Instead of strengthening a law which is there to protect injured workers the Government proposes to abolish a 1998 regulation requiring employers to hold onto their personal injury insurance details for 40 years.  The intention is to replace it with mere guidance.  This will only reduce the chance of finding an insurer to pay compensation.The government says that it’s pointless having the regulation as it’s impossible to police.  That may be true, but what is really needed is a change of approach.

Some injuries take many years to develop.  For example, mesothelioma, the fatal asbestos cancer, can take 40 years. 

As a lawyer advising people who have been injured by dangerous work practices, I regularly have to find insurers for companies that have gone out of business some years ago.

There is no source I can go to where I can be sure of an answer and drawing a blank is frustratingly common. So it’s a case of turning over what stones I can.

There are a limited number of places that one can look to try and find the right insurer (assuming one existed), including asking the Association of British Insurers which voluntarily circulates its members to see any of them has a record of cover. This may not easy for them to do because there have been mergers and old paper records may be patchy.   Apparently only in 28% of enquiries to the ABI did insurers come forward to confirm they had cover. 

Obviously where a company has gone bust or been dissolved so there are no assets, and subsequently an insurer cannot be found the claimant loses out on what might otherwise have been a strong claim for personal injury.

The flip side of this is that an anonymous insurer may well have saved the cost of paying compensation and thus received a windfall although not deliberately so.  The ABI response rate suggests this may be happening a good deal.

Perhaps it is too late to remedy past problems with record keeping.  What of the future?

Having a complete database of insurance for all vehicles on our roads works very well in road injury cases.  It means that information can be accessed immediately.  Why would that not work for employers liability records? Insurers could enter the details onto a central database where it could be retained for 40 years.  It might take some effort to set up but once going it ought to be fairly easy to maintain.

Victoria Wass

(correspondence wass@cardiff.ac.uk)

April 7th 2008

Background

The Ogden Tables (Sixth Edition) (2007) introduced a new methodology for the calculation of loss of future earnings when the claimant has post-injury earning capacity. The key departure from the conventional method used prior to The Sixth Edition is the separate calculation of post-injury earnings in which there is explicit account for the impact of disability on employment risks. These ‘disability-adjusted’ employment risks are based upon research undertaken by Victoria Wass at Cardiff University and her colleagues Zoltan Butt Richard Verrall and Steven Haberman at City University. This research is described in detail in “Calculating compensation for loss of future earnings: estimating and using work life expectancy” forthcoming 2008 Journal of the Royal Statistical Society A 171: 4 pp.1-37.

The reduction factors (RFs) are for employment risks and are averages for broadly defined groups of working age individuals. The intention is that the courts use their discretion in order to minimise the imprecision which arises from the use of averages when applied to the circumstances of a particular case. The average indicates the typical outcome for individuals within each defined group. An average is a single point within a distribution. In this sense it is a starting point. The average is a figure which is representative of the distribution because, in the most commonly observed distributions, a small interval around the average contains a large proportion of the population values. It is in this sense that the average is the norm.

It was the authors’ intention in producing the RFs to achieve greater accuracy in fulfilling the objective of damages for those with future earning capacity than is afforded under the Smith v Manchester approach. It is as yet early days in the use of the new approach but first indications point to a degree of inconsistency in the courts’ application of the suggested new approach with the result that there is greater uncertainty of outcome and greater potential for dispute between the parties.  

Three adjudicated cases

This article considers three recent quantum decisions in relation to future loss of earnings for a claimant with post injury earning capacity where the courts have sought to use the approach advocated in The Sixth Edition.

Conner v Bradman EWHC 2789 [2007]

Hunter v MOD NIQB 43 [2007]

Leesmith v Evans EWHC 134 (QB) [2008]

 In each case the claimant worked in manual employment and in each case suffered injury to a leg with subsequent impairment to mobility. The determination of quantum in each case involved a departure from a strict application of The Sixth Edition. This article proceeds by outlining a strict application of The Sixth Edition  in each case and then considers the courts’ discretionary adjustment in the light of the facts of each case. 

The Reduction Factor Line

The Reduction Factor Line is a useful tool when considering the direction and magnitude of any adjustment to the average reduction factors reported in The Sixth Edition. The Reduction Factor Line extends between 0 and 1 and displays the reduction factors reported in The Sixth Edition by age and by sex for a variety of different characteristics, including employment and non-employment; disabled and non-disabled; and low, mid and high level qualifications. 1 represents the reduction factor on the number of years to retirement without any account for employment risks. If the claimant were to have no physical/mental capacity for work, the reduction factor would be 0. All the reduction factors between the extremes of 0 and 1 assume that the claimant has some future earning capacity.

Conner v Bradman

The Reduction Factor Line is depicted in Figure 1 for the claimant in the case of Conner v Bradman.  Mr Conner was 51 years old at the time of trial. He was employed as a skilled manual worker. He had suffered injury to his knee when his motor bike was hit by a car. It was agreed that he would suffer permanent weakness and instability at the knee joint and that this would preclude his continued employment as an auto-fitter at Saab. Mr Conner had a second source of income from work as a taxi driver and, from a medical point of view, he was considered able to continue in this employment post injury.

Prior to injury the claimant was employed, not disabled and with a mid-level (including vocational) qualification. The RF which accounts for his life time employment risks is 0.82.  For the post-injury position (where the claimant is disabled), the RF is 0.49 where the claimant is employed and with a mid-level (including vocational) qualification. Non-employment at trial reduces the reduction factor to 0.18.  

0______ 0.18______ 0.40___ 0.49__ 0.53____ 0.66____ 0.82_____1

not employed                      employed                              employed
and disabled                      and disabled                  and not disabled

Figure 1 The Reduction Factor Line in Conner v adman

The impact of level of qualification for this claimant in the disabled state is illustrated by the comparison between 0.40, which is the reduction factor where the claimant is employed and with no qualification and 0.53 which is the reduction factor where the claimant is employed and with a high-level qualification.

The court adjusted the RF of 0.49 upwards to 0.66 (the mid-point between the pre-injury (non-disabled) position (0.82) and the post-injury (disabled) position (0.49). The basis for the adjustment is as follows:

it is very likely that the claimant will work as a taxi driver for more than half of his remaining working life. Indeed I consider that he has made the move to becoming a taxi driver precisely because he considers that he will be able to work for much of the next decade or more in that capacity. There is no medical reason why he will not be able to do so. (para 73)

Hunter v MOD

The Reduction Factor Line is depicted in Figure 2 for the claimant in the case of Hunter v MOD. Mr Hunter was aged 36 years at the time of trial (30 years at injury). He was employed as a corporal in the British Army. He suffered injury to his knee when falling on army training manoeuvres. It was agreed that he would suffer permanent weakness and instability at the knee joint and that this would preclude his continued employment in all but light manual work such as driving (without lifting). Mr Hunter also experienced psychological sequelae. He had not worked or looked for work since his injury.

Pre-injury the claimant was employed, not disabled and without qualification. The RF which accounts for his life time employment risks is 0.89 (and not 0.80 as determined by the court).  For the post-injury position (where the claimant is disabled), the reduction factor is 0.20 where the claimant is non employed and with no qualifications. Employment at trial increases the reduction factor to 0.38.  

0______0.20___ 0.28___0.38 0.39______ 0.60______0.80___ 0.89___ 1
not employed                  employed                                    employed  
and disabled                   and disabled                         and not disabled

Figure 2 The Reduction Factor Line in Hunter v MOD

The impact of level of qualification for this claimant in the disabled non-employed state is an increase in the reduction factor to 0.28 for a mid-level qualification and to 0.38 for a degree or equivalent.

The judge considered that Mr Hunter was medically capable of sedentary employment and that he ought to have looked for work following his injury. Moreover had he searched for work, he would very likely have found work by the date of trial. The court therefore adjusted the RF of 0.20 upwards to that for a disabled employed man of 36 years of age, 0.39. The judge then determined that Mr Hunter’s disability was relatively modest compared to those of his peer group (employed disabled), “I do not consider that the plaintiff’s degree of disability is sufficient to warrant such a discount to the multiplier.” (para 16). He made a further upward adjustment to the RF to 0.60 (half-way between the court determined pre-injury RF at 0.80 and the Ogden Six RF post-injury RF at 0.39).

Leesmith v Evans

The Reduction Factor Line is depicted in Figure 3 for the claimant in the case of Leesmith v Evans. Mr Leesmith was aged 28 at the time of trial (24 at injury).

He was employed as a lighting technician. He suffered injury to his knee which required an above-knee amputation and he had restricted grip in his dominant hand due to a hand injury. Mr Leesmith also experienced psychological sequelae. He returned to work as a lighting technician in a reduced capacity in terms of his hours, his skills and his capabilities. These aspects of his reduced earning capacity were accounted for in the post-injury multiplicand.

Prior to injury the claimant was employed, not disabled and with a mid-level (including vocational) qualification. The RF which accounts for his life time risks is 0.92.  For the post-injury position (where the claimant is disabled), the reduction factor is 0.54 where the claimant is employed. Non employment at trial reduces the reduction factor to 0.24.  

0________0.24________ 0.42____ 0.54___ 0.60__________0.92___ 1
not employed                    employed                                employed
and disabled                     and disabled                         and not disabled
 

Figure 3 The Reduction Factor Line in Leesmith  v Evans

The court made a small adjustment of 0.06 to the strict Ogden Six RF of 0.54 on the basis of partial agreement with the defendant’s submissions that (i) the degree of disability must be taken into account and (ii) some degree of disability was accounted for in the post-injury multiplicand of £10,000.

The circumstances of these three cases are similar. Injured manual workers have continuing but reduced employment capacity. All three judgments involve an upward adjustment to the RF. In all three cases, upward adjustment is made without detailed explanation or warranty but implies that the disadvantage suffered by the claimant is expected to be less than for the average for the claimant’s peer group. Despite the similarity in circumstances of each case, and the common adoption of the Odgen Six approach, the magnitude of adjustment showed a very wide variation from an 11% increase over the Ogden RF for Mr Leesmith through  a 35% increase for Mr Conner to a 200% increase for Mr Hunter.

Disability

An upward adjustment to the post-injury RF implies that the employment disadvantage is expected to be less severe for a particular claimant than for the average for the group to which the claimant belongs. In this context, disability is the source of employment disadvantage.  It is helpful to think of disability as reflecting a mismatch between an individual’s reduced capabilities, which result from functional impairment, in relation to the capabilities required to participate in normal daily activities, including the activities of work. As such the extent of disability (and thus disadvantage) will depend principally upon the severity of impairment and the transferability of pre-injury skills, aptitudes and abilities to potential post-injury employment. 

When is adjustment justified?

In each of the above cases the upward adjustment to the RF implies that the level of disability, defined as a mismatch of skills and capabilities, faced by claimants is modest relative to the group average. Since the extent of disability depends upon severity of impairment and the transferability of pre-injury skills, it is to these factors that we must look when considering the relative position of each claimant.  Unfortunately, there is no measure of severity of impairment in the data that are used to estimate the RFs and therefore we cannot estimate the impact of severity of impairment on employment risks, or disaggregate the reduction factors according to the severity of impairment. Neither is there a measure of transferability of skills. However, it should be noted that the RFs are disaggregated by those factors which have the greatest impact on employment prospects, namely age, sex, starting employment status, disability and educational attainment. Since each claimant is matched to his/her appropriate peer group, then, to a large degree, the impact of both severity and transferability on employment risks are accounted for in the RF. To the extent that the employed disabled are less severely impaired and/or have greater transferability of skills than the general population of disabled, the impact of both is already included in the RF. Where the claimant is not employed because, amongst other things, s/he is more severely disabled and/or her/his skills are not transferable to post-injury employment opportunities, the RF is substantially lower.

All three claimants had earned their living as manual workers. Their pre-injury skills related to this manual work. They all now have impaired mobility which restricts their future employment to light and unskilled manual work. Herein lies their greater vulnerability in the labour market. Their employment is less skilled and restricted. It is likely to be more sensitive to any increase in competitive pressure in the labour market than their pre-injury employment. In this there is nothing to suggest an upward adjustment to the RF.

How much to adjust?

Where, on the facts of the case, adjustment is considered to be appropriate, some indication as to the appropriate magnitude of adjustment can be gained from the following comparison. The RFs for each claimant in their actual employment state are indicated on the Reduction Factor Lines. The employed disabled 51 year old man with different levels of educational achievement range from 0.40 (zero or low-level qualifications) to 0.53 (a degree or equivalent). If the claimant had had a higher level qualification, and in particular one which was transferable, his opportunities for employment would have extended beyond those of unskilled manual worker. For Mr Conner, of course, the effects of injury precludes the use of his qualifications and he enters the labour market as unqualified.

The difference in RFs by education level is in line with the findings of studies which measure the negative impact of increasing severity of impairment on employment at one third for the less severely disabled, one half for those with moderate disability and two-thirds for the most severely disabled (Tania Burchardt, Ending Economic Exclusion: Disabled People, Income and Work, Joseph Rowntree Foundation, 2000). These are averages for aggregate groups which are not differentiated by age, starting employment status or educational attainment .

The magnitude of adjustment in Conner, from a 40 per cent reduction to a 20 per cent reduction, when compared with the magnitude of the difference in reduction factors from changing the level of education is seen to be overly harsh. It is even harsher in Hunter from a 77% reduction in the pre-injury multiplier to 33% reduction. In Leesmith the court’s discretion reduced a 41 % reduction in the pre-injury multiplier to a 35% reduction. While this is probably within an acceptable range, it is not clear why any adjustment is appropriate. The severity of disability associated with an above-knee amputation and reduced hand grip for a manual worker is likely to be above the average for the employed disabled population.       

Concluding Remarks

The size of movement away from the norm should bear some relationship to the degree to which the claimant’s characteristics and/or circumstances are likely to be different from those of his/her peer group, as defined by sex, age, employment status, disability and educational achievement. The RF for a claimant who is employed at the time of injury, already includes an allowance for any effects of severity of impairment and transferability of skills which are associated with gaining employment. Although the average will be imprecise at the level of the individual claimant, the level of imprecision in most cases should be small. It is in the nature of a distribution’s average point that most of the population lie close to it. An approach which selects and alternative and unrelated distribution (employed non-disabled) and takes the mid-point between the averages of each distribution is unsound in principle and unsafe in practice.

Personal injury lawyers acting for claimants continue to call on the government to introduce new legislation to allow sufferers of asbestos-related pleural plaques to claim compensation and so reverse the decision by the House of Lords last October 2007 which put an end to the longstanding right to compensation. 

Pleural plaque, although said to be benign, causes scarring to the tissue around the lungs and, inevitably, worry and distress which can really blight the lives of sufferers. 

So far the response of the government appears to have been sympathetic to sufferers, but it has not been willing to go so far as to reverse the decision and restore the right to compensation.

In contrast the Scottish Executive have acted quickly to introduce proposed legislation which will restore the right to claim in Scotland.  It seems particularly unfair that if one is diagnosed with pleural plaque in Bristol one will  receive no compensation.  If one is resident in Glasgow it is likely one will be compensated for the same condition. (more…)

It is very good news that on 17th January 2008 the Court of Appeal handed down a landmark judgment supporting claimants in a series of very serious personal injury claims where there are substantial future care costs as a result of serious and often catastrophic injury. 

These cases frequently involve the need to pay wages to carers for lifelong care and support for injured children.  Many of these claims are brought against the NHS.

Earnings, including carers earnings,  have always gone up faster than the Retail Prices Index, and presumably that will continue to be the case. So increasing the anual payment to be made by insurance companies and the NHS by referance to the RPI will produce an ever diminishing sum in real terms to pay for the cost of care. 

The Court accepted that over a long period this would result in the claimant not having enough to meet their needs and the shortfall would be substantial.  Conversely the insurer and the NHS would have a windfall at the injured person’s expense.

In spite of this the Defendants argued that the RPI was the right index to use.  The Court rejected this firmly and supported the principle of full compensation.  It selected ASHE 6115 as the right index to achieve that objective.  ASHE 6115 refers to a statistical estimate of the earnings of carers in the UK and is collected and published by the Office for National Statistics anually.

The Court of Appeal’s view appears to have been that barring any new and substantial issues in relation to the appropriateness of ASHE 6115 the argument should be considered closed in the Claimants favour.

The Court said ” We hope that as a result of these proceedings the NHS, and other Defendants in proceedings that involve catastrophic injury, will now accept that the appropriateness of indexation on the basis of ASHE 6115 has been established after an exhaustive review of all possible objections to its use, both in itself and as applied to the recovery of costs of care and case management.  It will not be appropriate to re open that issue in any future proceedings unless the defendant can produce evidence and argument significantly different from, and more persuasive than, that which has been deployed in these cases.  Judges should not hesitate to strike out any defences that do not meet that requirement”

A recent House of Lords decision has denied compensation to many thousands of workers negligently exposed to asbestos by their former employers and now diagnosed with the condition known a pleural plaque.

Even those suffering a real psychiatric disorder ( as opposed to just worry ) as a result of the  diagnosis will not be entitled to compensation.  This decision will be likely to save the insurance industry millions of pounds.

Some regret and sympathy was expressed in the House of Lords that the claimants do not now have any remedy.   Some of the Law Lords wondered whether a claim for breach of contract, which had not been put to them by the claimants’ legal team, could be a basis for a successful claim.   The difficulty with that is that the level of compensation may only be nominal.

Apparently there is support among some Scottish MPs for a change in the law to reverse the decision by legislation, and MPs in Westminster are being lobbied for the same purpose.

In reaching this decision the House of Lords have reversed a series of cases going back to the 1980s where substantial sums were awarded to those diagnosed with asbestos related pleural plaque.

The decision is based largely on the proposition that although pleural plaque amounts to an injury, it is an injury without symptoms or physical consequences and therefore not worthy of compensation.

As pleural plaque only very rarely cause any symptoms and as the plaques are said not lead directly to any of the more serious asbestos-related illnesses it was not felt by the Law Lords that there was any real damage.

The condition is caused when asbestos fibres inhaled perhaps many years ago slowly work their way through the lungs to the outside in the pleural cavity.  So there is permanent penetration of the lung tissue by the fibres.  Once there they form plaques.  They can often cover large areas of the lung.  After a few years they often calcify.  Inevitably anxiety about the possibility of a fatal condition developing at a later stage often accompanies a diagnosis.  Sometimes this anxiety can be disabling.

It  must still be strongly  arguable that the process of developing the plaques is an unpleasant and unwelcome insult to the body justifying an award of compensation, and one hopes that the decision can be reversed by Parliament.

The Health and Safety Executive is heavily criticised for its approach to tackling workplace cancer in a report to just published by experts at Stirling University.

The figure for work related cancer deaths could be as high as 24,000, not the figure of 6,000 favoured by the Health and Safety Executive. It would appear that the epidemic is not getting the attention and money needed to tackle it.

Serious concern is expressed about the number of cancers being suffered by workers in the micro electronics industry, where it is said that there are significantly higher levels of breast and other cancers, and in metalworking and woodworking processes amongst others.

It’s alarming that the history of the asbestos cancer disaster could repeat itself. Asbestos was identified potentially dangerous at the beginning of the last century, but it wasn’t until recently that the law recognized that no exposure to the lethal substance is safe.

The health and safety executive is under resourced: you can expect a visit by an inspector to your workplace on average once every 13 years. It must be impossible to police effectively the use of potentially lethal substances at use in the workplace, particularly where smaller employers are concerned.

Workplace cancer inevitably affects manual workers to a greater extent and women are now as much at risk as men.