This report contains an assessment of the appropriateness of the Government's decision to apply sections 44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) to mesothelioma compensation claims. These sections prevent winning claimants recovering from defendants success fees charged by their lawyers or premiums for insurance against having to meet defendants' costs (after the event, or ATE, insurance). They have applied to all other personal injury claims since April 2013, but section 48 of LASPO required Ministers to undertake a review before they could be brought into effect for claims relating to mesothelioma, a cancer of the lining of the lung arising from exposure to asbestos.
Evidence received by the Committee revealed that there were starkly opposing views on most aspects of this matter. Representatives of mesothelioma victims, claimant lawyers and trades unions argued that the special characteristics of mesothelioma claims made it necessary to maintain their exemption from sections 44 and 46 LASPO. On the other hand, the Government, defendant lawyers and insurers considered that there was no strong justification for the continuation of the exemption. The cost-benefit analysis published by the Government estimated that, taking into account other factors, particularly a 10% uplift in general damages in personal injury cases, there would be a net overall benefit to claimants. This was hotly contested by claimant representatives. We conclude that the reliability of the Government's cost-benefit analysis is central to any assessment of the financial impact on mesothelioma victims. We recommend that the Government commission an independent review of the risks of success and failure of mesothelioma claims to inform the setting of a maximum level of success fee.
In this inquiry we considered the process of the review carried out by the Government under section 48 of LASPO. We conclude that the timing and nature of the review had meant that respondents to the Government consultation on the mesothelioma claims process did not have available to them much relevant information, and we say that the shoehorning of part of the review into a wider consultation on the claims process was a maladroit way of proceeding.
During the course of our inquiry the Association of British Insurers provided us with a copy of a 2012 "Heads of Agreement" document between them and the Government on mesothelioma claims. This document was not a binding contract: not all the proposals in it have been implemented. We nevertheless express concern that the Government has not been transparent or open about the fact that its policy on mesothelioma has been shaped by an agreement, however informal and elastic, with insurers.
On some issues there is greater consensus on steps which need to be taken to expedite and improve the mesothelioma claims process. One such matter is the enactment of further primary legislation to enable the Third Party (Rights Against Insurers) Act 2010 to be commenced effectively, and we recommend that steps be taken to expedite the necessary legislation.
Our overall conclusion is that the Government did not prepare the ground for its section 48 review in a thorough and even-handed way, and we recommend that the Government undertake a further review by means of a consultation framed unambiguously and centrally on the question of whether the LASPO provisions should be brought into effect for mesothelioma. We consider that this consultation should not be undertaken until sufficient time has elapsed for the effects of the LASPO changes in non-mesothelioma cases to have been assessed.