top of page

“A racket” – judge hits out at hidden commissions in PI cases


A circuit judge has attacked the “little micro-industry of unknown and unknowable commissions or referral or arrangement fees” in personal injury claims.


Criticising a “non-transparent cartel” and describing credit hire charges as a “racket”, His Honour Judge Saggerson in Central London County Court said there needed to be transparency over the various costs involved or the courts’ powers to control costs “become a mockery”.


The case before him, Aminu-Edu v Esure, was the latest to consider whether medical reporting agencies should separate out their own fee from the expert’s.


HHJ Saggerson held that it should, saying that, in considering proportionality, “the court is entitled to consider what the fees are that are attributable to the medical referral agency”.


The contested fee was £2,916 for a pain management medical expert report in a road traffic accident claim that settled for £40,000.


The report provider, Premex, cited commercial sensitivity for not breaking down the fee, noting that “there is no obligation, and it is not necessary” to do so in order to assess its reasonableness and proportionality.


It also said: “The [fee] is not calculated on a case-by-case basis and full consideration of any breakdown provided would require a detailed and complex analysis of the macro-economics of the wider medical reporting market, which is disproportionate.”


The judge said: “This little micro-industry of unknown and unknowable commissions or referral or arrangement fees underscores the risk that litigation is pursued in the interests of an economic ecology far removed from the interests of justice or the protagonists.


“This is not an unknown problem. The racket that is claims for ‘Hire Charges’ illustrates how this sort of remote ecology can get completely out of hand to the benefit of nobody but lawyers and insurance companies.


“In my judgment, any adjudication on proportionality, in all its various component parts, demands transparency. Such an adjudication should not be hijacked by empty grandiloquent protestations of ‘macro-economic’ factors.


“The unavoidable suspicion is that the absence of transparency indicates that the agencies have something to hide. I entirely exclude from my thinking any unworthy suspicion that cross-commissions (‘back-handers’) are in play in this process. If I am wrong, the agencies will no doubt be pleased to demonstrate so.”


HHJ Saggerson said solicitors were entitled to assess the reasonableness of the agency fees “rather than simply (metaphorically) shrugging and saying: ‘that’s the system’, assuming someone else will pay for it”.


He added: “This would be, and is, a recipe for fee-farming by the agencies and is to be deplored.”

The judge insisted that medical agencies should be able to provide “at least sufficient indicative information” as to the proportion of a medical invoice that reflected the true value of their work.

He added that Premex’s explanation that the fee was not calculated by reference to the specific case was “the very antithesis of proportionality and looks more like taxation. Lower value cases are subsidising higher value cases”.


HHJ Saggerson predicted that, if claimant solicitors required breakdowns, the market would “soon adjust” to provide them.


He was also “unmoved by implicit threats that all this would demand resort to non-party disclosure applications and satellite litigation or even detailed considerations of whether the relevant information was within the control of a claimant”.


Claimants or their solicitors could simply use agencies that were prepared to be transparent.

“Alternatively, the work can be done in-house as it always was. It seems to me to be that it would be an enfeebled court system that buckled under any suggestion that a non-transparent cartel would simply withdraw its services en mass [sic] from the market if required to be open.


“The agencies may be cheaper than in-house services in which case the agencies should not hesitate to tell us and should be displaying their proportionality for all to see.”


HHJ Saggerson said defendants could adopt the course taken here, with a part 23 application for part 18 further information, backed up by an unless order if needed.


The agency’s work obviously cost something, so to assess it at nil “would be an unduly harsh sanction”. But finding the report in the case was “very straightforward”, he allowed £750 plus VAT.


James Miller of 18 St John Street, who acted for the defendant, said: “To welcoming paying parties, the court’s approach will be unsurprising as it mirrors the rationale of His Honour Judge Bird in Northampton General Hospital NHS Trust v Hoskin [last year]…

“Receiving parties will disagree. In the present case, the medical agency was not a party to the proceedings and the information sought was said to be outside the possession and control of the claimant. Ultimately, His Honour Judge Saggerson was ‘unmoved’ by those complaints, deciding that transparency ruled the day.”


The judge refused permission to appeal. Mr Miller said that, to date, the claimant has not provided a breakdown of the fee nor pursued an appeal.


STEWART HOUSE COMMENTS

Hidden commercial arrangements have long harmed the PI and Clinical Negligence expert witness reporting market and rather than providers being chosen on merit, they are more often chosen on a financial basis.


Stewart House is proud to confirm that we do not pay or receive any hidden commissions, referral fees, arrangement fees or any other inducements to secure work. We strongly believe that by providing the highest level of service to our customers and suppliers, we will gain repeat business.

3 views0 comments

Comments


bottom of page