As fraudsters and claims management companies begin to feel the impact of whiplash reform, is industrial deafness becoming insurers’ new problem area?
With the government’s bold promises on whiplash reform threatening to close the door on fraudsters, motor insurers can look to the future with cautious optimism. But with the whiplash consultation and the introduction of fixed costs as part of the Jackson reforms making the pursuit of such claims less appealing, the threat of claims migration to less well-protected areas – particularly the lucrative area of noise-induced hearing loss – is becoming increasingly prevalent.
In the last two years insurers have noted a steep increase in new industrial deafness claims, with some reporting a 50% rise. The greatest spike was seen in the months leading up to 1 April this year, when the Legal Aid, Sentencing and Punishment of Offenders Act came into force, as claims management companies rushed to lodge claims under the more favourable old regime. However, anecdotal evidence suggests legislation has done little to stem the tide of fraudulent claims thus far.
Although the phrase has a certain ring to it, most agree that calling deafness ‘the new whiplash’ is a misnomer, first because the phenomenon predates the explosion in whiplash claims, and second because – unlike whiplash – deafness can be measured against some objective criteria.
Joe Noel, personal injury technical director at Cunningham Lindsey, explains whiplash is “by definition fairly difficult to define” – which makes it so vulnerable to simulation. The lack of agreement on indicative symptoms and the widespread industry practice of making pre-med offers only serve to exacerbate the situation.
In contrast, deafness claimants are referred at an early stage to undergo diagnostic tests, undertaken by an audiologist or an ear, nose and throat surgeon.
According to Bridget Collier, principle solicitor with Slater & Gordon and member of the Association of Personal Injury Lawyers’ executive committee, it is “virtually impossible to fraudulently make up the audiogram”. She adds: “If the ENT or audiologist suspected you were misrepresenting your hearing in the audiogram they would re-run it and you wouldn’t be able to repeat the same test results. There are other tests you can do as well.”
While it is absolutely possible to say someone has suffered hearing loss, the grey area in deafness is causation – a vital factor when liability needs to be determined. However, in most cases, audiologists should be able to discern causation. “The ENT can put the line of what is expected from age-related hearing loss on the audiogram, [compare it with] the line produced on the graph in the audiogram and can tell what’s noise-induced hearing loss and [what’s] age-related hearing loss,” says Collier.
However, insurers point out that some cases are borderline, and evidence from some audiologists is more reliable than others. There has also been a rise in cases where CMCs are taking “a political decision not to co-operate and won’t agree to audiometry testing”, according to Berrymans Lace Mawer partner Nigel Lock.
Although the comparison of deafness claims to the whiplash situation does not entirely hold up to scrutiny, it does seem relevant when considering the actions of CMCs. While whiplash cases have long been the playground of such firms, evidence suggests they have honed in on deafness as one of the areas where they can still command hourly fees.
Jim Byard, head of disease at Weightmans, says issues with the Ministry of Justice’s claims portal are also causing problems, as the portal is “virtually unworkable for the vast number of noise claims”. Although a small number of deafness claims can be processed through the portal, a huge number fall out because of multiple defendants, lack of adequate paperwork or an inability to meet the stage timeframes.
Research by Cunningham Lindsey paints a very grim picture. “The vast majority of claims are £25 000 and below in value,” says Noel. “98% are settled below the £25 000 banner. Of those, we estimate 40% are multi-defendant so they won’t be portal appropriate. Of all noise-induced hearing-loss cases, 90% won’t be appropriate for portal.”
Insurers lay the blame for cases falling out of the portal squarely at the door of CMCs – but Collier says insurers are far from a guiltless party: “With my experience of hearing – and disease cases in general – it is infrequent that insurers admit breach of duty or causation.
“I’ve heard some defendant solicitors are requesting documents that, according to my understanding, aren’t to be disclosed as part of the portal. The portal says you must disclose medical records that are mentioned in the evidence you supply. It doesn’t refer to having to obtain and disclose occupational health records. But defendants are saying that we’ve not supplied enough information so [the case has] got to fall out of the portal.”
But Simon Gallimore, senior manager of casualty claims, UK & Ireland, at AIG, says the system, not insurer behaviour, is flawed: “The portal does not suit disease claims in its current format. As a minimum we would need an extension of the stage timeframes. It takes a lot longer than 30 days to establish liability and causation on noise-induced hearing-loss claims.
“We don’t have access to the same level of electronic information for disease claims. A lot of the records are paper records, which take a long time to find.”
In Gallimore’s view, the best way to tackle the current situation would be for the MoJ to introduce fixed costs for non-accident claims that fall outside the portal. “I’m not quite sure why they weren’t included in the table B charges [table b dictates which claim types fixed recoverable costs are applicable to] in the first place,” he says. “A cynic would say the subsequent rise in noise-induced hearing-loss claims due to hourly rates still being available may be a consequence of not having the fixed costs once claims drop out of the portal.”
While this may be an elegant solution, it is unlikely to gain support from the claimant lobby, with Collier describing it as “completely unrepresentative of what is involved in these claims” and warning that it could limit access to justice.
Balancing access to justice with identifying dubious cases is a highly contentious issue. While Apil argues objective tests mean accusations of fraud in noise-induced hearing-loss claims are unfounded, insurers point to a rise in ‘speculative cases’ – many of which stretch the bounds of credulity.
ECIC claims manager Ian Hollingworth says that as traditional deafness claims sources such as steelworkers and factory employees are now subject to more stringent safety regulations, claims are coming from other, less obvious individuals, such as those who do not perceive themselves as being at high risk of industrial deafness and, therefore, do not use ear protection.
While some of these may well be legitimate claims, such as electricians who are working off-site, others have raised eyebrows. “Some loss adjusters have seen claims from traffic wardens counting coins. We also had one from a nightclub bouncer who was standing outside of the club,” Hollingworth explains.
Gallimore adds that although the bulk of disease claims AIG is seeing are historical, “the diversity of cases we are seeing is becoming more curious”.
Few want to label all such cases as fraud but, at best, many of them appear to be speculative claims that would not have been made in a different economic climate.
Gallimore points out that the rate of rejected deafness claims is also on the rise: “We have a denial rate of 50% at the moment. It’s very high – the highest of any line I work with. Some of the claims come with very little paperwork, so they are quite easy to defeat once you start questioning them.
“We’ve taken a very conscious decision in that although we’ve been flooded with new claims this year, we’re not going to cut corners. It’s important we maintain a robust stance and we will investigate every claim.”
In the past there have been suggestions that some parts of the industry have taken an economic decision to settle claims, despite the lack of evidence. But, in the current climate, firms that do so risk appearing “a soft touch”, says Gallimore.
“Claimant law firms and CMCs, in particular, will often look at your defences and see where there’s a soft point of entry,” he continues. “It’s very important insurers do not just look to clear volume but maintain that stance of investigating.”
Collier agrees CMCs have probably spurred the levels of deafness claims, but says this does not mean the cases are not legitimate: “CMCs have perhaps educated people that where there is negligence you can bring a claim. People are realising what the symptoms of noise-induced hearing loss are, rather than just accepting that their hearing isn’t what it used to be. But while greater education may be driving people to bring these claims, they only succeed when negligence has been proven.”
Noel believes it is important insurers do not go too far in the other direction, saying that rather than contesting everything they should “pick their fights”. “If there are repeated concerns over the evidence of particular audiologists, let those drop out of the portal and ask for supplementary evidence,” he adds.
While taking action individually is important, greater information sharing between firms has been touted as one way to identify patterns in claimant behaviour, particularly when it comes to repeat claims that use the same evidence.
The idea of a central database for deafness claims is one many find appealing, although the issue of propriety data will need tackling. “Getting data on deafness would be great in an ideal world. We quite often see that people are having a second bite of the cherry and not declaring that they’ve made a previous claim,” says Noel.
The Insurance Fraud Enforcement Department and the Insurance Fraud Bureau could also be utilised more to increase public awareness that deafness fraud is a crime.
While insurers are not entirely in agreement, many say there is evidence that deafness claims are not accelerating at the same rate as they were before 1 April – but they are not going back to 2007 levels (when they were under 20 000) either, according to Gallimore: “They are starting to stabilise, but they are stabilising at a new reality for us. If you compare our 2012 average claims with our 2013 new claims, we’ve probably seen a 40% increase as the new norm.”
Insurers will be hoping the introduction of further portal reforms, or a fixed-cost regime for claims outside the portal – perhaps as part of Justice Ramsey’s costs review – could disincentivise CMCs and lead them to go elsewhere in search of easy money.
But in the quest to stem the tide of claims, insurers should not forget that genuine deafness can be a debilitating condition that severely impairs quality of life, says Collier. “People who used to go out all the time can live in social isolation because they can’t hear in large groups. In addition, about 20% of those suffering from noise-induced hearing loss also suffer from tinnitus, which can be so severe that it leads to depression, and it’s not unheard of that people commit suicide because of the symptoms.”
She concludes: “Where there is evidence that employees were negligently exposed to high noise levels, insurers should just accept responsibility and pay out.”
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