Ever since the Government launched its medical reporting portal for low value personal injury claims in motor accidents, it has been dogged by controversy. Will it be able to save its tarnished reputation?
Back in May, Lord Faulks, the then Minister of State for Justice, gave a speech at the Association of Personal Injury Lawyers’ (APIL) conference during which he praised MedCo.
“The Government is pleased with the work of MedCo one year in,” he said. He praised the fact that the portal had broken the financial links between solicitors and medical reporting organisations (MROs), and hailed the incoming accreditation process for medical experts, which he said would improve the quality of medical reports.
Faulks also made it clear that the Government would make sure that the practice of registering multiple so-called shell MROs onto the system by the largest players in the market – in order to try and get around the loss of business caused by MedCo’s randomisation – would be stopped.
Sure enough, on 8 November, MedCo announced that it had kicked 134 Tier 2-registered shell companies off the portal as they did not meet the basic new qualifying criteria for an MRO.
But how did it get to a point where the Government had to take such action?
Unintended consequences
“Random allocation was a good idea in theory, but it needed testing,” says Andrew Twambley, the director of InjuryLawyers4U.
He argues that Chris Grayling, the Justice Secretary at the time, pushed MedCo through without any real thought of the consequences. This led to two main issues.
“It encouraged any Tom, Dick and Harry to form a tier 2 MRO above a kebab shop and offer a free taxi ride [to go with it]. These outfits had no idea and were dodgy in the extreme. It was impossible to agree terms and they had zero service standards,” says Twambley.
Secondly, he says, the top MROs were looking at potential decimation. “These companies had set up years ago and had specialist, highly-geared organisations. They were never going to sit back and take the pain. Their fightback was inevitable.”
Following MedCo’s installment in April 2015, Claims Media spoke to one of those top MROs, Speed Medical. The company’s commercial director, Chris Chatterton, told Claims Media that the MRO’s worst fears had been realised and that its volumes had been drastically reduced.
“We’re very concerned,” he said at the time. “It is fundamentally anti-competitive.”
To counter its drastic loss of business, Speed Medical admitted to setting up multiple entries on the portal, which went live in mid-May 2015.
“This is essentially an attempt to pull back our market share, lost through no fault of our own,” said Chatterton. “Many solicitors want to work with us because we provide a great service and so this enables this to happen. If Medco was working correctly there would be no need for the additional agencies.”
Role of the board
But it is not only the basic structure of MedCo being problematic for many in the PI sector. The governance of the portal has also been questioned.
According to David Pearce, a director at Tier 2 MRO Citimedical, there has to, at least, be a perception that the shell companies were not dealt with sooner because certain members of the board had “total and complete” conflicts of interest. He said that the large MROs have both representatives on the board and “sympathetic solicitors and insurers” who used and benefited from the shell companies.
“Its like a board member of the Vegan Society declaring that he is opening up a butcher’s shop,” says Pearce. “No other board would tolerate that, and he would be asked to step down with immediate effect.”
Pearce argues that the MedCo board should be made up of wholly independent accountants, lawyers and other officials. Included in this would be an outlet whereby stakeholder groups can make representations to the board.
“It is outrageous that anyone with a commercial interest in the sector sits as a director on the board, and that includes the insurers, PI lawyers and MRO representatives,” he adds.
One of those board members is Nigel Teasdale, the new President of the Forum of Insurance Lawyers (FOIL) and a partner at DWF. He says that it unfair to point the finger at him and his fellow board members.
“We hear the criticism, but it’s not necessarily a core function of MedCo to be regulating the MRO industry. The aim of MedCo is to try and improve the quality of Medico-