Fieldfisher has claimed compensation for those with mesothelioma for over 30 years. Prior to 6th April 2014 compensation was only available for those employees who could both prove their employers were at fault and if the insurers for the relevant period of employment could be found. This was not easy to do given that you were generally looking at periods some 40 to 60 years before. The establishment of the Employers' Liability Tracing Office was the first bit of good news as this was the first database of employers' liability insurance. Then the government set up the Diffuse Mesothelioma Payment Scheme (DMPS) which would pay compensation according to a tariff to those eligible sufferers or dependants where the claim would have succeeded but for being able to trace the relevant employer's liability insurer.
Tariff payments are on a sliding scale between £271,120 for those 40 years and under and £87,061 for those 90 years and over.
Financing the Scheme
It's important to remember at all times that to finance the Diffuse Mesothelioma Payment Scheme the government sets a levy to be paid by active employers' liability insurers which covers all costs. Before the Scheme came into force the insurance industry confirmed that from their level of gross written premiums (GWP) they could pay up to 3% as a levy without having to pass the cost on to its customers. Each year the government sets the levy based on an assessment of payments for the forthcoming year and relevant insurers contribute an amount relative to their market share. Remember though that the 3% is a maximum, not a fixed amount.
The annual statistics for the Diffuse Mesothelioma Payment Scheme are soon to be announced; however, up to March 2017, the total figure paid out on applications amounted to £97.7 million. This represents both payments to the Claimant and repayment of benefits back to the Government.
The Tariff Payment
The tariff amount paid out is set according to the age when the sufferer is diagnosed with mesothelioma or the date of death if the diagnosis is afterwards. This amount is based on "the average" payment in a mesothelioma claim with figures having been gathered from details provided by the insurance industry prior to its inception in 2014. That date seems a long time ago now. Initially, the tariff was paid at 80% and this increased to 100% when the anticipated number of applications was lower than expected, but the actual tariff hasn't yet moved.
Impact of Inflation & Flexibility of the Set Tariff
You might expect that inflation would be a factor that impacts the average award. During discussions prior to the scheme starting it was intended that the tariff would increase with inflation; however, this is not within the rules and so will not happen automatically. Nor will the reassessment of what an "average civil award" will be.
When debating the Mesothelioma Bill in the House of Lords, the Parliamentary Under Secretary of State for DWP (Lord Freud) stated :
I put on the record that it is our intention to uprate the scheme payments annually in line with the CPI. If we were to put that in the Bill, we would have no flexibility to uprate by any other amount in future. For instance, we have given an undertaking to review the scheme’s operation and the rates of payment at the end of the smoothing period. Obviously I cannot pre-empt the findings of the future review, but were any review to show that a gap had developed between average civil damages and scheme payments, we would want to address that. If we were required by the Bill to uprate only in line with the CPI, we would be unable to do so. (Hansard Vol 747,17.07.13 column 837)
The reference to having the flexibility to uprate the amount by more than inflation has become particularly relevant with regard to immunotherapy because you may expect the inclusion of those costs to increase the valuation of an average award. The average value of a civil claim may increase overall as immunotherapy treatment increases, given that a full course of treatment can be estimated at £250,00 although never fully predictable. However where the future cost of treatment is included by way of an order, setting up payment only when and if it is needed, how will those costs be included in the assessment of the value of an average civil claim?
The question of whether immunotherapy treatment should impact on the tariff goes further, however. On first consideration, it appears to be an unfair lottery that a claimant able to succeed in a civil claim could cover the cost of the treatment, whereas no tariff award under the Diffuse Mesothelioma Payment Scheme would cover it in full. However, contrast this dilemma to the cost of treatment pushing up the tariff amount to the benefit of all successful applicants to the scheme whether undergoing immunotherapy or not, but still without covering the cost of immunotherapy for those that wanted it.
Impact of increasing the tariff
Previously I did say that is it is important to remember that the scheme is financed by a levy on the insurance industry and increases to the tariff impacts on how much the insurers must pay in. Whilst the GWP of the insurers must rise just as inflation does, what would happen if the levy paid by the insurers would have to be higher than their 3% GWP? The insurance industry presumably would not meet the cost which would leave a financial issue I cannot see being overcome.
The Diffuse Mesothelioma Payment Scheme has been good news for those with mesothelioma and recognition that the insurance industry has a responsibility for the risks insured where those policies could not be traced, and therefore no claim on the policy is possible. It is still a scheme of last resort and it does not replace the individual assessment that you would have with a civil claim. It is vital that the government keeps to its undertaking to reassess the tariff award and given that the settling in period has now passed it is time for the government to revisit the tariff level set.