The Lord Chancellor and Secretary of State for Justice Jack Straw has made a statement on the government's decision on the question of compensation for pleural plaques, and also about speeding up mesothelioma claims. It announced also the setting up of an Employers’ Liability Tracing Office and an Employers’ Liability Insurance Bureau.

Compensation for pleural plaques

In Johnston v NEI International & others (2007), the House of Lords held that the existence of pleural plaques caused by exposure to asbestos fibres did not constitute actionable or compensatable damage. Prior to that, people had been able to bring claims for compensation for pleural plaques since the 1980s.

In light of representations made by individuals and organisations who strongly disagreed with the Law Lords’ decision, the government published a consultation paper and sought medical advice. This confirmed that the presence of plaques is an indicator that a person has been exposed to asbestos, but in the great majority of cases, plaques do not in themselves produce any significant physiological change or loss of lung function, and only very rarely give rise to physical symptoms. In such rare cases, it is still possible for individuals to bring a civil claim for damages. There is no available medical evidence to show that plaques become malignant or lead to mesothelioma or other asbestos-related diseases.

The Lord Chancellor and Secretary of State for Justice has now said that, on the basis of medical evidence received, the Government is unable to conclude that the Law Lords’ decision should be overturned at this time, or that an open-ended no-fault compensation scheme should be set up. The statement indicate that the position will be reviewed only if new medical or other significant evidence were to emerge.

However, the Government recognised that there were individuals who had begun, but not resolved, claims for compensation for plaques at the time of the Lords’ ruling. As they would have had an understandable expectation that their claim would result in compensation, the Government has decided to make payments of £5,000 to such individuals in an extra-statutory scheme, details of which will be announced shortly. The scheme will apply to England and Wales only.

Simon Cradick's comment:

Thus, persons diagnosed with plaques only in England and Wales will have no right to compensation. There is a private member’s Bill proceeding through the Commons - Damages (Asbestos-Related Conditions) Bill – and an identical Bill which was commenced under a new procedure in the House of Lords designed to change the law to make plaques claims compensable as they are in Scotland following legislation passed by the Scottish Parliament. Neither has attracted Government support and obviously will not do so now, so they have no chance of becoming law .

The position in Scotland is that the legislation making plaques claims compensable is being challenged by a number of insurers. An application for Judicial Review has been brought on the basis of a breach of the Human Rights Act Art. 6 (right to a fair trial) and Art. 1 of the First Protocol (peaceful enjoyment of possessions); and also on the grounds of irrationality under the common law. The application failed at first instance in a judgment delivered on 08.01.10 but is being appealed. Claims that had been issued had been sisted (stayed) pending the outcome of the Judicial Review so will presumably remain sisted pending the appeal.

The Government has announced it will establish a working group composed of claimant solicitors, trade unions, insurers, the judiciary, and civil servants to examine litigation practices and procedures for compensation claims relating to mesothelioma, and identify options for streamlining them in order to reduce the time taken to conclude cases. In particular the working group will consider:

• the operation of the Practice Direction for court proceedings introduced in April 2008 to ensure that it is working effectively
• possible solutions to difficulties arising from delays in obtaining medical reports because of the shortage of medical experts in this area
• why more claims don’t settle, and whether any provisions in relation to pre-action behaviour would be helpful in reducing the time taken to establish liability without the need for court proceedings.

Consideration will be given to changes to the substantive law to:

• resolve difficulties experienced by mesothelioma sufferers as a result of differences in the value of claims which are settled before or after the death of the person concerned and to clarify the limitation period for bringing a claim
• clarify that the limitation period for bringing a claim runs from the date that the claimant becomes aware that he or she has mesothelioma rather than from the date they became aware of the original exposure to asbestos.

Simon Cradick's comment:

Insurers will welcome moves to encourage claims to be settled without Court proceedings, which are often issued at an early stage even when the living Claimant is not in imminent danger of dying. However, the suggestion that living Claimants might be able to claim more than at present in recognition that a claim by dependants after death may be worth more is less welcome. Whether any change is necessary is doubtful. The option exists now for Claimants to seek an interim award for PSLA and personal losses and seek a stay of proceedings so dependants can pursue an FAA claim after death. Again, as expressed, there is no need for a change in limitation. Knowledge of exposure to asbestos cannot found a claim so there is no limitation problem. The point may be aimed at Claimants diagnosed with an actionable injury such as asbestosis who choose not to pursue a claim as they may have difficulty with limitation if they develop mesothelioma some years later.

Third Parties (Rights against Insurers) Bill

In November 2009, the Government introduced the Third Parties (Rights against Insurers) Bill into Parliament under a new procedure for Law Commission Bills. The Bill will enable claims against insolvent employers to be brought direct against the employer’s insurer. This will simplify court procedures and remove the need for dissolved companies to be restored to the register of companies. The Bill is expected to become law in this Parliament.

Simon Cradick's comment:

The Bill will save the time and costs of restoring Companies so is good news for insurers.

The Government intends to create a UK-wide Employers’ Liability Tracing Office (ELTO) to manage an electronic database of EL policies and to operate the existing EL insurer tracing service. The new Office will initially be launched on a voluntary basis but ultimately it should be a requirement on all insurers to publish relevant policy details on the ELTO.

The ELTO will initially be populated with existing trace data but new and renewed policies will be included shortly afterwards.

Though an ELTO will help people in future, and may assist long tail disease claimants, there will be those who are still unable to trace EL insurers. The Government therefore proposes to establish an Employers’ Liability Insurance Bureau (ELIB) providing a compensation fund of last resort for individuals across the UK who are unable to trace EL insurance records.

A consultation document, published on 10.02.10 on the DWP website, examines what an ELIB should cover, the impact of an ELIB on insurers and employers, how much should be paid by way of compensation, limitations on claiming from the ELIB, and what more can be done to ensure that employers who are legally obliged to obtain ELCI do so. The Government will consider fully the responses to the consultation before determining next steps towards the introduction of an ELIB.

Simon Cradick, Partner
T: 029 2038 5464
E: simon.cradick@morgan-cole.com