An attempt to lower the threshold for hearing loss claims was treated as a victory for common sense by liability insurers but, as Lynn Rouse discovers, there are other significant and potentially expensive challenges still facing employers and insurers
Last February, liability insurers claimed more than a simple victory when Nottingham County Court dismissed seven test cases for industrial deafness, marking the culmination of three years of legal wrangling. Many issues came under the microscope but essentially claimants and their solicitors sought to lower the threshold for actionable damage by trying to prove that employers had knowledge that hearing loss could be caused at levels beneath those long-established to be 'safe' and should have taken steps to address this. Ultimately, however, they were unable to prove breach of duty at noise levels below 85 dBA.
At the time, insurers said they had been spared thousands of potential claims and millions of pounds in damages. Looking back, Mike Noonan, QBE's head of strategic claims, recalls: "In essence they were trying to reinvent the matrix of how deafness claims could be tackled and they lost. Insurers have not really saved money but what could have been an unfortunate development was avoided and means the status quo resumed."
One of the major hurdles claimants failed to surmount was that of medical causation. In April 2007, Robert Owen QC explained: "Once you get into exposures between 80 and 85 dBA, where is the epidemiological and medical evidence to show that kind of exposure can in fact cause significant hearing loss or damage? In all but one case, the claimants failed to establish the existence of any, or any significant, hearing damage." (Post, 12 April 2007, p14-16).
Chris Price, partner at Langleys solicitors, explains this issue continues to be a difficult one for claimants to overcome. "Medical experts are a bit torn over the risk of damage to hearing from noise below 85dba. Any damage is often considered marginal and something that can't be separated out from other causes of hearing loss. Unlike other occupational disease claims there is potentially quite a range of causes - such as age, hereditary problems, infections and ear wax.
"Therefore, the lower the noise exposure, the more difficult it is for experts to be clear that occupational noise has caused any hearing loss. So if claimants are trying to prepare cases relating to noise levels below 85 dBA they still face a significant problem on medical causation."
Darren Smith, partner at law firm Reed Smith, was involved in the Nottingham cases and explains that, although an appeal has been launched, it has been severely delayed by the claimants' inability to secure funding - which may suggest those who have been asked to back the appeal have concerns over its success. Public funding was refused. Reed Smith has seen several hundred claims affected by the judgment discontinued, he says, and has also seen a number of cases outside of Nottingham/Derbyshire withdrawn due to its effect.
Ian Macalister, partner at law firm DWF, adds: "The costs of the Nottingham cases, which the losing solicitors and legal expenses insurers will have to bear, will be very substantial indeed and are likely to deter any future challenges on this scale unless the claimants and their advisors are very sure of their ground. Even then, persuading legal expenses insurers to take a further risk on this type of case is likely to prove difficult."
So this particular litigation chapter in the story of industrial deafness remains unfinished and interested parties can only wait to see how it ultimately unfolds. For his part, Neil Hackett, disease and illness unit manager at loss adjuster Garwyn, says he would be "very surprised if these cases move forward; claimants and legal representatives seem dissuaded from pursuing them". And as Mr Smith says, referring to the fact the appeal process is yet to be concluded: "This situation cannot go on indefinitely."
Putting these test cases to one side, what other developments have arisen recently to influence the number and cost of claims for noise-induced hearing loss? Last October, Zurich reported that it had seen a 30% increase in deafness claims in the last year alone. So is the insurer's experience being replicated elsewhere?
Mr Noonan reports: "We have seen an increase and that's probably true for the market generally but it's not a step change. Five or six years ago I had a meeting with actuaries where we predicted these claims mirroring a ski slope, heading downhill so that by 2012 there would perhaps be no claims. In reality, claims have actually gone in the other direction with a gradual yet consistent build over the last three or four years to a point where numbers are 50% higher than they were four years ago."
So what does he attribute this rise to? One significant factor, believes Mr Noonan, is a switch in personal injury solicitor focus - away from pursuing coal miners' compensation claims and those for vibration white finger. "Frankly it is a lot easier to pursue these types of occupational disease claims and a lot more lucrative," he says, as an explanation of why these areas attracted more capacity initially, after conditional fee agreement regulations came into play. "Now these claims have effectively dried up and there is all this capacity out there needing to do something - so that's one reason why claim numbers have gone up in the last couple of years. But deafness claims are a harder seam to mine; they are trickier to pursue."
The experience of others seems to substantiate this. Jim Byard, partner at law firm Weightmans, reports: "So far as general claims intimated, insurers have undoubtedly seen an increase in such claims. Some insurers estimate that noise-induced hearing loss claims account for 50% of new claims received - principally as a consequence of the activities of claims farmers and claimant PI firms keen, albeit belatedly, to capitalise on the introduction of condition fee agreement regulations in 2001."
Reed Smith also reports a 27% increase in deafness claims since the Nottingham test cases took place - although Mr Smith is quick to point out that most of these are not affected by the judgment itself.
There are certainly other potential sources of claims that employers and their insurers can ill afford to ignore. For example, Mr Macalister anticipates an increase in claims as the Control of Noise at Work Regulations 2005 begin to bite, having come into force in April 2006. "These reduced the level at which employers must provide hearing protection to 85 decibels and the level at which they must assess the risk to workers' health and provide information and training to 80 decibels. The exposure limit is now 87 decibels.
He continues: "Since April this year the regulations also apply to employees in the music and entertainment sectors. These industries were given two years to adapt their practices and develop practical guidelines to help workers, employers and freelancers to protect their hearing." However, he also points out that the Health and Safety Executive's guidance - Sound Advice - was not published until July this year. "The fear is that many smaller operations and even some larger ones will be behind in implementing the regulations, creating potential liability for their insurers. We also foresee difficulties for insurers in dealing with claims from these sectors. The nature of bar or restaurant work is such that investigating and evaluating exposure is likely to prove difficult."
As a sizeable insurer of the leisure and entertainment industry, QBE is keeping a close eye on this area although it has seen no sign of a claims problem emerging yet. But Mr Noonan agrees that, should these industries produce deafness claims in time, "they would be hard to defend because employers are only now getting up to speed with the regulations surrounding noise at work".
Taking a more positive view - as far as being a liability insurer is concerned - he adds: "The leisure industry, on the other hand, tends to be non-unionised and more fragmented, with people often working in it part-time or for short periods. Consequently, it may not have the longevity or platform of information that would produce claims."
Mr Price agrees that the new legislation places a significantly higher burden on employers. "We have not yet seen this filtering through into claims but feel it is a challenging regime to comply with because noise exposures are generally geared to an average eight-hour working day."
To illustrate the significance of this fact, he explains that if the acceptable limit is 85 over an eight-hour working day, it would only take four hours of exposure to 88 to give the equivalent of this. Furthermore, if the exposure level is 91, you would only need two hours of exposure to hit the limit; and if the exposure is as high as 97, that equates to only 30 minutes. "So you can see that, once you start exceeding 85, you do not need that many hours to get into areas where people can be suffering injury. Consequently I have some sympathy with employers because this is a challenging regime to enforce, to get levels down to those they must comply with. However, claimants still need to establish that they have suffered an injury; they still need to establish medical causation."
When it comes to the financial burden brought by industrial deafness claims for insurers, everyone agrees there is currently one specific inflationary factor - that of special damages as opposed to general damages claims for pain and suffering. Basically these special damages boil down to additional compensation being sought to cover the purchase of digital hearing aids, plus their maintenance and renewal.
"Deafness claims have traditionally been regarded as the disease equivalent of 'slip and trip' claims in terms of damages, with awards typically limited to a few thousand pounds," explains Mr Macalister. "But the availability of expensive digital hearing aids in the private sector has greatly increased their potential and claimants' advisors have seized the opportunity to claim substantial amounts for hearing aids, even though they are now widely available on the NHS."
These points were considered in March by the Southampton County Court in Coffin and Tarrant v Ford Motor Company.
Mr Price says that the breach of duty was accepted and general damages for pain and suffering came to £4500 for one claimant and £5000 for the other. However, the schedule for special damages dwarfed these compensation amounts - being in excess of £10,000 even though neither claimant had significant hearing loss. "The claimant solicitor said their need for hearing aids had been accelerated by 10 years because of noise-induced hearing loss," explains Mr Price. "And they were asking for bespoke digital aids costing £1995 each that would need to be renewed after five years. That is an illustration of the kind of figures that are now being put forward and schedules include batteries and maintenance on an annual basis."
However, Mr Price says the judge was "not impressed with the claimant's expert who he said took an overly complicated mathematical approach on the cost of hearing aids. He also took the view that there are certain duties upon claimants and the standard that should apply is of someone having to go out and buy their own aids from their own money; the fact that people would seek to achieve the best price. That person would avail themselves of the opportunity to take advantage of the deals often seen and he made reference to a current Specsavers offering of a two-for-one deal which cost £795 for two hearing aids."
"This case is helpful for defendants, so they should use this authority to try and peg back special damages; it is a great common sense decision about the costs involved. The compensator should require damages to be assessed as if the claimant was out there trying to get the best deal for themselves."
Although this county court judgment does not carry the weight of a Court of Appeal decision, Mr Price underlines the very detailed analysis it provides on the hearing aid issue. "It is important and defendants should certainly want to use it as guidance. It's the most detailed analysis I've seen so you could argue that other county courts should take heed of it - unless the claimant can produce a higher court decision that suggests this approach should not be followed."
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