APPENDIX 10
Supplementary memorandum by Capita IRISC
INQUIRY INTO
THE COAL
HEALTH COMPENSATION
SCHEME
Capita Group plc welcomed the opportunity to
contribute to the Select Committee's Inquiry on the Coal Health
Compensation Scheme and its administration.
When we saw the supplementary evidence which
other witnesses had submitted we felt that it would be appropriate
and helpful to submit a short additional memorandum.
This short memorandum complements the more detailed
memorandum submitted by the Department for Trade and Industry
and our oral evidence. It seeks to explain Capita's role and responsibilities
in respect of the Scheme and to address specific issues raised
in other supplementary evidence.
Capita assumed responsibility for the administration
of all of the claims handling process and the medical examinations
for claimants for the Vibration White Finger (VWF) element of
the Scheme in February 2004. Capita had had no involvement with
the Scheme prior to this date.
As a service delivery partner for the Department
of Trade and Industry, Capita has defined contractual roles and
responsibilities. However, as in its other major public service
delivery partnerships, Capita seeks wherever possible to draw
on its wider expertise, experience and values to work with the
Department and the other stakeholders to ensure the development
and the success of this critical Scheme.
CAPITA IRISC—CLAIMS
HANDLING—KEY
RESPONSIBILITIES
— claims handling of all British Coal
personal injury claims arising from a range of identified industrial
diseases
— maintenance of effective working
relationships with all the stakeholders to ensure the smooth operation
of the services, and to avoid where necessary, resolve disputes
— provision of generic legal advice
as instructed by the DTI
— support to the DTI in the management
of responses to Parliamentary Questions, Ministerial and officials'
correspondence and media relations, and the provision of an advice
and support service to coalfield MPs
— establish and maintain electronic
links with all parties to the Claims handling process
— the management of all financial matters
to a high degree of probity and the provision of internal audit
systems agreed with the DTI and its auditors
— contribution to the anti-fraud management
for the Scheme together with the provision of an internal anti
fraud audit programme which agreed with the DTI
— provision of policy support and advice
in relation to claims handling required by the DTI including contributions
to the continuous policy review and the development of policy
particularly in respect of future of the Schemes
— the development and implementation
of the `World Class Programme' of service improvements and efficiencies
— upgrading the IT systems and business
process re-engineering to support the claims handling processes
Capita IRISC employs 1339 staff in Sheffield
(961), Manchester (178), Cardiff (112) and Edinburgh (88)
Capita Health Solutions (CHS)—VWF medical
assessments
Capita Health Solutions (CHS) is the DTI's service
provider for the VWF Services Medical examination, where a Co-Morbidity
Assessment is carried out as part of a compensation claim against
the former British Coal Corporation.
The medical assessment has been designed to
concentrate on the claimants well being and how they are affected
in their everyday life, by any health problems they may have.
Medical examinations are conducted with the claimant and the results
passed on to Capita IRISC.
Services examinations are undertaken at centres
in:
Barnsley, Stapenhill (Burton), Stretton (Burton),
Canterbury, Doncaster, Mansfield, Seaham, St. Helens, Cardiff,
Swansea, Glenrothes, Kilmarnock, Livingston and Prestwick
CHS role is limited to the medical assessment
process. It does not have any claims handling responsibilities
SERVICES CLAIMS
The CG has questioned Jeff Wilson's evidence
that inappropriate questioning by Capita staff of services' questionnaire
forms was due to inexperience whilst the pilot project was underway.
Capita comment:
— We would re-iterate the evidence
given by Mr Wilson. Capita measure performance on a regular basis
across all claims in terms of quality assessments and checking.
We constantly review performance and provide training and advice
based upon this. In addition, issues which arise from monitoring
group meetings and feedback received from the Claimants' Group
are built into our training programme.
— In addition, Ms Roy's subsequent
evidence went on to inform the Select Committee (OE p21 Q103)
that Capita have fairly rigorous internal audit procedures and
processes where, by checking individual claims and looking at
the quality of claims handling decisions being made within those
claims, we analyse the outputs from that, and feedback, not only
to built into our training programmes, but also to the individuals
concerned and subsequently shared with the claims adjusters .
. . There is a need for us to constantly review how effective
our decisions are. Feedback from solicitors is exceptionally helpful
in these instances.
STALLED CLAIMS
/ CAPITA PERFORMANCE
STALLED
CLAIMS
Reference was made to the evidence given by
Martin Trainer on behalf of Capita that Capita's reward is based
upon achievement of targets (OE,p.13), that there is no reference
to penalties for poor performance (Q131-134, and Q66-68, Q 85-87).
The CG states in its addendum that "The
Department has resisted tacking 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".
Capita Performance
The CG has referred to the evidence given by
Kate Roy in relation to meeting targets on COPD and aspirational
end dates in the VWF scheme which Capita and the DTI have formulated
(OE, pp 14-17 and 24-25 Q90-96).
The CG states in its addendum that "there
are signs of significant slippage in Capita's progress towards
meeting the group 3 aspirational end date of concluded investigations
by September 2005 . . . 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)"
Capita comment:
— It is not accurate for the CG to
suggest that the current Capita contract does not contain any
penalty provision. Capita can confirm that there is provision
within the current contract for financial penalty relating to
specific areas of claims handling performance.
— The CG has put proposals to the department
regarding sanctions when delays are due to the department's or
its contractors handling of the claim. A response is due by the
end of March. Capita are currently in dialogue with the DTI on
this matter.
— We are contractually measured on
both volume and quality targets, set each quarter by the client
and independently verified by PwC. The volume targets are always
shared and discussed with the CG at monthly operational meetings
and the COPD targets are reported upon publicly by the DTI.
— Our contact with the DTI has in place
reward mechanisms dependent upon delivery of short and long term
volume targets in accordance with the DTI's plans and with continually
improved quality levels. Failure to achieve these targets would
result in a significant reduction in profit.
— Resource levels are planned on all
aspects of the scheme by Capita using a sophisticated model implemented
in July 2004 as part of the business improvement programme. These
plans are based upon the requirements of the DTI and recruitment
programmes are put in place to meet the plans. There is a constant
need to balance capacity with all contractors and solicitors,
as steady throughput is reliant upon this. For example for VWF
Services (ie services pre MAP), only 27% of cases are within the
control of Capita and there is now a real risk of work drying
up until solicitors submit outstanding info. In addition, Capita
as an organisation has over 23,000 employees, 5,000 of whom are
employed in the general insurance (majority claims handling) environment.
Finally there is no financial benefit to Capita to restrict resource
on the contract. The reverse is actually the case.
— The aspirational end date for Group
3 investigations is to be completed by the end of September 2005.
The appropriate resource is in place to support this. With the
full cooperation of all parties Capita believe this date can be
achieved.
SECURITY INVESTIGATION
DEPARTMENT
Reference has been made to Kate Roy's evidence
in respect of this Department. It is said that 1,500 claims were
referred to SID for consideration, 800 investigations had been
concluded and in 300 cases there had been deductions from the
compensation or nothing at all had been paid (OE, p 22-24 Q107-113).
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 the reason for the request, Ms
Roy's evidence was that they were advised of "the potential
for further investigation" . . . internal guidelines based
on FSA standards.
Ann Taylor (DTI) 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.
The CG state in their addendum "that claimants'
representatives are still not being made aware of the nature of
the department's concerns . . ." 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 represent reliable guide to the benefit
to the taxpayer derived from the work of SID.
Capita comment:
— The Security Investigation Department
is in place to investigate potential discrepancies or misrepresentations,
be that deliberate or otherwise which to date has resulted in
compensation savings of £3.1 million. The claims handling
arrangements require the claimant to substantiate their claim.
(with evidence where available)
— It is accurate to say that the costs
quoted relate specifically to the SID costs and do not include
"extra process and handling costs" as these would arise
in any event, when discrepancies occur in the process.
— We would also point out that, in
relation to "FSA standards", as detailed in the evidence
given by Ms Roy (OE p 23 Q111), our investigators are an external
organisation, part of the Capita Group, who are compliant to
FSA standards.
— The SID team has been operational
for no more than two years.
— Following the VWF Court hearing of
20 December 2004, and Dame Janet Smith's comments, we are taking
steps to ensure sufficient information is included within the
initial letter of contact to the solicitor.
John Tizard
Director of Policy and Public Affairs
The Capita Group Plc
21 March 2005
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