The Motor Accidents Compensation Regulation 2015 (the Regulation) has now been finalized, following a series of in depth consultations and discussions with stakeholders. The Regulation commenced on 1 April 2015. The Regulation is made under the Motor Accidents Compensation Act 1999.
The Regulation incorporates some key changes to the former Motor Accidents Compensation Regulation 2005. The key changes under the Regulation are summarised below and these endeavor to curb limits on medico-legal fees (these are fees charged by medical experts who are instructed to provide a medical opinion about an injured claimant’s condition), to impose mandatory disclosures of solicitor-client costs in motor vehicle accident claims, to prohibit referral fees from legal practitioners and to uplift regulated costs in instances where an insurer does not accept the amount of assessed damages made by the Claims Assessment and Resolution Service (CARS).
1. Recoverable legal and medico-legal fee increases
Schedule 1 of the Regulation now makes a provision for an increase in the maximum recoverable stage-based legal fees, with the base amounts increased by approximately 8% as a means to accurately reflect the latest Consumer Price Index (CPI) increases since the fees were last updated in 2010. In circumstances where the events or disputes in a claim are of a complex nature, the maximum recoverable legal fees have increased by a significant amount.
Furthermore, Schedule 2 of the Regulation now provides for a significant increase in the maximum recoverable fees for medico-legal services, to better and accurately reflect current market rates. These fee increases bode well for medico-legal providers and claimants as these increases would mean that insurers will now have to consider offering more towards a claimant’s total legal and medico-legal costs. Hence, these implementations would effectively reduce the proportion that would be paid by a claimant.
2. Mandatory disclosure of solicitor-client costs
This latest inclusion in Clauses 8(d) and 23 of the Regulation stipulate all legal practitioners representing a claimant to provide the Motor Accidents Authority (MAA) with a costs breakdown in relation to a claim whenever a claim is finalized. This practice was never required prior to the new Regulations and these changes have given law firms an opportunity to re-assess and evaluate their current solicitor-client costs. It is anticipated that law firms may congregate to negotiate and reconcile over what may be ‘acceptable and ‘reasonable’ solicitor-client costs that are to be charged across the board. Furthermore, the latest inclusions in the new Regulations serve to equip the MAA with more ability to survey, collect data for research purposes and investigate solicitor-costs that are currently applied in motor vehicle accident claims.
These latest inclusions stipulate all legal practitioners to provide a costs breakdown to the MAA that articulate and itemize the total amount the claim was resolved for, all deductions (including all legal costs and disbursements) and paybacks in relation to the claim, and the total amount paid to the claimant.
As a policy tool, these provisions will provide greater transparency in relation to expenses and deductions in motor vehicle accident claims and enable the MAA to properly monitor the overall efficiency of the Compulsory Third Party scheme.
However, the requirements under Clause 8(d) and 23 of the new Regulations do not come into effect until the MAA has approved the form for disclosure. There is currently no approved form, and the MAA will be developing the proposed form for disclosure over the coming months, in consultation with the legal profession, although many law firms would have now commenced preparations for the impending costs disclosure.
3. Costs where an insurer does not accept assessed amount of damages
Clause 15 of the Regulation now provides that where an insurer does not accept liability for the assessed amount of damages imposed by the Claims Assessment and Resolution Service (CARS) within 21 days after the Certificate of Assessment is issued, the insurer is then liable to pay all the party-party costs of the claimant incurred after the Certificate of Assessment is issued, as well as any incidental court fees. Clause 15 then proceeds to uplift and de-regulate the maximum costs set out in the Regulation. This new requirement applies to all claims in the event an insurer does not accept a CARS assessment of damages, regardless of whether the claim is ultimately resolved in Court or not.
This provision also further complements the existing costs penalties that apply to claimants who do not accept the amount of damages assessed by the Claims Assessment and Resolution Service, under s151 of the Motor Accidents Compensation Act 1999.
Another newly incorporated change to the regulations is provided under Clause 24 of the Regulation, which serve to prohibit the issuance of referral fees to or from legal practitioners or close associates of the legal practitioner in motor accident vehicle claims. A legal practitioner is deemed to have given or received consideration if a close associate of the legal practitioner gives or receives consideration. Under the Regulation, a ‘close associate’ is defined as an employee of the legal practitioner, a partner of the legal practitioner, an employee or agent of the legal practitioner or a family member of the legal practitioner. Reviewing the context and originating nature of Clause 24, it is likely that this change will aim to fasten and crack down on the practice of issuing referral fees that are made to appear as actual referral fees, when the underlying referrals are not in fact transferred to external parties.
Our firm believes that the major changes in the new regulations are designed to arm the MAA with further governance and inquisitorial capacities on the distribution and allocation of costs by legal services and medico-legal providers in motor vehicle accident claims. It is undoubted that these new regulations impose further red tape on legal practitioners to comply with regulated costs under the scheme. The proposed changes in the new regulations will also assist legal practitioners across the industry to conduct due diligence on their solicitor-client costs for the benefit of further maximizing compensation rewards granted to claimants. At Gerard Malouf and Partners, we are a special few that would be willing to reduce our legal costs and fees, so that your compensation is maximized.