Jackson on MROs
A review of the cost of civil litigation was less than
complimentary about medical reporting organisations
In his Review of Civil Litigation Costs, Lord Justice Jackson was less than complimentary about the medical reporting organisations (MROs). It has long been the view of many that the MROs are a parasite living on civil litigation that adds nothing but delay and expense. So, it was welcome news to hear that Jackson was coming to the same view.
MROs cause delay and unnecessary expense
Summarising the view taken by one circuit judge, Jackson quotes him as saying that MROs ‘add to the cost of personal injury litigation. In my experience they do not add value to the process and their use leads to delay and unnecessary expense’. There was also a perception that, because everything had to be channelled through the agency, this created yet one more link in the chain that led to inevitable delays. The same circuit judge is also scathing about the lack of transparency in the charges made by MROs and the fact that no breakdown is provided between the fee received by the expert and that charged by the agency.
Jackson referred to MROs as ‘yet another group of middlemen who have recently arrived upon the scene and draw remuneration from the personal injuries process. They are enabled to do so because the rules permit their fees to be recoverable as a disbursement’. It is implicit that not only are costs in civil litigation inflated by the existence of such extraneous layers, but there are also other disadvantages. As David Fisher of AXA Insurance said at a Cardiff seminar in June 2009:
‘... coinciding with the withdrawal of legal aid and the introduction of CFAs there has been an increase in the number of anonymous stakeholders involved in the injury claims process such as claims management companies, medical reporting agencies and the like. Many of these organisations layer costs into the process and cause inflationary pressures as the lawyer looks to recoup the referral fee paid. Is it more than a coincidence that the increase in fraud, particularly motor fraud, corresponds with the introduction of CFAs, additional liabilities and the layering of the process by these anonymous stakeholders?‘
Of course, the report acknowledges the argument of the MROs: that they provide ‘a one-stop shop’ for obtaining medical evidence all around the UK (although the expert witness directories also serve this purpose). Jackson also acknowledged their claim to have aided procedures by ‘creating expert panels; arranging medical appointments; undertaking all the work associated with obtaining medical evidence; obtaining medical records; negotiating fixed rates with GPs and consultants for medical reports; and developing report writing software’. However, he also refers to the view of one GP that MROs introduce a third party into the relationship so that authority (for example, authority to obtain additional investigations such as X-ray reports) has to be passed through the agency which then communicates with the solicitor. This, said the GP, frequently generates such delay that the patient has to return on a second occasion rather than undertake the test on the same day.
Delays of this sort can increase the time it takes for courts to deal with claims, and inefficient use of court time is certainly one area that Jackson is keen to eradicate. However, the greatest inflationary pressure exerted by the MROs is almost certainly the effect on the overall cost of the medical report.
In the discussion that followed the Cardiff seminar referred to above, Fisher said that the fee typically paid to an MRO for a medical report was £195. Out of that sum, perhaps £50 is paid to the doctor and a referral fee of £50 might be paid to the solicitor. However, the remainder, around £100, is retained by the MRO. Other speakers challenged this, and there were some who believed that their arrangements with the MROs were ‘cost effective’. But, revealingly, when specifically asked whether doctors received less than half the fee charged by the MRO for a medical report, the Chairman of the Association of Medical Reporting Organisations (AMRO) agreed that this was true for GPs (who provide the majority of reports commissioned through MROs).
AMRO points out that some medical experts have become dependent on instructions from MROs, because those experts cannot provide, for an acceptable fee, the services that MROs provide collectively. It also makes the point that many of the overheads that would normally be reflected in a GP’s fees have effectively been outsourced to the MROs. The Review acknowledges this view, but also notes that those firms that are members of AMRO appear to be paying the least to doctors.
A close shave for the MROs
Initially, it was Jackson’s stated intention to recommend that the rules should be changed so that fees paid to medical practitioners should be recoverable as a disbursement, but fees paid to MROs should not. However, following further consideration with his assessors, he was persuaded that ‘the intervention of MROs has had the overall effect of controlling the costs of obtaining medical evidence in personal injury cases. Therefore I do not, at the moment, recommend any change in the rules…’ . Given the fairly jaundiced eye with which he views the MROs elsewhere in the Review, it would be interesting to know precisely what role the assessors believe the MROs play in the overall ‘controlling of costs’. So we asked his office, but were told all the evidence is in the published report!
The Review does, however, strike one blow that will undoubtedly erode the position of MROs. Jackson said that any restriction on the free communication between the expert and the lawyer was ‘contrary to the public interest’ and was liable to cause delay and increased costs. He therefore recommended that direct communication should always be permitted between a solicitor and any medical expert whom the MRO instructs on behalf of that solicitor.