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| ISSN 1470-8108 | Issue 92 | Autumn 2013 |
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Contents:
1. The Mesothelioma Bill – A Gift to Insurers 1. The Mesothelioma Bill – A Gift to Insurers By Tony Whitston, Chair of the Asbestos Victims' Support Groups Forum UK Asbestos victims and their representatives have welcomed the Mesothelioma Bill. After all, it is the first attempt to remedy a long-standing injustice. But, on close examination, it is a gift to insurers who could not indefinitely hide behind their own failures and evade liability for insurance they wrote for so many years. The day of reckoning has come, but at great cost to asbestos victims and with a great discount to insurers. It is in examining the detail of the payment scheme that the true cost to asbestos victims is found. This article sets out the main elements of the scheme and then discusses the Government's rationale for its generosity to insurers. Background For decades, insurers wantonly destroyed or simply lost records of employers' liability insurance – insurance which victims of very long latent asbestos diseases, such as mesothelioma, would later come to rely on long after the companies who exposed them to asbestos had ceased trading. Unmoved by the suffering and incalculable loss of life caused by asbestos, insurers persistently refused to accept responsibility for their failure to retain records and turned their backs on dying asbestos victims, who searched in vain for evidence of insurance which might provide some security for the families they would leave behind. At last, in February 2010, the Labour Government consulted on measures to remedy this gross injustice with a recommendation to set up an Employers' Liability Insurance Bureau (ELIB), similar to the Motor Insurance Bureau (MIB) which pays compensation in the event negligent drivers are uninsured or insurance cannot be traced. The consultation closed in May 2010 and responsibility for responding to the consultation fell to the Coalition Government Minister, Lord Freud. Two years later, on the 25 July 2012, Lord Freud announced his response. The Mesothelioma Bill and the Diffuse Mesothelioma Payment Scheme Instead of creating an ELIB, the Government has drafted the Mesothelioma Bill to set up a Diffuse Mesothelioma Payment Scheme (Payment Scheme), funded from a levy on active insurers, which will pay discounted average compensation based on age to mesothelioma sufferers who were diagnosed on or after 25 July 2012. The Bill commenced in the House of Lords where the discounted payment of 70% of average compensation was increased to 75%. The Bill has now commenced its passage through the House of Commons. Royal assent is expected to be given in April 2014 and payments are set to commence in summer 2014. It is estimated that approximately 3,500 payments will be made by 2024 at a cost of £322 million. Although average compensation in 2012 was £154,000, due to the increasing age of claimants it is expected that average litigated settlements over the first ten years of the scheme will be £124,286. At 75% of this figure, the average scheme payment would be £93,214. However, benefits and lump sum payments would be deducted in full, at an average deduction of £20,480, reducing the average payment to £72,734. The levy will be collected by the Department of Work and Pensions (DWP) and treated as a hypothecated tax, i.e. public money. Dependants may claim under the scheme, but unlike claims in law, no payment will be made to the deceased's estate if there are no dependants. However, the scheme applies common law rules for recovery of benefits. Peers challenged the Government's very selective application of common law rules, but to no avail. Fifty per cent of asbestos victims are excluded from the scheme, which is limited to mesothelioma sufferers only, even though it would only increase the cost by 20% to include all asbestos victims. Despite the fact that it took two years to respond to the consultation, the Government has refused to accept the modest request to set the eligibility date at the commencement of the consultation, 10 February 2010. The scheme excludes claims for negligent environmental exposures and contaminated work clothes exposures, and claims from the self-employed. Turner & Newall (T&N) claimants, who are not protected by T&N insurance and are paid just 27% of tariff payments from T&N scheme funds, are also excluded. The payment scheme is the result of two years' negotiation with insurers held behind closed doors in which insurers drove a hard a bargain, reducing scheme benefits well below the limit of acceptability. With threats of court action and utter intransigence, insurers have bullied and faced down the Government, thereby gaining an overwhelming advantage. The Government expects to receive £71 million in recovered benefits and lump sum payments in the period 2014 to 2024, of which £17 million is to be given as a gift to insurers to help them out. This is a gift; it is not to be paid back. The Government is also lending insurers £30 million to help to “smooth” the first four years when there will be a spike in claims due to claims coming forward from 25 July 2012. This money will be paid back in years six and seven. The insurers have insisted that they will pass on levy costs to businesses if the levy exceeds 3% of the annual amount they receive from employers' liability premiums, i.e. Gross Working Premium (GWP). They argue that anything over a 70% payment will exceed 3% GWP. The Government has disputed the insurers' estimates and their figures show that over the initial 10 years of the scheme, 100% compensation could be paid without exceeding 3% GWP. Nevertheless, the Government has accepted the insurers' estimates and the arbitrary 3% threshold and have pledged not to levy insurers above 3% GWP. For the first four years of the scheme (2014-2018) insurers will have to meet the cost of claims, but the DWP will fund any cost in excess of 3% GWP. After the first four years, the DWP will have to estimate the annual cost of claims and set the levy accordingly. Any shortfall in the levy is the DWP's responsibility and any surplus will be paid into the Government Consolidated Fund. If the estimated levy payment is above 3% GWP the DWP will pay the excess, not the insurers. Discussion The Government justifies its concessions to insurers saying the insurers paying the levy are not necessarily the ones who took the premiums paying for untraceable historical policies so they have to be fair to them. But insurers should take collective responsibility for their collective failure. If this is “rough justice” it is nothing compared to the injustice suffered by asbestos victims. We should be clear about where responsibility lies. The Financial Services Authority (now the FCA) described the long-standing problem of untraced insurance as “… a situation where insurers/policyholders are inappropriately subsidised by claimants ….” According to the Mesothelioma Bill Impact Assessment an estimated 6,000 mesothelioma sufferers have lost approximately £800 million in compensation due to untraced insurance. That is the extent to which mesothelioma sufferers have subsidised insurers. If one includes other asbestos victims we find that asbestos victims have subsidised insurers to the tune of £1 billion. In the face of such financial loss, not to speak of the loss of life, does fairness lie in mesothelioma sufferers continuing to subsidise insurers by 25% and other asbestos victims subsidising them by 100%? Notwithstanding the Government's uncritical acceptance of the insurers' 3% GWP threshold, there is no certainty whatsoever that insurers will not pass on the cost to businesses at any level of GWP. The Government should not give way to threats of this sort, and certainly should not use taxpayers' money to subsidise insurers in the event of the levy exceeding the insurers' convenient 3% threshold. We have come to a pretty pass when dying asbestos victims are called on to absorb insurers' cost to protect business! In the face of an obdurate, litigious and self-serving insurance industry, Lord Freud has negotiated a scheme at too great a cost to mesothelioma sufferers. Asbestos victims are entitled to 100% justice. We are asking everyone who is concerned about justice for asbestos victims to write to their MPs asking them to improve the Bill for mesothelioma sufferers and to give a commitment to include victims of other asbestos diseases in the scheme in the future.
2. Compensation for Asbestos Related Pleural Thickening By Michael Osborne, Senior Solicitor, Moore Blatch Resolve LLP The number of cases of pleural thickening has increased dramatically over the last 20 years. Between 1991 and 2011 the number of successful applications for Industrial Injuries Disablement Benefit for pleural thickening rose from 150 to 440. More than double that number of cases (821) were diagnosed by hospital respiratory physicians in 2011. Medically, the condition is a thickening of the surfaces of the pleura, usually the visceral inner surface, although it can also involve the outer parietal pleura. It can be caused by lower doses of exposure to asbestos than asbestosis. Frequently, pleural thickening does not show up on an x-ray and a high resolution CT scan is required to identify it. Pleural thickening often causes breathlessness and can cause chest pain. Full lung function tests are often required to establish whether pleural thickening is causing breathlessness. If tests show a constrictive impairment, a Medical Expert may well state that it is. In most cases, the level of disability caused by pleural thickening does not increase over time but remains static. It is estimated that in about 10-25% of cases respiratory disability does, in fact, increase in the first 10 or so years after diagnosis. In these cases, the disease seems to progress intermittently, in fits and starts. After this 10-year period, progression of breathlessness is quite rare. The Claimant's Solicitors must review the medical records carefully. This is because pleural thickening is not always the result of asbestos exposure. It can be caused by rheumatoid arthritis, by bleeding (for example after trauma or surgery) or by a previous infection (such as empyema or tuberculosis). In 2007, the House of Lords held that symptomless pleural plaques were not actionable (Rothwell -v- Chemical and Insulation Company Limited). In the light of this decision it is likely that any claim for symptomless pleural thickening would fail. In a test case concerning claims for asbestosis, however, it was held that if this condition caused respiratory disability between 1 and 3% this was “significant” and, therefore, actionable (Beddoes -v- Vinters Defence Systems (2009)). Thus, if pleural thickening is causing this level of disability or more, there is a good chance that the condition is actionable. In cases where an individual has been exposed to asbestos by multiple tortfeasors (which, practically speaking, usually means several employers), the Court considers pleural thickening to be a divisible or dose-related condition. Each tortfeasor is liable to compensate the Claimant for the proportion of his/her overall exposure to asbestos which was unlawful and for which it was responsible (following the Court of Appeal decision in Holtby -v- Brigham and Cowan (Hull) (2000)). Damages awards for pleural thickening can be significant. The current guidelines of the Judicial Studies Board (JSB) (the body which gives training to judges) states that the general range of awards where disability is more than 10% and typically causing progressive symptoms of breathlessness is from £27,450 to £56,000. Where the level of respiratory disability is between 3 and 10%, the JSB range of awards is £10,750 to £27,450. The younger the client, the stronger the argument for him/her claiming provisional damages, rather than full and final damages. This will give the Claimant the security of knowing that he/she can make a further claim if he/she develops mesothelioma, asbestos related lung cancer or asbestosis. In the last few months, several pleural thickening cases have been settled on the basis of the above guidelines, including for:
Mr Hobson becomes breathless on exertion and can no longer enjoy his favourite pastime of walking. He said: “This is just something I have to live with, but I am keen to let others know about my experience, particularly anyone who may be suffering from similar symptoms to me, so that they have an opportunity to access the support and services they need.” The effects of pleural thickening can, therefore, be severe. Even if the condition is causing relatively minor symptoms, however, success in a provisional damages claim usually gives a claimant the security of knowing that he/she will recover damages if he/she develops mesothelioma. This is because liability will have been admitted by the defendant and investigations in the pleural thickening claim very often identify its insurance company. Consequently, even if the defendant itself is later dissolved, the insurers would have to pay damages in a mesothelioma claim. Lawyers should not, therefore, overlook pleural thickening cases as a category of claim. By Laurie Kazan-Allen On July 3, 2013, mesothelioma sufferer Mavis Nye highlighted the disjointed health services that continue to fail UK mesothelioma patients in evidence she presented to the Parliamentary Asbestos Sub-Group. She asked MPs “Why does a doctor in the South know more about mesothelioma than a doctor up North? Why does one hospital know about drugs that can be used and others do not know?” Her experience was confirmed by that of the late Debbie Brewer, whose daughter told the politicians of a breathtaking lack of compassion exhibited by the oncologist who confirmed her Mother's fatal diagnosis. “I have always looked back on that day with anger,” Ms. Brewer said. “It was one of the most difficult days of my life but the system seemed to place no value on us. We felt shuffled in and out quickly with little regard to the devastating news we'd just received.”1 Despite efforts to improve the medical treatment of people suffering from malignant mesothelioma, such as the Mesothelioma Charter for Patients (2006) and the NHS Mesothelioma Framework (2007), 2 in 2013 patients continue to report delays in treatment, lack of continuity in medical care, failure to provide adequate information on available alternatives, including clinical trials and methods of symptom control, and a scarcity of practice-based research capable of improving health care. An initiative being launched in December (2013) by the James Lind Alliance (JLA)3 to delineate the priorities of mesothelioma patients, carers and clinicians is therefore a timely and valuable opportunity to make much-needed changes. A steering group of mesothelioma patient and clinical groups will guide the work of the Mesothelioma Priority Setting Partnership (PSP) in developing a top ten list of questions for researchers to address which will, hopefully, inform both government policy and influence new research protocols. This project, which is being funded by the National Institute for Health Research (NIHR), has been endorsed by Professor Dame Sally C. Davies, Chief Medical Officer and Chief Scientific Adviser at the Department of Health, who said: “Mesothelioma research has been identified as an important area. I'm delighted that the NIHR can support the James Lind Alliance in forming a Priority Setting Partnership to bring together patients, carers and clinicians in this area. The Priority Setting Partnership process is a tried and tested way for them all to contribute equally to decisions about what the important questions are for Mesothelioma research to address.” Commenting on the Mesothelioma PSP, Macmillan Nurse Consultant Liz Darlison of Mesothelioma UK said: “It is a privilege for Mesothelioma UK to be working with patients, the JLA team and the NIHR on the mesothelioma priority setting partnership and we look forward to seeing this rigorous approach reach fruition. Research into the treatment and care of mesothelioma needs and deserves significant investment and hopefully that will follow once genuine research priorities have been identified.” In a recent discussion with Mavis Nye she made clear her plans to take an active role in the consultation process. Highlighting the need to bring together patients, carers and doctors in order to establish the needs of patients, she said: “The survey is a great way to understand the issues that worry mesothelioma patients. As a group, we feel that our voice is unheard. The fact that this disease is classified as rare provides an excuse for the authorities to ignore us. But as we are seeing, the incidence of this deadly cancer continues to increase and as more DIY-ers are exposed in their homes and as children continue to be exposed in their classrooms, our fear is that there will be many more victims. We need more money for research now.” The Mesothelioma PSP has had two steering group meetings to date and the launch of the project will take place in December; the PSP survey is scheduled for launch in February 2014 after which it will be circulated widely.4 'Crime-fraud' Allegations Cloud Conference In September 2013, the participation of Scottish Professor Ken Donaldson in a Nottingham conference attracted criticism from asbestos victims' groups and campaigners.5 Two months previously, the involvement of Donaldson and others in litigation-driven research commissioned by U.S. asbestos defendant Georgia-Pacific (GP) had been examined by the New York Supreme Court. The background to this high-profile asbestos lawsuit was forensically examined in a stunning feature in Hazards Magazine entitled “Dust storm: 'Crime-fraud' allegations cloud conference.” Australian Asbestos Law Firm Buys UK Companies On October 24, 2013, Slater & Gordon, a listed Australian law firm which has pioneered asbestos litigation, confirmed the acquisition of John Pickering & Partners (JPP), a firm known for its expertise in handling claims for asbestos victims. Commenting on this development, Paul Glanville, JPP's managing partner said: “Our organisations have much in common, both having forged reputations in fighting for justice for asbestos victims. At a time when Government reforms and the insurance industry are putting greater pressure on asbestos disease victims, we feel that by combining our strengths, we will be able to ensure that we offer the best representation for our clients.” The sale of JPP was due for completion by the end of November (2013).6 Slater & Gordon had previously purchased other UK law firms including Russell Jones Walker, Taylor Vinters, Fenton and Goodmans. Welsh Assembly Passes Asbestos Law On November 20, 2013, the Welsh Assembly enacted a bill to allow the NHS to recover the costs of treating patients with asbestos-related diseases from businesses or insurers. It is believed that the new law will enable the Welsh NHS to recover £1 million a year.7
___________ 1 Kazan-Allen L. Annual Parliamentary Asbestos Seminar. British Asbestos Newsletter, Issue 91, Summer 2013. http://www.britishasbestosnewsletter.org/ban91.htm 2 Mesothelioma Framework, February 2007. 3 Since April 2013, the work of the James Lind Alliance has been coordinated by the Evaluation, Trials and Studies Coordinating Centre (NETSCC) of the National Institute for Health Research. 4 Queries about the PSP can be sent to jla@soton.ac.uk. The link to the PSP Mesothelioma website, which is due to go live next year, is: www.psp.nihr.ac.uk/mesothelioma 5 O'Neill R. Dust storm: 'Crime-fraud' allegations cloud conference. July-September 2013 issue. 6 Slater & Gordon confirms another UK acquisition. October 24, 2013. 7 Asbestos NHS treatment cost recovery bill is voted into law. November 20, 2013. ___________ Compiled by Laurie Kazan-Allen |