Monday, 11 March 2013

Fine Tuning PPOs

Two court decisions from March 2013 must be taken into account in all PPO cases.

In the first, a further hearing in the case of RH-v-University Hospitals Bristol NHS Foundation Trust [2013] EWHC 229 (QB) , Swift J gave judgment incorporating a technical but important change to the model PPO agreement reached with the NHSLA.

The Office of National Statistics publishes an Annual Survey of Hours and Earnings (ASHE). The SOC (Standard Occupational Code)  numbered 6115 is used for indexing periodical payments for care and case management. "First release" and "revised" data are published. The problem which had arisen was described by Swift J as follows:

"Paragraph 5 of Part 3 of the Schedule to the model order sets out the method of calculation to be used when the ONS has revised its classification of the relevant occupational group. The calculations require the use of a value, "AF", where "AF" is the "revised" hourly gross wage rate for the previously applied SOC. The SOC applied by the ONS up to 2011 was SOC 2000. The ONS has not published the "revised" 2011 ASHE 6115 data based on SOC 2000 methodology and has said that it is unable to do so. As a result, when the NHSLA was preparing to calculate the annual periodical payments due to claimants under the terms of the model order in December 2012, the value of "AF" could not be determined. "

The solution adopted by the parties and thus the court was "that paragraph 6.1.2 of Part 3 of the Schedule to the model order should be amended to provide that if, for the year of reclassification, the ONS does not publish "AF" [the revised rate] , then the value "OPF" [the first release rate] shall be applied in its place."

Thus the model agreement changes accordingly.

The Judge observed that PPO cases not involving the NHSLA would be affected by the same issue and urged all compensators "to review the terms of their existing order(s) and, in the event that the terms of the order(s) require it and the same problem of calculation arises, to seek acceptance by claimants and Deputies to amendments similar to those which have been made to the NHS LA model order in this case. "

In a further case, this time from the Court of Appeal - Wallace-v-Follett [2013] EWCA Civ 146 -  the parties could not agree two details in a PPO. The first was in relation to the provision for future medical reports in relation to the Claimant's condition. Defendant insurers/compensators wish to have Claimant's examined on occasions for purposes of purchasing annuities. The Claimant emphasised the need to protect the autonomy of the Claimant. The second issue was in relation to the requirement for providing annual proof to the Defendant/Compensator that the Claimant is still living and the consequences of failing to provide such evidence.

The Court of Appeal's solutions were to order that the following clauses should be incorporated into the PPO

"The Defence Insurer shall be entitled to require the Claimant to undergo medical examination at its request upon reasonable notice being given to the Claimant at any time during the Claimant's life time, such medical examinations to be limited to obtaining a medical opinion as to the Claimant's general health in order to obtain a quotation for the purchase cost of an annuity to fund the periodical payments and/or (not more frequently than once every seven years) for the express purposes of reviewing its reserve. The cost of any such examination, to include any reasonable costs and any loss of earnings incurred by the Claimant in attending the examination, shall be paid by the defence insurer. The Claimant shall have permission to apply to the court in the event of reasonable concern as to the nature or extent of any such examination."
"Following a request by the Defence Insurer in writing on or before 1 November each year, the Claimant shall obtain and provide to the Defence Insurer by 1 December each year, commencing 01/12/2012, written confirmation from his GP or other medical adviser dated not before 1 November of the same year confirming that the GP or medical adviser has seen the Claimant on or after that date and that the Claimant is still alive, in default of which the obligation of the Defence Insurer to make instalment payments to the Claimant shall be suspended until 7 days after the written confirmation (dated not more than one month before the date of its submission) is provided to the Defence Insurer."
It can be expected that these will now become standard terms in PPOs.


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