - May 2019