APPENDIX 7
Supplementary memorandum by Claimants'
Solicitors' Group
EVIDENCE GIVEN BY THE MINISTER, DTI OFFICIALS,
CAPITA AND ATOS PERSONNEL ON 1 MARCH 2005
Note: references below to the OE and page numbers
are to the uncorrected transcript of oral evidence given on Tuesday
1 March, and to the pages where the relevant evidence may be found.
Use is also made of question numbers (Q then the number) for ease
of reference.
In this addendum report to the Committee, we
have prepared a commentary upon the evidence given on 1 March,
where it appears to us that the evidence was factually incorrect.
Whilst we take issue with some of the opinions expressed, the
extent and nature of our disagreement with them is set out in
the written material we have submitted and in the evidence that
we have given.
SCHEME CAPACITY
The Minister gave evidence that all parties
including the unions and solicitors under-estimated the total
likely numbers of claimants who would present themselves through
the compensation schemes (OE, p.27, Q 119).
CG comment: Neither the unions nor claimants'
solicitors were involved initially in estimating likely claim
volumes and capacities in either scheme. It appeared to the Claimants'
Group after agreeing the COPD claims' handling agreement, that
there had been inadequate planning and provision for what was
likely in our view, to be very many more claims than the DTI envisaged.
By around 2000, it was clear that the medical contractor Healthcall
was struggling to cope with volumes. They disclosed that they
had been instructed to cater for around 70,000 COPD claims in
total. We accept that volumes have been difficult to predict but
the initial under-estimation was achieved without the involvement
of unions and solicitors.
MINIMUM PAYMENTS
The Minister gave evidence that he was not against
the principle of a minimum payment funded by solicitors, only
against such payment funded by the Department. His objection to
the RPI method was that this would not provide sufficient funds.
He indicated that his officials had advised of a shortfall of
£400,000 on the CG's original proposal to fund by half the
RPI for the year. He also objected that there was no guarantee
that the proposal would be "self funding" for all claimants
going forward (OE, pp.38-42, Q 141-145).
CG comment: In formulating our proposal, we
relied entirely upon information provided by the DTI concerning
the numbers of offers not accepted below the proposed minimum
payment threshold of £500.We calculated that the fund needed
to ensure that £500 could be offered to the 3,500 claimants
whom we were advised were then outstanding, would be less than
a sum yielded by one half of the RPI due to be added onto solicitors'
costs for 2004. The DTI were plainly opposed to this method of
funding a minimum payment scheme but that was not because there
would be insufficient funds yielded by the RPI; rather, they wished
to impose their own preferred method of funding the payment case
by case instead.
Just before the end of 2004, we were advised
that the numbers had grown to 7,500, and so the RPI fund we proposed
would not be enough. This is hardly surprising, since it can be
anticipated that numbers outstanding will continue to increase
unless and until the minimum payment is introduced, resulting
in settlement of claims. Once the first RPI fund is exhausted,
funding for claims subsequently falling below the minimum payment
level can be considered in light of the numbers that can be safely
predicted (in prospect), or the numbers known (in retrospect).
The DTI has exacerbated the problem by resisting
the minimum payment. The Department's position, which is that
they do so because the eventual numbers are unknown, would result
in no decision being made regarding the minimum payment until
the value of the last offer is determined, which at the very least,
would lead to unacceptable delay in concluding cases affected.
The Chairman's summary of the position reached
in regard to minimum payments (OE, p.40 ) which the Minister accepted
as an accurate summary, is incorrect in two particulars. First,
minimum payment cases do not require any less work of the solicitor
than other cases within the process. Claims are fully appraised
and valued on each occasion and it is only when that exercise
is completed after due application of the CHA procedures, that
it may be appreciated that a claim is worth less than £500.
Second, the department maintains that it has refused to fund a
minimum payment not because the judge would not permit its introduction
were it proposed to pay for it through public funds, but for the
reasons set out by the Minister in his answer to Q 137 (concern
over the setting of a precedent by overruling a court formula).
SURFACE DUST
CLAIMS
The Minister said his responsibility was to
ensure that people who were injured by dust get compensated and
this could either be done by civil action or bringing them into
the Scheme. The Minister gave evidence that he had "opened
the records for inspection" to claimants' solicitors and
then pointed out that a number of extensions to the court's timetable
for proceeding with surface dust litigation had been granted.
The CG had eventually withdrawn the group litigation on the 14
of December 2004. He had written about this to the CG but had
yet to receive a response (OE, pp.42-45, Q 148-154).
He suggested that unions did not enforce the
sampling regime on the surface and said that spirometry and other
tests showed little evidence of damage. He added that there was
no evidence of measurable lung damage to surface-only workers.
He confirmed however that further discussion would be helpful
and that he would maximise co-operation to resolve the issue.
CG comment: As the Respirable Dust Regulations
(RDR) did not apply to the surface, mining unions could not seek
to enforce a regime which did not exist. The absence of regime
is one of the main reasons for the sketchy nature of the dust
readings now available to claimants looking for proof of the excessive
levels of dust. As Mr Clapham said (p.44), samples were rarely
pursued on the surface but that does not mean that this was because
there was no hazard.
The Minister and his officials have invited
further litigation from the mining communities on the issue of
surface dust exposure despite the terms of the Minute laid before
Parliament in 2000.The access granted to the surface dust "archive"
was in reality, access to a huge amount of documentation that
was not indexed or arranged so as to permit searchers to find
surface dust records separately from underground records, or indeed
from other unrelated documents. The search itself would have taken
several more months to complete satisfactorily.
The Department were not willing to allow that
to be done without (a) pressing for the surface dust litigation
to be commenced and (b) ensuring that claimants proceeding with
litigation would require to pay the Department's costs in the
event of failure. Six volumes of material yielded by the search
were produced to the Department's solicitors, including records
which contain evidence of excessive dust exposure.
FAST TRACK
OFFERS/COMPULSORY
SCHEME
The Minister and his senior civil servant (Ann
Taylor) gave evidence that it was the Judge's idea for the Department
to advocate a compulsory scheme, and that this had only been intended
for people with low levels of disability, not for people at higher
levels of disability. Ann Taylor commented that they were looking
at a compulsory scheme only for people with normal spirometry
(OE, pp.36-37 Q 135-136).
CG comment: The Department did not confine themselves
to such claims in formulating their compulsory scheme proposal.
Relatively few claimants would have been able to escape the compulsory
tariff (men unfit to test at spirometry, and some widows). The
judge did not advise the department to argue for a compulsory
scheme; rather, he encouraged the parties to consider all the
options, of which a compulsory scheme was one. It was for the
department to determine their position. The judge made no comment
when the department did not proceed with their proposal for a
compulsory scheme at the court hearing which followed.
The department also abandoned their earlier
advocacy of fast track offers in posthumous claims based upon
the average damages paid out to a given cohort of claimant. Thus,
the average damages actually paid within the fast track scheme
to category 3 claimants (no COPD on death certificates) is of
the order of £9,000-£10,000, whereas the flat rate amount
payable under their fast track proposal is £1,200 (widows)
and £1,000 (estates).
STALLED CLAIMS
The Minister said there was some confusion as
to where claims are in the chain, with solicitors or with Capita.
Although he said he was grateful for suggestions on speeding up
the process on both sides from the CG, the Minister added that
it wasn't in Capita's interest to stall claims as they were paid
by meeting targets (OE, p.34). There was earlier evidence from
ATOS (Ms Gibson) that they were not penalised in their contract
for delays or late handling (OE, p.3); and there was evidence
from Martin Trainer (Capita) that their reward is based upon the
achievement of targets (OE, p.13) ; he made no reference to penalties
for poor performance (Q 131-134, and Q 66-68, Q 85-87).
The Department were asked about the 4,000 letters
sent out that Capita could not deal with when responses were made
by solicitors. Christine Chamberlain did not answer this question
but gave evidence that it was proper to look at blocked claims
and then said that the onus is on solicitors to tell the Department
where a claim is blocked. The Department claimed credit for suspending
the process which the Judge had "endorsed" (OE, pp.35-36
Q 133-134).
CG comment: Given that the DTI maintain that
they are actively managing their contractors, it is surprising
that Ms Chamberlain should express the view that the onus is on
solicitors to advise the Department what the problem is, even
if the claim is stalled at Capita. As to the Minister's observations
regarding Capita's financial incentive to ensure that claims progress,
it is identical to the incentive which exists for solicitors to
do likewise: they will not get paid for their work until settlement.
Nonetheless, the department has required no persuasion (as it
does in respect of its contractor) to pursue claims stalled with
claimants or their solicitors by additional means.
The Department has resisted tackling its contractor
Capita over claims languishing in their offices, whether contractually
or in terms of the process. That it appears that no penalties
may be visited upon the contractor for unacceptable delays in
handling is a major difficulty. This may also explain the reluctance
to support a stalled claims procedure designed to address claims
stuck at Capita. The underlying problem here may be under-funding
or resourcing of the claim handling contract.
The Department did not promote the suspension
of the stalled claim procedure designed to address claims stuck
within solicitors' offices which it activated in VWF claims in
October 2004; suspension was requested by the CG in correspondence
dated 16 December 2004, in view of reports from solicitors as
to the chaotic manner in which implementation had proceeded up
to December 2004.
SECURITIES INVESTIGATION
DEPT
During Kate Roy's evidence it was said that
there required to be a robust process in place to vet claims.
She said that there were 1,500 claims referred for SID consideration.
800 investigations had been concluded and in 300 cases there had
been deductions from compensation or nothing at all had been paid
(OE, p.22-24 Q 107-113). In Ms Roy's evidence a distinction between
an intention to mislead and exaggeration was accepted, but the
distinction was not further explained or developed.
She said that the investigation process was
to correspond with the solicitor and seek an interview and give
an option to solicitors to attend or to be copied in on correspondence.
When pressed as to whether solicitors were told of the reason
for the request, Ms Roy's evidence was that they were advised
of "the potential for further investigation". This was
done to internal guidelines based on FSA standards. Capita had
no objection to release of these documents to the Committee for
appraisal.
The Minister's evidence was that there were
1,549 claims referred to SID or about 2% of the schemes (OE, pp.47-48
Q 161-164). Ann Taylor indicated that in 156 denied claims there
had been a saving of £1.85 million and the reduced value
claims (132 cases) had resulted in a saving of £1.25 million
or a total of £3.1 million. Investigation costs were given
as £0.5 million and it was confirmed that this was an annual
cost. This appeared to be confined to the costs of running SID
rather than the knock-on transaction and processing costs.
CG comment: Ms Roy's evidence confirms that
claimants' representatives are still not being made aware of the
nature of the department's concerns even in cases where there
is a request for claimant interview.
Claims made that settle for less than the full
amount sought should not be regarded as necessarily fraudulent
or exaggerated. Many claims settle for less because the evidence
adduced in support is alleged to be unsatisfactory, causing them
to be queried. By no means are all such queries valid or properly
raised. Claimants may be willing to accept offers for part only
of their claims for various reasons, including the difficulties
experienced in tracing reliable witnesses, and the frustration
occasioned by protracted delays in concluding their cases.
The annual expenditure on the SID (£0.5
million) does not represent the full cost of the unit's work.
Extra process and handling costs arise as claims are investigated
both at Capita and within solicitors' offices. The Department
have agreed to meet the extra costs payable to claimants' agents
where cases are concluded by payment following investigation.
There was no evidence as to how long the unit has been operational.
This has probably been for longer than two years.
Without more precise information as to whether
the DTI/Capita view of exaggerated or fraudulent claims excludes
claims where there is no reasonable basis for suspecting deliberate
misrepresentation, it is difficult to say whether the savings
quoted by the Minister (£3.1 million) represent a reliable
guide to the benefit to the taxpayer derived from the work of
SID. It seems that most cases are returned to Capita for normal
processing.
The Minister's evidence that potential fraud
accounts for some 2% of claims within the schemes, should be 0.2%
(about 1,500 claims from 750,000).
SERVICES
Inept questioning by Capita staff of services'
questionnaire forms was put down by Jeff Wilson to the pilot project
experience and his position was that his team are constantly discussing
problems and that there is rigorous training to improve performance.
There was a continuing need to review effectiveness. Feedback
from solicitors about problem areas was very helpful (OE, pp.20-21
Q101-104).
CG comment: The services' pilot took place four
years ago. Our experience has been that the problems encountered
in agreeing the extent of service provision and the periods of
time involved, have continued since then to the present day albeit
there are fewer reported instances of mis-handling. It appears
that the training given to Capita staff proceeds while they are
working on claims, which may explain some of the mistakes encountered.
CAPITA PERFORMANCE
Kate Roy answered a question about this primarily
by reference to the meeting of targets in the COPD scheme rather
than Capita's ability to meet targets in the VWF scheme as it
winds down. However, Capita said that they are able to cope with
the various aspirational end dates in the VWF scheme which they
and the department have formulated (OE, pp.14-17 and 24-25 Q 90-96,
and 114-115). Capita referred to a business improvement programme
and said that there were a number of initiatives agreed with the
department particularly as regards the high turnover of staff
(25% loss in 2004) to retain staff, reward and recognise them
for their performance; pay best market rate and bonuses and improve
their surroundings.
CG comment: There are signs of significant slippage
in Capita's progress towards meeting the group 3 aspirational
end date of concluded investigations by September 2005. Moreover,
there are concerns that other work required of Capita to bring
claims to a conclusion (for example, attention to claimants' wage
loss schedules and services' claims) may suffer as pressure mounts
to meet the targets set. The sometimes terminal consequences visited
upon claimants who are not able to comply with the end dates fixed,
may be contrasted with the apparent lack of any sanction against
Capita for delays that may follow from juggling and shifting resource
from one area of the process to another to meet the Department's
demands (or even failing to meet them).
RELATIONS/DIALOGUE
The Minister gave evidence that it was not his
impression that there had been deterioration in constructive dialogue.
He said that there might be frustration for solicitors in the
CG because of the lack of success in some areas and did not accept
that there were fair criticisms of his officials in the CG evidence
(OE, pp.30-31 Q 125-126).
Sir Robert Smith asked if it was not a symptom
of problems in the negotiating forum when the Department had to
rely upon the Judge as much as it did in the "fast track"
context and Ann Taylor's answer was that the Judge was drawn into
that process (OE, p.32 Q 128).
Christine Chamberlain said that the department
were no less transparent or open than they had been. There were
sticky issues now to resolve towards the back-end of the schemes
and the impression given was that this was only to be expected
(OE, ibid.).
Ann Taylor at the end of the session objected
to the chairman's comments in the CG session about officials'
alleged lack of transparency, and said that officials had all
tried very hard to share information and there was a mass of it
produced for all sides (OE, pp. 48-49).
CG comment: There have been many fewer meetings
than required in past months in the context of the construction
of a new fast track process. The Department have in our view,
abandoned the notion that the Court is a last resort and have
preferred to leave it to the court to deal with many of the difficult
issues attendant upon the introduction of this procedure while
(a) there continues to be a full process available to claimants
in tandem and (b) a large number of claimants are and were at
various stages of progress through the full process and (c) many
claims have been concluded without a fast track process. We have
seen a more traditional adversarial approach taken by the DTI
in preparing its position before the court, that has been inimical
to the consultation and discussion processes the parties had previously
fostered.
There has also been absence of transparency
which contrary to Mrs Taylor's evidence, is not vouchsafed by
provision of a mass of data (much of which is unilluminating in
regard to key matters, such as the performance of the Department's
contractors), but which requires instead an open approach to the
means by which each side seeks to resolve problems. Examples of
the use of stealth and attempted imposition of the DTI view have
been cited in the CG evidence to the Committee.
Finally, there is no reason why problems that
cannot be resolved between the parties should naturally increase
as the schemes begin to wind down. It might be thought that with
relatively little at stake, and against a background of large
sums of damages paid and the volumes processed, parties would
be able to bring the schemes to a negotiated conclusion instead
of leaving over the prospect of further litigation. As one Monitoring
Committee member of parliament has observed outwith these proceedings,
that seems an unfortunate and unnecessarily acrimonious way to
bring an end to two remarkable compensation processes; and it
may tarnish the credit that should otherwise reflect upon those
responsible for them.
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