Lucy Boyle discusses the new payment system for victims of asbestos.
Since July 2014 The Diffuse Mesothelioma Payments Scheme has made payments to people suffering from mesothelioma. The Diffuse Mesothelioma Payments Scheme was created by the Mesothelioma Act 2014 and is detailed in the Diffuse Mesothelioma Payment Scheme Regulations 2014
When the scheme was first announced, Lord Freud explained:
“… for the first time, sufferers of diffuse mesothelioma, who cannot trace either a liable insurer or employers’ liability insurer, will have access to extra payments.”
However, it is not a ‘no fault’ scheme and has a number of interesting and novel features as well as potential pitfalls.
Eligible applicants
Only employers’ liability cases are eligible. Public liability and secondary exposure cases are excluded. Other asbestos-related illnesses apart from mesothelioma, such as asbestosis or pleural thickening, are also ineligible. Additionally, the person must have been ‘first diagnosed with the disease on or after 25 July 2012’ (s2(1)(b) of the Act). The reason given for this cut-off point by the government is that this is when the scheme was first announced and, therefore, when anyone could have developed an expectation that they would receive a payment. To victims and their families, this date is completely arbitrary.
The eligibility requirements
These are listed in s2 of the Act. A person is eligible for a payment if:
A relevant employer has negligently or in breach of statutory duty caused or permitted the person to be exposed to asbestos.
The person must not have already brought an action for damages against an employer or insurer and they must be ‘unable to bring an action’ because an employer or insurer ‘cannot be found or no longer exists or for any other reason’. Further, an applicant must not have received damages or ‘a specified payment’ in respect of the disease or be eligible to receive such a payment.
At first glance, these requirements seem okay. In particular, unlike with civil claims, there is no specific requirement for an applicant to prove causation in respect of the disease. Additionally, the requirement of being unable to bring a claim ‘for any other reason’ sounds potentially very broad. The reality is that the criteria will be highly problematic for many mesothelioma sufferers. The circumstances in which a person is to be treated as unable to bring an action are defined tightly in reg 7 of the regulations. Another potentially liable employer or insurer cannot exist, thereby excluding any applicant who, as is very often the case, experienced multiple instances of exposure to asbestos throughout different employments. This also imposes a more onerous requirement that the common law where the principle of joint and several liability allows a claimant to sue any tortfeasor. Alternatively, an applicant’s circumstances must fall within one of the ‘relevant provisions’, namely the Third Parties Rights Against Insurers Legislation and the like. Although this will assist some, the real problem with the ‘for any other reason’ aspect of the scheme is that it will force other victims to litigate in circumstances where they are unlikely to receive any compensation. Practitioners will be familiar with cases where bringing an action against a defendant will cause it to go into liquidation or administration.
Dependants
Although ‘dependants’ of a deceased victim can apply for a payment, only dependants falling within the definition given in s3(1) of the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 are eligible. This is a hierarchical list of dependants starting with the sufferer’s spouse, somewhat different from the more commonly understood meaning of dependant in the Fatal Accidents Act 1976.
The requirement regarding when the person with mesothelioma was ‘first diagnosed’ is adapted in respect of dependants to include a diagnosis following a post-mortem examination or in writing after the person has died (schedule 1, para 8).
Limitation
Applicants must be made within three years of diagnosis or, if the sufferer was diagnosed or died between 25 July 2012 and 5 April 2014, within three years of the regulations coming into force. The time limit can be extended (reg 9(3)):
… Where the scheme administrator considers that there was good reason for the failure to make the application [in time] and for any delay since then.
It remains to be seen how this provision will operate and, in particular, whether considerations similar to those relevant to extension under the Limitation Act 1980 will apply.
Procedure
Regulation 8 and schedule 3 of the regulations provide the scheme administrator with broad powers regarding the information and supporting documents that an applicant may have to provide as well as the ‘key issues’ they must address. An application ‘must be made in writing to the scheme administrator in such format as the scheme administrator may approve’. The application form provided on Gallagher Bassett’s website is, thankfully, not unduly onerous. Apart from evidence of a failed Employers Liability Tracing Office (ELTO) search, it more or less requires the same information and evidence that a Claimant would need to provide in a civil claim. This includes a witness statement providing details of work history, exposure, details of any witnesses and ‘other evidence’ to support an applicant’s case.
Request for third parties to provide information
The scheme administrator may request third parties to provide documents ‘reasonably required for the purposes of determining the application’ (reg 10(b)). If the documents are not provided, the scheme administrator can apply to the High Court for an order (reg 13(4) to (6)). This provides the scheme administrator with powers similar to those contained in Part 31 of the Civil Procedure Rules.
Level of payments
The most disappointing aspect of the scheme is that successful applicants will only receive ‘80% of average civil damages’, namely a lump sum payment that decreases with the sufferer’s age. The tariff of payments is provided in a table at Schedule 4 of the DMPS Regulations. Mesothelioma sufferers deserve 100% of compensation. However, this outcome is hardly surprising given that the scheme is being funded by a levy on the active employers’ liability market but not the ‘run-offs’. Worse still, 100% of CRU will be deducted from this 80% figure (schedule 1 of the Act).
Legal Costs
The tariff payment includes a figure of £7,000 towards legal fees. An applicant is entitled to keep the difference if they incur legal costs of less than this, or the full amount if they do not use a solicitor. The government presumably envisages that will go some way to bridging the 20% shortfall in compensation for applicants.
Technical Committee
Section 15 of the Act provides that ‘the secretary of state may make arrangements with a body to establish a committee called the Technical Committee’ which has jurisdiction to make binding decisions about whether an employer maintained employers’ liability insurance with an insurer. The technical committee is not mentioned in the regulations and there is no separate statutory instrument on this topic. During the Act’s passage through Parliament, Lord Freud emphasised that the technical committee is merely an extension of ELTO and ‘addressed at improving consistency across the insurance industry’. It is therefore entirely separate from the application process. Further, the technical committee does not have jurisdiction to decide a question that has already been decided by a Court. It is difficult to understand what the allure of going to the technical committee could be for a potential applicant when an independent Court could determine the same issue.
Comment
The scheme is far from perfect and many feel that a valuable opportunity to achieve justice for mesothelioma victims has not been fully realised. Nevertheless, for those who have ever had to advise a client that they cannot receive any compensation because an insurer cannot be traced, the scheme is more than a step in the right direction. It is hoped that there is scope for the scheme to develop in ways that are more aligned with victims’ needs.
