The House of Commons had its third and final reading of the mesothelioma bill on the 7th January 2014. The government successfully defeated a number of potential amendments, including one to raise £4 million pounds from the insurance industry to fund further research into all asbestos related illnesses.
The Mesothelioma Bill is the culmination of many years of lobbying in support of the introduction of a fund to compensate mesothelioma victims where the defendant company is no longer in existence, and where no insurers can be found for the company. The fund, which will be a fund of last resort to compensate mesothelioma victims where the defendant and/or its insurers cannot be found, represents a huge step forward for mesothelioma victims and their claims.
However, the scheme has a number of drawbacks which have been widely criticised by those who support the cause of mesothelioma victims. The scheme will only pay 75% of the compensation that claimants would be entitled to had the claim been fought through the courts. Claimants’ representatives have argued that it is simply unfair that there should be any deduction on damages. However, insurers have been successful in their argument that they could not afford to pay the claims at 100% and the insurer’s argument has been accepted by the government representing a pragmatic compromise deal.
Another significant problem with the new scheme is that it will only apply to claimants diagnosed with mesothelioma after the 25th July 2012 so anyone diagnosed with mesothelioma on the 24th July 2012 or before this date, will not be able to claim under the scheme. There has been severe criticism of this arbitrary date.
The Association of Personal Injury Lawyers has described the plans as watered down justice.
The scheme is to be funded by a levy placed on insurers, a levy which is to be 3% of insurers’ gross written premiums. The government have promised the insurance industry that the levy will be reduced after 4 years.
The new scheme is to be operational from July 2014.
At the same time as implementing this new fund, the government have decided to lift the exemption that currently applies to mesothelioma victims under the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO). The effect of this is that from July 2014 the recovery of success fees and ATE premiums from defendants in mesothelioma claims will no longer apply. This change will mean that mesothelioma victims will have to be responsible for payment of their lawyers’ success fee, up to a maximum cap of 25% of damages for past losses. The award for general damages (damages for pain, suffering and loss of amenity) has been increased by 10% to help offset these fees which claimant’s will now face paying.
From July 2014 claimants will also be responsible for paying their own After the Event Insurance premium. This is a policy taken out to recover the cost of disbursements incurred in the case, such as medical and expert fees which can run into many thousands of pounds. The After the Event Insurance policy covers payment of these fees in the event a claim is not successful and therefore offers the claimant protection. At the present time this premium is recoverable from the defendant, but from July 2014 the claimant will have to pay this premium themselves, a further deduction from damages.
The government has rejected the insurance industry’s own compensation plan for mesothelioma claims. The insurance industry proposed a Mesothelioma Pre-Action Protocol (MPAP), but this plan has been scrapped by the government after reviewing the response to its consultation. Many of the responses were highly critical of the proposals put forward by insurers. The MPAP was to be built by the insurance industry and was supposed to help victims quickly settle uncontested claims with the insurers. However, the proposed scheme would have delayed commencement of claims in the specialist mesothelioma court and this is often the only way to persuade defendants and their insurers to admit liability. Consequently, the proposals stood to delay claims rather than speed them up. Thankfully the government have listened to the consultation responses and scrapped the ABI proposal.
In summary the package of changes which now apply to mesothelioma claims, to be implemented in July 2014, represent a mixed bag of proposals for mesothelioma victims. Claims under the new scheme will only be paid at 75% of the value they would have if the claim proceeded to court. Only mesothelioma sufferers diagnosed after 25th July 2012 will be able to claim under the scheme. At the same time success fees and After the Event Insurance premiums will no longer be recoverable from defendants from July 2014 and will be paid from victims’ damages, albeit victims’ damages in respect of pain, suffering and loss of amenity will be increased by 10% to help offset these charges. Finally, the government has listened to sense and scrapped the ABIs proposed Mesothelioma Pre-Action Protocol.