Coal Health Compensation Schemes€¦ · Coal Health Compensation Schemes Fourteenth Report of...

HC 375-II Published on 4 May 2005

by authority of the House of Commons London: The Stationery Office Limited

House of Commons

Trade and Industry Committee

Coal Health Compensation Schemes

Fourteenth Report of Session 2004–05

Oral and Written Evidence

Ordered by The House of Commons to be printed 22 March 2005

£14.50

The Trade and Industry Committee

The Trade and Industry Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department of Trade and Industry.

Current membership

Mr Martin O’Neill MP (Labour, Ochil) (Chairman) Mr Roger Berry MP (Labour, Kingswood) Richard Burden MP (Labour, Birmingham Northfield) Mr Michael Clapham MP (Labour, Barnsley West and Penistone) Mr Jonathan Djanogly MP (Conservative, Huntingdon) Mr Nigel Evans MP (Conservative, Ribble Valley) Mr Lindsay Hoyle MP (Labour, Chorley) Miss Julie Kirkbride MP (Conservative, Bromsgrove) Judy Mallaber MP (Labour, Amber Valley) Linda Perham MP (Labour, Ilford North) Sir Robert Smith MP (Liberal Democrat, West Aberdeenshire and Kincardine)

Powers

The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk.

Publications

The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/t&icom.

Committee staff

The current staff of the Committee is Elizabeth Flood (Clerk), David Lees (Second Clerk), Philip Larkin (Committee Specialist), Grahame Allen (Inquiry Manager), Clare Genis (Committee Assistant) and Joanne Larcombe (Secretary).

Contacts

All correspondence should be addressed to the Clerks of the Trade and Industry Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5777; the Committee’s email address is [email protected].

Footnotes

In the footnotes of this Report, references to oral evidence are indicated by ‘Q’ followed by the question number. References to written evidence are indicated in the form ‘Appendix’ followed by the Appendix number.

Witnesses

Wednesday 23 February 2005 Page

Mr Andrew Tucker, Mr Roger Maddocks, Mr Peter Evans, Mr Gareth Morgan and Mr Lawrence Lumsden, Claimants’ Solicitors’ Groups Ev 1

Tuesday 1 March 2005

Ms Sue Gibson, Dr Colin Wigley and Mr Simon Chipperfield, Atos Origin Medical Services Ev 16 Mr Martin Trainer, Mr Jeff Wilson, Ms Kate Roy and Mr John Tizard, Capita-IRISC Ev 19 Mr Nigel Griffiths MP, Mr Nick French, Ms Ann Taylor CBE and Ms ChristineChamberlain, Department of Trade and Industry Ev 24

List of written evidence

1 Coalfield Communities Campaign Ev 33

2 Department of Trade and Industry Ev 36

3 DTI (supplementary) Ev 64

4 Scottish Ministerial Monitoring Committee Ev 69

5 Claimants’ Solicitors’ Group Ev 70

6 Claimants’ Solicitors’ Group (supplementary) Ev 83

7 Claimants’ Solicitors’ Group (supplementary) Ev 88

8 English Ministerial Monitoring Group Ev 92

9 The Law Society Ev 101

10 Capita-IRISC Ev 101

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Trade and Industry Committee: Evidence Ev 1

Oral evidence

Taken before the Trade and Industry Committee

on Wednesday 23 February 2005

Members present:

Mr Martin O’Neill, in the Chair

Mr Michael Clapham Judy MallaberMr Nigel Evans Sir Robert Smith

Witnesses:Mr Andrew Tucker and Mr Roger Maddocks, (Irwin Mitchell), Mr Peter Evans and Mr GarethMorgan (Hugh James), andMrLawrence Lumsden (Thompsons (Scotland)), Claimants’ Solicitors’ Groups,examined.

Q1 Chairman: Good morning, Mr Tucker. Can I Q3 Chairman: Maybe I can put this in a diVerentway because although I do not want to flog thiswelcome you and your colleagues. I was just sayinghorse I think it is useful. We know that claims areto my colleagues that we do not intend to raise withprobably not taking as long as they did originallyyou any specific constituency cases this morning,and that assessments by the doctors have perhapsyou will be pleased to hear; we will leave that tobeen dealt with more speedily now, but is it yourlater. Perhaps you could introduce your colleaguesimpression that lessons have been learned over timeand we will get started.by the DTI and that there have been improvementsMr Tucker: Peter Evans who is from Hugh James;or are you still stuck in the grooves that you wereRoger Maddocks who is from Irwin Mitchell; asfour or five years ago?am I; Gareth Morgan who is from Hugh James,Mr Tucker: I think generally speaking, yes, lessonsand Lawrence Lumsden from Thompsons. Therehave been learned and probably not only by theare two firms of that name; this is the Scottish sideDTI, to be fair. As you can see from ourof the practice.memorandum, there are still issues that concernus now and that we can see going into the

Q2 Chairman: Thank you. Pretty early in your immediate future.memorandum you bring to our attention thestability of the membership of the Solicitors’

Q4 Mr Clapham: Could I take you on to someGroups involved in the coal health schemesof the procedures for dealing with certaincompared with the high turnover of DTI ministersoccupational groups with Vibration White Finger.and personnel. Is it your feeling that theIn your memorandum you criticise Capita-IRISCDepartment’s development and implementation offor the way in which they have implemented thethe schemes has suVered as a consequence of thisoccupational procedure for Group 3 VWF claims.turnover? Is the feeling that you have that everyHow does the procedural bar which you claim istime there is a new minister, there is a newbeing applied work in practice? How do the actualapproach, there is a new initiative, and every timeprocedures of Group 3 prevent progress?there is a new senior oYcial responsible that thereMr Maddocks: The Group 3 procedure has beenis a change in emphasis? Would that be a caricaturedogged by lack of progression of claims within it,of what you are saying or is it something nearly really since the handling arrangement was set up.

true? It is important to bear in mind that the originalMr Tucker: I do not think it has been by any means handling arrangement provided for Group 3 claimsthe most significant issue. Certainly when there and provided the information that would behave been changes of minister, on each occasion necessary to be produced, and that was followedthere has been a period of time which it has taken for a period of a couple of years or so afterto brief the person concerned and for them to get the handling arrangement was established whenup to speed. It is also true to say that there have claims were being submitted and being denied onbeen diVerent styles as between them. The same has the grounds that they were Group 3. Those denialsbeen true to a diVerent degree when there have been were then being tested and there was nochanges of personnel at the DTI. I suppose the mechanism, it appeared, for resolving the claims,main thing that we now notice is that there is for dealing with them. We were told aboutnobody currently on the DTI team, which extends complaints about lack of uniformity of evidencebeyond the oYcials to their legal advisers as well, submitted by claimants. It appeared that IRISC didwho was about when either of these agreements not have the resource or the approach developedwere actually negotiated, which occasionally causes to enable the claims to be assessed. To try andsome dislocation in the exercise of going back to resolve some of these diYculties we negotiated thewhy we have got to where we are, but, as I say, it occupational group procedure which was intended

to address a raft of issues related to occupationalis not the biggest point.

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Ev 2 Trade and Industry Committee: Evidence

23 February 2005 Claimants’ Solicitors’ Groups

groups but one of its major purposes was to quite troubling that that should be put down in astatement by somebody whose job it is to look intoaddress the issue of Group 3 claims and provide athese claims.standardised form for their presentation. The

underlying thinking was if the claims werepresented in a form that fulfilled the requirements

Q5 Mr Clapham: On that, the insurers usethen subject to the absence of evidence to theadjudicators or people with mining expertise. Fromcontrary, provided on its face the evidence stackedyour experience, would it seem that the people thatup and made mining sense, that the claim would beare used tend not to use “mining sense” but ratheraccepted and would go through. It was notto operate to the book?envisaged that this would mean that IRISC would Mr Morgan: I would not like to say that becauserefuse to consider the merits of other claims but of my lack of involvement. My concern was aboutmerely this procedure would be a vehicle, if you the view of somebody whose job it was to look intolike, for providing smooth passage for claims that these expressing the opinion that you cannot rely

met those requirements. Then following on from on what the miners are saying.that there have been other procedural hurdles that Mr Lumsden: There are concerns, to answer yourhave evolved that claimants have had to overcome. question Mr Clapham, that adjusters operate to theIRISC will not consider claims that do not meet the book then the book that they are using should berequirements of the OGP unless they pass the accurate. There are concerns that the guidelinesquality audit that they devise, and part of that they may have used in the past to assessthe quality audit is checking that you have got Group 3 claims have not accurately described whatthe right number of statements in from miners have done in particular jobs, so that is aappropriate witnesses. In circumstances where continuing concern.those requirements are not met they will only Mr Maddocks: I think it is fair to say that there haveconsider a claim if a request is made for discretion been long-standing concerns about the approach ofwhich requires the claimant to demonstrate that the adjusters as to the way that they approach thethere are some exceptional circumstances and to set investigation and adjudication of the claims and alsoout in detail the steps that they have taken to trace and separately, concerns about the rate at whichthe witnesses, so there are other hurdles that have those claims are being carried out and the rate ofto be overcome. It is fair to point out that requests progress there. I would be happy to develop either offor discretion are largely accepted but it is an those points if you wish.additional step that the claimants have to gothrough. It is fair to point out that the DTI have

Q6Mr Clapham: Before I go any further could I foraccepted that where claimants are elderly or inthe record declare an interest. I am a member of theposthumous claims then that satisfies the criteriaEnglish Monitoring Group. Just coming back to thefor ‘exceptional’, but nonetheless there is a series ofway in which the adjudicators are used, is it yoursteps that has to be gone over and at various pointsview that the adjudicators are used in a way toalong the way people have dropped out of theminimise settlements?process. It is of particular concern that in OctoberMr Tucker: We do not know what their terms and2002 a cut-oV date was put in place whereby allconditions are, so to speak, or precisely how they areevidence that complied with the occupationalinstructed by the Department. I think anyonegroup was to be submitted if the claims were to goobserving it could be forgiven for coming to thatforward and where that step was not taken theconclusion over the period that Group 3 claims haveposition was the claims would not be considered.been assessed. We give some figures in our reportThat was before we had in place a witness databasethat show how decisions that have been taken in thewhich has only been developed within the lastfirst instance, so to speak, have been subsequently12 months which facilitates claimants to identifychanged and claims have been recategorised as theywitnesses and produce those in support of themove through the process of assessment and thenclaim. The concern is that there are over 10,000through the disputes process. I think the maincases where an intention had been intimated toconcern has been about the application of what iscontest the denial. They were never actuallycalled in the procedure “mining sense”, which iscontested by the deadline and the concern is thatreally expert opinion about the operation of coalin a proportion of those cases that would bemines at the particular time that the individualbecause the claimants felt that they could not findconcerned was at work, and in that sense thethe witnesses; there was in place at that time noadjusters are almost acting as judge and jury becausewitness database.they are giving an expert viewwhich then determinesMr Morgan: Could I make an observation pleasewhether they accept the case or not. It is fair to sayon the Group 3 claims and the VWF. I do not dealthat it is subject to the right of challenge andpersonally with the VWF claims but I was at aultimately the right to go to court but that has beenWelsh Monitoring Group when a statement was the main area of concern.submitted to it dealing with VWF. The statement

was submitted by Mr Glyn Moss and heinvestigates disputed Group 3 claims for Capita Q7 Mr Clapham: Given that the court made itsand the statement included this: “My opinion is decision regarding the issue of negligence, given thatthat many claimants’ and witnesses’ statements are you negotiated the various group procedures, do

you feel that the use of adjusters is in a way oncenot to be replied upon.” I must say we found that

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again giving British Coal, so to speak, a second bite Mr Maddocks: In relation to the VWF ServicesAgreement we are happy with the terms of theof the cherry because the case has already been

decided in court? agreement which was intended to facilitate speedyresolution of a lot of claims. There have been a lot ofMr Tucker: I think we accept that it is necessary toconcerns about its implementation and there seemedshow that the claimant concerned was exposed toto be diYculties in the early days at IRISC in thattools that vibrate in the workplace, so we accept thatthere appeared to be a lack of understanding reallythat is necessary for themajority of jobs that fall intoas to the basis for the services claim, a lack ofthis category. I think our main concern really is thatunderstanding about the impact of the symptoms ofthe Group 3 adjusters appear to have been leftVWF, the vascular on the one hand and thelargely to their own devices to set their ownsensorineural on the other. So there have been lotsevidential standards, which has been most recentlyof issues that have arisen in relation to those sorts ofevidenced by the issue of so-called guidelines thatmatters generally and then specifically in relation tothey operate to that the English Monitoring Group,cases in which there is a suggestion that theas you know, found out about and called forclaimant’s employment in someway suggests that hedisclosure of andwere eventually providedwith onlyshould be ineligible to recover for the costs ofto be subsequently told that they were of nomaterialassistance with services tasked and a failure touse to the adjusters.understand that the Services Agreement is intendedto compensate where assistance is required not only

Q8 Mr Clapham: Given that you have raised the in situations where there may be a complete inabilityguidance notes and bearing in mind that as the to do the task and a failure to understand that forClaimants’ Group of Solicitors you liaise down employment to be a bar then you would really needthe line with solicitors, represent solicitors in to demonstrate that the employment indicated thatnegotiations with the DTI, have you at all been the claimant was capable of doing all aspects of theinvolved in negotiating the notes of guidance that task for which he claimed assistance. So there haveare used by the adjudicators in these cases? been a lot of those sorts of issues and training hasMr Maddocks: The notes of guidance are a DTI been a problem and continues to be a problem. Somedocument of instruction. We have seen drafts of time into the implementation of the Servicesthem and been invited to comment on them and we Agreement and because of the diYculties, we werehave taken that up; we have commented and some invited to go down and assist IRISC with someof our comments have been adopted. We were very training and, in fact, it was something that Iconcerned about the guidance notes because of our did personally. In the discussion involved in theconcerns about the way that the adjusters were training it was quite clear there was a real lack ofapproaching the task of investigating. There were understanding about the basis of the Servicesissues not only as to their application of mining Agreement and how it was proposed it shouldsense, which has been questioned, but also the improve. It has improved but there continue to berelative weight that they were giving to diVerent diYculties. The early stages were also dogged withtypes and diVerent elements of evidence and this has lots of inquiries from IRISC, the relevance of whichbeen a major concern here, where it has appeared in was not immediately apparent or if it appeared thata number of cases they have given disproportionate it might have been relevant, it was hard to see how itweight to documentary evidence which is not could really have been determinative of the issue.pertinent to the issue of vibration exposure but may Lots of inquiries at an early stage are for tenancybe relevant to the issue of what job the claimant agreements and documents to prove ownership ofwas doing on the one hand when on the other there vehicles and things like that. That sort of problemmay be evidence from the claimant and his has persisted to date. We still have lots of queries

generated and when you look at a query it is hard toquestionnaires, who will include oYcials, thatunderstand why that question has been asked. Onecompletely contradict that. There have been allof the most bizarre recent ones was an inquiry forthose sorts of issues about the approach to thedetails of the claimant’s involvement in his hobby inweighing of the evidence, the investigation of thekeeping tropical fish. You just wonder what is goingclaims, that those guidelines were attempting toon. In broad termswe are happywith the agreement.address. Although we have had input, they haveOur concerns are about implementation. Training isbeen shared with us, we have commented and somea big issue on the way that the claims are handled,of the comments have been adopted, there hasand also I think it is clear that there is a lot ofremained a concern about the extent to which theyinvestigation being conducted by IRISC some ofare followed in practice. When you look at thewhich we question the relevance of, which when youindividual cases coming through there are clearlylook at the text of the Services Agreement itself youissues there.think the agreement made it clear that it was set upin the way it was with a view to limiting the factual

Q9 Mr Evans: Am I right in believing that you are investigation and yet at the same time we have gotquite content with the services agreement between this huge amount of activity going on investigatingyourselves and the DTI but you are unhappy at the claims, lots of claims stuck at the investigation stage,way it is being implemented in practice? I am just and one is left wondering why. We do not know thewondering if you could give us some practical terms of the arrangement between IRISC and DTIexamples of where Capita-IRISC are doing things so we do not know whether the answer is to be

found there.which you are really unhappy about.




Q10 Mr Evans: Have you got communications with anomalies in evidence that is submitted there havetheDTI in asmuch as the points you have raised just been significant savings by the Department and bynow are quite appalling? I thought the Services the claim handlers in relation to the value of theseAgreement was there to speed things up in order that claims and it may be said that the procedure isthese cases can be dealt with expeditiously and get designed to flush out exaggeration, whether it isthe money through to the people who are rightfully deliberately contrived at or unintentional. Theclaiming it. You have mentioned training. The fact problem is, as we see it, that many people who havethat they do not even understand the basic tenets of been in this process for years simply becomewhat they are doing seems to be hugely alarming. scunnered with the time it is taking to get to the endWhat recommendations would you now make at of it all and some of them undoubtedly will simplythis stage that could bemade in order to speed things accept what is on oVer on the table now rather thanup and make it expeditious? wait another several months for it all to be resolved.Mr Maddocks: Two points. I stand by everything That is not to say that there are not claims where thethat I have said. I think things have improved. I evidence may not hang together or that there is notthink there is scope for significant further a case to be made for looking at the claims closely, itimprovement. I think that there needs to be better is simply to make the point that if you do not do thistraining by the adjusters who are dealing with the on a proper basis then youmaywell find that you getclaims at IRISC so they have got a better basic a lot of people simply getting disenchanted with theunderstanding of the fundamental issue, the time it is taking.premises upon which the agreement is intended tooperate and then there needs to be a radical look at

Q14Mr Evans: There may be some people out therethe way IRISC investigates cases to see whether ornot that could be streamlined because the impression who may exaggerate simply to get more money butthat one is left with is that there is a lot of activity, a in your estimation there are other cases wherelot of queries raised where the relevance of a lot of through the ‘harassment’ of parts of their claims,the inquiries is at best marginal and there is which have got nothing to do with the claimsignificant scope for streamlining the process. basically in the way that IRISC is operating,

claimants are being cheated out of money that isrightfully theirs because they have just given in?Q11 Mr Evans: They do not seem to be complyingMr Lumsden: I do not say there are necessarilywith the spirit of the agreement. Some of thesepeople out there deliberately exaggerating. I think itquestions, particularly the tropical fish one which isis a complicated process. You may have a claima practical example you have given, seem tome to bewhere part of the evidence is quite good for five yearsludicrous. Are you able to get that back to the DTI

to say they are not complying with the spirit of the of the period for which you are claiming but it is notagreement that you have come up with? so good for two years of the period for which you areMr Maddocks: We have a regular dialogue with the claiming. It may be that you aremade an oVer on theDTI. We meet them on a cycle of meetings every basis of the five years and not seven years. Themonth or six weeks to discuss service claims in claimant may simply get to the end of his tether andparticular. We have raised these examples. Where think, “I may as well accept this because it has beenthe examples are raised they are taken back and a going on long enough,” rather than hold out for thespecific example is usually addressed and if it is like extra two years. That is not to say he does not havethe example I have given it is acknowledged that it is a good claim for the two years. It is just that thenot relevant. The concern is that whilst the specific evidence may be a bit indiVerent. The witness doesexamples are identified, the wider message is not fed not remember all the facts that he requires toback. What may have been identified as a training remember in terms of these processes.need with a particular adjuster is not then addressedso that there is further training for adjusters more

Q15 Mr Evans: But is there a sense of harassmentwidely.and delay which then leads to people being cheatedout of money that should rightfully be theirs?Q12 Mr Evans: Is there a big changeover in staV

Mr Lumsden: Inevitably that pressure is there onthere with new people coming in?people to accept things because they think they haveMr Maddocks: There is. We are led to understandreached the end of the road and they wonder howthat there is a significant problem with staYng atmuch longer is it all going to take.IRISC. In connection with some discussions weMr Evans: Chairman, there can be little or no doubtwere having with them about the stalled claims

procedure, we were told they had had a that there is a group of claimants who simply25% turnover of staV in the last year, and that become worn out by the process, particularly if theyobviously will create its own diYculties. are asked for information that they find diYcult to

see the relevance of, but if they are properly advisedwill recognise it is part of the process and give thatQ13Mr Evans: That is enormously worrying, I haveinformation, but when they are asked for moregot to say.information again in sixmonths’ time and again theyMr Lumsden: Can I add a point to what Roger hasare wondering about the relevance of it and thatjust said which is it may be said by the Departmenthappens a third and a fourth time, they begin to getthat by asking the claim handlers to go through these

questionnaires and to pick out discrepancies and the perception that the dice is loaded against them.




In those circumstances an oVer is made, and a lot of where there was a leaked report in The Guardianabout attempts to use technology to pick up peoplethem think, “I do not think it is right but I have had

enough of this,” and they bail out. making misleading comments on the telephone.Throughout the period there has been this idea thatthere are vast numbers of people from the miningQ16 Mr Evans: Do you think this approach iscommunities out to make fraudulent claims. Thisintentional or unintentional?has coloured a lot of what the DTI’s thinking isMr Evans: I have got no doubt that in the early partabout. It is simply not right.of these proceedings there was a determination toChairman: You must excuse us, Mr Morgan. Wepay the proper amount of compensation as was due.have just been taking evidence from the ExportHowever, as the process has got very complicatedCredits Guarantee Department concerning briberyand has taken a long time, it is much more diYcultand corruption regulations in which the ‘tenderto have confidence that the root desire is to pay theseflowers’ of British business have felt that they weremen as opposed to making sure that it is right. Ifbeing trampled on by civil servants who were askingthere is a doubt as to whether it is too much or toothem far more polite questions with far lesslittle, I suspect it usually goes one way.requirement of evidence and the loss of evidencecoming into play than they ask elderlymenwhohave

Q17 Chairman: You have said that people get tired. been broken by a life of very hard work and areThe other side of the coin is that of course they die. being treated rather more rigorously by some partsMr Evans: Yes. of the DTI than by others. It is just an observation

to make. We are not intending for a moment to beQ18Chairman:Weare talking about people who are rude here. It is just there were wry grins coming overby definition ill or they would not be able to our faces when you were giving important evidence.complain and because of the nature of the coal Many of us were just setting one bit of evidenceindustry we are talking about men who are getting against the other.old and a lot of them are into their 70s now.Certainly from my experience amongst the most

Q19 Mr Evans: Following what you said, Mrdistressing is when you get cases of dementia settingMorgan and following what you said, Mr Lumsdenin over and above the other things and the familywhich is that a lot of these cases can be somewhatjust say, “We want to draw a line under it.” You justcomplicated and we are talking about people whowonder if people are rather cynically observing theare ill or very aged, have you got any evidence thatdeterioration in condition and saying, “If we waitthe frighteners are being put on claimants that theylong enough, they will be dead”?ought not be claiming for things that are theirsMr Evans: I think we have all had the experience ofbecause they are frightened perhaps that they will bepeople saying, “They are just waiting for me to die.”accused of fraud and could end up in prison or withThey are wrong because it costs the Departmenta fine or indeed losing their entire claim?more if that happens. They are wrong but thatMr Morgan: I think the most distressing aspect ofdoes not prevent the perception being there inthis was when widows and elderly men were askedcommunities and, sadly, there are now familiesfor proof of employment. A lot of British Coalwhere not just the miner but perhaps the miner’srecords were destroyed. They were destroyed whendependents have died. Even now we think aboutthis litigation was going on but they were destroyed.some of these claims being brought by miners’So you had men who may have spent 50 yearschildren, and I always think of them as being youngworking underground or the widow of a husbandpeople. In fact, they are often people in their 60s nowwho had spent 50 years underground being asked forand, sadly, there is no doubt that that is happeningproof of employment. This caused a great deal ofagain.distress because the implication to those people wasMr Morgan: I would also like to add thatthat they were not being believed. That system wasthroughout this process there has been a feeling bychanged and after a lot of argument it becamesome in the DTI that a lot of people are trying toagreed that that evidence would be accepted butmake fraudulent claims and there has been a distrustthere was a time when people were being asked forof the mining community. Right at the beginningproof of employment. Proof was being given in ofthis was evidenced by the DTI wanting to introducethings such as a long service award signed by thea declaration on the claim form that included theChairman of British Coal. That caused a great dealphrase “if errors are made deliberately it may lead toof resentment in the community because thosearrest and imprisonment”. There were tremendouspeople saw this as their word not being accepted.eVorts to get that onto the claim form. How many

elderly miners or widows would have signed such aform? It was very diYcult to get them to back oV Q20 Mr Clapham: Could I go on to the issue of

minimum payments because when the COPD camefrom that. Then when the medical assessmentprocess was being discussed, theDTI were very, very in in 1999 theDTI at the timewas reluctant to accept

the idea of minimum payments and, as I understandconcerned that there should be physical tests forthese elderly miners to go through. We had to get it, the judge who presides over the case was also of

the view that minimum payments were not the waymedical evidence to the eVect that these tests wouldactually kill some of these men. It was only with that forward. Since then the CSG has suggested to the

DTI a revised procedure for minimum payments inevidence that that was backed oV from. The finalstage of it is probably Appendix 6 to our report which you would be making a contribution. Have




you got the support of your members and the wanted a direct payment model where the firmsupport of other parties to go aheadwith aminimum concerned has a reduction in the actual fee for thepayment and do you feel that a minimum payment actual claimant and the claimant receives the £500.would actually speed up the resolution of some of We had addressed that model about 18 monthsthese cases, lessening the queue therefore and adding beforehand and the diYculty that it created was thatto the more expeditious settling of the cases that some firms of solicitors were prepared to do it andare left? some were not. I suppose it has a more immediateMr Tucker: The question requires a step back to give impact potentially on the firm depending on theiryou a bit of background first. We did raise the issue profile than the (if I can put it inelegantly) skimming-of the minimum payment when the scheme was oV-the-top method across the whole fund that weunder negotiation for the reason, quite simply, that had in mind. We have listened to the DTI. We thinkit was clear from the way the scheme was designed in the RPI fundworks better as a whole, albeit it causesterms of assessing the level of dust exposure and then more administrative work for them, which weapplying that fraction, whatever it might be, to the accept, because we think it has the facility ofindividual for the level of damages, that it was covering the whole scheme, sowe are now consultingentirely probable that you could come out with low with due respect to the DTI’s proposal and theawards. There have been oVers that are down in the Minister’s suggestion with the Solicitors’ Grouppounds. No court awards damages at that level. again at the moment as to whether or not they areJudges start at a baseline if they are going to award prepared to consider reverting to the previousanything which obviously varies over time and may model. It has not concluded yet but a group of firmsbe £500 or £1,000 or something of that order. If the have indicated that they would not want to opt intoscheme was going to reflect common law, which is it. So unfortunately at the moment it appears thatthe broad aimof it, that should be in place. The other whilst some firms might be prepared to elect for thefeature of it, of course, is that it gives the scheme funding model, the DTI preferred model, not all ofsome basic integrity because it is not producing themwould and that is less than ideal as far as we areoutcomes which for some are just seen as insulting. concerned, and depending on how many say that toThose were the two primary reasons to give a us will aVect what we say to the DTI about where weminimum payment in the first place and I think the would prefer it to be moving forward.VWF scheme actually has a minimum payment in it.If you qualify at all you get £500. It is not specified

Q21Mr Clapham: So would it be fair to say that theas such but that is the eVect of the agreement. Itmodel that you are consulting on now, which is thecould not be done as part of the scheme althoughone that you previously discussed with the DTI, isthere were precedents at the outset for putting one inunlikely to get the support of all the solicitors andplace, and we have raised the subject subsequentlytherefore if it does not have the support of all thewithout landing a report. When the negotiationssolicitors it is very unlikely that it will be a runner?recommenced in 2003 there were then aboutMr Tucker: We have been told in the last few days3,500 oVers that were below £500 that had not beenthat theUDMpanel of firms, of which there are fouraccepted. We talked to the DTI about what were

eVectively matched funding proposals. Solicitors or five, do not support the scheme funded directly onwould forego some of the increase in tariV costs, the a case-by-case basis and we will have to see what theDTI would contribute some money, and that would other firms say. Certainly it looks as though we willfund a minimum payment, but that was not not have a unanimous approach by all theacceptable to them as a proper use of public money. Claimants’ Solicitors’ Group members.We went away and reconsidered it and because wesee that there are benefits to the scheme as a whole

Q22 Mr Clapham: So when would you expect thatwe were prepared to say that the solicitors ought toconsultation exercise to be completed?attempt to fund the scheme themselves. EventuallyMr Tucker: It is going to conclude in the middle ofwe formulated a proposal whereby a sum of moneyMarch.would be withheld from the solicitors’ fees in allMr Morgan: We have been told by UDMsuccessful cases irrespective of the value of the oVersolicitors—and they have had separate meetings(obviously not just the low value cases) and thatwith the DTI which we were not told about—that atwould apply across the whole scheme and wouldtheir meetings to discuss minimum payments theybind all of the firms of solicitors concerned. I thinkhave told the DTI that they do not agree with it inhalf of an annual RPI uplift at that time would haveprinciple.cleared oV the 3,500 cases and would also have left aMr Evans: Can we be clear that the model is we arebit of money over. Because there is no good way ofconsulting on is not what we regard as the idealpredicting what the future trend would be in volumemodel. The ideal model is the one that Andrewof low value oVers, we did not feel able to say weoutlined first which is creating a sum of money tocould do this for the lifetime of the scheme. We didpay this and had that been accepted we think thatsay that is what wewanted to achieve, but wewantedwould have been something which could haveto retain the right to review. After what in our viewapplied across the board. Unfortunately, the modelhas been 12 months of prevarication by oYcials, thenow which we are having to consult on is not ourMinister confirmed at the end of last year that theymodel and may result in some opting in and somewould accept a minimum payment scheme in

principle but instead of the RPI fund model they opting out which is less than ideal.




Mr Tucker: It may lead us to come back and say Q26 Chairman: But nevertheless any recalcitrantgroup has in eVect the power of veto?if this is going to run it has to be the RPI model.

One point I should have added, and it is in our Mr Morgan: Not if there were an agreement thathalf the RPI (or whatever percentage of the upliftreport, is the number of cases concerned has now

increased. From the CSG membership it is about or whatever mechanism) never formed part of thesolicitors’ costs and instead of that money going7,500 claimants and the original 50% of an annual

increase to create a fund would not be suYcient so into solicitors’ costs, which would allow solicitorsto control it, it did not go there, it went somewhereit would have to be a bigger sum of money, but we

do not see that as an insuperable hurdle. else which solicitors individually had no control on.After consultation—and we consulted on this andMr Morgan: I think it is fair to say that the

negotiations with the DTI on minimum payments everybody was prepared to go along with thatscheme—the problem comes with the DTI modelhave been very diYcult. Even though the solicitors

are funding it, the view we have had is for some (which maybe they do not realise, I do not know)because it is based on individual solicitors dealingreason the DTI were against us. It was not until the

judge in open court said it was a good idea that with their individual claims and taking less costsper claim. That model is much easier for solicitorsthere seemed to be a change of attitude.to say, “I am not doing that, I am not agreeing tothat, I want my full fees,” and we know the UDMQ23 Mr Clapham: Any idea why that change ofsolicitors are saying that.attitude might have been?Mr Evans: Our proposal would have spread theMr Morgan: The judge saying solicitors funding acost among every participating solicitor.payment scheme was something he had never heard

of before and was something to be applauded.Mr Lumsden: It may be worth adding as well that Q27 Sir Robert Smith: Could one of thethe idea is that the RPI fund mechanism would be participating solicitors have said, “I don’t want toreviewed. It is not just something that we want to go down that road”?do this year and never do again, if that is the Mr Tucker: We consulted on it and they did not.Department’s concern, and we have said that to Sir Robert Smith: They were willing because it wasthem. It is something that we would look at when collective?the time comes around next year on a periodic basis Chairman: We will take that up with the DTI.to see what sort of fund of money would be Robert?required to keep it going.

Q28 Sir Robert Smith: So in a sense that route wouldQ24 Chairman: Can we get a handle on how many have got rid of a lot of the backlog and got things upclaimants we are talking about here and how long to speed a bit. One of the things being raised is theit will have to operate? way the DTI concentrated on claims that got stalledMr Morgan: I think there are some 7,000 now. on your side in the handling. How has that beenMr Lumsden: 7,500. resolved?Mr Morgan: When we first suggested the scheme Mr Maddocks: The stalled claim proposals haveit was less than half of that. If a scheme had been arisen under both schemes and my involvementintroduced at that time that backlog could have has been greatest on the VWF scheme which Ibeen cleared with half the RPI and it would only think came first. There is a problem. Obviouslybe an ongoing figure then which would have been thousands of cases are being dealt with andmuch easier to handle. The longer we take arguing inevitably cases get overlooked and get stuck andand discussing this the more diYcult it becomes to become stalled.We support the idea that there needsdeal with the increased numbers that are going to to be a procedure for identifying and addressing thebe involved. problem of stalled claims. There is no diYculty

there. Our diYculties with the DTI’s approach installed claims in VWF essentially were two-fold.Q25 Chairman: I am not quite clear. Does this have

to operate on the basis of consent or could it Firstly, there has been a reluctance to address theproblem of claims that are stuck in the system atconceivably be imposed by the DTI?

Mr Morgan: No, it cannot be imposed by the IRISC. The whole issue of stalled claims was firstraised about a year ago. We said at the time it wasDTI because the solicitors have to fund it. The

suggestion that we made whereby a fund was put something that we were happy to discuss with themconstructively but we wanted some reciprocity andaside for this was much easier to persuade every

solicitor to buy into and they were not then having we wanted to address the problem of stalled claimsat IRISC too. They did not seem interested into deal with individual cases. The DTI model is that

each solicitor takes less in costs per case that he has discussing that but only focusing on problems on thesolicitors’ side. Although they have been keen tofor less than £500. Our concern about this is that

it makes it much easier for solicitors to say, “I do push on in addressing the problems that theyperceive with solicitors, they have not addressed thenot want any part of this,” and that is what we

now have with the UDM group of solicitors. problem of claims stalled at IRISC at all and in factonly yesterday we obtained from the court an orderThey represent a large number of claims. If other

solicitors then take the same view as the UDM it which requires them now to respond to proposalsthat we have put (which are a slight refinement ofbecomes very diYcult. It would be much easier to

implement it on the model that we suggested. some proposals we put back in November) and they




have got to respond by 31 March, so we hope that Q29 Sir Robert Smith: In your evidence you say thata high proportion of cases are put into the stalledfinally the DTI will be pushed to address theprocess in error. Do you have a rough breakdown?question of claims stalled at IRISC. The otherMr Maddocks: It is diYcult. There were suggestionsproblem was that they sought to implement thefrom firms that 50% of the cases that IRISC hadprocedure without proper consultation and thisidentified had stalled had been put in in error. Casesproved to be hugely disruptive. Initially the idea waswere regarded as put into the stalled scheme in errorfloated, as I have said, about a year ago and then inon a number of accounts. In some cases it wasMarch of last year we were given a supplementarybecause the information that was allegedlypaper which meant that we then had in outline aoutstanding (and the fact it was outstanding was thecomplete picture of what they were proposing. Wereason it was in stalled claims) had in fact beenresponded and indicated the diYculties that wesupplied on more than one occasion and IRISC hadthought needed addressing. We were presented withoverlooked it. In other cases it was because IRISCa revised package in July which they floated past thehad been told that the case could not progresscourt and the judge said that she thought it was abecause informationwas awaited from a third party,good idea without having been addressed or seen thethey were waiting for a DSS schedule to confirmdetail, and they then proceeded to implement it.employment or waiting to learn whether or not theThere were a number of deficiencies that weman would undergo surgery for Carpel Tunnelidentified and the DTI have now accepted neededSyndrome, this sort of thing. So therewould be a raftremedying but did not before they proceeded to of diVerent reasons but various firms suggested thatimplement. Frankly, it caused a lot of diYculty over 50% of cases subject to the stalled claims procedure

the period between October and December 2004. they thought had been subjected to the procedureThey wrote in something like 4,000 claims saying inappropriately.“this claim is now subject to the stalled claimsprocedure”. You have to understand from the time

Q30 Sir Robert Smith: One of the other thingsthe solicitor got that letter it meant they were on aobviously is the working of the fast track scheme intimetable whereby the claimwould be closed in threeterms of trying to get things moving again and youmonths if they did not respond. With that kind ofhave got concerns about that. What are your maindraconian consequence of course other things go byconcerns?the board. Other claims handling activities areMr Evans: We support the idea of a fast track. It isdisrupted while they drop everything and try andobviously necessary. In the early part of this schemepick up the ball that is being thrown to them. Theythere was what was referred to as an “expeditedwere responding to IRISC only to find that IRISCpayment” scheme and that worked well. It had to bedid not have the resources to deal with the responses.improved by the Minister because it was recognisedWith the agreement of the DTI, IRISC werethat the sums on oVer were not of a kind of sum thatproposing to simply put to one side all the responseswere attracting people to leave the scheme, whichthat they received until the beginning of this yearwas what was required, and the expedited paymentswhen they would reply which meant of course thatwere increased. It worked reasonably well. It was asolicitors did not know if the claim was still subjectscheme which was very much a joint endeavour. Myto the stalled claims procedure and facing possiblefeeling is—and I think my colleagues share thisstrike out or closure or whether now everything wasfeeling—that the present fast track oVer scheme isback to where it was, so the way it was implementednot the collective venture that the expedited was.caused huge diYculties. We have now got to a There was a proposal, which we found abhorrent, toposition where the scheme has beenmodified and we make this a compulsory scheme. That was brought

have got something that is workable. I hope some to the attention of representatives of communitieslessons have been learned. The judge was moved in and there was a meeting in the House of CommonsDecember to say that IRISC needed to be much and there was no doubt, everyone’s feeling theremore careful about the way they put claims into the was that this was wrong and it was withdrawn.procedure but we still have the problem remaining Interestingly in the language that is used this is stillthat there is nothing to address the diYculties at described as the fast track “optional” scheme whichIRISC. Some of the things that emerged from that is rather odd because there is nothing to contrast itabortive implementation were the big diYculties at to, there is no compulsory scheme, but that is aIRISC, their inability to respondwithin a reasonable historic hangover from the time when there maytime because they did not have the resources to do it. have been the desire to impose this. Frankly, forIn discussions with solicitors, various solicitors were deceased cases the sums are £1,000 for a family andtold at times IRISC had got 28,000 pieces of £1,200 where there is a widow. In our view, that isoutstanding post that needed addressing. You not likely to be particularly tempting and to achieveexpect some work in progress but on the face of it what we hope to achieve. This is supposed to startthat is quite startling. We have real concerns that being implemented on 28February and there are stillthere has been a reluctance to address problems at outstanding issues.IRISC and that is symptomatic of a wider concern Mr Morgan: I think the outstanding issues are as aabout whether the Department is in a position to result of the real diYculties we find in trying tomonitor what is going on at IRISC and hold them negotiate matters with theDepartment. In the past aproperly to account. We think that theme runs lot was done by negotiation and agreement but over

time there seems to have been a hardening ofacross both schemes.




attitudes and it is now very diYcult to have any which you could pinpoint which would take us a lotlonger than the timewe have got today to go throughmeaningful negotiations on many topics. With this

fast track system meant to be introduced on the but it is an example of how trust gets lost. TheDepartment itself came along with this compulsory28 February there are still disputes as to how much

should be paid in certain categories. We still have position on fast track oVers without telling us that ithad changed its mind about what to do with fastuncertainty as to into which categories people may

fall. It is our view that this is a result of lack of tracks because up until 22 September when weinformally discussed things with the judge themeaningful negotiations between the parties where

the court is now seen as the DTI’s first option rather Department’s position was that it would be anoption, not compulsory. Something changedthan where it should be; their last option.between 22 September and some time in October butMr Lumsden: It may be worth making the pointwe were not informed that it had changed. It was a(because it relates to the last item that you werevery important thing to come forward to theasking questions about) that in both the fast trackcoalfields and say to them that there would be aoVer context and in the context of stalled claims,compulsory fast track oVer and not an option. It wasboth parties reallywere at one at the start of it all anda very, very important change and not to inform usit is interesting to watch how what has happened isabout that or tell us what was driving that led us tothat each has resulted in adversarial positions beinghave some dark suspicions about what thetaken up. On the stalled claims issue, our mainDepartment were doing.position on that is that you have to have an even-

handed procedure otherwise all it looks as if you aretrying to do is put pressure on claimants and get the Q32 Sir Robert Smith: So trust has broken down?claimants out of the system on the one hand but on Mr Lumsden: Yes.the other hand you do not apply any pressure onyour own contractor to make sure the contractor

Q33 Judy Mallaber: Just to pick up on one of thosefinishes the claim that is sitting in his oYce. That justoutstanding issues, do you have any hope at all ofdoes not seem right and we have tried to approachpersuading the DTI to change their position onit from a basic fairness point of view and say to thesurface worker claims?Department we have the same interest in thisMr Morgan: We really have tried on this. The initialbecause we do not want claims to be stalled injudgment was 1998. None of the lead judgmentssolicitors’ oYces or in IRISC’s oYce. We want allcovered surface work exposure so the judgment didthe claims to be progressed to an end. It is interestingnot cover it at all. There was intensive negotiationthat we have ended up adversarially on a point thatand investigation into the surface work positionin fact we should really be at one on. It is the samewhich led in July 2000 to a Minute being put beforewith fast track oVers. We started oV with each sideParliament and this Minute was quite clear. It waswanting to have fast track oVers, each side wantingan acknowledgement that there were high levels ofto see the scheme speeded up, to see it improved indust on the surface and that the Government wasits delivery and focus on those claims where we thinkgoing to accept liability for it but within days of thatwe can make fast track oVers work, but in fact theMinute going before Parliament there was a changedialogue broke down very early on. That episode inand the DTI took a diVerent stance and the newOctober that has been referred to by one of mystance was that they would only pay compensationcolleagues which required intervention from thefor dust exposure on the surface if a man had fiveHouse of Commons to get something done about ityears’ underground experience or five years’ dustwas really the end of proper dialogue with theexposure underground. The logic for this was theyDepartment. It is sad to say that several months ondid not accept there were high levels of dust on thewe have not been able to resume a proper discussionsurface suYcient to damage a man’s lung unless thatabout how we should implement fast track oVers.man had a damaged lung when he commenced workon the surface and they accepted five years’

Q31 Sir Robert Smith: What do you think has underground work could have damaged the lungbroken down that dialogue? suYciently to make the dust levels on the surfaceMr Lumsden: I think part of it is trust. The element impact on it. Legally the position is completelyof trust is not there that ought to be there to have a without logic because the majority of surfaceproper discussion with people about how you are workers would have been smokers so they wouldgoing to resolve a problem. One of the issues that have taken into the coal preparation plants damagedcaused diYculties at the time was that there was an lungs. Youmay feel that there is a diVerence betweenindication that the Department had gone to its own a man whose lungs are damaged by undergroundmedical contractor Atos and obtained some work and by smoking but as far as the consequenceinformation that we did not get to seewhenwe ought of his dust exposure on the surface is concerned fromto have got to see it. The result was that we were not a legal point of view it makes absolutely noin a proper position to make representations in diVerence whatsoever. The basic legal position isrelation to that information. It was advice fromAtos that you take your claimant as you find him and ifabout how you might speed up the medical part of his lungs are damaged, it does not matter how, andthe process. The big capacity problem is getting the if you cause more damage you should compensatemedicals done, so the Department had gone and him. Despite that they took a completely diVerentsought some information in relation to that but we view and the reason they took this viewwas that they

found some dust records which indicated very lowdid not know that, and there are issues like that




levels of dust in preparation plants. They then employed in a British coalmine but if you wereemployed on the surface you cannot. That just doesobtained a medical report that said that level of dustnot seem to us to be fair.will not cause any harm. You do not necessarily

disagree with a doctor who says that if a man is notexposed to dust he will not have any dust-damaged Q34 Judy Mallaber: Basically it is deadlock unlesslungs. What we have found is many, many records there is a ministerial decision to waive costs? Is thatwhich show quite high levels of dust on the the current position?preparation plants but what we cannot get is a run Mr Tucker: I do not think we would be complainingof records in one preparation plant which would at all about the DTI’s position if we were atshow dust levels over a period of time, the reason the beginning of the litigation process and not eightbeing that the respiratory dust regulations which years down the track with it. Having alreadymade NCB and British Coal take dust samples established legal liability for exposure to the sameunderground on a regular basis did not apply to the dust underground and having 500,000 claimantscoal preparation plants. The dust samples there were underground and having paid out however muchtaken on a more ad hoc basis. The problem is if there has been paid in damages as of today, it just seemswas a group litigation there would be a number of to us that having been through all of that and alsomen in that group who we could not prove had been having agreed that the men who have worked on theexposed to high levels of dust because the records do surface in coal preparation plants and worked fivenot exist. It does not mean that that man was not years underground get compensated for theirexposed to dust. It does not mean that that man has surface exposure (which has therefore removed thenot got lung damage due to dust. It means we could majority of the coal preparationworkers because the

majority did work underground) a sympatheticnot prove it.What would happen then is there wouldattitude would have allowed the remaining fewbe an adverse cost order and that individual manthousand surface-only coal preparation men intowould have to pay the costs. Bearing in mind thethe scheme.small numbers involved, the cost of this sort ofMr Morgan: Could I add one other point on surfacelitigation and the risk of adverse cost orders, it reallyworkers and that is the impact of the fast trackis not a piece of litigation that should be brought onsystem. A surface worker who has workedan economic basis. We did ask the DTI if they wereunderground for one or two days will now beprepared to consider waiving their rights to costs inentitled to a payment under the fast track system sothe event of these cases being lost (which would havethat should reduce even more the numbers who arebeen a very significant factor) but the reply we hadgoing to be excluded. It is only going to excludefrom theDTI was no they would not and they wouldthose men who have not spent a day underground.not because they had taken legal advice and thereIf you have spent one day underground you get paid;was no legal reason why they should do this. That isif you have got no days underground you do not.of course right. You have a lawyer to win your case

and any lawyer if he could prevent the opponentgetting the claim to court would advise that. That is Q35 Chairman: Have you any estimates of what thethe way to do it. It is not a legal question; it is a new figure will be?political and moral question and we feel it has not Mr Morgan: We do not know how many willbeen answered in that way and we feel that as long be picked up. All we know is that there are aboutas the DTI says that any man who loses their claim 3,500 to 5,000 who have got less than five years’will have to pay adverse costs the claims cannot go exposure.on because we know there is a paucity of records andthe chances of picking up the claimant who has the Q36 Chairman: Three and a half to five yearsmedical conditions and perchance dust records were underground?taken when he was there are not great. What we can Mr Morgan: 3,500 to 5,000 men who have less thanshow, and we can show anybody, is many, many five years’ exposure underground but now anybodydust records of high dust levels in these preparation will be picked up as long as they have some.plants. We have submitted these to the DTI. Wespent weeks looking through records to get these Q37Mr Clapham: Could I just ask a question abouttogether and we put volumes of them together and the medical assessors because the medical assessorssent them oV to the DTI and said, “These do not cover both schemes. Are you satisfied with theprove any individual case; what they prove is that the medical assessment process and the way in whichdust records that you used as the basis of your resources are being used in order to speed up theassessment are not indicative generally of dust levels claims?in these preparation plants.” The reply we got back Mr Evans: The medical process is now provided bywas, “It does not prove anything for an individual. a company called Atos Origin and we feel that theyIf you want to get compensation for those men take provide logistically and by the use of IT amuchmoreit to court and if you lose the casewewant the costs.” eYcient method of delivery than the previousMr Evans: Weestimate that between 3,000 and 5,000 contractor. Our concern is—and it perhaps reflectspeople are aVected by this in a scheme which now some of the other matters that we have touched onhas over half a million people registered and it is before—that it is surprising that they are not moreworth contrasting with what is known as the ‘rest of acutely aware than they appear to be that they arethe world’ protocol. You could be in Venezuela and providing a joint expert. Frankly, they regard

themselves as theDTI’s contractors and dance to themake a claim under this scheme if you had been




tune of the paymaster, whereas we feel that they instructed by the Department to check out men whopresented for spirometry tests to see if they wereshould rigorously maintain an independent role.

However, that is an attitude matter; the actual people who had actually been in mining. You maythink that is a fairly obvious point that one woulddelivery is considerably better.want to verify. However, it is not presently part ofAtos’s remit to that. It is not in the process that weQ38 Mr Clapham: So you are satisfied with thehave agreed with the Department, so somebodydelivery. On this issue of independence has that at allsomewhere has asked Atos to make a check upbeen brought up with the DTI and what has theiron a miner’s credentials. If he does not pass thatresponse been?credentials check, he is turned away and sent backMr Morgan: Wedo raise this. It is not an easymatterhome again.We did not know about this. It certainlyto put your finger on because what you are reallywas news to me when that report came back to me.saying is there is an attitude. Just as a simpleIf it is true then it is another example of how Atosexample, they would have numerous and frequentwill respond to that type of direct request to modifymeetings with the Department. I cannot for my owntheir procedures and seem to forget that they arepart imagine the Department saying that we couldsupposed to be jointly instructed in the process, nothave meetings with them, for example. Given whereinstructed by one side or the other.they are in the process, given our role, it seems to meMr Morgan: I think there are also problems with thethat it would be perfectly logical that they meet withfast track system and the medical assessmentus as often as they meet with the Department.process. When the expedited system was introducedit was agreed that medical reports would simply be

Q39 Chairman: You have sought meetings and been held back until the man had made his choice. Nowrefused or you have never asked? the DTI are insisting that medical reports are notMr Tucker: Wedomeet them to review the quarterly prepared and that may have serious logisticalaudit so we have that meeting facility with them. I problems and may interfere long term with thethink a contemporary example is that when the fast production of medical reports by those who want totrack scheme was before the court we wrote to Atos go through the process, and it may delay mattersand asked them some questions that were relevant to rather than speed them up.the structure of the system going forward and weretold that they could not answer without the

Q41 Chairman: You have cast doubt on the abilitypermission of the DTI and the request should goof Capita-IRISC and the DTI to achieve thethrough their legal team rather than fromus directly.aspirational end date for the settlement of theAs Peter said, it is true that they are contracted to theservices claims. Do you think the DTI’s aspirationalDTI but they are providing independent medicalend dates are feasible or is this just pie in the sky?assessments so anything that goes to the clinical bitMr Maddocks: Is that generally or in relation toof the process is a joint exercise, so that is where ourparticular cases?concern lies.

Q40 Mr Clapham: Just coming back to the answer Q42 Chairman: Just in general terms.Mr Maddocks: Speaking with regard toVWFwe arethat Mr Lumsden gave earlier with regard to the

medical assessors, he suggested that a paper had very concerned as to whether or not the aspirationalend dates are going to be achieved in relation to thebeen produced for the hearing in court on the review

of the scheme but you never got sight of that until investigation of Group 3 cases. The aspirational enddate for concluding investigations is September thisyou reached the court steps?

Mr Tucker: Yes, I think it was produced for the year but, on the latest figures, to achieve that IRISCinvestigators would have to conclude investigationsDepartment either by Atos or their subcontractor. I

do not know whether theDepartment asked for it or at a rate which is significantly in excess of the targetto date, and they have so far consistently failed towhether it was produced by the contractor who

knew about the process. I do not think it matters achieve targets. So we are very doubtful that theaspirational end date of 30 September will bemuch which it was, but it was not made available to

us on a timely basis and only after we discovered it achieved even though we know that despite poorperformance and a poor record in relation to targetsand asked for it was it produced.

Mr Morgan: And it was a very important document to date they are confident it can be done. We justwonder how. In relation to VWF services claims weat the time because the Department were trying to

introduce a compulsory fast track system, the main are concerned there as to whether or not theaspirational end dates are achievable. We wrote toproblem being in getting medical reports out. This

document suggested that Atos could speed up the the DTI at the end of December with an analysis ofsome figures. They had acknowledged in their courtproduction of these medical reports and that there

would therefore not be a necessity for the fast track report, to be fair, that they thought there was sixmonths’ slippage in the timetable and we wrote tosystem now being envisaged but that document was

not provided to us. them and said having looked at the figures ourselveswe were concerned slippage was potentiallyMr Lumsden: There is a feeling, Mr Clapham, that

Atos will respond directly to the Department much significantly more than six months for the reasonsthat we set out, and we invited comment which wemore readily than they will respond directly to the

claimants’ side. Recently in Edinburgh he had an are still awaiting. On a broader level in VWF, thereare significant concerns that in relation to certainexample of being advised that Atos had been




cases the statistics that are available do not really obviously a vexed issue. It may be one that attractsenable anyone to get a clear picture on progress. We more attention in the eyes of some people than ithave had some discussions only recently with the merits. We would not for a moment suggest that theDTI in relation to the statistics that are produced for DTI should not be exercised by fraudulent claimsservices claims and made some suggestions there. because fraud draws the whole scheme intoWe have raised with them the issue of statistics disrepute and it is harmful to the reputation ofwhich they have just now started to consider in decent people who are trying to make reasonablerelation to VWF wage loss claims, the wage loss cut- claims. Do you think there could be improvements?oV having kicked in on 31 January. There is a Given that this is an unfortunate necessity, do youconcern that the statistics that are available do not think there are improvements that could be made toenable certainly ourselves or the Department to the system of investigation that is going on at thereally measure performance and the way that some moment?of the statistics are providedmakes it very diYcult to Mr Evans: It is diYcult because as with the articlesee what the performance of the Department’s that was referred to earlier we are not taken into thecontractor is. The services statistics that they have Department’s confidence about this and theyreferred to in their formal presentation are very hard eVectively say that if it were made known how theyto see. You can see the performance of some of the were investigating it, it would only lead to another interested parties in the process but it almost increase in fraud, so the fact of the matter is we arelooks as if they have been designed—and I am not kept at arms’ length from that. We do not for asuggesting this is deliberate—one could almost think moment say that it is anything other than perfectlythey had been designed so that you could not get a proper to investigate potentially fraudulent claimshandle on the position at IRISC. when you are spending this amount of publicmoney.

On the other hand, it is worth putting it in context.You well know the size of this scheme. In JanuaryQ43 Chairman: That has happened before.2005 of the respiratory claims 132 claims had beenObfuscation is not unusual.

Mr Maddocks: Therefore it is very diYcult for us to denied and 86% reduced. That just gives you asee (unless theDepartment have statistics that we do feeling of how much at the margin this is. Evennot see) how they are in a position to monitor though all human endeavour, sadly, is going to beperformance and therefore get a clear picture of the tinged with this, there is nothing to suggest that thislikelihood of achieving certain of the aspirational is in any way more susceptible to fraud than anyend dates. other scheme and what evidence there is suggests

that it is less likely to be susceptible to it.Mr Maddocks: I have real concerns about the wayQ44 Chairman: If you open the hearts of manythat fraud is investigated. We all start from the sameoYcials when they die I doubt if you will find thepoint that it is perfectly proper for the Departmentword ‘transparency’ on them, but that is anotherto investigate cases where there are grounds formatter!suspecting fraud and that is entirely accepted, butMr Lumsden: Does this question not also go to somethere have been real concerns about theway inwhichextent to planning because you might ask theinvestigations have been conducted and the length ofquestion in the context of having to grapple with thetime that they are taking. It has been something thatlarge numbers of claims that came in, was itwe have raised with the Department on a number ofnecessary to have end dates at all in that way? It wasoccasions. There has been a refusal to make cleardesirable surely to have people who had claims towhat the procedures to which the investigatorsmake make them as soon as possible, but was itoperate are, and that has been touched on already.necessary to bring a drawbridge down that closedOne part of the approach that they were adoptingthe whole scheme down? If you look at whatwas that at a certain point they would seek tohappened in industrial deafness claims in 1980s andinterview the claimant, which would be a very1990s (and many miners obviously madeunusual step in civil litigation, one that a solicitorcompensation claims in respect of that ailment) thereadvising a client would hesitate to encourage anever was a cut-oV date imposed after two or threeclaimant to agree to. The position was compoundedyears or four or five years.because the Department’s investigators were nottelling the claimant or the claimant’s solicitor inQ45 Chairman: With respect, Mr Lumsden, that isadvance what the nature of the concerns were, so themaybe a rhetorical question. I do not think it is forrequest was for an interview but without revealingus to answer but it is for us to ask and we certainlyany guidance as to what areas theywished to discuss.will take it up. I think they might well take theThat created problems in a number of cases whereview that the volume, the amount of publicity, thebecause of the reluctance to be a bit moreattention that was given to it, the close-knittransparent no progress was made towardscharacter of mining communities would meaninterview.A lot of the cases which have been referredthat most people would know about the availabilityto the security investigation department of Capitaor opportunity to claim and that perhaps forseem to take a long while to make any progress andadministrative reasons a line was drawn underneathdelay is a big concern. A delay of months with noit. I think we will leave the Minister et al to discussexplanation as to what is happening and why thethat. There is one small point that I just wanted tocase has been stuck. The example was given at theraise before we come on to the final questions and it

was in relation to fraudulent claims. This is VWF hearing in December of a case that had




disappeared. It was under investigation for months Mr Maddocks: Can I very briefly make a couple ofquick points on the fraud point. If you look at theand months, approaching a year, and during that

time neither the claimant nor the claimant’s solicitor figures when you get them as to the amount ofmoney that is contended being saved, then one hascould get any understanding as to what the problem

was. We asked the Department recently if we could to have care to see that the money saved is actuallyas a result of the revelation of fraud. Figures that wehave some figures so we could see the size of the

problem. We wanted to know the number of cases have seen suggest that some cases are beinginvestigated, a number have been denied or hadthat have been referred and of those how many had

been under investigation for three months or more monies reduced, and we do not know whether theywere denied because the claim was fraudulent orthan six months, and we were told that they were not

prepared to share that information with us. We are denied because of the some other reason or that theclaim was reduced because of fraud or reducedaware that delay is a problem but we do not have a

clear picture and we do not knowwhether they do as simply as part of the claims handling process. Thefigures need to be looked at critically on this point.to the extent.

Q49 Chairman: I would also imagine—and you areQ46 Chairman: That is something we will take uplawyers and you would know about this—that ifwith them. Certainly the number of claimants whosomething is fraudulent you do not get any money?are being investigated, the number who have been,Mr Tucker: Yes, Chairman.the strike rate, if I can put it that way, the amount

of money that has been raised and perhaps even, asQ50 Judy Mallaber: Can I move on to the claimstaxpayers, the amount of money that has beenhandling companies and the controversy about themexpended in trying to see this--- If there is anyone intaking money out of settlements even thoughthe room who is listening to this they will have duesolicitors are getting paid by the DTI for doing thewarning that we will be seeking that informationwork. Can I take it that you do not represent any offrom the Minister when he comes along.the claims handling companies? Can you tell us howMr Morgan: Can I make a final point on thisthe solicitors that you represent deal with thosequestion. We object to the assumption on theclaims handling companies and how they have dealtamount of fraud that is going on. There was thiswith this question about fees being taken out tofeeling there was going to be a large number ofpay them?fraudulent claims from themining community. HowMr Tucker: The answer is that we do not know. Thisdo you make a fraudulent claim for respiratoryis very much an iceberg scenario.disease? Are you going to put in a claim if you have

never worked underground? You may be lucky andfind out that the records have been destroyed from Q51 JudyMallaber:Presumably your companies are

getting quite a lot of cases passed on to you fromthat colliery but any miner because of the nature ofhis work will have medical records referring to him those companies?

MrTucker:Undoubtedly thereare solicitors’ firms inas a miner. If a person is not a miner, it is evidentfrom his medical records. There was a fear of the solicitors’groupwhoreceive referrals fromclaims

management companies. Claims managementmultiple claims but all claims are routed down to thedeceased miner and so they are picked up. There are companies come in all shapes and forms and

regrettably some of them take charges from themultiple claims not to defraud but because brothersand sisters have fallen out and they have both put claimant; others do not, they just charge the solicitor

a referral fee. So there is awide variety of practice butclaims in.Mr Lumsden: That is quite common. we do not know any of the specific arrangements

between individual firms and the various claimsMr Morgan: The one piece of dishonesty that wehave found is amongst the family where one brother management companies that exist.has fallen out with a sister but that does not aVectthe amount of compensation and does not aVect Q52 JudyMallaber: The biggest oVender in my areatheir ETI. is UDM where money is taken out of settlements.

What is your view on theUDMhaving that separatehandling scheme and do you have any ideas aboutQ47 Chairman: You can only take the horse to thehow that came about, or again is this something thatwater once?you have observed?Mr Morgan: Yes.Mr Morgan: Wewere very, very surprised to see thatbecause we represent the other mining unions. Forsome reason the UDM was oVered this deal, whichQ48 Chairman: My understanding, having

represented a mining constituency for 25 years, is financially is of quite considerable benefit to them,but that arrangement was not made available to thethat there is a fair amount of knowledge about

everybody else’s business and when somebody steps NUM or NACODS. Why that is we do not knowbut it is financially very advantageous to the UDMout of line in this kind of way there is tremendous

community resentment against it. It worries one that because they are allowed to be paid for handlingclaims. They have a separate handling agreementthere seems to be a lack of appreciation of the nature

of the communities from which these people come. that shadows ours and there are separatenegotiations with the UDM. Why they are theIf I can go on and ask Judy to ask you some

questions. This is our last set of questions. favoured union we do not know.




Q53 Judy Mallaber: So you do not know anything Mr Tucker:Yes, it has the same potential for causingabout the history as to how that would have come us grief as it does you in that sense but there is aabout? prioritisation system. Also the fast track process willMr Morgan: It is something the other unions have assist in taking out some of those cases that do notasked us on many occasions and they would like to require a full medical assessment. Sowe hope andweknow, but we do not know. certainly intend to work towards the living claims

and the widows’ claims still getting them pushedthrough first.Q54 JudyMallaber:The other area that concernsmeMr Evans: We should make it clear that we wouldlocally about what I call the ‘ambulance chasers’prefer these claims handling companies simply notrather than the claims handling companies is theirto exist. If they have to exist they ought to beswoop now on trying to get families to make claims

where it might not have occurred to them to make properly regulated. Our universal view is that theyclaims. The hard work was done in our area by add nothing to this system; they are parasitical on it.organisations linked to the unions getting currentand former miners’ claims in, but now there havebeen mass mailings, as you know, encouraging

Q57 JudyMallaber:There was one other issue aboutchildren, brothers, sisters, et cetera. I know there isresources. TheEnglishMonitoringGroup suggestedstill meant to be a clear priority for current minersthat the fee structure for solicitors does not provideand widows but do you think that that mass attemptany incentive to check or query calculations forto get a broader range of people claiming for familiescompensation other than your own professionalhas in any sense distorted the work of the solicitorsconduct and there were also queries raised about theand the work of IRISC and so on and this has madeability to check claims properly. We had oneit harder to make sure priority does go to the mostsuggestion of one firm with 80,000 claims and onlyimportant cases?three qualified solicitors. Is that an area thatMr Lumsden: If I can attempt to answer that one, Iconcerns you?think the short answer is yes it has to some extent butMr Evans: I hope that we can all rely on ourit is a by-product, is it not, of the cut-oV date and thecolleagues’ professional conduct. People are paid toadvertising that the Chairman was referring to a bitcheck these oVers and it is our clear view that theyearlier, that people were encouraged by all sorts of

means to try and get their claims in before that date ought to be doing so. Any solicitor who does notwas missed. What you saw happening in the scheme opens themselves up ultimately to a negligenceif you were involved in it from the start, as some of claim.us were, for better or worse, was that in the early Chairman: We will leave it to your union to pursueyears many ill people came forward, made claims, that matter.and there was only a very slow realisation thatfamilies could make claims and that families mightbe able to make claims in respect of deaths that

Q58 Mr Clapham: Just one very quick question,occurred decades ago. All that started to penetrateChairman. I hear what Mr Evans said about therelatively late into the consciousness of the miningclaims handling companies and the fact that it iscommunities and the advertising campaigns starteddiYcult to get a grip on them. Is it your viewto be directed specifically at those groups of people.collectively that if, for example, the Law SocietyYou have got an eVect there of the cut-oV date andwere to instruct that where solicitors use a claimsof targeted mass advertising combining to producedhandling company that they should be responsiblea large influx of claims in a short space of time beforefor paying the fees of the company rather than31March andmost of those claims, if you look at theallowing the solicitor to pass them on to the clientprofile of them, are exactly the kind of claims thatthat it would control the claims handlingyou are describing.companies?Mr Evans: It is tempting and I think it is the presentQ55 JudyMallaber:Do you think that has distortedstrategy to try and use solicitors to control the claimsthe process or has it been possible for us to still makecompanies. In my view that is mistaken and it wouldsure that the priority is going to those priority cases?be far better if they did not exist or if they wereMr Tucker: We still have a prioritisation systemindependently regulated. Without that then you arethat targets the living and the widows’ casesforced into trying to get the solicitors to controlpredominantly but the overall profile has beenthem and that is well without our control, that is adistorted so that there are now more estate claimsmatter that the Law Society would have to rule on.than anything else.We have brought to the Law Society’s attentionvariousmatters and theLaw Society issued guidanceQ56 Judy Mallaber: But the fact I will write onin January 2004 about this very matter.behalf of an aggrieved constituent who has come toMr Tucker: This is not about regulation but you canme because the estate claim has not been settled,regulate in that way by requiring a regulated body,even when I might not be totally sympathetic to thea solicitor, to control the activities of a third party.personal circumstances there, does that not thenHowever, it seems tome it is regulationwith one armcreate problems for you as solicitors in that you areup your back and the better thing to do is to regulatestill having to respond to it if it is a claim that has

been lodged via one of your firms? the organisations you are concerned about directly.




Q59 Chairman: Is it the same in Scotland? Q60 Chairman: We did ask the Law Society forevidence. They did not produce any but that doesMr Lumsden: It is the same, Chairman, and I would

just add to the points that have been made to my not prevent us from asking them some pointedwritten questions and I think we may well take it up.right: what about insurance? What insurance do

these companies carry? Solicitors all have to carry Could I just ask one last question. Itmight seemkindof daft but when do you expect this to finish?insurance for our mistakes. What about the

protection for the claimant when people go to claims Mr Lumsden: 2009 is the projected end date forCOP.companies? What is the service that they get when

they go to claims handling companies? What Chairman: I will not use the expression I was goingto use but I think we will believe that when we see it.standard is being set for any service that they

purportedly oVer? What about the practices that we The reason I was asking that is if there is to be anyregulation of this kind of activity one would imaginehave seen in the mining context perhaps more than

in any other recently; cold calling? What about that it might well fall within the Financial ServicesAgency or something like that. We will explore thehidden charges? I think all of this is an area

that needs to be looked at. We have said for quite issue of who would be an appropriate body toregulate the unregulated, as it were, if that is an issue,some time, looking at it from where we sit, that it

is something that the Government should be and we will certainly take it up with the Law Society.Can I just say we are grateful for the evidence youregulating.

Mr Morgan: As a result of claims farmers’ work in have given us. Once we have pored over it there maybe additional informationwe require, although fromVWF there is now a lot of secondary litigation to

enable people to get the right amount of the evidence you have given us at least some of theadditional information we require will come fromcompensation, but that is no way of doing it. A

claimant does not want to have one claim, then find the DTI, I suspect, and they keep an eye on theseproceedings and doubtless they will have an idea asout he has been undersold and litigate again. That is

a very poor way of resolving it. It is important that to areas we will want to explore with them in duecourse. Thank you very much for your contributionthere is regulation and these things are done

properly the first time. this morning.



Tuesday 1 March 2005

Members present:

Mr Martin O’Neill, in the Chair

Mr Roger Berry Linda PerhamMr Michael Clapham Sir Robert SmithJudy Mallaber

Witnesses: Ms Sue Gibson, General Manager and Accounts Director, Occupational Health, Counsellingand Screening Services, Dr Colin Wigley, Head of Service Delivery Screening Services and Mr SimonChipperfield, Vice President, Atos Origin Medical Services, examined.

Q61 Chairman: Good afternoon. Ms Gibson, can Q66 Linda Perham: That sounds very good, but is itset out that there are financial incentives or penaltiesyou introduce your colleagues please.attached to performance targets?Ms Gibson: On my right is Simon Chipperfield, whoMs Gibson: There are no financial penalties in eitheris theVice President of theMedical ServicesDivisioncontract. In the Chronic Obstructive Pulmonarywithin Atos Origin. I am the Accounts Director andDisease there is an incentive linked to quality where,General Manager for Occupational Health andin fact, we do not realise the full value of the revenueScreening Services, which includes the work we doin the contract unless we deliver a fit for purposefor the Department of Trade and Industry. On myreport in at least 95% of cases.left is Dr Colin Wigley, who is the Service Delivery

Manager for both the Vibration White Finger andthe Chronic Obstructive Pulmonary Disease Q67 Linda Perham: Sorry, did you say there were nocontracts. penalties attached?

Ms Gibson: There are no financial penalties, that iscorrect.Q62Chairman:Thank you.Maybewe can start with

you giving us a sort of overview of the scale of youroperations in connection with the Coal Health Q68 Linda Perham: Is that unusual?Compensation Schemes? Ms Gibson: We deliver medical assessments to a

number of Government departments and someMr Chipperfield: We have been involved since thecontracts do include financial penalties and some doinception of Vibration White Finger in 1999. Wenot, it is probably about 50-50.carried out all of the medical assessments for the

Vibration White Finger medical assessment processand that is over 100,000 since 1999. For the Chronic Q69 Sir Robert Smith: Last week we heard aboutObstructive Pulmonary Disease contract, we delays in the process, on the whole, of handling ofbecame involved in November 2002 when it was re- claims, and we heard about various concerns fromtendered and since then we have carried out over the Solicitors’ Groups. From what you are saying,100,000 assessments for Chronic Obstructive does the medical assessment in any way play a partPulmonary Disease and more than 100,000 in the delays in handling claimants?Spirometry assessments. Ms Gibson: I will let Colin answer that as our

contract manager.Dr Wigley: It is a very complicated process and forQ63 Mr Berry: Does your contract with the DTIa claim to make its way from the start of the claimrequire you to perform the assessments within athrough to a completed assessment, it goes throughparticular timescale? I assume they do, so whatseveral stages. Initially, the case is referred throughwould those timescales be?to us for a Spirometry assessment. Those cases cameMs Gibson: The contract includes the requirementthrough to us in a large volume at the beginning ofthat we deliver a medical report back to IRISCthe scheme, so it is a matter of working through thatwithin 20 days of the assessment taking place, but it head of work, again we will finish that by probablydoes not specify timescales for assessments taking June/July of this year. In terms of clearing cases

place. Currently, in both schemes, because our head quickly, we have a very small head of work.What weof work is very low, we turn around assessments do have an issue with is cases which become stuck invery, very quickly. the system and that is usually where we are either

waiting for information because we have not gotcontact details—we are trying to contact theQ64MrBerry:Youmeet the timescale comfortably?claimant but we cannot get hold of them—or whereMs Gibson: Yes.a case is on hold because for one reason or anotherthe claimant cannot attend, they may be ill or

Q65 Mr Berry: In all cases? awaiting an operation. Currently the situation is weMs Gibson: The contractual timescale is to deliver have cases on hold because the oVer scheme, whichthe report back to IRISC within 20 days and yes, we is in place now, will prevent cases going through to

examination.meet that.



1 March 2005 Atos Origin Medical Services

Q70 Sir Robert Smith:The actual medical bit is quite to deliver a certain number of cases to a certainstandard and they have a role in monitoring ourquick, but the trigger is when you have got

everything you need? performance there. If there are any policy issues inrelation to the completion of the MAP reports, thenDr Wigley: The case is referred through for

Spirometry and then we refer it back to the claims those issues are discussed at joint meetings. Wehave joint meetings with the Department and thehandlers. When the additional information from the

claimants’ representative is there and all the Solicitors’ Group on a regular basis, every month.We have regular meetings with large groups ofmandates are there for the record collection, it is

then referred back to us. It then takes probably solicitors to look at the problems with the processand where cases are being stalled within the processabout three months for us to obtain the medical

records; we have a subcontractor, Elision, who to try and make things move through more quickly.On projects such as Electronic Form, we haveprovides that service for us. There are a lot of

processes in place to ensure cases do not get stuck in recently introduced an electronic report form to tryand improve quality and make the reports morethat process. There is a process of prioritisation of

cases according to the age of the claimant and how legible. To develop that we had meetings withmembers of the CG on their own to identify issueslong they have been within the scheme to ensure the

more urgent cases are dealt with quickly. That they had with it so we were fully informed abouttheir concerns. I thinkwe dowork closely with them,prioritisation works also once the case gets referred

for medical assessment. On the whole, the head of but the relationship is diVerent between theDTI andthe CG because the DTI have a contractualwork—people waiting for assessments—is fairly

low. Providing we have all the contact details of the monitoring process which the CG do not have. Inrelation to medical issues, we work jointly withclaimant, we would expect the case to proceed

through a three month period for record collection, them.then probably two months waiting for anappointment and then another couple of weeks Q73Mr Clapham:Why do you think they might feelwhilst we do our quality checks before it is returned you are more biased to the DTI than workingto the customer. equally with them?

Dr Wigley: Again, I am surprised to hear they feelthat because I think we try and maintain an equalQ71 Sir Robert Smith: Would there be any regionalbalance between both parties. I know concerns havepattern to that? Is that an overall average for thebeen raised about the issuing of instructions, but Icountry or are there areas where it is quick and areasthink those instructions have always been in relationwhere it is slow?to processes rather than medical assessments. WeDr Wigley: There are certain parts of the countryaccept the medical assessment must be independentwhere we have much more resource than we haveand jointly acceptable to both parties.claimants, and therefore we are not able to fully

utilise that. There are other areas, certainly in theYorkshire area, where there aremore claimants than Q74 Mr Clapham: Do you feel that when preparingwe have had capacity. That was true in the past, documents for a proposal put by the DTI, forcurrently, there is virtually no head of work example, on changes to the scheme, any informationanywhere in the country and as a result of cases you provide should be available also to the other sidebeing withdrawn from the TariV Option scheme. as well?

Dr Wigley: Absolutely. I have no reservations aboutthat at all.Q72 Mr Clapham: Last week the Claimants’ Group

of Solicitors told us that they were generally satisfiedwith the medical aspects of your work, but there Q75Mr Clapham:One of the things which came out

last week was there was a feeling of grievance thatwere other things which did cause them someconcern. For example, they thought the relationship the Claimants’ Group of Solicitors found when they

were in court on one session, there had been a reportshould be one in which you are working for bothsides, but the way they saw it generally they were prepared about some of the changes which were

being proposed and your role in those changes, butseen to be working for the DTI rather than beingseen as working with both parties. Do you agree you that document had not been disclosed to them until

they got to the court.should be working with both parties?Dr Wigley: Absolutely. Can I answer that by Dr Wigley: I would like to clarify that. Certainly that

was not a document which we prepared, that wassplitting it into two halves. The main objective is toproduce a MAP report which is independent, prepared independently by our subcontractor who

does the record collection, Elision, and we had noobjective and unbiased and that is produced equallyfor both parties. The rules and regulations which part to play in the production of that. We were

copied into it when theDTIwas copied into it as welldetermine how that report is completed arecontained in the Claims Handling Agreement. to ask for opinions, but, again, we felt it was

inappropriate for us to comment on that. We wereObviously we apply that strictly and any changes toprocesses have to be agreed by both parties and, fully involved in the development of the oVer

schemes. We had numerous workshops with allcertainly, we do not give any instructions to therespiratory specialists without them being agreed by parties and also the judge to look at ways in which

the scheme should be brought forward. We had anboth parties. The relationship we have with the DTIis diVerent, obviously we have a contract with them opportunity to express our ideas and concerns about




the scheme at that stage, therefore it seemed those doctors who appear to be possibly behavingdiVerently. I think we have to accept there is a wideinappropriate for us to comment on that document

prior to court. Certainly it was not an ATOS variation there. That is contained within thequarterly report which goes to both parties and ifdocument.they identify doctors who they wish to look at inmore detail, then we will do a more detailed targetedQ76 Judy Mallaber: Are there types of information,audit of their cases and report those findings back tolike progress reports, for example, that you arethe parties.contractually required to reserve for the DTI

because the point made by Michael Clapham aboutthe complaint of reluctance to pass on information Q80 Judy Mallaber: We had one doctor who was

taken oV the list who was dealing with one of myto the solicitors, which has gone to the DTI, is acomplaint which was made? Are there certain constituents, but it seemed to take a large number of

complaints coming in from individual cases andreports which you are required to reserve just forthe DTI? letters to the Minister before that doctor was taken

oV the list. How strict are youwhere you see a doctorMs Gibson: No. We are contractually obliged toproduce a quarterly report which covers our who is refusing to accept any claims, for example?

Dr Wigley: We will stop using doctors if theperformance against all of the contractual targets,both in terms of turnaround time and quality. That feedback we are giving does not appear to put the

situation right. I believe the case I think you areis made available to all parties and, in fact, isdiscussed at a joint meeting with the DTI, the talking about was before we took over this contract.

Again, we have a very robust process for theClaimants’ Solicitors Group and other parties. Wefeel there is very much visibility of our performance feedback to the respiratory specialists. We then do a

further audit to make sure the situation hasagainst our contracted targets.improved or has been resolved to satisfaction. If ithas not, we have a standard process for taking themQ77 Judy Mallaber: So the claimants’through retraining and if retraining has not worked,representatives can obtain exactly the same level ofwe will stop using the doctor.information as the DTI?

Ms Gibson: Yes.Q81 Judy Mallaber: One of the earlier complaintscertainly we had was about the discomfort ofQ78 Judy Mallaber: Do they know whatundertaking some of the lung tests. Has that nowinformation you provide to the DTI so they knowbeen resolved and are you happy with the way inwhat information to ask you for?which they are now handled?Ms Gibson: I would say I believe so, but I would beDr Wigley: I think that is largely an issue ofguessing.understanding. The respiratory test, if undertakencorrectly takes a lot of eVort. I know from havingQ79 JudyMallaber:Can I ask you on one particulartried to perform them myself, you are looking for aaspect of assessments which has come up in relationvery forceful blow and that may be diYcult forto claims which have been dealt with in my area.elderly people and people who are not well. We sendHow far do you monitor the work of the diVerenta video out with the MAP appointment so they havedoctors and specialists who are undertaking thesean idea about what is expected of them when theyclaims to see whether they are operating consistentcome. Inevitably there will be complaints, but Icriteria across the claims they are dealing with?think the complaint rate is something like 0.2% forDr Wigley: Obviously a uniform approach to this isthe MAPs which have been completed during thecrucial to the success of the scheme because we havecourse, so it is a very, very small proportion. Again,got 200 doctors working and we need to make sureit is something which we are aware of and it isthey are all applying the same rules—applying thesomething we cover in the training we give to thescheme in the same way. There is always a dangerlung function technicians.with experts that they can all have independent

opinions. What we are trying to do in the scheme isQ82MrClapham:Finally, are the doctors under anyto say, “The actual process has already been definedinstruction, for example, to record core morbidity,by another panel of experts and really you have gotwhere we have got an additional disease, forto adhere to those rules if you are doing theseexample, and if not, can I ask why not?assessments”. We have a quality monitoring systemDr Wigley: Yes, they are. It is something which hasandwe audit a statistically valid sample of cases eachbeen within the MAP process and, again, it has beenmonth against a set of standard criteria, there are ahighlighted by changes in the MAP form in the mostseries of attributes which have to be present withinrecent version because, certainly, doctors should beeach report. Those results are fed back to theexpected to take account of that.individual doctor and they have a regional adviser to

act as mentors to give feedback to their respiratoryspecialist. Sue mentioned that we produce a Q83 Mr Clapham: One of the discussions we had

earlier with the second Minister of Energy was whatquarterly report also and with that we havediagnosis rates, so we can compare one centre we would do at the end of the process with the data?

It was agreed in that period that it may all be passedagainst another to see if any doctors’ outcomes fromthose reports appear to be diVerent from the norm. on to the Industrial Injuries Advisory Council for

further scrutiny because, clearly, this is perhaps theWe apply statistical analysis to those and highlight




most comprehensive study of any working group comment. The point you make is very valid thoughas it is probably the biggest pool of information thatwhich is available. In terms of the reporting of core

morbidity, is there any particular second disease has ever been recorded on this type of condition andI am sure it could be put to good use. The diYcultywhich is striking?

Dr Wigley: I do not think I am in a position to with it will be that it is on paper-based form, so it willbe diYcult to evaluate.answer that because whilst I am medical, I am not a

respiratory specialist. I am not actually completing Chairman: Thank you very much, that is veryhelpful.MAPs myself and it would be diYcult for me to

Witnesses: Mr Martin Trainer, COO Claims Outsourcing, Mr JeV Wilson, IRISC Technical Director,Ms Kate Roy, IRISC Operations Director and Mr John Tizard, Director, Group Corporate AVairs and,Capita-IRISC, examined.

Q84 Chairman: Mr Trainer, would you like to Department. Our reward is based almost totallyupon achieving targets which are agreed and setintroduce your colleagues?with the Department.Mr Trainer: I am Martin Trainer and I am the

Chief Operating OYcer for our ClaimsOutsourcing Business. To my left I have John Q88 Linda Perham: We have heard from otherTizard, who is our Group Director of Corporate witnesses that the administration of the schemesAVairs; to my right I have Kate Roy, who is the was poor from the outset, but things are improvingOperations Director for the IRISC Operations now. Do you have any explanation of thewhich run the Coal Health Scheme, Claims underlying reasons for the bad impression?Handling and to my far right is JeV Wilson, who Mr Wilson: When we go back to when the schemesis the Technical Director for the IRISC Operation. were formulated, with the Claims Handling

Agreements in 1999, there was an estimation thattherewerepotentially 100,000 claimswhichwouldbe

Q85 Chairman: I would like to start oV much the dealt with over five years. What has happenedsame way as we did with the previous group of throughout time is more andmore claims have comewitnesses. Can you describe to us the basis and into the pot to the extent that when the COPD—thatterms of your contractual relationship with the is the chest disease scheme—cut-oV was applied inDTI? March2004, in the 12monthsprior to that therewereMr Trainer: Certainly. Capita has been involved in 250,000 claims which were submitted and of thesethe scheme now for just over 12 months. We approximately 150,000 claims submitted in the finalacquired the IRISC business, which has been acting quarter of that period, so volume and scale hasas claims handlers on the contract now for some increased significantly from the original projections.time, from Aon in February 2004. In April 2004,we again acquired a business from Aon, at that Q89 Linda Perham: It was really the sheer size of thetime—called Aon Health Solutions, which handles problem rather than poor planning or poor projectthe medical assessment in the VWF services definition on behalf of the customer?element of the scheme. So from February of last Mr Wilson: The sheer size has taken all parties byyear, and then subsequently from April in the case surprise. As far back in the days of British Coal, theyof the Health Solutions business, we have been employed statisticians to try and predict theworking closely with the Department and other potential numbers. The DTI and all parties havestakeholders on delivering business as usual and constantly tried to predict the number of claimsimproving the programme to make things better throughout this process. In fact, in the 12 monthsand more eVective for everybody. Our contracting prior to the cut-oV, we spent a lot of time withrelationship is direct with the DTI, we are not solicitors and other parties trying to get a feel for theinstructed jointly. The DTI sets the priorities and scale of the numbers. Ultimately it is the sheer scalethe terms under which we engage with all parties. of the numbers involved.

Q90 Linda Perham: We may come on to the specificQ86 Chairman: You have got targets to meet inproblems in a moment, but how do you assess yourreference to the work which goes through and theperformance compared to one, two or even threespeed of the claims and things like that, is thatyears ago?correct?Ms Roy: In relation to performance targets, whichMr Trainer: Absolutely.for both schemes are predominantly linked to theprogression of claims and ultimately the payment of

Q87 Chairman: Does that have incentives for you damages within the scheme, we have year-on-year,to try harder? since the signing of the claims handlingMr Trainer: Yes. The essence of our contract is that arrangements, increased the throughput on bothwe agree our resourcing plans with the Department schemes. To date, we have paid over two and a halfin advance and most of the costs which we incur billion pounds worth of compensation out to

claimants within the scheme. We have consistentlyon the scheme are directly recoverable from the



1 March 2005 Capita-IRISC

increased our full and final oVer outputs over the last Q94 Sir Robert Smith: The question we had fromone of the witnesses we had last week was how muchthree years. For COPD alone, we moved fromexpertise and training those staV had, particularly50,000 oVers to 60,000 oVers to 70,000 oVers lastthe claims adjusters. There was a concern by theyear and we anticipate somewhere in the region ofwitnesses to the feeling that they did not have120,000 oVers including the fast-track system, whichenough. How do you respond to that?went live yesterday, to be able to take claims out ofMr Wilson: We have bespoke training schemesthe system this year as well.and we have invested a lot of time and money intraining new staV. Most staV spend between six andnine months on a training programme which isQ91 Linda Perham: How have you managed toaccelerated depending upon their progress and theirmake those improvements? Has it been morelevel of skills which they bring to the claims.We haveeYcient? Are there more staV?mentoring and coaching systems in place and weMs Roy: It is a combination of staV recruitment andhave 40 technical staV who are ex-British Coalramp-up. We have increased our staYng numberspeople who give mining information and expertise.consistently to some significant level over the lastIn addition to that, in the Group 3 claims we havefour to five years. Four years ago we had somewhere61 staV who have a considerable number of years ofin the region of 150 staV involved in the claimsmining experience. In fact, one of our problems ishandling process, we have almost 1,400 staV nowour technical staV training is particularly so goodacross four sites across the country in mining areas that we lose people to other solicitors in the process.managing throughputs on both of these schemes. We go out and we train solicitors, we go out and we

Mr Trainer: Since Capita acquired the business last give them calculators, so ultimately we spend a lot ofyear, we have engaged with the Department and set time and investment on training, but in any newin place a Continuous Improvement Programme process when you train it takes time for it to bed in.which is designed to improve eYciency, eVectiveness Also, it is accepted that when staV are being trained,and value for money across the piece. We have put in some respects their experience only progresses toin a significant investment which has been going on the point where they are fully trained over a periodnow for something like eight months which is of time.designed to and is already delivering significantresults, which will increase productivity, throughput

Q95 SirRobert Smith:Youmentioned that you trainand quality. A continuous improvement culture isthem and then theymove on and that was the secondvery much the message. We have got a great team inconcern which was raised, that there was a highIRISC, they have been working very hard for a long turnover of the workforce. The suggestion was intime and they understand the concerns which are 2004, it was as high as 25%. Is that accurate?

utmost to all of us, the Department and other Ms Roy: It is important to remember that we arestakeholders, the claimants and the claimants’ currently on plan for all of our staYng targets, wesolicitors. We are very proud of what we do and our are ahead on the overall staV numbers this yearsole mission in life, as it were, obviously is to pay the against last year. You are absolutely right, weright amount of money to the right person as quickly recognise thatwe have tomanage the turnover issuesas possible. We are proactively engaging with all the within the business. No one should be reallystakeholders to try and drive forward, as far and as surprised at the level of turnover we are seeing,fast as we can, the estimates of when the schemes will which is currently at around 25%. Our four keyultimately be closed. operational sites are situated within very buoyant

employment markets. In SheYeld, in particular, wehave a high degree of employment for this type in

Q92 Sir Robert Smith: Whose initiative was it to this sector of job and, as my colleague has alreadybring the Business Improvement Programme mentioned, particularly in SheYeld, nearly 28% offorward? our leavers have gone directly to solicitors whoMr Trainer: When we were in the process of operate within the scheme. This has been brought todiscussing with the Department and Aon the the attention of the judges within the process.We are

aware of it and we have managed to thosepossibility of Capita acquiring the business, thereconstraints. This is almost a naturally inflatedwas discussion, which had already been initiatednumber of staV turnover within these schemes by thebetween the Department and Aon, about a Businessvery nature of its uniqueness.Improvement Programme. Capita made the point

that we would normally expect to do a BusinessImprovement Programme on a business which we Q96 Sir Robert Smith:Would it be worth resourcingacquired, therefore we were absolutely very them more to try and stop the turnover? In a sense,supportive of the idea. We have maintained that which is better: keeping the person you have trainedconcept and enhanced and invested significantly in it or putting the eVort into training a new person?over the last 12 months. Ms Roy: Clearly the eVort of investment, both in

time and resources in training new staV, would be farbetter spent, in our view, by retaining them in the

Q93 Sir Robert Smith:To follow up, there are 14,000 first place. Under the Business ImprovementstaV now? Programme, which my colleague has already

mentioned, we have a number of initiatives whichweMr Trainer: There are 1,400 staV.




are looking at to ensure we can retain greater levels Young, and we have listened to the concerns of theof staV. Specifically, and not surprisingly to the monitoring groups and other people. As a result ofCommittee, we are looking at reward and that, we now give out more detailed information torecognition packages, ensuring that we are paying solicitors. We have enhanced the quality checkingcompetitive market rates to not only attract the best where people who are new to the job havestaV but to make sure they stay with us. We are 100% checking of their decisions and even thelooking at the performance targets and rewards and experts have something like a one in ten check. Webonuses involved within that process and we are brought regional experts in who were recommendedlooking at the environment within which they to us by the unions to also assess this. Month-on-operate. When you are in a buoyant employment month last year, we increased productivity andmarket, our surroundings, in terms of air output but there is still some way to go to do that.conditioning, the desks, the circumstances that theywill work in, can all be instrumental in encouraging

Q99Mr Clapham: Given some of the criticisms, andpeople to look elsewhere. We are addressing eachone of these areas under our Improvement bearing in mind what you have said about theProgramme. mining expertise, there comes a point when perhaps

mining sense rather than the expertise is required ifwe are going to move some of these cases on. Is thisQ97 Chairman: Maybe the lawyers are getting moreone of the issues which has been discussed with themoney than you are?adjusters, but the adjusters have perhaps been toldMs Roy: It would not be for me to comment.to focus a little more and use some mining senseMr Wilson: We take the view that if people at leastrather than merely the expertise which relates togo to lawyers in this process, they are still in thethe book?process and, certainly, we would meet with our ex-Mr Wilson: We constantly review that and wecolleagues and other solicitors in certain instances toencourage people to look at things in the balance ofshare and compare notes.probability and try and find in favour of theclaimant. What happens is the senior expert team

Q98 Mr Clapham: Can I ask a question about the have regular monthly workshops with the adjustersOccupational Group Procedure because some of the themselves and we do measure the outliers and thesubmissions we received, and particularly taking decisions which they make. For example if someoneevidence from the solicitors last week, they were

may have a high proportion of denials that mightcritical that the process was first introduced to speedlook unusual or a high proportion of acceptances.up the claims, but now you have introduced variousWe move the claims around constantly to diVerentnew aspects—for example the adjusters, the miningadjusters and we measure the decisions which theyexpertise—and it has slowed down the claims. Intake.particular, they were critical about the Group 3

claimants. How would you respond to thatcriticism? Q100 Mr Clapham: Would it be fair to say that inMr Wilson: TheOccupationalGroup Procedure sets some cases it may appear that the use of the adjustersout the level of evidence which must be submitted by has introduced another adversarial tier?the claimant and it was negotiated between the DTI

Mr Wilson: It may appear like that, but we areand the CSG. The DTI look to be satisfied that thecommitted to moving these claims through theclaimants did handle vibrating tools in jobs whichprocess and we are committed to the right decisionswould not normally be perceived as being exposed tobeing made and the right compensation being paidvibration. Capita’s job is to assess the evidence toto the claimants. These are individuals who aremake sure the employment criteria are met. It isemployed by Capita and the standard that we set isimportant that when information and evidence isthey have to be consistent in the decisions which theysubmitted in the Occupational Group Procedure, itmake. At the end of the day, there will always be afollows the form of proper evidence in terms ofproportion of claims which come through that willclaims, questionnaires and witness statements.be denied and those that tend to be the case areThere will be instances where we will have to qualityclaims which are contested.check that information and return it to the solicitors.

I understand the concerns regarding the Group 3adjusters, but what we have employed are 61

Q101 Judy Mallaber: Following on from that, theindividuals who have got 1,500 years of miningsolicitors were complaining to us about requests onexperience. Ultimately, what they are trying tothe VWF Services Agreement for irrelevant andassess is the evidence before them.What we try to doinappropriate information and they were beingis encourage our adjusters to look for ways to pass aasked for information which they did not see wasclaim rather than fail it. We should be alive to therelevant and that was resulting in delays. Is that notfact that approximately 50% of the claims whicha problem which you recognise at all?they have assessed have been accepted. The issueMr Wilson: Obviously in any scheme we have toremains about the level of those claims which arehave evidence to support a claim. We are required todenied and that is a process which is refined andask questions to check that level of evidence. We askconstantly reviewed. Over the last 12 months wequestions to support a claim so we can decide on thehave tried to continually improve the process. We

have had audits from external parties, like Ernst & compensation to pay.




Q102 Judy Mallaber: The Claimants’ Group told us the end of this month. We have plans in place tomanage the cut-oV for Group 3 evidencethat in some instances you have been responsive to

complaints about the conduct of individual cases submissions at the end of June. All of these cut-oV

processes have been formally managed throughand you put matters right, but that seemed to bedealt with very much on a case-by-case basis. They standard project management processes in

partnership with the DTI involving othersaid you did not seem to share that knowledgeamongst claims adjusters to make sure when a stakeholders and solicitors where necessary.

Certainly the COPD case is an example with largemistake was made in one case it was not repeatedelsewhere. Is that fair and what steps do you put in numbers and it was planned for over nine months to

ensure that we could successfully secure the cut-oV.place to make sure there is a spread of best practiceand to stop any errors being duplicated?Mr Wilson: I think they may be referring to the time Q106 Sir Robert Smith: Is the aim that the cut-oV

when we talked about the Services Pilot which was a will not aVect other claims?couple of years ago, where in that period we invited Ms Roy: Our experience would be no.solicitors in to discuss with us seeing things from theother side. What we have done since then is to Q107 Mr Berry: Can we turn to fraudulent claims.constantly measure performance across all claims in How big a problem is this?terms of quality assessments and checking. We Ms Roy: To paint a picture in relation to ourconstantly discuss experiences and give training position as the appointed claims handlers, ouradvice based on any issues which arise from primary role is to accurately disburse public moniesmonitoring groups and meetings with the in terms of compensation to over three quarters of aClaimants’ Group. million claimants across both schemes. The Claims

Handling Agreements clearly set out how thoseQ103 Judy Mallaber: You are confident that payments should be made, so we have a number ofexperience is fully shared and once you have internal screening and validation processes whichdiscovered one way of doing things, which maybe ensure we get the right level of compensation to thewas not quite right, that is passed on to all your other right claimant at the right time. Taken in thatclaims adjusters? context, there is a requirement, with the levels ofMs Roy: From an operational perspective, we have public money which we are involved in, to havesome fairly rigorous internal audit procedures and fairly robust procedures where those validationprocesses where, by checking individual claims and processes suggest there might be something whichlooking at the quality of claims handling decisions potentially needs some further investigation. Inbeing made within those claims, we analyse the context, out of the three quarters of a million claimsoutputs from that, we feed that back in not only to we are currently processing, so far 1,500 have beenour training programmes, we deliver it back to the referred for some further investigation where thereindividuals concerned and we learn lessons across may be some potential concerns around thoseour technical team. It is the case that some of those validation processes.claims have continued to evolve over the last fewyears, whilst the Agreements were signed some four Q108 Mr Berry: The DTI in their submission saidor five years ago. We are still making new decisions that there have been 1,500 cases registered aswithin the process, so there is a constant need to potentially fraudulent. Do you know how many arereview how the operation will implement a legal fraudulent?decision or a legal agreement which has been Ms Roy: There is a distinction to be made between areached and there is a need for us to constantly fraudulent prospective, where we are looking forreview how eVective that is. Feedback from the evidence of intent tomislead, andwhere theremaybesolicitors is exceptionally helpful in these instances. a degree of exaggeration involved within the claims

handling process. The claims handling processesQ104 Judy Mallaber: You are happy when we write themselves are designed to identify that if someoneto you about things? does not meet the criteria, they do not progress. InMs Roy: Absolutely. relation to those who have been concluded so far, of

the800concluded investigations, 300have resulted ineither a reduction inoverall compensationbeingpaidQ105 Sir Robert Smith: One of the concerns raisedor a prevention of that compensation being paid.with us, dealing with the Vibration cut-oV, is the

deadline set by the court for submitting evidence.Doyou anticipate a surge in claims because of people Q109 Mr Berry: Last week the solicitors expressed

some concern about the tactics adopted by fraudtrying to get in before the deadline?Ms Roy: Across both schemes we have managed the investigators. Is it right that when applicants are

being investigated they are not given a clear idea ofVWF general damages cut-oV both for live andposthumous claims. We have managed the fairly why they are being investigated and what the issues

of concern are?significant operational spike which came aroundwith the COPD cut-oV in March last year. We have Ms Roy: In the small number of instances where

there is an external investigation involved, thejust managed the VWF wage loss cut-oV which tookplace on 31 January. We have fairly advanced process for the external organisation will always be,

first of all, to correspond with the claimant’splanning in place, from an operational perspective,to manage the services cut-oV which is scheduled for representative and seek their permission to contact




claimants, and each claimant representative is given created seven aspirational end dates in relation tothe various stages of theVWFprocess. By enhancingthe option to attend an interview or be involved in

any subsequent correspondence between both of our planning capabilities and forecastingmethodologies during the course of last year, wethose parties.We recognise that the claimants within

this process have a right to representation at every have now some confidence over both the realisticelements of these end dates and, consequently, ourstep of the process, and we continue with that during

the external investigation as well. ability to deliver them, subject to the co-operation ofall parties, so if certain assumptions take place, wecan plan and forecast much more accurately now.Q110Mr Berry: Does the claimant or the claimant’s

representative know the reason why the There is a recognition that we are only one part ofthe big process here, and all stakeholders need toinvestigation is taking place? Are they told, “our

cause for concern is . . . ” or is it a trawl? be engaged.Ms Roy: They will be made aware that this has beenhighlighted as having the potential for further Q115 Chairman: So with all these qualifications

would we be right in assuming that completeinvestigation.investigation of Group 3 claims will be achieved bythe end of quarter three of this year; that you will beQ111 Mr Berry: Do your investigators operate

under DTI guidelines? able to finish services MAPs by the end of 2006 andsettle all service claims by the end of 2007? Do youMs Roy: Our investigators are an external

organisation, part of the Cantor Group, who are think these are realistic?Ms Roy: Yes, we do.compliant to FSA standards. They operate within

the insurance industry, which is tightly governed by Mr Trainer: I would just like to put a couple ofcaveats to that. Firstly, as Kate said, there isFSA standards.significant interdependence between ourselves andthe claimants’ representatives, and the claimants’Q112 Mr Berry: In the DTI’s submission,

interestingly, the question about the guidelines representatives need to buy into these timescales andtargets and do their part of the piece. Secondly, ourwhich claims handlers use to identify potentially

fraudulent cases is referred to, and we are told that contract expires in 2006 so if we are still involvedbeyond 2006 we are confident, but obviously itthese were intended as internal documents, and that

is why they are not in the public domain. There remains to be seen whether that is the case.would be no reason, would there, why theseguidelines could not be provided to the Committee Q116 Chairman: You have been parachuted in here.

Do you have any regrets? Do you wish you hadin confidence?Mr Trainer: They are certainly documents that are never started?

Mr Trainer: Absolutely not.agreed with the Department. As to whether theycould be provided to the Committee, we have noobjections to that, but that is a matter I suggest you Q117 Chairman: It is not uncommon for us to find

that people come in as visiting fire people ormight want to raise with the Department.Mr Berry: Thank you. I think we will. whatever, and they say, “God, we wish we had never

got into this”.Mr Trainer: If I go back 15-16 months ago, I guessQ113Chairman:AmI right in thinking that from the

figures you have suggested there are 1,500 out of when I first became aware of the scheme I was quiteastonished, to be honest, that something of this scale750,000, so it is about 2%?

Ms Roy: 0.2%. and magnitude was going on. Outside of the miningareas it was not widely known what was going on.Having got into the process and met the team andQ114Chairman:Wehave spoken about the fact that

you are incentivised, and it is understandable thatwe seen what is going on, it is a wholly worthwhileendeavour, andwe are very proud of whatwe do andhave that, but we have now got a series of

aspirational end dates. Are they more realistic than we are very pleased to be doing it.Chairman: Let us hope we do not have to call you inaspirational, or more aspirational than realistic?

Ms Roy: In the early part of last year, we alongside again and say, “why have you not done this?”Certainly I would not, but some of my colleaguesother contractors were involved with the

Department in looking at ways in which we could may well do. Thank you for your evidence. If thereis anything else that we need, we will get back to you,bring some closure for the claimants within VWF

scheme. As a consequence, we, in partnership, but you have been very helpful.



Witnesses:Mr Nigel GriYths, a Member of the House, Parliamentary Under-Secretary of State, Mr NickFrench, Assistant Director, COPD Operations, Ms Ann Taylor CBE Director, Co-Liabilities Unit andMs Christine Chamberlain, Assistant Director, Vibration White Finger Operations, Department of Tradeand Industry, examined.

Q118 Chairman: Good afternoon, Mr GriYths. and others that put together the agreement. Thatagreement was reached on COPD in SeptemberWould you like to introduce your team, and then we

will get started? 1999, and two months later the UDM signed anidentical agreement. It was identical for 476 pages.Nigel GriYths: Thank you, Mr O’Neill. Ann Taylor,

CBE, is theDirector of our Co-LiabilitiesUnit; Nick We have them here. There were two pages that werediVerent, and those concerned the payment. TheFrench is the Assistant Director of the COPD

Operations, the respiratory claims, and Christine UDM levies a lower fee, and that is reflected on page446 of the contract. Indeed, my predecessors had aChamberlain is the Assistant Director of Vibration

White Finger Operations. I should like to thank you correspondence with the NUM to ask whether theywanted a similar agreement, and the answer wasand the Members here for your long-term

commitment on behalf of constituents to this “no”. They had an agreement with the CG.scheme. I estimate that the six Members present onthe Committee—and I know others are in theChamber—have represented up to 12,488 sick Q121 Judy Mallaber: But according to the evidenceminers, at a total cost in compensation of

we had from theEnglishmonitoring group, the trade£67.2 million. Thank you for your help.unions have denied that they were made such oVers,and there has not been any evidence of that from

Q119 Chairman: I am sure our constituents will be the DTI.informed! We started with the best of intentions. It Nigel GriYths: I am very happy to furnish you withprobably could have had a better beginning, but the minutes from Helen Liddell through to Brianthere is a sense now that we seem to be on the Wilson that reinforce that oVer. I understand that noright track, and there are probably still some response was given to the oVers of my predecessorsshortcomings, and we will want to explore them, but to sit down. I am not quite sure why they wanted toafter a diYcult start and a period when it looked as sit down and have separate agreements. As I say, forif you were being swamped, are you beginning to see 476 pages these are identical, so there is nothinglights at the ends of tunnels? special. The only special deal is that the UDM, byNigel GriYths: I think that is a very fair summary. If not using solicitors, in particular more latterly, I amyou look at the estimates that the National Union of informed charge a smaller fee.Mineworkers, the solicitors and the DTI hadprovided in the beginning, they were far too low:5,000 vibration white finger lead cases, with a

Q122 Judy Mallaber: However, the claims handlingforecast of 40,000, was more than four times anorganisation, Vendside, which is clearly integrallyunderestimate of 170,000; and 30,000 respiratoryconnected with UDM—I am not sure of the exactCOPD claims, with a forecast of 70,000 cases, morestructure—does insist on taking a payment out ofthan eight times underestimated. There was a rapidthe settlements that are made, and you know thatresponse in the early days which meant thatthat is a source of considerable grievance whensolicitors as well as us had capacity problems; butpeople are asked to sign up to those agreementsthe desire of members and my predecessors and ofwith Vendside, in my area in Derbyshire, inthe Department staV was to catch sick miners whileNottinghamshire and the Leicestershire coalfields.they were still alive andmake payments as quickly asNigel GriYths: I am aware of that. That, of course,possible.What have become the two largest personalis nothing to do with the Claims Handlinginjury compensation schemes in the world haveAgreement and is not reflected in the Claimsevolved from there, and so have the staYng ratiosHandling Agreement; and that is why there is nobeen ratcheted up.preferential treatment. It is quite a separate issue.Indeed, the NUM in some areas—the UDM and

Q120 Judy Mallaber: I should declare an interest as NACODs charge a sort of membership fee orwe have had nearly £17million of compensation into whatever in various areas, so it is not just VendsideAmber Valley so far. You will not be surprised if I that has this type of arrangement. It is not coveredraise this issue, though: both the claimants’ solicitors by either the Claims Handling Agreement, or by thegroup and the voluntary groups drew our attention agreement with Vendside, which I am informed isto the fact that the DTI negotiated a separate identical apart from the payment pages—sorry, it isHandling Agreement with the UDM, but not with a reduced fee basis.the other unions and not with the NUM orNACODs.Why did theUDMget special treatment?Nigel GriYths: It did not get special treatment.What

Q123 Judy Mallaber: But from experience that doeshappened was that in the 1990s the National Unionnot seem to happen with the claims in my areaof Mineworkers wound up its claims-handlingthat are settled through the NUM-connecteddepartment and transferred all its claims processingorganisations.to nominated solicitors; but UDM separatelyNigel GriYths: That could well be why I did choosecontinued to handle members’ claims. The UDMmy words carefully. I said that the NUM in somewere not represented by the claimants’ group, the

original group representing solicitors, and theNUM areas—



1 March 2005 Department of Trade and Industry

Q124 Judy Mallaber: Is it acceptable that that diYcult because of the desire to ensure that publicmoney is not paid out when it should not be, or tomoney is taken out by Vendside in Claims Handling

Agreements, and is it also acceptable that the UDM reduce the size of the claim?Nigel GriYths: The National Audit OYce is notand Vendside have come touting for business, even

in areas that are not majority UDM areas? simply limited to an assessment of how publicmoney is spent; it is also very interested, as Sir JohnNigel GriYths: I am not here to give a personal view

on whether it is acceptable or not. Is it permitted Bourne proselytises for, in best practice too, so it isin a slightly wider context here. Last year has been awithin the present rules of how trade unions run

their aVairs? I understand it is. Colleagues who have frustrating time for the solicitors; they have had highhopes in certain areas of these compensation claims,discussed this with me who feel it is not I do not

believe have succeeded in getting those responsible with, as far as I am aware—and I can assure theCommittee they cooperated fully with them—butfor regulating union conduct to reach a conclusion

that I may concur with and that you have certainly some of the areas they thought would bear fruit fortheir clients just did not, and I think perhaps thatgot a strong view on, but is outwith the Claims

Handling Agreement. frustration is reflected in their statements aboutcooperation. I take all criticisms seriously, and I donot believe that these are fair criticisms.Q125 Sir Robert Smith: Can we move on to the

relationship between the DTI and otherQ127 Sir Robert Smith: I think other members of thestakeholders. The claimants’ solicitors and theCommittee are now going to explore the specificEnglish and Scottish monitoring groups have voicedareas, which maybe will tease out where thea fear that there was initially a constructive anddiVerences are.collaborative approach adopted by theDepartment,Ms Taylor: I think we have been in a slightlybut they sense it is changing. The solicitorsdiVerent situation in the last few months in that thespecifically referred to deterioration of constructiveJudge is now more involved on the lung diseasedialogue aimed at resolving issues by agreement. Isscheme, in terms of setting parameters for the fast-that a concern you would share? Has there been atrack oVers. So things that we had previouslychange in relationship, or a move away from anegotiated ourselves, the Judge is now concerningconstructive dialogue to a more adversarialhimself with.approach?

Nigel GriYths: In my time of doing this job, SirRobert, it is not my impression, chairing regular Q128 Sir Robert Smith: Is that not a symptom of themeetings with the solicitors, the unions and MP point they are making, that things have got awaycolleagues, that there has been this marked from the ability to come to a negotiated settlement,deterioration. Of course, there are diVerences of and now the Judge is back into the process?opinion, but we have given solicitors unprecedented Ms Taylor: We had a workshop meeting with theaccess both to British records—a decision I took in Judge in September, with the solicitors, all together,September 2003—and to other data supplied by and it was at that point that we were all agreed thatIRISC. I accept that the solicitors, the unions and continuing with the scheme we had got was going toothers, together with us, have a common cause, and take far too long andwe needed collectively to adoptthat is to make sure that those sick miners, their a fast-track approach. The Judge was then drawnwidows and their families receive the payment to into that and became involved in that. That was onewhich they are entitled as quickly as possible. Such of the reasons why we put forward a suggestionaccounts as the one you have given do distress me, about mandatory oVers, which we know did not findbut I do not believe they broadly reflect the favour, but it was the Judge who asked us to do that;relationship between all the parties involved in it was not something we did of our own volition.securingwhat is our aim to deliver. Lastmonth I was Ms Chamberlain: Can I just say on VWF that on achecking the figures, and our DTI team, which working level since I have been in post over five yearsincidentally was praised by the National Audit we have increased the frequency with which we meetOYce in its report last year, met solicitors on four the claimants’ groups, some of themembers youmetoccasions over COPD, on three occasions on last week. We meet them more often on morevibrationwhite finger; and that was outside informal subjects than we have ever done, and we corresponddiscussions which had taken place in court and with them regularly. Virtually every day there areelsewhere. Our oYcials met them again yesterday letters coming in and out on various issues. I do notand they have another meeting again next week. I necessarily recognise that we have been lessthink that I cannot allow my own civil servants to be transparent. It is a feature particularly on VWF thatcriticised for complying with issues that the Judge we are at the very end part of the scheme, andhas instructed us to do, which I know again have therefore any issues that are easy to resolvewewouldbeen the source of some complaint by the solicitors’ have resolved by now; however, we have got thegroup, the claimants’ group. sticky issues which clearly are not so easy to resolve,

and they might require the Judge’s intervention.Q126 Sir Robert Smith: If the National Audit OYceendorsed the DTI’s role, would that be partly in a Q129 Mr Clapham: Minister, could I look at three

issues that were raised by the claimants’ group ofsense perhaps where they were coming from in termsof protecting public money? Would the solicitors solicitors, but before doing so I should like to ask

about the particularly scandalous operation that hashave been concerned that things had got more




been run by claims handling companies. I know that appeared to move for some time were resolved; andthis is under discussion. I understand the solicitorsyou feel the same as I do about the way in which

claims-handling companies have been able to exploit put forward their attempt at a solution to this on theVWF claims and separately on the COPD claims,the situation. We did expect something more robust

coming from the Clementi report. I want to explore because we are dealing with two diVerent judges.Weare getting back to them this month on the VWFwhether you take the view that the best way of being

to control these claims-handling companies would claim, and shortly afterwards the COPD claim. Weare trying to resolve this. Capita of course, as theybe by way of insisting that where a company

provides a solicitor with claims, that it is up to that touched on, do get an element of payment by theirresults. It is not in their interest to stall claims. Thatsolicitor to pay the fees for the claims-handling

company rather than the claims-handling company is not an eYcient use of their human resources orother resources, and nor does it ensure that they getto exploit the situation and take the fee from the

claimant. full payments under the contract. They are requiredto meet certain targets, and those targets areNigel GriYths: That arrangement would certainly

make claims-handling companies’ activities farmore determined not by stopping people getting paid butby making sure that people get paid and as quicklyaccountable, and I am sure far more acceptable to

colleagues. as possible.

Q132 Mr Clapham: Nevertheless, as you say, whereQ130 Mr Clapham: Is that something that youwould support? Is it something, for example, that we stalled claims have occurred on the contractors’ side,

you take steps tomake sure that they are moving on.might find the Department may well suggest to theConstitutional Department, that there should be a Nigel GriYths:We are on both sides. As I say, we are

grateful to the solicitors for their suggestions aboutway of controlling these claims-handling firms?Nigel GriYths: We are very happy to give our advice how to speed things up. This is part of the dialogue

that my colleagues are having with them, and I hopeand experience to colleagues in other departments,and to highlight from the sort of cases that you and we can reach agreement on COPD before the end of

this month. That is the intention for VWF before theother colleagues have assiduously brought to ourattention the real diYculties that this is posing—the end of this month, and, shortly after, respiratory.resentment of miners who find that they are havingto give up some of their compensation. My stand, Q133 Mr Clapham: One of the other things that theand that of my predecessor and theDepartment, has claimants’ group raisedwas the fact that IRISCwerebeen very clear on this. We have spent £477 million instructed by theDepartment to send out some 4,000on the legal and other expenses separate from letters, when in fact they were not in a position tocompensation to ensure that not one penny of deal with responses. What was the reasoning behindcompensation is lost by miners. We have heard that? Did it cause delay and, if it did, have we nowalready how certain organisations have charged fees got over the delays?that colleagues have been critical of, and this is Ms Chamberlain: We have certainly got over thoseanother area. It is certainly true that if they were delays. Let us put this into some sort of context.required in any way to work through solicitors, then Managing the contractors and the process is not aall the control and supervision that is required by the passive experience for the Department; we areLaw Society would be brought to bear on their actively managing various stages of the process, andactivities. that means where there are blockages, wherever that

blockage is it is part of our role and responsibility totry to unblock that. It is proper that we should lookQ131 Mr Clapham: The Law Society has been

particularly helpful in relation to their members, but at those claims that are stalled with solicitors forclarity’s sake and certainty’s sake, and to at least tryit is the group of claims companies that are very

diYcult to control, and it is a way of finding how we to bring some certainty to those claimants that arestill in the system. The point that I have made aboutmight exercise control on them. Having said that, I

turn to three particular points that were raised by the where we are in the VWF scheme—we are virtuallyat the end of general damages. There are perhapsclaimants’ group of solicitors around stalled claims.

One of the questions they raised was why the DTI only between 10 and 12% of all claims in generaldamages that are yet to be settled or to have ainsisted for example to tackle the backlog of claims

stalled under the claimants’ side whilst it appears decision. We are not at the start. We are really at theend. It is this remainder of claims that we need tothat on the side of the contractors there was not any

pressure exerted to deal with that backlog. seek some clarity on, as to whether or not theyare progressing through the system. That is theNigel GriYths: You will know, and I want to

make clear to everyone, that there is quite often on background as to why we felt it was appropriate asproper, good business governance of the scheme, tostalled claims a simple confusion—because of the

750,000 claims going in—about just where they are say that if a claim has stalled and is stuck in thesystem, why is that? If we can progress, let usin the chain. Sometimes solicitors believe that IRISC

is sitting on them, and they are stalled at IRISC, and progress it; but the onus is on the solicitor, as far aswe are concerned, to tell us what the problem is.sometimes on exactly the same claim there is that

misapprehension that it is the solicitors. In order to With any new process there are teething problems,and we have had further negotiations with the CGtackle that, we asked the Judge last year to put in

place a mechanism where claims that have not about areas of the stalled claims process that we can




refine and amend. We think we have got to the stage aware of course that colleagues felt that that wouldnot be seen as fair within their communities, and wenow where it is operating properly, and while there

were those discussions going on, we suspended the listened to you on that and decided accordingly.process because we thought it was proper to do so.But the Judge has endorsed it, and it is back on track

Q136 Linda Perham: You are saying you moved tonow from 1 February, and from an IRISC anda voluntary system because you were listening to theCapita perspective they are resourced up to deal withwishes of other members who, from their experiencethe correspondence that comes in. You are right toin their communities, decided that their feeling wassay there are only 4,000 claims, and that is somethingthat that would be a better system?like 3% of all the claims we have handled for VWFNigel GriYths: Indeed. The Judge instructed us tothat have gone into this process. That is probably anlook at a compulsory scheme as one of the options.indication of the fact that there are not significantWe did it, and having taken soundings from thosevolumes of claims yet to go through the system.most aVected we decided that we would not goThere are a small number that are stuck, andwe needforward on the basis of a compulsory scheme; thatto know why.that would cause claims to be settled a little later, butit would not be seen to be unjust.

Q134 Mr Clapham: Is it fair to say that now Ms Taylor: At that stage we were looking only atdiscussions are taking place with the solicitor and we making oVers to those people who on spirometryare getting over some of the feeling that perhaps showed normal lung function, so their respiratorythere have been some shortcuts taken by not function was normal on the spirometry readings,discussing with the solicitors that have led to frayed and only a small percentage of those people wouldrelationships, shall we say? have gone on to show disability in the full MAPMs Chamberlain: It is fair to say there were frayed process—around 6% of those people. It was a grouprelationships but then at the end of the day the Judge of claimants who very likely were not going to bewas involved on numerous occasions, and on the last disabled, and we were proposing an average tariV.occasion she went through the whole of the The scheme has moved on since then and we have aagreement and endorsed it. In fact, at an earlier wider group in there.hearing she went further than the Department had Nigel GriYths: There are those of us who know—proposed by deciding that a claim, once it is through those of us in here, but the wider world perhaps doesthis process, is out and outside of the scheme. That not—that there is only a finite number of medicalwas her decision. We tried to involve the Judge in specialists who can carry out the medical assessmentmaking decisions where it was appropriate to do so, process. There are about 600 respiratory specialistsbut inevitably when you are talking about claims in the country, and we are using 200 of them, one-which potentially have the capacity to exit the third of just about all the available man and womanscheme, you are talking about contentious areas power, to put people through the proper levels ofwhere there will not necessarily be a degree of unity testing that we know unfortunately medicalwith solicitors that that is what should happen. practitioners cannot be brought up to the proper

standards on and deliver full and just assessments. ItQ135 Linda Perham: Minister, can I ask you about is a desire to harness the resources that we have gotthe fast-track oYce for COPD? I understand last there, and that is one of the major bottlenecks ofyear the Department tried to introduce a that scheme that we have been working hard tocompulsory system and has now fixed on a overcome—and I am grateful to the medicalvoluntary one. Why was the attempt made initially profession.to move to a compulsory system? Mr French: Around 90% of the claimants withNigel GriYths: Because that is what the Judge asked normal lung function would go on to show chronicus to do. The pressure to fast-track has come from bronchitis in medical assessment, although theyMPs, from sick miners, from unions, from widows would not have disabling chronic obstructiveand from solicitors; and the Judge agreed to that. In pulmonary disease. That is why we are proposingSeptember he instructed our Department and my fast-track payments to that group rather than denialcolleagues to look at the options, and he specifically of the claims.asked the parties to examine a compulsory tariVscheme for miners showing little or no health

Q137 Mr Berry: May we turn to minimumdisability. This was done to try and stop those whopayments, an issue that youwould expect us to raise?are the least aVected from delaying the claims ofFrom the start of the COPD scheme, the DTI hassicker miners. Anyone with high levels of disabilityrefused to accept the principle, and has not yetat the spirometry tests would still go straight toaccepted the principle of a minimum paymentsMAP and still will. I recognise that the Judge’s wishscheme. Why is that?for us to examine a compulsory fast-track schemeNigel GriYths: Because there is no real scope for thedid not command the support of the claimants’Government to overrule the amount that isgroup. In fairness, the solicitors in front of the Judgecalculated using a court formula, and on the basis ofdid object all along; however, it is wrong to suggestmillions of cases of civilians who suVered fromthat the compulsory scheme originated from us,medical problems that are directly attributable towhen the Judge himself said that on the basis of antheir workplace, it would leave any litigant who wasestimate a compulsory scheme would make the

process that we all seek even faster. But I was also dissatisfied with a court decision on compensation




against a Government department or agency, to say, payments. Within the confines of the judicialdecision, there is a problem, but outwith the judicial“give me a higher ex gratia payment”. That is one of

the key problems with it. decision, where the money would be sourcedelsewhere other than government, then it is possibleto do it.Q138Mr Berry: Why are you discussing the issue ofNigel GriYths: I am happy to take that as aminimum payments?summary.Nigel GriYths: We are discussing it because theChairman:That is where we start from.Roger wouldsolicitors proposed a solicitors’-funded scheme tolike to pursue a couple of points.provide a minimum payment of £500 to me some

time ago.Q143 Mr Berry: The solicitors suggested that itwould be impossible to fund a minimum paymentsQ139 Mr Berry: Sorry, but is the issue here thescheme through the increased funding they will beprinciple, or is the issue the funding? I thought yourable to get from the RPI increase.first answer, Minister, was that it was an issue ofNigel GriYths: It would be?principle.

Nigel GriYths: Correct.Q144 Mr Berry: It would be.Nigel GriYths: No. On our calculation they haveQ140Mr Berry: If it is an issue of principle, I do notsaid that that is their preferredway of doing it, whichunderstand why there is a discussion of funding.is to take half of the increase in the RPI. TheWhat is the point of having discussions five yearsshortfall, if was to be applied last year, is estimateddown the line on funding when you are saying youat 400,000 and would not fund it—it would leavecannot do it or should not do it?1,600 miners without money to make up for theNigel GriYths: No, I am saying what we are not ableminimum payment.to do. I am sorry, I have not made myself clear. The

solicitors some time ago proposed to me that thereshould be a solicitors’-funded scheme to provide Q145 Mr Berry: Their argument is that if thatminimum payments of £500. I think that that is on scheme had been implemented when they firstthe basis, as I said earlier, that we have paid some suggested it, it would have covered the costs. Are£477 million to solicitors in fees. I am not making a they wrong?comment on that. The solicitor’s standard fee is Nigel GriYths: I do not know whether they are right£2,300 plus VAT. I can appreciate the feeling of or wrong on that. To be fair to them, I have beensome solicitors that to their client thismay seemhigh warned throughout that it would not fund it, and Iwhen the settlements that they are asking them to can tell you retrospectively if it had been brought inaccept, because of for instance heavy smoking, were to cover last year, on the figures I have seen, ourreduced to a few hundred pounds. actuaries have advised me that the shortfall would

have been £400,000.Q141 Mr Berry: Forgive me, I am still not clearwhether it is the principle you are opposing the Q146 Chairman: Can you send us a note?minimum payment scheme, or you have not yet Nigel GriYths: Yes.found a funding way that is acceptable. Is it the firstor the second? Q147Mr Berry: Is there any argument that has beenNigel GriYths: The second. suggested that a delay in considering that proposal

eVectively means that it goes from being fundable toThe Committee was suspended from 4.04 pm to being non-fundable? I would be very keen to see the4.27 pm for a Division in the House of Commons numbers behind that.

Nigel GriYths: I am very keen to supply them, butthere is a fundamental objection to that way of doingQ142 Chairman: As I understand it, if I may clarify

the situation, the protocol which followed the things, and it is illustrated by the figures I have given;but there is no guarantee that that would be self-judicial decision that triggered oV the whole process

does not provide for minimum payments funded by funding. Indeed the fears of our oYcials on this werewell-founded, if you apply it back—and I will supplythe DTI. The Judge has indicated however that

minimum payments could be introduced provided the Committee with the figures. From day one, whenthe solicitors proposed this, I have given it everythey did not come from public funds, and that at

least some of the claims settlement community are encouragement. We have told the court. We weretold that they could not fund it directly because theprepared to forego some of their fees on the

understanding that they would be used forminimum Law Society did not allow for that. We checked withthe Law Society and they confirmed that it could bepayments, because the understanding that we got

was that since a minimum amount of work is funded in a way that would allow us to cut out thebureaucracy. My objection to the way the solicitorsinvolved in minimum payments, nevertheless the fee

is on a pro rata basis, which does not necessarily have suggested that they pay this is not just that itcould lead to a shortfall of hundreds if not thousandsrelate to the amount of eVort that the solicitors put

in. They are saying that given the minimal amount of people not getting that minimum payment havinghad high expectations, with no chance of a pay-out;of eVort involved inminimumpayments, they would

be happy to forego at least a part of their fee, and but I was suggesting that the simple way to achievethe minimum payment was for the Department tothat that money could be used to fund the minimum




send solicitors monies to cover their fee and the employment, that is to say claimants who workedunderground and then on the surface, because wecompensation so that the miner would get £500 and

the solicitor the balance. If I might give an believe that their underground employment wouldtake them to a threshold of exposure after whichillustration, if they assess compensation of, say,

£400, the solicitor would get a cheque for £2,200 not further exposure on the surface could cause themdamage.£2,300, and the miner would be passed a cheque for

£500. In terms of making this administrativelysimple and ensuring the speediest payment, I clearly

Q151 Judy Mallaber: As of now, are you sayingbelieve that this is the best way forward.the door is still open for further discussions if theChairman: We look forward to receiving thesolicitors’ group comes back with further evidenceadditional information.and arguments?Nigel GriYths: I do not want to egg the pudding, but

Q148 Judy Mallaber: On surface worker claims, in I went out of my way to accede to their verythe evidence session last week the solicitors’ group reasonable request to look at the court records weconceded that your refusal to accept liability for held, because they felt that they did not have full andsurface worker claims was legally correct, but that appropriate access to them. They were given that. Ityou should recognise your moral responsibilities. was as a result of that that I have catalogued theDo you not think that you have some form of court hearings. Everything was very optimistic untilresponsibility to these men? late last year. They informed the Judge they hadNigel GriYths: My responsibility is to make sure identified 15 cases. They had set aside their medicalthat people who have suVered lung disease because experts to look at it, which is why I am sure, becausethey have inhaled coal dust get compensation. There of his commitments, and also wanting to do aare two ways of achieving this. There is the way that thorough examination, they were not expecting tois open to any individual at the moment, which is report back to the court until January. However,through a civil case—and of course the schemes we from the evidence they gave last week it appears thatare talking about were because of a number of civil

what Nick French has just said is right; that there iscases advanced—or to bring them within one of thenot evidence, and they cannot get cases where theyschemes we have. Our problem is this: in Septembercan show measurable levels of damage to lungs2003 I agreed to open the records for the inspectioncaused to surface-only workers.of solicitors to see if they could advance cases that

show that COPD has been caused on the surface.From 5 May of last year the solicitors told the Judge Q152Mr Clapham:Can I respond to that, Minister?that they would be preparing a case for 9 July. On 13 As I understood what was said last week, althoughJuly they asked for an extension to 1 October. On 4 there were 15 cases, the real diYculty is that thereOctober they asked for a further extension to 17 were no readings in the coal preparation plantsNovember, and at that time they asked for an where these men had been exposed. Theextension to January so that their medical expert, underground workings were monitored on a veryMr Rudd, could examine 15 cases. On 14 December systematic basis, but the coal prep plants were notthey withdrew their claim. I have since written to monitored as such. Consequently, although one canthem, asking them why, and I have not yet received identify men who have a chest disease, being able toa response. prove that that chest disease was due to excessive

dust becomes extremely diYcult when there are noQ149 Judy Mallaber: So the ball is in their court. gravometer readings taken in the coal preparationNigel GriYths: Very much so. plant. I understand that is what the solicitors were

saying yesterday; but if you are saying that youwould be prepared to discuss the matter further, IQ150 Judy Mallaber: I understand what you aream sure it might be able to be taken further towardssaying about taking civil claims, but obviously thata conclusion.is a real problem, given the cost for an individual toNigel GriYths: I would hope so. That is a verytake a common law claim for this.helpful explanation. I think though the reason whyNigel GriYths: Of course there are ways for lowthere was not monitoring in those surface areas andincome individuals, people with disabilities on lowthe reason why the National Union of Mineworkersincomes, to look at how they can get funded for that,would have insisted on it, almost throughout theeither through legal aid; or it can be agreed—and Ihistory of the union, was because theywell knew thatam not speaking as a qualified lawyer here—how athere was a real deep-seated problem underground,payment can be appointed, in terms of taking thoseand in those locations; and therefore it had to becases between the claimant and the defendant.monitored. There is an element of commonsenseMr French: The diYculty we have is that accordingthat says to me that because the surface was notto our evidence the levels of respirable dust on thethought in any way to be comparable, then thesurface will be too low to cause COPD in all but themonitoring was not pressed for by the workers’most extreme susceptible cases. On that basis, it doesrepresentatives and certainly not acceded to by thenot seem logical to set up a scheme to pay damagesmining companies. That is the strong impression Ifor COPD to these claimants, whereas we can lookget, which would reinforce what spirometry andat individual claims that are advanced. The otherother tests I understand are saying about surfacepoint that I would like to make is that we do already

compensate claimants who had so-called mixed working.




Q153MrClapham:Another explanation of course is Mr French: A number of claims have already beenprocessed in relation to small mines, so we arethat the underground took precedence, and there

was little done. I can tell you that I worked for two starting to make oVers. I think perhaps the softwareissue you are referring to is in relation to pensionyears as a member of the safety team, and as part of

that my job was air monitoring and dust sampling. calculations. We are in discussion with theclaimants’ solicitors group and with the small minesI can count honestly on one hand over the two-year

period the times that we went into the coal prep about amendments to the pensions calculator thatwill be required for some claims. I understand that itplant.

Nigel GriYths: You speak with great authority on only aVects claims whose last period of employmentwas with a small mine, so we are paying out thosethis subject.

Mr French: I think we would all agree that the claims that we can at present whilst actively seekingto resolve the issues with the claimants’ solicitorsprincipal issue relates to dust levels. I do not think

the claimants’ solicitors’ medical expert would and with AGF, so that all of the claims, even thoseclaims where the final period of employment wassuggest that if the dust levels we have are correct,

men whoworked only on the surface would contract with a small mine, can be fully discharged.COPD from working on the surface. Their issue isthat the dust levels we have are incorrect. We have Q158 Judy Mallaber: Are you saying it will not begiven access to the claimants’ solicitors to look possible to resolve the pre-1972 claims?through the dust records, and they have not as yet Mr French: That is a separate issue. The issue now isfound evidence that supports their position; but we that—not the claimants’ solicitors but someall agree that it is the central issue. coalfield representatives—have suggested to us that

in the absence of an insurer for those claims pre-1972, that theDepartment should accept liability forQ154Mr Clapham: It may be, Minister, if we can sitthem. Our advice is that we have no legal liability fordown and discuss the matter, that we might be ablethose claims where there is no insurer pre-1972.to come to a satisfactory conclusion.

Nigel GriYths: I can undertake to colleagues and toQ159 Judy Mallaber: Will a moral liability bethis Committee that we will give maximumaccepted to include those people who just happen tocooperation to resolving this.have slipped through the net?Nigel GriYths: Obviously, we look at how, withinQ155 Judy Mallaber: Can I move on to another the parameters wework under, we can secure justice,unresolved issue and clarify the position on but it is a diYcult area. The courts are likely not tosmall mines? My understanding from the last find us liable. We cannot be liable for everybody elsecorrespondence I had with you Minister, is that who is not liable, if you know what I mean; so ifagreement was meant to have been reached on people fall down on their liabilities, government ofincorporating small mines in the Claims-Handling course does not automatically pick that up. That isAgreement, but we certainly still know of solicitors why we are working hard with the smaller mines towhere—some small mines are still contesting their try and ensure that they meet their commitments. Iinvolvement within that. I, and others, have am sadly certain that there will not be 100% justiceconstituents who may well die before this issue is in this area.resolved, and I wonder whether you can clarify the

current position.Q160 Chairman: Do you think that on some of theNigel GriYths: Not too many, I would hope. I thinkpoints relating to small mines, you could write to usthere have been significant moves by small mines.in relation to points you would want to clarify? ThatMr French: There is agreement between thewould be helpful.Department, the claimants’ solicitors and AGF whoMr French: Yes.represent the interests of small mines, who are the

insurers of small mines from 1972 onwards, aboutQ161Mr Clapham: Can I pick up a couple of pointsincorporation of small mines into the Claimsthat Roger raised with IRISC Capita on the issue ofHandling Agreement. There is an agreement that isthe fraudulent claims. There are 1,500 of which it isnow being operationalised. There is an issue infair to say that 300 have been found to have somerelation to claims pre-1972, where there is noelement of exaggeration rather than fraud; and thatinsurer.resulted in the damages being modified in some wayor another. Is it possible to say howmuchmoney has

Q156 Judy Mallaber: So it is not relating to specific been saved as a result of having a specialmines; it is relating to the timescale. investigation department?Mr French: Myunderstanding is that it relates to the Nigel GriYths: I think it will be hard to quantifytimescale. for one clear reason: there are figures covering

those cases, but of course by having such adepartment and people being aware that theyQ157 JudyMallaber:The other question is how long

it will take the British coal insurers to resolve the should retain as sharp a memory as possible andexaggerate as little as possible, then there is asoftware issues that we understand are still on

disaggregating the claims arising from British Coal deterrent there to any element of dishonesty.The vast majority of people are perfectly honest. Iand from small mines employment. When will those

software issues be dealt with? am advised that we estimated the saving on the




156 denied claims to be £1.85 million as a result of to clarify with us as well, so we would be happyto receive the correspondence. Thank you for yourthis; and the 132 reduced claims that wereevidence.mentioned by Capita is £1.25 million; so the savingsMs Taylor: Can I say one thing before we finish?were £3.1 million on those specifically. That was onOne of the things you said last time really stung1,594 claims that were referred, which, as youme when I was looking back through the transcript,rightly point out, were only 0.2% of all claimsabout transparency rarely being found on the heartregistered.of oYcials when they died. Actually, we havetried in my team to wear transparency on ourQ162 Mr Clapham: Is it possible to say how much sleeves. We have tried very hard to be open withwas spent on investigating those cases? solicitors and other stakeholders. We do have joint

Nigel GriYths: I am advised it was £500,000. operations meetings. We have provided masses andmasses of information to the solicitors’ group and

Q163 Mr Clapham: Half a million pounds on other people. That is certainly something that weinvestigation and so in cost/benefit analysis there have tried throughout the whole of this process tohas been a benefit. Is it possible to say how much do. It is diYcult and we have probably failed in allthe special investigation department is costing sorts of areas, but we have tried very hard to be as

transparent as possible so that when the sunshineannually?shone on us people would say that everybody knewMs Taylor: Half a million pounds.what we were doing.

Q164 Mr Clapham: Half a million poundsQ166 Chairman: Ten years in this job as Chairmanannually. I thought that related to the cases thathas made me very conscious of the obfuscatingwe had identified rather than the cost of the tendencies within the British public service, and ifdepartment. for any reason I have lumped you in with the rest

Ms Taylor: It is about half a million pounds a year of them, please forgive me. There are characteristicsto keep the special investigations department. within the DTI and beyond in Whitehall that

sometimes tend to veer towards opacity rather thanQ165 Chairman: I think we have covered all the transparency—let us put it like that. Thank you forareas. Having said that, if there is something else your evidence.that we think of, we will write to you, I imagine. Nigel GriYths: Thank you for your commitment to

this issue.There are obviously some points that you will want

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Written evidenceAPPENDIX 1

Memorandum submitted by Coalfield Communities Campaign

1. Coalfield Communities Campaign (CCC)

1.1 The Coalfield Communities Campaign (CCC) is the all-party association representing more thaneighty local authorities in the present and former coalmining areas of England, Scotland and Wales. Thecoalfields in total include around five million people. Since its formation in 1985, CCC has played a pivotalrole in promoting the economic, social and environmental renewal of areas aVected by mining job losses.

2. CCC Involvement

2.1 As a local government body from coalfield areas, CCC representatives have inevitably had to deal ona daily basis with the legacy of the coal mining industry. Part of that legacy is associated with the coal healthcompensation schemes.

2.2 When the court cases were won and the two main compensation schemes were set up, CCC waspleased that the Labour government was in the process of putting right some old wrongs and properlycompensating miners for the damage to their health inflicted as a result of working in the coal industry.

2.3 Unfortunately, the message our local councillors have been getting for some years was that the waythe schemes are administered is resulting in much frustration and bitterness.

2.4 With regard to the respiratory disease scheme, after the first year or so when the administrativemachinery struggled to cope, successive ministers, the DTI and the organisations under them have workedhard to improve matters. There were huge diYculties delivering the biggest schemes of their type in theworld. There are also so many complexities within the Claims Handling Agreement that it is not surprisingproblems have arisen.

2.5 Now, some eight years after the court cases, both schemes have paid out around £2.3 billion in total(DTI Press Release 24 January 2005). No one should play down the significance of this for former miningareas. Many ex-miners or their families have received compensation and in many cases they will be satisfiedwith the outcome.

2.6 Nevertheless, in general, people in the coalfields remain dissatisfied with the way the schemes havebeen operating. Despite the hard work of all agencies and the progress made in getting the administrativemachinery to work, problems persist. The DTI has been keen not to dwell on the problems and appearedto take the view that it is just a matter of letting the administrative machinery do its job. It was not untilafter the scheme closed and the true size of the task ahead became clear that the DTI was moved to lookagain at the Handling Agreement and what could be done to expedite matters.

2.7 The Hand Arm Vibration Syndrome/Vibration White Finger (HAVS/VWF) scheme has had a lowerpublic profile and less apparent controversy. Nevertheless, there are also some outstanding areas of concernwithin the HAVS scheme, mainly associated with Group 3 claims and the burden of proof required toestablish a claim. In common with the respiratory disease schemes, these concerns have been expressedrepeatedly by claimants, solicitors, the Monitoring Groups, not just CCC.

3. Respiratory Disease Scheme—Outstanding Issues

3.1 In January 2004, according to Hansard, there were 34,306 settlements for less than £1,000. That wassome 26%of all settlements at that time. If that ratewere to be applied to the total claims submitted (560,000)there could have been the prospect of over 145,000 claims settled for less than £1,000. Because of the recentFast Track proposals, that will not now happen because fewer claims will go through the full MedicalAssessment Procedure (MAP). In January 2005 the DTI assessed that there were 9,000 low value oVersoutstanding.

3.2 Low oVers and low settlements remain a central concern of CCC. This has been for three reasons.Firstly, oVers have beenmade as compensation for respiratory disease that has occurred as result of workingin the coal industry. Having won the right in court to compensation, an ex-miner with lung damage shouldbe entitled to a fair payment no matter what other contributing factors are taken into account. Secondly,low oVers clog up the system because claimants are unwilling to settle. Thirdly, these low oVers are out ofall proportion to the amount of resources used to process the claims and the amount of money going to theorganisations involved. Reported in Hansard in March 2004, solicitors were being paid £2,000 for a claimthat was worth only £200 to the claimants. This does not take into account the bill for the services of othercontractors (Capita/IRISC, Atos Origin/Sema/Healthcall). It is unhelpful to create an impression that theclaimants themselves benefit from the schemes the least.



The case for a minimum payment

3.3 CCC, solicitors (including the Claimants’ Solicitors Group) and Members of Parliament have allmade the case for a minimum payment. The basis of this argument has been that there is both a moral anda practical case to make a minimum payment where damage to the lungs from working in the mines isestablished.

3.4 CCC contends that by rigidly applying the Handling Agreement and the mathematical formula thatis supposed to work out a fair apportionment of liability, oVers are made that do not come near to thoseroutinely oVered in County Court settlements.

3.5 For every low oVer made in the coal health schemes for respiratory disease, hundreds of other CountyCourt settlements could be used to demonstrate the inequity. Two examples as comparators are includedhere but these are not unusual.

3.6 Case 1—an ex-miner with 13 years in the coal industry in Derbyshire was found to have chronicbronchitis and his un-apportioned award assessed at £5,304. Using the Handling Agreement calculator therecoverable proportion (taking into account smoking) was just 0.31% of the total, resulting in an oVer of£17.64.

3.7 Compare this to a 46 year-old woman in Taunton was awarded £925 for a lumber strain as a resultof a minor road accident. She has some time oV work but was fully recovered in 12 weeks.

3.8 Case 2—an ex-miner with 13 years’ underground service in County Durham was oVered £33.36 dueto 24 years of average smoking being taken into account.

3.9 Compare this to a publican who was sued by a customer for a small cut to the little finger of a childfrom broken glass. The child was left with a half a centimetre long, faint scar and was awarded £962.05p.

Fast track and minimum payments

3.10 For many years the DTI defended the Handling Agreement and therefore saw no problem ifthousands of claimants were oVered compensation of less than £1,000. In many cases the oVers were formuch less—sometimes just a few pounds. More recently with the fast track scheme, the DTI hasdemonstrated a willingness to be more flexible in order to address the problems of so many claims and thepotential work load for many years to come.

3.11 The new Fast Track or Risk OVer proposals try to balance fairness with expediency just as CCC hasargued. If a claimant is found to have some lung damage as result of working in the coal industry he willnow be compensated for no less than £1,400. The bottom tariV for deceased claims is £1,000 for estates and£1,200 for widows.

3.12 Under the new Fast Track scheme—the same ex-miners referred to in the previous examples whowere oVered £17.64 and £33.36 would have been oVered £1,400.

3.13 Yet in the DTI Report to court of January 2005 it is categorically stated:“The Department has made it clear that public money will not be used to fund a minimumpayment.” (Paragraph 44, page 11.)

3.14 The DTI is therefore not considering introducing any type of minimum payment outside of the FastTrack option, either for claims still in the system or retrospectively.

3.15 Instead the DTI have focused on the solicitors’ proposals to top-up payments to a £500 minimumusing a proportion of their own fees. CCC would not wish to dissuade the solicitors from making acontribution in this way, but this is a reflection of the embarrassment they feel because the scheme hasproduced such derisory oVers in the first place. Solicitors should not be put in such a position.

3.16 The Government took over the liabilities of British Coal, therefore it is the obligation of the DTI toaddress this issue and not the solicitors. By supporting a minimum payment on the proviso that someoneelse pays, the DTI is side stepping its responsibilities.

3.17 CCC takes the view that the Handling Agreement produced unfair results at the bottom end of thecompensation scale and that it is neither a misuse of public money nor does it set a dangerous precedent tomake the necessary changes to accommodate a minimum payment.

3.18 Taking into account the money already oVered, the overall cost to the Government would berelatively modest and only a fraction of the many billions of pounds involved in the schemes overall. Withregard to minimum payments, it cannot be fair to have such a discrepancy between very low settlementsunder the full MAP scheme and the current minimum of £1,400 for live claims under the Fast Track option.

Surface only claims

3.19 The longstanding issue of claims for coal mining employees who only worked on the surface appearsno nearer a satisfactory resolution. Although the number of mineworkers who may wish to claim in thiscategory is relatively small, the DTI and its solicitors have resolutely defended their exclusion from thescheme. This position was adopted based on their interpretation of an expert medical opinion.



3.20 After the Judge gave leave for the Claimants’ Solicitors Group to search for evidence in British Coalrecords, prospects for real progress improved. However, faced with financial risks associated with grouplitigation, the CSG have not proceeded.

3.21 Although this issue has been back and forth between the various parties involved, the basic argumentremains the same. It is universally accepted that a great deal of airborne dust was generated in coalpreparation plants and coke batteries. Records of the levels of dust were not routinely kept, therefore findingevidence to support claims has been more diYcult. Nevertheless, there is an established causal link betweencoal dust and respiratory disease. It is not surprising therefore that the question continues to be asked—whywas British Coal (and now the DTI) found liable for exposing its underground workers to harmful dust butnot those who worked in dusty conditions on the surface?

3.22 In Hansard (27 January) the DTI minister gave an undertaking to examine the position once more.CCC welcomes that and hopes that justice can be done for this excluded group of mineworkers.

4. Hand Arm Vibration Syndrome (HAVS) or Vibration White Finger (VWF)—Outstanding Issues

4.1 The HAVS/VWF scheme was closed at the end of October 2002. Yet only 60% of the claims havebeen settled. This is in part due to the continuing wrangle about denials of Group 3 claims and in part dueto outstanding “services” claims. The current and long running argument is mainly about burden of proof.A claim is placed in the Group 3 category if the assigned job did not involve using the relevant vibratingtools. An assumption is made that because it was not in the job description the claimant cannot have usedthe tools and they are automatically denied. Claimants then have to find evidence to prove otherwise.

4.2 The English Monitoring Group has consistently challenged the approach of the DTI and its claimsadjusters to Group 3 cases. A dossier containing seventeen examples was submitted by the EnglishMonitoring Group in 2003. The intention was not to resolve the individual cases but to demonstrate thatthe adversarial approach of the DTI and its contractors was biased against the claimant.

4.3 Denials have been based on misunderstandings about mining practice and an assumption that claimsin the Group 3 category were less legitimate than others. There is a requirement for claims to be supportedby evidence from two witnesses. This is very diYcult to achieve especially with older or deceased claimants.Capita/IRISC have discretionary powers to settle for less evidence but have, by and large, chosen not to.

4.4 Where evidence is produced by claimants and backed up by witness statements, it appears to havelittle validity in the eyes of Capita/IRISC adjusters. The role of the claims adjusters is key to the problemwith many of these denials and there is a continuing argument about the written guidance they use to makeassessments.

Some examples of injustice

4.5 Case 1—The claim was denied of a shift charge engineer (electrical) who worked at Murton collieryin County Durham. The IRISC claims adjuster asserts that the claimant could not have used any vibratorytools because he was too busy doing other work and could have deployed someone else to use the tools ifnecessary. Witness statements from fellow workers of the claimant were ignored.

4.6 Case 2—A coal face overman worked at Horden colliery (County Durham) for 35 years. His claimfor vibration white finger was denied because using the specified tools was judged not consistent with thejob of a face overman despite witness statements to the contrary.

4.7 Case 3—A miner from Maltby colliery (Yorkshire) was denied, then reviewed, then denied againdespite the fact that his training records and an accident report clearly showed him to have worked as a faceripper during part of his post-1975 service. Ripping is a Group 1 occupation and involved regular use of thespecified tools.

4.8 Case 4—A worker at Duckmanton workshops in Derbyshire was denied a claim despite his bossconfirming he often used vibrating tools. After his local MP took up the matter with two DTI ministers,IRISC agree to look at it again and an oVer was made.

4.9 Such cases are commonplace in HAVS/VWF denials. Very often the success or failure of the claimcomes down to vague assertions about mining practice and the assumption that “one man one job” was theuniversal code of all mineworkers. On the contrary, the very nature of mining meant that tasks wereinterchangeable and that diYculties were overcome by teamwork with the use of all kinds of tools, includingcompressed air tools or similar.

4.10 Several thousand Group 3 cases were eventually re-examined by Capita/IRISC. A significantproportion of the re-examined cases were found to be in fact Group 1 or 2 cases ie in occupational groupseligible for compensation. This demonstrates that many initial denials were made with little reference to theevidence.

4.11 It is a recurring theme at Monitoring Group meetings that Capita/IRISC have not always followedthe correct procedure or have missed some important information. Missing information or no record ofletters received, for example, may seem fairly trivial administrative matters but, taken as a whole, they givethe impression that claims are being blocked rather than simply processed.



4.12 There can be no winners if these claims are allowed to drag on for years, costing the taxpayer muchmore than if reasonable settlements were made based on the balance of probabilities. The approach of theDTI and the adjusters appears to have been to stonewall these claims until they become time-barred or theclaimant just gives up. In such circumstances any mutual trust between parties is lost. The recent concernabout the use of lie detection technology (Hansard, 10 January 2005) only serves to reinforce claimants’perceptions.

5. In Conclusion

5.1 Throughout the life of the coal health compensation schemes there should have been a willingness onall sides to adapt to a developing situation. After all it was entirely new territory, particularly with regardto the volume of claims for respiratory disease. It is only by learning lessons and then implementing sensiblepolicy solutions that a satisfactory outcome can be achieved.

5.2 Ministers and the DTI have responded to developments and taken action to move matters forward.It bears repeating that these schemes were huge and, with the best will in the world, many diYculties wouldhave to be overcome. Yet an element of an adversarial approach remains.

5.3 The assertion that the DTI cannot use public money to help fund a minimum payment flies in theface of common sense. The Handling Agreement has been modified to address practical issues and it can bemodified to provide aminimumpayment for all. The new fast track proposals demonstrate clearly that thereis suYcient flexibility in the system and that there need be no precedent set for industrial disease and injurybenefits outside of the scheme.

5.4 A similar willingness to balance fairness and expediency for surface only claims and the remainingoutstanding issues in the HAVS/VWF scheme would go a long way to resolving problems and make fasterprogress towards completion of the whole process for both schemes.

February 2005

APPENDIX 2

Memorandum by the Department of Trade and Industry

Terms of Reference

The Committee intends to review the scope of the two schemes and their administration, including claimsregistration and handling, the coordination of these processes with the medical assessment procedures, theclaims settlement process and the scope for accelerating the settlement and payment of claims.

INDEX

Title Page—Including Terms of Reference

Index

Glossary

Introduction

Background

Judgments and Handling Agreements

The Conditions

Parties to the Process

Flowchart for COPD claims

Flowchart for VWF claims

Flowchart for VWF Services claims

Medical assessments

Record collection

Progress

Constraints

Electronic delivery

Communications

Monitoring the Processes

Fraud



EYciency

Recent Progress

Remaining Issues

Aspirational Scheme End Dates

Conclusion

Annex A—Copy of the COPD CHA on CD-Rom*

Annex B—Copy of the VWF CHA on CD-Rom*

Annex C—Copy of the latest COPD quarterly report to court

Annex D—Copy of the latest VWF quarterly report to court

Annex E—COPD Claims Process

Annex F—VWF Claims Process

Annex G1 & G2—Headline Statistics

Annex H—Top 25 constituencies by total compensation

Glossary

ASEDS—Aspirational Scheme End Dates

BCC—British Coal Corporation

CAPITA—Is not an acronym

CB—Chronic Bronchitis

CBE—Chronic Bronchitis and Emphysema

CG—Coordinating Group (the negotiating group of solicitors)

CHA—Claims Handling Agreement (COPD)/Arrangement (VWF)

CLU—Coal Liabilities Unit

COPD—Chronic Obstructive Pulmonary Disease

DWP—Department for Work and Pensions

FEV1—Forced Expiratory Volume (of air breathed out in first second)

FVC—Forced Vital Capacity (maximum volume of air that can be breathed out with maximum eVort)

IRISC—Is not an acronym

MAP—Medical Assessment Process

RS—Respiratory Specialist

VWF—Vibration White Finger

Introduction

1. The British Coal health compensation schemes have attracted considerable regional media andParliamentary attention since the original court judgments seven years ago. This has increased over recentmonths, following the introduction of initiatives by the Department, miners’ solicitors and Sir MichaelTurner, the judge who oversees the respiratory disease litigation, for speeding up the claims process.

2. This memorandum responds to a call by the Trade and Industry Select Committee for evidence inrelation to the progress and administration of the coal health schemes.

Background

Judgments and Handling Agreements

3. DTI has responsibility for the two largest personal injury compensation schemes in the world, one forlung diseases due to coal dust (Chronic Obstructive Pulmonary Disease), the second for hand injuries dueto vibration (Vibration White Finger). There are nearly 770,000 claims registered under the schemes, whichare both now closed to new claimants. Costs are likely to be around £7.5 billion, with nearly £2.5 billionpaid to date. Nothing like this, in size or complexity, has been attempted before. The Coal Liabilities Unitadministers the schemes with some forty staV plus 1,700 people at six service providers involved in delivery.

* Not printed.



4. DTI took on these liabilities from British Coal on 1 January 1998 under the Coal Industry Act 1994.It had not been feasible to pass them on to purchasers of the pits due to uncertainty as to their nature andsize and diYculty in obtaining employer’s liability insurance. British Coal was taken to the High Court intwo separate group actions and found negligent in both, in January 1998 for COPD and July 1997 for VWF.British Coal was found negligent in relation to exposure to coal dust from 1954 to 1994 and in relation toVWF from 1975 to 1994.

5. The courts ordered DTI and the miners’ solicitors to agree detailed arrangements to assesscompensation. The alternative, each claimant having to fight in court, was unacceptable to all, not leastbecause the Personal Injury courts’ capacity is in the region of 10,000 claims per year. Detailed ClaimsHandling Agreements (CHAs) for dealing with the claims, which have now been signed up to by 700 or sofirms of solicitors acting for individual claimants, were negotiatedwith the claimants’ solicitors coordinatinggroup (CG).

6. As the judgments did not cover Scottish claims, a separate agreement for each scheme was negotiatedfor these. These agreements are substantially the same as those for England and Wales, diVering only whereScottish law is diVerent. In addition, separate agreements were also signed with the Union of DemocraticMineworkers (UDM) which were identical to those signed with the CG except for the levels of costs paid,which were lower as the UDM handle claims through their own claims handling agent.

7. The CHAs for each disease were then endorsed by the two High Court judges who manage all claims.They are necessarily complex as they specify how claims will be handled, in accordance with common law,and they reflect the judgments in the test cases presented in the group actions. Awards are set (at court levels)for given levels of injury, payments for financial loss due to that injury, and the broadweight of evidence is asrequired by a court. This is diVerent to a “no-fault” scheme (eg the CoalWorkers’ Pneumoconiosis Scheme )where less evidence is needed and smaller, less discriminatory awards are made. The courts oversee theCHAs’ operation aiming to avoid further court action. The judges resolve points of law and DTI and theCG report back to them regularly (3–4 times a year) on progress in settling claims. As the CHAs arecontracts between DTI and the solicitors all changes are by mutual agreement. Copies of the CHAs areattached, on CD-Rom, at Annex A (COPD) and Annex B (VWF). In addition, copies of the most recentreports to the Court are attached at Annex C (COPD) and Annex D (VWF).

The conditions

8. COPD covers chronic bronchitis and emphysema, with breathlessness the main symptom, as the lungscannot get enough oxygen into the blood, and thus into the muscles, to allow normal exertion. COPD isirreversible and untreatable, usually progressive and can cause premature death. In the general population,the most common cause is smoking. VWF aVects the fingers, with damage to blood vessels and nerves, andvaries from temporary numbness and tingling, through reduced dexterity, to amputation in severe cases. Itis irreversible and untreatable and worse when exposed to cold.

Parties to the Process

9. The Schemes are managed by the DTI who negotiate changes to the CHAs with the Claimants Group(CG). The CG represent the solicitors in the process. Sir Michael Turner presides as Court case managerfor the COPD Scheme and Dame Janet Smith for the VWF Scheme. The administration of the Schemes isdelivered through service providers contracted to the DTI who are responsible for claims handling, medicalservices, record collection and legal advice. The solicitors act on behalf of claimants and mainly deal directwith the DTI’s claims handlers.

10. A more detailed summary of the other parties responsibilities are detailed below:

(a) Claimants Solicitors/UDM—Claims are submitted to the DTI Claims Handlers, IRISC. The DTIdoes not deal directly with claimants. Claimants representatives are responsible for takinginstructions from their clients and providing the appropriate information and documentation toIRISC. They are responsible for assessing oVers and arranging acceptance and payment.

(b) DTI Claims Handlers—IRISC have been the claims handling service providers for both Schemessince the CHAs were agreed in 1999. They were originally part of the Aon Group until February2004 when Capita assumed responsibility for the service. Claims are processed at oYces inSheYeld, Manchester, Edinburgh and CardiV.

IRISC’s responsibilities include claims registration, agreeing employment history, collating thedocumentation prior tomedical records collection for COPD, valuing claims, making oVers whereappropriate and providing claims handling policy advice to the DTI. They also have an MPs’ unitthat provides answers to MP enquiries and information for parliamentary questions, inconsultation with CLU.

(c) Medical assessment—COPD—Healthcall were the service providers for the COPD MedicalAssessment from 1999 to 2002. Responsibility for this transferred to Atos Origin, formerly knownas SchlumbergerSema in November 2002.

Atos Origin sub contract the collection of medical records to Elision previously known as MPC.



(d) Medical Assessment ı VWF—ATOS Origin, formerly known as SchlumbergerSema, have beenservice providers for VWF General Damages since the formation of the CHA.

AonHealth Solutions were the original service providers for the VWFServicesmedical assessmentprocess when it commenced in April 2003. Capita took over the company and assumedresponsibility for this service in March 2004.

(e) British Coal records holder;—Hays Record Management was originally the British Coal Recordsholder. The business was subsequently purchased by Iron Mountain. Whilst Iron Mountain storethe British Coal Records all the data is wholly owned by the Department.

(f) Legal Service Provider—Nabarro Nathanson are the DTI’s legal service provider for bothschemes. They assist in the provision of legal advice to the DTI and with the management of thecourt process. McClure Naismith provide specific advice in relation to Scottish issues.

11. Disputes Procedures covering all aspects of claims handling, including medical issues, have beenagreed for each disease with the CG. If the issues in dispute cannot be resolved the cases can, with the judges’agreement, go back to court. However, to keep to an absolute minimum the number of cases that go backto court, the option of mediation (a form of Alternative Dispute Resolution) is available after the disputesprocedure. To date no cases have proceeded back to court.

12. Claims for deceased miners are handled in broadly the same way as living claimants, using anymedical records, a death certificate and post mortem report (for COPD), and DWP assessment for VWF.A statutory bereavement award is payable to the widow where COPD was the main or a contributory causeof death.

13. Diagrams showing the flow of the claims handling processes are below , and descriptions of theprocess are attached at Annex E (COPD) and Annex F (VWF).



Iron MountainATOSOriginCapita IRISCSolicitors

Solicitors submitclaim CAPITA register the claim CAPITA send details to

medical contractor

CAPITA requestEmployment Records

Collate and submitrecords or advise if

unavailable

Solicitors receiveemployment records

CAPITA receiveemployment records

ATOS conduct theSpirometry test

(Live Claims only)

Spiro results received atCAPITA

(Live Claims only)

CAPITA make either anExpedited Offer and the

claim is settled or the claimprogresses to MAP(Live Claims only)

ATOS requests Ellision tocollect medical rcords

Solicitors completeand submit the

ClaimsQuestionnaire pack

CAPITA receive theMAP and make

either an Offer orDenial

SETTLE THECLAIM

High Level - COPD Flowchart

Take ClaimantsInstructions

Accept or RejectExpedited Offer/

Risk Offer

ATOS conducts the MAPAccept Offer or Denial

in Full and Final orquery/dispute Offer

Ackowledge receipt ofquery or dispute and

consider



Solicitor Capita IRISC ATOS Origin Iron Mountain

Prepare Schedule8 and submit

Letter of ClaimAcknowledgeClaim receipt,register and

request recordsfrom Iron Mountainrequesting furtherSch 8 information

if appropriate

Perform Medicaland submit reportto Capita IRISC

Confirm minimumliability for VWFand prepare forMedical or Deny

claim

Collate andSubmit records or

advise ifunavailable

Request Medicalfrom ATOS Origin

Review MedicalReport and

prepare Offer orDenial forClaimant

Accept GeneralDamages Award in

Full and FinalSettlement, AgreeDenial, Reject foranother Head of

Damage, Query orDispute

Pay General Damages Awardand Costs, Settling Claim

High Level - VWF General Damages Flowchart

Pay Interim and acknowledgeClaim for additional Head of

Damage

Take Claimantsinstructions

Supply furtherinformation

Agree Denial orprovide Additional/

Supportinginformation

Acknowledge receipt of Queryor Dispute and consider

SETTLE CLAIM



Solicitor Capita IRISC Capita Health Solutions Helpers

Collect Claimantand Helper

Questionnaires

Reject VWFGeneral DamagesOffer for Services

award, submitquestionnaires

Review submittedquestionnaires requestany missing informationand prepare for HelperCalls. Query missing

Information.

Perform ServicesMedical and

submit report toCapita IRISC

Perform HelperCalls

Corroborateinformation

supplied in HelperQuestionnaires

Complete HelperQuestionnaires

Prepare Claim forServices Medical

Review MedicalReport and

prepare Offer forClaimant or

Request additionalinformation

Accept ServicesDamage AwardOffer or Query /

Dispute

Pay ServicesAward and Costs*

Settling Claim

(* Costs not yetagreed)

High Level - VWF Services Flowchart

Take ClaimantsInstructions

Provide furtherinformation

Respond toRequest forAdditional

information

SETTLE CLAIM

Acknowledgereceipt of query or

dispute andconsider



Medical Assessments

14. The CHAs set out the medical assessments which will be conducted. The assessment processes wereagreed by the Department and the CG with advice from senior medical experts in each condition. Theassessing doctors are regarded as joint experts answerable to both the Department and the CG. Thesedefined medical assessments for each disease produce consistent, reliable reports and replace the individualreferrals by each party to a doctor of their choice, which is more usual in common law cases. Major deliverycontracts allow nation-wide processing to assured standards.

15. For COPD, the first stage of the assessment is screening spirometry which shows the extent of lungdamage, but not the cause, allowing risk and fast track oVers to be made, enabling claimants to leave theprocess early. Alternatively it prioritises claimants, allowing the eldest and most severely injured to be seenfirst in the main Medical Assessment Process(MAP). In this a respiratory specialist, aided by lung functiontest results, medical records and a consultation with the claimant (in live cases), diagnoses any diseases andassesses disability due to COPD in 10% gradations, discounting co-morbidity (other disabling conditionsfor which DTI is not liable). The medical judgments involved require the use of specialists, they are not onesGPs could make.

16. For VWF, a long standing injury scale is used—though this is critically dependent upon the accuratereporting of his symptoms by the claimant—with evidence obtained by a combination of tests and aninterview with a generalist doctor. The “staging” of the disease on assessment is then read across to agreedtariVs in the CHA.

17. The medial experts continue to provide advice and expertise as members of the jointly appointedCOPD and VWF Services Medical Reference Panels.

Record Collection

18. Iron Mountain (the company who have custody of the former British Coal records) are responsiblefor the collation of an agreed employment records pack and its dissemination to IRISC and the claimants’solicitors. The collection of these employment records has not been without diYculty as the existing recordsretrieval system was not designed for large scale, speedy retrieval. A further problem is missing employmentrecords: some local records were destroyed as the industry contracted. Those records that survive can insome cases be incomplete, which can aVect the agreement of the employment history.

19. The Department has funded improvements to the Iron Mountain database to allow forcomprehensive searching amongst the files that Iron Mountain hold. This has reduced the number of notraces, thus making the establishment of employment history easier.

20. The DTI introduced scanning of employment records to move away from a paper based system toallow easier storage, to lay foundations for electronic archives more fitting for the 21st Century and to assistfor any possible future claims against the Department.

21. Electronic links between IRISC and IronMountain enable electronic transfer of information betweenthese two key service providers. This reduces the amount of time needed to transfer information and thepossibility of losing files.

22. Atos Origin have sub-contracted to Elision Group the task of collecting the medical records forindividual claimants. The records include both GP and hospital records, as well as those held by the DWPand BCC medical records—although hospital records are only collected if the GP records are not available.

Progress

23. With regard to COPD, nearly 576,000 claims have been fully registered to date. In the last six monthsof the scheme over 250,000 claims (doubling the total number of claims) were received, mostly from youngermen with potentially much lower levels of disability, and estate claims, where theminer diedmany years agoand is therefore unlikely to have any medical records. Nearly 183,000 claims have been settled and a further78,000 interim payments made. In total over £1.3 billion has been paid to COPD claimants.

24. As to VWF, 170,000 claims were received prior to the cut-oV date. Nearly 100,000 claims have beensettled and 97,000 interim payments made. In total nearly £1.1 billion has been paid to VWF claimants.Copies of the national statistics are attached at Annex G which show the current position of the schemesand Annex H shows how much has been spent in the main coal constituencies.

25. Levels of compensation vary greatly, as shown in the statistics, but the average settlements are forCOPD £7,800 and for VWF general damages £7,400.



Constraints

26. The CHAs are, as Sir Michael Turner has previously stated, necessarily complex and the sheer scaleof the schemes is unprecedented. This hasmeant that there have been a number of constraints in establishingand maintaining both schemes.

27. Following the Court Judgments of 1997 and 1998 there was tremendous pressure to see thatcompensation started to flow quickly to claimants, particularly those with lung disease, many of whomwereold and sick and some dying of the disease. This meant that as soon as the structure and basic details of theAgreements were settled, the process had to be put into operation immediately. There wasn’t time to pilotthe process. The Department has worked with both its service providers and the CG to address issues asthey arose and tried to ensure that these delays to the flow of claims were kept to a minimum.

28. SirMichael Turner has kept a close watch on progress of the lung disease scheme andwhile concernedabout delays has commended the eVorts of all those involved to get the process going and noted that thecomplexities of the Scheme and the thorough medical assessment were a necessary part of ensuring thatclaimants get a fair deal.

29. Pressures to get money flowing out led to several significant changes in the process early on. OnCOPD, for example, the scope for expedited oVers was extended—on professional medical advice and onthe basis of evidence from cases that had already gone through. This successfully got compensation ofaround £80 million paid in three months but also produced diYculties with some claims which were halfway through the process.

30. In May 2000 the VWF Agreement was extended to cover a further head of damages—Services.Damages are paid as compensation for miners with VWF needing help with common household work suchas gardening, car maintenance and DIY. Their eligibility for this is determined from a further medical andquestionnaires completed by helpers.

31. The volume of claims has been much higher than anyone expected and this has led to problems inscaling up the process. At the time of the lead case trial judgment there were less than 5,000 VWF cases andthe forecast total was around 40,000. On COPD, the figures were 30,000 and 70,000. These were the bestguess estimates of the CG and DTI. No one had any firm basis for making these estimates—British Coalhad estimated their total liability very much lower (only £50 million was included as a provision in theiraccounts). The outturn has been very diVerent (seeNational Statistics). As noted above, as at February 2005there are nearly 170,000 VWF claims registered and 576,000 claims for COPD.

32. Managing rapid change has been a feature of both schemes. As claims began to increase significantlyin 2000, plans were put in place by the DTI with its service providers to ramp up resources to deal with thisincrease. This included additional resources, enhancing existing systems and encouraging the use of e-technology amongst claimants’ solicitors.

33. The key constraint on the COPD process has been the availability of Respiratory Specialists in theUK that could be available to be trained in the Medical Assessment Process ( MAP ). There are only 600respiratory specialists in the UK and around 200 are involved in the scheme. Service providers have rampedup resources to deal with rapid flow through of claims. IRISC for example increased claims handlingresources on COPD from 140 in 2000 to 532 by the end of 2003 to accommodate the growth in claims. Dueto the complexity of the work new members of staV are required to go through a steep learning curve whichmeans it takes time to train individuals to the required standard. The Department has always involvedsolicitors in projecting flow through to ensure that claims are delayed as little as possible at each stage. Onboth schemes we have organised workshops for solicitors so that they knew what was happening on theschemes and what to expect going forward.

34. On VWF, there have been two main constraints. Earlier in the scheme, the provision of trainingrecords to confirm occupation was slow and cumbersome but was speeded up largely by the use of electronicdata imaging between IRISC and Iron Mountain.

35. Latterly, it has become clear that the remaining general damages claims have a high level of co-defendant involvement (the claimant worked for mines other than British Coal’s); these claims are, bynecessity, more complex to co-ordinate. A programme of activity is currently underway at IRISC to ensurethe engagement of co-defendants in the process, particularly at oVer stage.

36. If those negotiating the CHAs had been able to see the volumes which would be going through theprocesses, it might have been that both sides would have recognised that the complexity of the Agreements,while accurately reflecting common law and the judgments (and thus giving every man his due) was notsuitable for what is eVectively now an industrial process. The complexity has slowed delivery. Simplerschemes that involved more averaging would have been quicker in delivery, although less fair to theindividual.

37. The slow start up caused by the formulation of the CHAs and the diYculties of resolving policy issuesand then putting change into operation, have meant that many thousands of cases when they got to finalassessment stage were held up because a full and final oVer could not bemade. The rapid increase in volumesof claims on COPD over a short period of time in 2000 meant that service providers and solicitors could nothandle all the cases in the time frames set out in the Handling Agreement. It was agreed by the parties to



suspend these timetables and a whole cohort of claims—those for miners’ estates other than widows—were,with the agreement of the CG and the judge, set aside so that live claims and widows’ claims could be dealtwith first.

Electronic Delivery

38. When the parties were considering how to put into operation the administration of the Schemes inmid 1999 web use was only just taking oV. The CG believed that some solicitors would have diYculty inadopting electronic technology.

39. From the beginning the Schemes had some innovative e-business elements. Employment and medicalrecords were sent to IRISC and solicitors on CDs and there were internal database links between the Serviceproviders but, initially, solicitors were not part of the web community.

40. E-solutions over the last three years have significantly speeded up the process. Both Schemes haveembraced e-business and the Department’s service providers and solicitors have greatly expanded the e-business element of delivery. For example, calculationmodels have been developedwhich have substantiallyimproved productivity by reducing the time taken for complex calculations of special damages. These wereshared with the solicitors on CD-Rom and are now available on the website.

41. Significant investments in electronic processes have included the DTI’s claims handlers introducingin 2002 an electronic document management system which saw 30 million pages of paper documentsscanned into the system. All work at IRISC is now handled exclusively via electronic means. In addition,as noted above, the British Coal’s employment record archive was scanned, enabling copies to be circulatedto both claims handlers and solicitors much more eYciently and speedily.

42. In August 2000 DTI contracted with Healthcall to develop a process by which, initially, certaindatabases could be accessed and claims forms could be completed electronically via the internet. Thecoalclaims.com website came on line at the end of October 2000 and solicitors welcomed the system as away to speed up claims processing. The site was further developed in July 2001 to include a case trackingsystem. The site was fully revamped in September 2003 when the development and hosting contract was re-tendered and awarded to Cable & Wireless. This is the first e-claims website of its kind and is now used byover 2,000 individual users who represent some 60% of solicitors.

43. The website contains the Dust Calculator (for apportioning damages), the Schedule 10 Calculator(for special damages) and details of work history can be agreed over the web and oVers made. Claimshandling teams can agree workflow of cases with solicitors so that both sides are working on the same claimsto improve eYciency. Solicitors can use the website to provide management information about their owncaseload.

Communications

44. DTI has monthly meetings with the CG for each scheme on claims processing and policy issues, withad hoc meetings as necessary. Service providers attend on a regular basis. IRISC have developed routinecontacts with solicitors, with Solicitor Liaison Managers employed to deal with the top 10 firms (whorepresent 80% of the total claims) on a regular basis. The Department and the CG get quarterly reports onthe quality of the medical assessments from the service providers’ internal audits.

45. DTI produces a quarterly Compensation for Miners Newsletter which provides information on theschemes, progress to date, procedures etc and is circulated to GP surgeries, Citizens Advice Bureaux,Members of Parliament and mining unions. Ministers have also continued to write to interested MPs on aregular basis to bring them up to speed.

46. In addition, in November 1999 Helen Liddell, the then DTI Minister for Energy, established a CoalHealth Ministerial Monitoring Group. The National Group comprises three members from each ofEngland, Wales and Scotland with at least one MP and union oYcial from each. The CG, DTI oYcials andservice providers attend the Groups meetings.

47. The purpose of the Group is to monitor the process “on the ground” and report back to the Ministerabout problems. It meets 3–4 times per year. In additionMembers from the three national groups (England,Wales & Scotland) also meet together in between National Group meetings to discuss issues which arespecific to their areas. Within England there are further regional groups established which meet regularlyto discuss the specific impact of issues on their region.

48. To assist solicitors and claimants, DTI set up helplines for assessment queries, apportionmentquestions and for help with electronic forms.

49. The DTI has its own website with background to the schemes, current issues and figures of paymentsmade broken down by constituency. It gets around 15,000 hits a month.



Monitoring the Processes

50. The main risks to smooth delivery of compensation have been problems and delays due to changesin policy or process and operational risks between the service providers and solicitors. CLU keep serviceproviders’ performance under regular review and there are frequent meetings with them. There is a regularprogramme of audit of service providers ı systems, processes, and disaster recovery arrangements. CLUkeeps a comprehensive risk register and its risk management processes have been commended by theNational Audit OYce.

51. CLU has visited other public agencies handling claims to see if we could learn any lessons from thembut no one is dealing with the handling of schemed litigated claims or with anything on this scale.

Fraud

52. There is an inherent risk within any scheme of this size that there will be some fraud. In COPD themedical assessment process is the main protection against fraud and in VWF the employment requirementserves the same purpose. About 10% of COPD claims and 20% of VWF claims are denied. The unit and itsservice providers also have procedures and controls in place for managing potentially fraudulent claims.There have currently been 1,500 cases registered as potentially fraudulent—most of them concerned withVWF services claims.

53. The Department has received requests from solicitors and members of the Ministerial MonitoringGroups to disclose the guidelines which our claims handlers use to identify potentially fraudulent cases.These were intended as internal documents and the VWF judge, Dame Janet Smith, has indicated that sheagrees it would be inappropriate to disclose them.

Efficiency

54. Since the inception of the Schemes there has been a continuous focus at the DTI and with IRISC itsclaims handlers on eYciency improvements. Within DTI, for example, a high-level secondee from Shell UKworked with CLU for a year to restructure the CLU organisation and put in place improved arrangementsformanaging the CLUprocesses in line with commercial private sector practice for handlingmajor projects.This work resulted in CLU taking on secondees from PWC and latterly Deloitte to provide professionalinput to project management, risk and audit work and process improvement. In addition, major benefitshave been achieved at IRISC in terms of productivity improvement, quality enhancement, eVectiveness ofcommunications, and assurance levels. Overall we estimate that the measures taken improved eYciency byaround £100 million. This figure includes a saving of around £40 million from the retendering of contractsand a major contribution from the introduction of electronic calculators for special damages.

55. Since 2002, IRISC have operated a Programme OYce to manage major eYciency improvementprogrammes. In addition, both the VWF and COPD schemes have their own process improvement teamsspecifically focused on enhancing eYciency in their respective areas.

56. In addition to productivity improvements there have also been additional benefits in terms ofaccuracy and consistency. By allowing claimants’ solicitors access to the calculators, disputes over amountsoVered have also been virtually eliminated because solicitors are now able to check through the calculationthemselves. This is a highly unusual, but beneficial feature of the claims handling work—it is not normal inlitigation cases for defendants and claimants to co-operate to the extent of sharing systems.

57. Following the completion of the cut oV dates for VWF Services and Group 3 claims in March andJune of this year both schemes will be in “run-oV”mode. Themanagement challenges then will be to processdiYcult “pockets” of cases where the work resource required to complete each case may be substantiallydiVerent and greater than that at present. To manage the run oV eVectively tight control of resources andstrong management information systems will be required in order to set and control operational priorities.

58. To address the above management challenges, IRISC embarked, during 2004, on a “World ClassProgramme” with the overall objective of uplifting quality, service, and cost eYciency to top rate standards.The “IRISC World Class Programme” builds on the foundations and improvements already put in place,and will deliver a significant step change in performance to a “World Class level”. In addition theprogramme aims to deliver a review of the strategic options and practical solutions to deliver the schemeswithin acceptable and realistic timescales.

Recent Progress

59. Given the number of COPD claims received prior to the cut-oV date urgent and radical measures arerequired to speed up the settlement of claims. The steps in hand are described below in paragraphs 68–72.



60. The decision of key co-defendants, such as UK Coal, and AGF (the insurer representing the interestsof small private mines) to sign up to the terms of the CHA is a welcome step forward. Work is in hand tomake the necessary adjustments to the relevant calculators to accommodate these co-defendants so thatcases involving more than one employer can be fully discharged. Cases involving small mines have alreadystarted to receive full and final payments.

61. In relation to VWF, there has been recent emphasis on progressing those general damages claimswhich have been through the medical process but have not yet had an oVer. This broadly resulted at the endof last year in every such claim, where practicable, either receiving an oVer or an interim payment. We haveagreed cut-oV dates with the claimants’ solicitors for those remaining heads of damage; these come intoeVect over the course of this year. The Court has also endorsed a stalled claims process which is aimed atflushing out or closing claims which are no longer active. This is being put into operation at IRISC.

Remaining Issues

62. A very small number of detailed COPD policy issues remain under discussion between the parties. Inthe great majority of cases, these issues do not prevent the oVer or settlement of claims.

63. The parties are at present in discussion on the issue of minimum payments. The CG believe thatclaimants whose claims are worth less than £500 following apportionment should receive a top up paymentto bring the claim to the value of £500. They have oVered to fund this, asking the DTI to administer thepayments on their behalf through IRISC. The DTI is willing to administer the payments but believes thepayment mechanism should be sustainable, pointing to a need to fund the payments from solicitors’ corecosts, rather than the CG’s preferred option of the “pot” of money available from forgoing the RPI increaseon solicitors’ costs (which DTI believes may be insuYcient to meet requirements, in the first year of makingsuch payments). The CG are considering this.

64. Claims from men who worked only on the surface in the mines were not covered by the COPDjudgment which dealt with underground work. Surface-only claims are therefore outwith the scope of thescheme. Following a minute to Parliament on this potential liability in June 2000, the Department and theCG entered into negotiations on the possible inclusion in the scheme of surface workers and did agree termson which men who had worked both underground and on the surface could be covered by the scheme. Itwas not however possible to agree terms for surface only workers and following a joint medical study, theDTI made clear that it could not accept that payments for COPD for surface workers could be schemed.The CG then initiated group litigation against the DTI. That litigation was withdrawn in December 2004.The DTI is of course willing to consider individual cases for surface dust compensation under a commonlaw approach.

65. There are a small number of outstanding VWF policy issues aVecting a relatively small number ofclaimants. On Services there are two main areas requiring resolution which aVect claims:

— Crossover—where a claimant is entitled to a payment under both the COPD and VWF schemeand the extent to which any such payment should be taken into account and, if so, how that it tobe calculated. A Court Hearing is scheduled for 22–23 February to resolve this issue.

— Employment—where a claimant is in employment which, at first sight, contra-indicates his claimfor services (eg someone employed as a painter seeking compensation for help with decorating).The Department takes the view that it cannot, uncritically, accept the claimant’s account and willseek clarification in relevant cases. The judge agrees that we should make reasonableinvestigations.

66. The Department has not yet agreed solicitors’ costs in respect of services claims and a practical pilotis underway to evaluate this, looking at costs in a sample of cases.

67. On Group 3 (where claimants have to provide evidence of use of vibrating tools), there is an issuebetween the Department and the CG as to the extent to which apprentices and trainees should be routinelyaccepted into the scheme. An agreement is required as to the amount of time and usage of hand-heldvibrating tools that such miners would be exposed to. It has been agreed that this issue should be referredto the Vibration Reference Panel, the jointly appointed advisory panel, for guidance.

68. There remains an issue about the qualifying criteria for Group 3 claimants and whether a solutioncan be found which would put them on a broadly equivalent footing to the criteria used for Group 1 and 2claimants where the job done indicated suYcient exposure. The Department has made a proposal to the CGin this regard.

Aspirational Scheme End Dates (ASEDs)

69. COPD—Following the large influx of claims into the COPD scheme up to end March 2004, it wasclear that at current rates of progress, the COPD scheme would extend up to 2009 for live claimants, and2011 for deceased claims. The Judge overseeing the scheme, the DTI and the CG all regarded this timescaleas unacceptable. As a result, the parties entered into negotiations on ways to speed up the settlement ofclaims. In mid-October, the Judge approved new optional risk oVers for 4 categories of live claimants, basedon spirometry results. The idea behind the payments is that these claimants (who, for the most part, are not



disabled, but who may have suVered from chronic bronchitis, which is a non-disabling condition) will havethe option to take a risk payment based on the average for their spirometry category and leave the scheme.Those who do not wish to take the payment retain the right to a full medical assessment.

70. The payments will apply to over three quarters of remaining live claimants and will help to freeresource in the MAP to deal with more seriously disabled cases. The risk oVers will go live on 28 February.The risk oVers fall into four bands but the amounts payable under each band are currently being contestedby the CG. The rates currently on the table are £1,400 for those with normal lung function at screeningspirometry and for those whose tests were avoidably unreliable; and £3,700 for those with a ratio failure;and £12,900 for those with failed reversibility.

71. The Judge has also ruled that risk oVers of £1000 to estates and £1200 to widows respectively shouldbe paid for deceased claimswhere there is no evidence on the death certificate of COPD. Such cases are likelyto recover damages for CB only at MAP. Again, this approach will help to free medical resource to give adetailed assessment to the more disabled cases where recovery of damages for COPD is more likely. Theparties are in discussion on how best to put into operation the risk oVers for deceased cases.

72. The parties believe that, dependent on take-up, the risk oVers should bring forward the end dates forthe COPD scheme to around 2007 for live claims and 2009 for deceased claims.

73. The judge has made rulings on solicitors costs with which we do not agree and the Department willbe appealing the judgment on this issue.

74. The Department has put in place a number of aspirational end dates for the VWF scheme. The first,the making of general damages oVers, where practicable, to all claimants who have undergone their medicalassessment, was achieved at the end of 2004.

75. The other aspirational dates are as follows:

— all general damages claims settled by end quarter 3 2005, subject to co-defendant cooperation;

— finish Services MAPs by end 2006;

— settle all Services claims by end 2007; and

— complete investigation of Group 3 claims by end quarter 3 2005.

Conclusion

76. The Department assumed the coal health liabilities in 1998. The COPD judgment was handed downonly a few weeks later and the framework of negotiating handling agreements with the CG and operatingunder the supervision of the judges was quickly established. Nothing of this size and complexity had everbeen done before. Throughout the negotiation and operationalisation of the CHAs there have been manydelays, most of which were unforeseen, and the Department has worked hard in conjunction with its serviceproviders to limit their impact and ensure that compensation was paid as speedily and as fairly as possible.

77. It should not be forgotten that the schemes have seen to date nearly half amillion individual paymentsmade to former miners, and their families, totalling nearly £2.5 billion.

Annex C

Report to Court—January 2005

Department of Trade and Industry

Overview

Section I below sets out the headline statistics for progress since the last Report in October 2004 and thekey points contained within the Report.

Section II covers the main issues that have emerged since the last Report including the risk oVer proposalsintended to shorten the life of the scheme, spirometry, proactive management of stalled claims, surface dustlitigation, post cut oV date claims, smoking history protocol, the CG’s minimum payment proposal,unassessable claims, COPD VWF services claims, co-defendants, and fraud management.

SECTION I—KEY POINTS—HEADLINE STATISTICS

As at 9 January 2005, 322,232 claim packs have been received, up 16% since the last Report.

As at 9 January 2005, total postMAPoVers stood at 179,827. This is up 13% since September 2004. Capitamet its target for 2004 of making 70,000 oVers over the 12 month period. 178,132 claims have been settledsince September 2004, up 15%. This figure increases to 195,352 if archived and denied claims are included.As at 9 January 2005, 39% of live mineworker claims had been settled, 43% of widows’ claims and 18% ofestate claims ı reflecting the late influx of estate claims prior to the cut oV date.

As at 9 January 2005, total fully registered claims capable of progressing through the scheme stood at575,222. 43% of these are live claims, 14% are widows claims and 42% estate claims. A further 29,500 claimsare held pending the supply of further information to progress them, examples being date of birth, NI



number, full name and address. As at 9 January 2005, total post MAP oVers stood at 179,827 up 13% sinceSeptember 2004. Capita met the target for 2004 of making 70,000 oVers over the year. 178,132 claims havebeen settled. This is up 15% since September 2004. This increases to 34% if archived and denied claims arealso included.

There continues to be a steady increase in denials up 39% since the last Report. This is thought to beprimarily due to the profile of claims now within the scheme where increasing numbers of claims relate toolder deceased mineworkers who may have an invalid claim due to no BC work history after the date ofguilty knowledge; insuYcient evidence supplied via the CQor available records in deceased cases to establishCOPD/CB.

Throughput and proposals to shorten the duration of the scheme

As recorded in the last Report the Department, its contractors and the Claimants Group (CG) have beenin discussions about how to manage the large volume of claims now in the scheme. On 22 September 2004,Sir Michael Turner was updated on these discussions at a workshop. These were worked up into proposalsfor shortening the scheme and special Hearings took place in October, November and December regardingthese proposals. Sir Michael Turner ruled on 22 October 2004 that optional risk oVers will be introduced,pre MAP, for surviving mineworkers with certain spirometry results, and at tariVs that reflect likelysettlements under the scheme. The process is due to become operational at the end of February 2005.

Sir Michael Turner ruled on 22 December 2004 that optional risk oVers will be introduced pre-MAP fordeceased cases. The implementation of the deceased risk oVer process is to be discussed between the parties,who will report back at the Review Hearing. Capita intend to work closely with Claimants’ Representatives(CRs) to ensure that the new processes are implemented with a minimum of disruption.

SECTION II—MAIN ISSUES—RISK OFFERS

All parties are agreed that given the volume of claims now in the scheme, the majority of which weresubmitted in its closing months, it is imperative that ways are found to expedite the flow of claims tosettlement. To this end a number of meetings have been held between the parties to consider ways ofexpediting the process. These have culminated in a series of Court Hearings in October, November andDecember.

Live Risk Offers—Overview

Sir Michael Turner has ruled that optional risk oVers will be introduced pre MAP for survivingmineworkers with the following spirometry results.

— FEV1 (90.

— Avoidably unreliable.

— Ratio failure (excluding where the RS’s review did change the result).

— Failed reversibility (excluding where the RS’s review did change the result).

Sir Michael also ruled on the principles upon which the tariVs for the various categories should becalculated. Those calculations have been made and the results audited by Ernst & Young ı see Annex 5. ThetariVs applicable to the categories are shown below:

FEV1 (90 £1,400

Avoidably unreliable £1,400

Ratio failure £3,700

Failed reversibility £12,900

OVers will be made after spirometry but before MAP appointment. Claimants currently categorisedsubsequent to their spirometry test as: FEV1 (90, avoidably unreliable, failed reversibility and ratio failure,and who have a MAP appointment after 28 February 2005 (the implementation date for the new process),will need to cancel the appointment to become eligible for the risk oVer. Claimants who have less than sevendays before their MAP appointment will NOT be eligible for a risk oVer on canceling their MAP. Thismeasure is to avoid undue disruptions to the medical process. The risk oVer, once made, will remain openfor 56 days, after which time, if the oVer has not been properly accepted, the claim will proceed through thenormal claims handling process.

Deceased Risk Offers—Overview

It has been agreed that there will also be a risk oVer approach in deceased cases where there is no mentionof COPD on the death certificate that would be attractive to claimants who might otherwise be likely toreceive CB only awards under the scheme, ie claimswhere few or nomedical records are likely to be availableand where there is no available evidence of COPD. TariVs of £1,000 in estate cases and £1,200 in widowscases were accepted by the Court, these are based on average awards in the scheme to date for CB only, withthe addition of an uplift as an encouragement towards wider take up.



Claimants will opt in to the risk oVer via a formal acceptance prior to the MAP being dispatched toCapita. Detailed discussions are being held with the CG about how this proposal will be implemented andthe parties will report back at the Hearing.

Communication Strategy

The success of the risk oVer process is dependent on eVective communication with claimants and CRs.The DTI had proposed regional workshops with CRs to discuss Sir Michael’s rulings and facilitatediscussion regarding the operational detail of the process, however these workshops have been declined bythe CG on the basis that they do not believe these would aid planning. One to one meetings with the top 12CRs to discuss suitable volumes of risk oVers on an individual basis have also been declined by the CG.

In the absence of such discussions a guide will be made available explaining in detail the operationprocesses involved for live and deceased risk oVers. The guide will outline key aspects of the risk oVerprocess; claim eligibility criteria; managing the live risk oVer once it has been “opened”; solicitorcommunication and agreed cut oV rules. It is important that this message is imparted to CRs as soon aspossible to minimise unnecessary disruption to the normal scheme process which could follow from anymisunderstanding of the operational details or claimant eligibility for risk oVers.

Information about the risk oVers will also be provided in a DTI newsletter (which is distributed to GPsurgeries, Citizen Advice Bureaux, unions, the CG and MPs).

Risk Offer—Volumes and Capacity

In the absence of specific details about the capacity of individual firms to handle volumes of risk oVers,as detailed above, the Department has accepted the CG proposal that it allocates capacity on the basis ofa percentage of the number of CRs eligible claims at December 2004. Capita plan to make an average of2,000 live risk oVers per week with a view to make all live risk oVers within one year of the first oVers beingissued. Initially oVer rates will be 10% of this figure and will gradually ramp up to maximum capacity overeight weeks.

At these levels the average volume of live risk oVers likely to be received by the top 20 CRs based on theireligible claims is shown below.

Solicitor Average weekly no. of risk oVers

Beresfords Solicitors 402Union of Democratic Mineworkers To be confirmedRaleys Solicitors 141Browell Smith & Co 136Hugh James, Merthyr Tydfil 99Watson Burton 91Graysons Solicitors, SheYeld 81Thompsons Solicitors, Newcastle upon Tyne 73Avalon Solicitors 58Barber & Co 53Delta Legal 38Gorman Hamilton Solicitors 36Thompsons Solicitors, CardiV 36The Legal Warehouse 34AMS Law 32Thompsons Solicitors, Edinburgh 31Corries Solicitors, York 29Corries Solicitors, Glasgow 26Randell Lloyd Jenkins & Martin 24Kidd & Spoor Harper Solicitors 21

Further details are contained in Annex 6.

As an opt in process volumes of deceased risk oVers will be driven in their entirety by the activity of CRs.Timescales will be dependent upon firstly, keeping operational processes simple and secondly, informationfrom the CG and other CRs on likely volumes, time estimates and dependencies to accurately timetableresource requirements. As indicated by Counsel for the CG at the Court Hearing on 16 November 2004 theCG are confident that solicitors will be able to cope with dealing with risk oVers.



Risk Offers and Interaction with Existing Process

At the Hearing on 3 December 2004 the Department raised its concerns about cancellation of cases preMAP by CRs. Some 960 appointments have been cancelled or refused since 11 November 2004 howeverAtos Origin have managed to maintain throughput by making extra eVorts to re-fill cancelled slots withother claimants. MAP cancellations will continue to be monitored and a further report will be provided atthe next Hearing. Once the Risk OVer process goes live it is anticipated that MAP throughput will bedramatically reduced as up to 90% of living claimants ready for a MAP appointment will be placed “onhold” until such time as they have received and considered their risk oVer.

Risk Offers and Solicitors Costs

At the Hearing on 18 November Sir Michael ruled on the solicitors costs that will apply where liveclaimant risk oVers are accepted. The Department indicated via Counsel at that Hearing that it may wishto appeal that decision. Sir Michael agreed that the time for seeking leave to appeal should run from thedate of his ruling on solicitors’ costs on deceased risk oVers.

Monitoring Risk Offers and Throughput—Review of Management Information

Given the radical overhauling of the scheme to take account of the volume of claims now within it, itwould seem appropriate to review the statistics produced to monitor the traditional elements of the scheme,and to commission new statistical reports to monitor the production and take-up of risk oVers.

The Department has undertaken such a review over the last several months and an update ProgressReport has been produced, see Annex 7, which is intended to replace all the statistics normally provided inthe standard Progress Report, as well as the statistics normally provided in the Court Report itself, in theone document. Additional statistics to track the newOptionalRiskOVers will be added in the comingweeks.Some preliminary formats which indicate the type of data which is likely to be included in future reports isshown below.

CR progress by firm

0

500

1000

1500

2000

2500

3000

3500

Office 1 Office 2 Office 3 Office 4 Office 5 Office 6 Office 7 Office 8 Office 9 Office10

Office20

Liv

e R

isk

Off

ers

Timed OutDeclinedAccepted



CR Progress by firm

0%10%20%30%40%50%60%70%80%90%

100%

Office 1 Office 2 Office 3 Office 4 Office 5 Office 6 Office 7 Office 8 Office 9 Office10

Office20

Perc

en

tag

e o

f L

ive R

isk

Off

ers

Timed OutDeclinedAccepted

Traditional Scheme Process and Issues

Annexes 1 and 2 show the activity in the scheme as at the last four Hearings and by month over the lastyear of the scheme.

As stated above, as at 9 January 2005, total fully registered claims capable of progressing through thescheme stood at 575,222 43% are live claims, 14% widows claims and 42% estate claims. A further 29,500claims are held pending the supply of further information to progress them, for example date of birth, NInumber, full name and address.

As at 9 January 2005, 322,232 claim packs have been received, up 16% since the last Report.

As at 9 January 2005, total postMAPoVers stood at 179,827. This is up 13% since September 2004. Capitamet its target for 2004 of making 70,000 oVers over the 12 month period. 178,132 claims have been settledsince September 2004, up 15%. This figure increases to 195,352 if archived and denied claims are included.As at 9 January 2005, 39% of live mineworker claims had been settled, 43 percent of widows’ claims and18% of estate claims—reflecting the late influx of estate claims prior to the cut oV date.

Annex 3 illustrates that the percentage of claimants with COPD disability at MAP is currently 18.3%down from 34 recorded for MAPs completed in January to March 2002. Average COPD disability levelsare 19.9 up slightly from 19.4 in the period July to September 04.

Spirometry

Annex 4 reflects claims that have not yet progressed to Atos Origin. At the end of December 2004 42,000claims not yet at Atos Origin were currently awaiting a spirometry test. Atos Origin carry out an averageof 1,346 tests per week and are on target to have tested the majority of claimants available to test by the endofMarch 2005. The average is based on the threemonths between weeks ending 2 October and 25December2005. This period also accounts for the holiday season, which naturally sees fewer claimants tested. Therewill of course be a number of cases which for one reason or another cannot be tested in this timescale. TheDTI will be discussing with Atos Origin in the coming months how to make arrangements for the testing ofthese claimants.

Proactive Management of Stalled Claims

The end to end archiving procedures discussed in previous reports are now in operation. In amodificationto the process put before the Court in the July 2004 Report the new procedures will only be introduced forclaims which are not eligible for risk oVers. This is to reduce nugatory work archiving claims that may exitthe process as a result of acceptance of a risk oVer.

The archiving protocol operates where information or action is awaited to move a claim forward andwhere the claim would not otherwise be subject to a live or deceased risk oVer. This supplements existingarchiving processes where an expedited oVer has been made post spirometry but a statement of truth isawaited, and where the claimant has persistently failed to respond to an oVer of a spirometry appointment.



Archiving procedures

Notice of the intention to archive will be given in each case to be archived. At the relevant point of entryinto the archiving procedure, a letter will be sent to the CR advising them that the claim, or schedule ofclaims will be archived in six months unless a substantive response is received. Five months later a reminderletter will be issued giving 28 days notice for a response before the claim is archived. Six months after thepoint of entry into the archiving procedure a letter to the CR will confirm that the file has been archived.

Where a substantive response is received, then the claim will be removed from the archiving procedure.If the claim again becomes stalled at a later date then the claim will start the archiving procedure afresh.

The timescales at which claims enter the archiving procedure will be as follows:

Stage Entry point to archiving procedure

Denied claims Three months after the denial letter was dispatchedor claim withdrawn

Failure to provide a Substantive Response Six months after the query has been raised.to Capita or Atos Origin

Once a claim is archived, Capita will no longer review or process the claim unless a response is receivedfrom the CR enabling the claim to progress. Should the claimant wish to re-enter the claims assessmentprocess, he may do so at any time until the claim is struck out. However, if a claim has been denied withinthe last 12months and evidence is received in support of disputing the denial this will be taken through eitherthe general or medical disputes procedure as appropriate. Those denials over 12 months old will beconsidered on a case by case basis. As reported previously in a number of cases CRs have attempted toreactivate withdrawn claims. These claims have not been accepted back in to the scheme.

Claimants may reactivate archived claims at any time up to the point of strike out should a strike outprocedure be approved by the Court.

Striking Out Of Archived Claims

As agreed at the last Hearing, the parties have set out their positions by way of Skeleton Argument. TheDepartment’s application to hear arguments on StrikeOutwas to be heard at the JanuaryHearing.Howevergiven the number of issues to be considered at this Hearing the Department proposes that this applicationbe postponed until the following Hearing.

Surface Dust

Following the Hearing on 17 November 2004, the CG have given written notice to the Department to theeVect that the Group Litigation will not now proceed. They have, however, indicated that proceedings maybe commenced in a number of individual claims and it would seem appropriate for all other pure surfacework cases to be withdrawn by CRs.

The Department believes that the case management conference listed for 28 February is no longerrequired as a result of the developments above.

Post Cut-off Date Claims and the Stay

It was agreed at the July 2004 Hearing that the retention of the stay should be considered at each futureHearing. The Department believes that the retention of the stay has provided a significant disincentive tothe filing of post cut oV claims in England and Wales. The Department believes the stay should continue tobe retained to prevent “queue jumping” in view of the very significant numbers of schemed claims receivedbefore its closure. No further litigated claims have been received since the two claims reported at theOctober2004 Hearing.

To date, 247 late scheme claims have been received, as shown below.

Month Late scheme claims

April 91May 32June 27July 43August 12September 9October 13November 19December 1Total: 247



Smoking History Protocol

In the last report to the court it was explained that detailed planning was taking place for theimplementation of the agreed Smoking History Protocol. Implementation plans were agreed and theprotocol is now being implemented.

Minimum Payment

The CGhave proposed that CRs fund aminimum postMAP oVer to cover all future postMAP low valueoVers and currently outstanding low value oVers. The value of the minimum oVer proposed is £500. TheDepartment has accepted this oVer in principle but has rejected the proposed method of funding (from halfof theRPI uplift to CRcosts in 2005–06). TheDepartment is concerned that themethod proposed is unlikelyto raise suYcient to cover the top-up payments required in 2005–06 for new oVers and outstanding low valueoVers from previous years. As at 31 December 2004 there were 9,000 low value oVers outstanding, 7,500 ofwhich relate to claimswithCSGmembers. It is estimated that over £2.25millionhwould be required tomakea minimum payment of £500 in these cases. This in itself is likely to exhaust the 50% RPI uplift fundproposed. As part of their proposal the CG also wish to introduce additional process to check for aminimum five year period of underground employment before a top up oVer is made. The Departmentrejects this requirement which would slow down oVer production at a time when considerable resource isbeing devoted to speed up processing.

Low value oVers can arise for several reasons under the CHA, low levels of disability or no disabilitysuVered by the miner, short periods of time working for British Coal after the agreed date of “guiltyknowledge”, and the reduction of damages for factors such as smoking and other disabling conditions forwhich British Coal were not found liable. The Department has made clear that public money will not beused to fund a minimum payment.

Unassessable Claims

There are currently a number of claims within the schemewhichRS’s consider to be unassessable. Furtherscrutiny of these claims and discussions with the CG are planned to clarify the circumstances where a claimis to be formally considered unassessable and how that decision is ultimately made. The Department willreport back at the next Hearing on these discussions.

COPD/VWF Services Claims

At the last COPD Review Hearing, directions were put in place by Sir Michael Turner for thedetermination of the issues in dispute. The timetable culminates in a two day Hearing listed for 22 February2005 and 23February 2005 to be heard before both Lady Justice Smith and SirMichael Turner. TheHearingwill proceed if agreement cannot be reached between the parties prior to that date.

Co-defendants

Small Mines

Small mines claims have now entered the operational stage. Full and final oVers commenced calculationin October 2004. There remains a cohort of claims which will be held up pending agreement on pension lossissues and amendment to the model. Work has begun on tackling these issues.

Successor Companies

Having examined UK Coal’s proposals for accession to the Claims Handling Agreement in detail, theDepartment announced to the court on 3 December 2004 and subsequently confirmed in writing that it wascontent to proceed on this basis.

Fraud Management

The Department has continued to develop its approach to potentially fraudulent claims under bothschemes. The following statistics provide an overview of the position to date:

Since May 2002, 1,470 potentially suspicious cases have been referred for additional investigation. Theseclaims have a total potential claim value of £21.3 million. Approximately 60 new cases are referred eachmonth directly from Operations. Themajority of cases still relate to VWFServices, but since the COPD cut-oV date the number of COPD claims being referred has increased dramatically, currently 33% of all referralsare related to COPD claims.



Of the 1,470 referrals, 737 are currently under investigation and 773 have had their investigationscompleted. Of those that have had investigations completed, 132 claims have been denied and 86 claims havebeen reduced, with a total value of £2.6 million.

The remaining claims were returned for processing once it was confirmed that there was no fraudulentactivity, a claim was valid within the remit of the schemes, or any anomalies were clarified. Processstreamlining and improvements are continuing to be introduced to minimise any unnecessary delay tovalid claims.

Where theDepartment is unable to complete its investigations (for example, where a witness or a claimantdeclines to be interviewed), then such cases are held in abeyance until such time as the Department’sconcerns are either confirmed or allayed. Currently in excess of 34 claims are in abeyance;

Various solicitors have been written to, addressing issues of professional conduct rather than fraud perse, eg intimating duplicate claims. Where appropriate, the Law Society is being included in thiscorrespondence, with whom a working relationship has developed;

TheDepartment and the SID are providing a quarterly update to the CGonpotentially fraudulent claims.

Annex D

THE HIGH COURT OF JUSTICEQUEEN’S BENCH DIVISIONNEWCASTLE DISTRICT REGISTRY

BETWEEN:A B AND OTHERS

Claimant

and

BRITISH COAL CORPORATION(Department of Trade and Industry)

First Defendant

and

THYSSEN (GB) LIMITEDHOLLYBANK ENGINEERING LIMITED

CEMENTATION MINING LIMITED

Second Defendants

REPORT OF THE FIRST DEFENDANT AT HEARING ON 20 DECEMBER 2004

The Position as Between the Department and the CSG

1. The Department would, in particular, wish to raise with the Court the following issues between theDepartment and the CSG;

(a) Application of cut oV dates for submission of evidence in Services, Group 3 and Wage Loss claims(see paragraph 9);

(b) Definition of “Significant period” in Group 3 claims (see paragraph 16);

(c) Warnings in Group 3 claims (see paragraph 17);

(d) Employment issues in Services claims (see paragraph 19);

(e) Stalled claims (see paragraph 22);

Progress on Claims

Statistics

2. AtAppendixA to thisReport is a summary of the headline statistics relating to the processing of claimsunder the Scheme. TheCourt will note that to the end ofNovember £1.041 billion has been paid to claimantsby way of compensation.

3. At the date of closure of the Scheme the total number of claims is 169,601. Approximately 13% ofclaims are made on behalf of deceased mineworkers’ estates. This number takes no account of PublicLiability claims, which are outside of the Scheme.



OVers

4. The focus since the last hearing continues to be on those claims which have medical evidence but nooVer (or are subject to the posthumous protocol) “the priority pools”. These claims continue to beproactively reviewed by IRISC with the intention of a full and final oVer being made, or a 100% interimbeing made, or the claim entering the Stalled Claims Procedure. At the last hearing there were 14,652 claimsin this category and as at 28 November there were 11,350. The Department remains optimistic that it willmeet the aspiration that all Claimants, whose claims are ready for oVer (whether final, or in co-defendedcases, interim) will receive an oVer by the end of the year.

5. The CSG has expressed concern at this approach, claiming that correspondence which does not relateto the priority pools is not receiving prompt response. This concern is understood but the Department takesthe view that claims ready for oVer should take priority. Correspondence which raises matters of urgency,such as that relating to claimants with short life expectancy, is dealt with promptly. Other, less urgent, letterswill be dealt with as expeditiously as possible.

Services

6. There are currently 11 Services MAP centres in operation; two in Scotland, two in Wales and seven inEngland. In the new year two further centres are already planned (one in Scotland and one in England) aspart of eVorts to increase the number of services MAP reports.

7. The numbers of claims and their current position in the process are shown below.

Potential number of Services claims (As at 28/11/04)

28,155

2,297

22,277

Servicesquestionnaireshave beensubmitted andclaim being workedby IRISC (53%)

Servicesquestionnaire hasbeen submitted butthe claim not yethad the GeneralDamages elementresolved (4%)

There is a potentialclaim due tostaging but noquestionnaire hasyet been submitted(42%)

8. There are only a few remaining areas of disagreement between the Department and the CSG; these arereferred to below. The focus is now on operational delivery and the achievement of the ASEDs. Theaspiration was to complete all Services medicals by the end of 2006, however based on current volume theDepartment estimates that target is almost six months behind schedule. The Department is considering anumber of options and initiatives with its service providers to see what might be done to rectify the position.The Department will report to the Court on the next occasion in this regard.

Cut-off Dates for Services, Group 3 and Wage Loss Claims

9. As the Court will be aware, anOrder (Appendix B) wasmade at the last Court hearing on 30 July 2004,providing for cut oV dates for submission of evidence by Claimants’ representatives in Services, Group 3and Wage Loss claims.

10. The CSG has suggested to the Department that the cut oV dates, set out in the Order referred toabove, do not apply to cases involving co-defendants where occupation group is still to be confirmed. TheDepartment is of the view that these cut oV dates apply irrespective of any co-defendant involvement in acase. IRISC will confirm occupation group for the Department as soon as it can, irrespective of any co-defendant involvement.



11. Any Claimant must know whether he intends to advance a loss of earnings and/or services claimagainst theDepartment when he receives hisGeneral DamagesMAPReport, or confirmation of occupationgroup. Any such claim against the Department should be made within the time period set out in the Order,irrespective of the co-defendant confirming employment, or whether that co-defendant is willing to acceptany liability. In any event many co-defendants still do not accept the CHA occupation groups.

12. Furthermore, the Department does not accept that any delay on the part of a co-defendant inaccepting liability has any eVect upon the Claimant’s claim for loss of earnings/services against theDepartment. This is particularly the case as, at the present time, no party other than the Departmentsubscribes to the Services Agreement and Loss of Earnings and Associated Losses Protocol under whichsuch claims are brought.

Group 3 Claims

13. This cohort of claims remains contentious and at the forefront of the Department and CSG’sattention.

14. To date, 23 claims have been raised with IRISC as being suitable for reference to the VibrationReference Panel (VRP). Of these, two claims have been deemed as unsuitable for referral to the VRP as theyrelated to issues with the calculator rather than of mining sense. Upon further investigation, a further twoclaims were accepted thereby rendering referral unnecessary. The Special Investigations Department (seeparagraph 32) is investigating one of the claims and six are in the process of being prepared for sending tothe VRP. In the remaining 12 cases the VRP has reported to the parties, and in all of the cases the VRP’srecommendations as to the Claimant’s likely tool usage have been accepted by the Department (andapparently not contested by the Claimant). This has resulted in liability being accepted in five cases and thedenial being maintained in seven.

15. Over 7,200Group 3 claim investigations have been completed. Of these, approximately 750 have beenaccepted as Group 3 with exposure, 3,600 remain denied as Group 3 claims and 2,800 have been acceptedas Group 1 or 2 claims upon further investigation. The following pie chart shows the number of claims tobe investigated and the number of claims where the contested claim does not comply with the OGP and isawaiting action from the solicitor. The Department remains confident that all current contested Group 3claims, where evidence has been submitted, will have been assessed by the end of September 2005.

Group 3 Investigations = 7,844

5,697

2,147

InvestigationsOngoing atIRSIC - 72%

Failed QA ordo notcomply withOGP -awaitingsolicitoraction - 28%

Definition of “significant period”

16. Having regard to the judgment following the hearing on 29/30 July 2004 the Department reviewedthe documents leading up to the agreement of the CHA which included a number of drafts of the CHA andcorrespondence between the interested parties with a view to forming an informed conclusion as to how thequalifying periods of employment for Group 1 and Group 2 Claimants (12 months and 24 months) werearrived at and agreed upon. This exercise confirmed the belief that these periods were not fixed on anyscientific basis and were not extrapolated from Table 5 of BS:6842. In order to give eVect to the Court’sindication that the qualifying criteria for Group 3 Claimants should be fixed so as to create a broadequivalence of treatment between them and Group 1 and Group 2 Claimants the Department endeavoured



to assess the tool usage of typical employees in those Groups, and to extrapolate from those typicalexposures periods by reference to Table 5. This analysis was then used to fix proposed qualifying criteriafor Group 3 Claimants. These proposals have been put to the CSG with an explanation of the underlyingmethodology. The Department believes that its proposal does justice as between the parties and achieves inso far as is possible, the broad equivalence of treatment as between occupation groups that the Courtdesired. The CSG is considering the Department’s proposal.

Warnings

17. Notwithstanding the Court’s judgment the Department has received representations from the CSGthat cases that proceed solely on the basis of warnings (with no qualifying period of exposure) should bedealt with within the Disputes Procedure of the CHA. The Department is firmly opposed to that proposal.The diYculties identified by the Court in its judgment would still remain. The Minister has recently receivedrepresentations on this issue and the Court will be updated at the hearing.

Apprentices and Trainees

18. This remains an issue between the Department and the CSG. It has been agreed that it should be thesubject of a reference to the VRP.

Employment Issues in Services Claim

19. This issue was raised in the Department’s last Report to the Court at paragraph 36 (Appendix C). Itis the Department’s position that it is entitled to question a Claimant about his employment history inrelation to his Services claim, as it cannot simply accept uncritically a Claimant’s account. The Departmentalso contends that it is entitled to seek disclosure of documentary evidence such as the Claimant’semployment records, in appropriate cases.

20. The Department had intended to make an application for specific disclosure in one case in order toobtain guidance and clarification from the Court on this issue. However, that Claimant’s solicitors haverecently agreed to provide this disclosure voluntarily by means of a signed authority from their Client.

21. The Court is referred to paragraph 37 from the Department’s last Court Report on the ServicesMatrix. In light of the comments made by the MRP in relation to the Employment Matrix and thesubsequent comments received from the CSG, the Department intends to instruct IRISC to assess each caseon its merits (where there is an issue of employment that may contraindicate the Claimant’s claim forservices) and to base its initial judgement on the medical evidence guidance as opposed to the EmploymentMatrix. This guidance will be based upon already agreed medical descriptions of the relevant staging.Accordingly where IRISC identifies an employment that may contraindicate the claim for services, it willfirst carry out a desktop investigation and may then ask for further evidence from the Claimant. In somecases it will be appropriate to ask the Claimant to provide a signed Form of Authority for release of hispersonnel and/or medical records. The Court is requested to endorse the Department’s position andproposals in this regard.

Stalled Claims

22. The Stalled Claims Procedure was instituted on 1 October 2004. Since then 3,611 letters have beensent to solicitors under Stage 1 of the procedure. This is a larger number than it is anticipated will be sentin future because the process has only just started in earnest and there was a backlog of claims to which thenew process applied. Representations have been made by Claimants’ representatives concerning the lead-in time (90 days in most cases) for specific categories of claims and a proposal has recently been made to theCSG which the Department believes will go some way to reduce the volumes of letters presently being sentto Claimants representatives. Services claims are presently excluded from the Stalled Claims Procedure. Acopy of the Department’s Stalled Claims Procedure is attached as Appendix D.

23. The Department is disappointed that some Claimants representatives have failed to co-operate at allwith the process, taking the view that it has not been agreed by the CSG nor approved by the Court. TheDepartment views this as unhelpful. The Department’s last Court Report outlined the stages of the StalledClaims Procedure and the timescales which were to be applied. There was discussion about the merits of theproposal and there were no substantive disagreements with the CSG save on one issue on limitation onwhich it made representations at the hearing. See the transcript from the last hearing at Appendix E pages8 to 10 and 47 to 50.

24. The Department has, in any event, agreed that the Stalled Claims Procedure should include a facilityfor Claimants representatives to be able to request extensions of time. These are viewed sympathetically byIRISC on an individual basis, depending on the reasons given. In addition, IRISC sends out lists toClaimants representatives each month of those claims in which the first letter has been sent; this allowsClaimants representatives to check that correspondence has not slipped through the net or been misfiled.



25. Although apparently agreeing in principle to the Stalled Claims Procedure the CSG has raised avariety of criticisms of it which the Department is unable to accept. For example the CSG complains thatthe procedure has been implemented without appropriate desk instructions or training of claims handlersand that claims have been “inappropriately” placed within the Stalled Claims Procedure. The formercriticism is incorrect. The Department is prepared to accept that there may have been mistakes made in asmall number of individual cases and continues to work with its services providers to minimise the incidenceof the same. Individual Claimants representatives have been critical of the operation of the procedure butinvestigation of those criticisms usually reveals that they have either not understood or misinterpreted theprocedure.

Other Issues

Loss of Earnings and Associated Losses Protocol (Wage Loss)

26. The number of claims and their current position in the process is shown below.

Loss of Earnings Claims Number of claims

5392

351

Potential claims

Claims at least partdocumented

Loss of Earnings claims - fully or partly documented Number of Claims

129

103

119Full documented - under investigationFully documented -denied/withdrawn

Part documented

27. The Department continues to consider claims in line with the Protocol.

28. The Department is continuing to provide counter schedules of loss in individual cases, whichincorporate requests for further information where such information is necessary in the Department’sinvestigation and assessment of a claim.

29. A meeting between the Department and the CSG will take place in the New Year to discuss theseclaims and the Department’s general approach.



Amended CHA

30. The CSG in its letter of 5 November 2004 provided its comments on the most recent version of theCHA which had been sent to the CSG on 20 April 2004. This version of the CHA was forwarded to theCourt on 13 July 2004. The proposed amendments suggested by the CSGhave been considered and a reviseddraft was sent to the CSG on 10 December 2004. It is hoped that this version of the CHA will be agreedbetween the parties (subject to a small number of sections in the CHA that are not agreed and are put intosquare brackets so that they are easily identified). The revised draft of the CHA will be added to the CoalClaims Website and will be sent to the Court and the co-defendants.

Fraud investigation

31. The Department has continued to develop its approach to potentially fraudulent claims under bothschemes (ie COPD and VWF).

32. IRISC have set up the Special Investigations Department (SID). SID will manage and investigatepotentially fraudulent claims. SID management have been delegated authority to make case investigationdecisions to help improve eYciency.

33. The Department and SID provide a quarterly update to the CSG on potentially fraudulent claims.

34. TheDepartment has also recentlymade proposals to the CSG in relation to the payment of Claimantsrepresentatives’ costs where cases are subject to investigation. In cases where Claimants representativesattendwith their client for an interview and as a result of the interview the case is referred back for processingand there is no deduction from the value of the claim, the Claimants representatives’ reasonable costs inattending the interview will be paid. This proposal is still with the CSG.

The Position as Between the Department and Co-defendants

35. Co-defended claims account for almost 75% of the remaining post MAP pool. An insurer liaisonprogramme has been introduced in an attempt to expedite the settlement of outstanding co-defended claims.Progress has been made as follows.

36. A letter outlining the current position on co-defendant claims was sent out to the top 16 insurers who,between them, are handling approximately 80% of outstanding co defended claims. The letter covered theclosure of the scheme, ASED’s, stalled claims, the insurer liaison process and improved communications.This was followed by a schedule of each firm’s potential liabilities.

37. Twelve of the 16 companies have now responded. Of these, eight were extremely positive andwelcomed the proposals to improve communications and progress the files. Of the remaining four, two weremerely acknowledgements; onewas fairly negative and onewas not interested at all. This lack of cooperationis disappointing.

38. The 16 companies have now been contacted again, with a view to arranging meetings where necessaryor to confirm their position (see Appendix F).

39. To date 10 visits have been made to seven insurers/claims handlers. File discussions have beenarranged with three companies as a direct result. A further four visits are scheduled to take place before theend of the year, with another visit scheduled for January. A visit issues log has been created to keep a centralrecord of actions arising from meetings.

40. DLA, for their clients, have provided an Annex A for the revised CHA detailing the provisions of theCHA to which their clients do not subscribe.

41. The Department has requested in correspondence confirmation from the other co-defendantrepresentatives that they will prepare a similar document or confirm that their clients’ position reflects thatof DLA’s clients. No response has been forthcoming save that Ricksons have indicated that, subject toformal approval by Zurich Insurance, the draft Annex A accords with their clients’ position. TheDepartment understands that a similar request has recently been made by the CSG.

42. Such information is helpful to all parties in providing a full and clear picture of the stance of each co-defendant in relation to the CHA.

43. Some diYculties have arisen in relation to reimbursement between co-defendants. DLA have recentlywritten to IRISC claiming reimbursement said to be long outstanding. It is understood that IRISC is dealingwith these requests. It is fair to point out however that, as agreed with co-defendants, the Departmentcontinues to make repayments to the Compensation Recovery Unit of sums in fact due from co-defendants

Crossover

44. At the last COPD Court Review Hearing, directions were given by Sir Michael Turner for thedetermination of the issues in dispute. The timetable culminates in a two day hearing listed for the 22February 2005 and 23 February 2005 to be heard before both Lady Justice Smith and Sir Michael Turner.The Hearing will proceed if agreement cannot be reached between the parties prior to that date.



Costs

Base Costs

45. The CSG has made a request for an increase on base costs. A procedure for reviewing the level ofClaimant’s representatives’ costs has been agreed as between the Department and the CSG. This requiresthe identification of a cohort of cases, randomly chosen, and the assessment of the Claimants representativescosts by a Cost Draftsman appointed by the Department. The Department will then consider whether anincrease in base costs might be warranted in the light of the evidence that it has received. It is intended thatthe co-defendants would be consulted before the Department makes any decisions. The result of the CostDraftsman’s review will be shared with all interested parties.

Services Costs

46. The agreed assessment of a finite number of cases before the possible agreement of an appropriatefixed tariV is still underway. The other option that will be considered will be to continue to assess each caseon its merits.

Co-Defendant Costs

47. The CSG has made representations that the costs paid in Co-Defended cases under the CHA shouldbe uplifted to reflect the additional work undertaken by Claimants representatives in dealing with suchclaims. Neither the Department nor the co-defendants are attracted by the arguments so advanced by theCSG.

Phase V Generic Costs

48. Interim payments in respect of the Phase V costs have been made by the Department and the Co-Defendants. Apportionment of costs has been agreed as between the Department and the Co-Defendants.

Phase VI Generic Costs

49. The Department has made interim payments in respect of Phase VI. Apportionment as between theDefendants remains outstanding. A meeting between the Defendants’ Costs Draftsmen is proposed toconsider the CSG’s Phase VI costs and it is anticipated that following this meeting, the Defendants willbetween them resolve the issue of apportionment of this phase of the generic costs.

Ronald Walker QC, Catherine Foster

13 December 2004

Annex E

PROCESSING A COPD CLAIM

The following steps summarise the procedures for processing a claim under the Respiratory DiseaseClaims Handling Agreement.

— Upon receipt, the details of the claim are registered by IRISC, DTI’s claims handlers.

— Live claimants are prioritised by age and date of claim to then undertake spirometry (basic lungfunction tests). In parallel, IRISC request employment records from Iron Mountain who lookafter the former British Coal records.

— If a live claimant is receiving Industrial Injuries Disablement Benefit from DWP for ChronicBronchitis and Emphysema, they receive a £2,000 interim payment.

— Depending on the spirometry results IRISC may make an oVer of an Expedited Payment in finalsettlement of the claim. The claimant can accept the oVer and settle his claim, or decline the oVerand proceed through the Medical Assessment Process (MAP). If the latter, in most cases he willthen receive an interim payment equal to roughly 70% of the Expedited oVer. Those who fail toattract an Expedited oVer on the basis of their spirometry results can still elect to proceed throughthe MAP.

— Live claimants are then re-prioritised to proceed through the MAP on the basis of age, date ofclaim and the spirometry results—the greater the loss of lung function the higher the prioritypoints.

— IRISC inform the claimants’ solicitors of the revised priority score and ask them to send in claimspacks—mandates (to allow access to the claimants’ medical records), claims questionnaire andfinancial and other losses questionnaire—in priority order.



— Having received a completed claims pack, IRISC check it for completeness before passing it toAtos Origin, together with the associated priority score.

— Atos Origin extract the mandates and pass them to their sub-contractor, Elision, who is chargedwith obtaining and scanning (on to CD-ROM) the claimant’s medical records.

— In parallel IRISC seek to agree the claimant’s detailed work history with the claimant’s solicitor,informed by whatever records Iron Mountain were able to supply.

— Once the medical records have been scanned, Atos Origin contact the claimant to arrange a MAPappointment at the nearest or most convenient centre (or at home if the claimant is unfit to travel).Here the claimant undergoes a more comprehensive set of lung function tests than at screeningspirometry before having a consultation with a Respiratory Specialist of consultant status.

— The doctor checks the claimant’s medical history and asks a series of standard questions. Hediagnoses any COPD conditions, plus other conditions which may be contributing to overalldisability but for which DTI are not liable and thus do not merit compensation. He also validates,or amends, the claimant’s smoking history, before completing his medical, ie “MAP” report.

— The MAP report is then QA’d by Atos Origin (for completeness and internal consistency, notclinical accuracy) before being returned to IRISC.

— If IRISC have by then agreed the man’s work history with his solicitor they then calculate anycompensation that is due.

— If IRISC are unable to make a full and final oVer because of an incomplete or unagreed workhistory, or other unresolved issue, wherever possible they make a further interim payment.

— Once the claimant’s representative accept a full and final oVer payment is made and the claim isclosed.

Claims relating to deceasedmen are handled in a broadly similarmanner using the records only, obviouslywithout the benefit of lung function tests and a consultation with a specialist. Claims are prioritised by ageof the widow before the solicitor is invited to submit a Claims Pack, again consisting of mandates andquestionnaires, in priority order. Claims from widows are also assessed initially for any entitlement to astatutory bereavement award. This is based primarily on the death certificate (and any post mortem report),and is paid where COPD caused or materially contributed to the death. Bereavement awards can also insome circumstances be paid post-MAP. For the full MAP report, the Respiratory Specialist completes thison the basis of the medical records and information in the claims documentation.

Annex F

PROCESSING A VWF CLAIM

The following steps summarise the procedures for processing a claim under the Vibration White FingerClaims Handling Arrangement.

— Upon receipt of a claim details are registered by IRISC, DTI’s claims handlers.

— IRISC request the claimant’s employment records from Iron Mountain to determine theclaimant’s occupation—the first criterion for entitlement.

— Once the occupation group has been established, claimants are prioritised by date of claim beforegoing through the Medical Assessment Process (MAP). At this point an interim payment is paidwhere a claimant is receiving Industrial Injuries Disablement Benefit for VWF from DWP.

— Claimants are invited to attend a convenient testing centre, run by Atos Origin, to undergo theMAP.

— At the centre, initially, a technician carries out a series of tests to establish the degree of injury tothe man’s blood vessels and nerve endings that may constitute disability due to VWF.

— The technician completes a report with test results which is then passed to the doctor, usually aGP, who asks a series of standard questions of the man and conducts some additional tests. Thedoctor then completes the MAP report.

— Atos Origin QA the report and forward it to IRISC, who then determine the amount ofcompensation where appropriate.

— If IRISC are unable to make a full and final oVer because of an unresolved issue they make aninterim payment where possible.

The above procedures relate to general damages. In addition, there are many claims for certain heads ofspecial damages—principally Loss of Services.



Annex G1

RESPIRATORY DISEASE HEADLINE STATISTICS

18 Jan 27 Jun 12 Sep 09 Jan Increase Since2004 2004 2004 2005 Sept 2004

No. %

a. Total number of claims *1 399,938 566,624 570,247 575,222 4,975 0.9%b. Compensation paid £ million 959 1,116 1,191 1,292 100 8.4%c. Claims pack submitted to Capita*2 201,932 241,328 277,342 322,232 44,890 16.2%d. MAPs completed 167,784 195,891 211,613 242,372 30,759 14.5%Cases processed post MAPe. Interim payments 35,185 36,014 36,264 36,634 370 1.0%f. Full and Final OVers*3 106,536 131,389 143,216 160,808 17,592 12.3%g. Denials 11,956 15,014 16,540 19,019 2,479 15.0%h. Total Post MAP OVers 118,492 146,403 159,756 179,827 20,071 12.6%Percentage of MAPs (d) 70.6% 74.7% 75.5% 74.2%Total Settlementsi. Expedited Settlements 14,955 16,672 17,728 19,207 1,479 8.3%j. Post MAP Settlements 81,226 101,597 113,678 132,072 18,394 16.2%j(i) by payment 79,699 99,630 111,222 128,650 17,428 15.7%j(ii) by non payment (denials) 1,527 1,967 2,456 3,422 966 39.3%

k. Other Settlements (non-MAP) 13,603 20,054 23,489 26,853 3,364 14.3%k(i) by payment 607 657 688 723 35 5.1%k(ii) by non payment (withdrawn) 12,996 19,397 22,801 26,130 3,329 14.6%

l. Total Settled claims (I!j!k) 109,784 138,323 154,895 178,132 23,237 15.0%Percentage of Total claims 27.5% 24.4% 27.2% 31.0%m. Potential Settlements 12,810 14,784 15,710 17,220 1,510 9.6%m(i) Archived (stalled) claims 2,381 1,737 1,626 1,623 –3 –0.2%m(ii) Outstanding Post MAP denials 10,429 13,047 14,084 15,597 1,513 10.7%

n. Total Settled claims (l!m) 122,594 153,107 170,605 195,352 24,747 14.5%Percentage of Total claims 30.7% 27.0% 29.9% 34.0%

*1 Claim receipts are those claims that are fully registered, ie exclude pool of claims accepted with minimumdata, awaiting further information to permit cross referencing and duplicate checks prior to full registration.*2 Includes incomplete Claims Packs.*3 Includes “Negative OVers”.

Annex G2

VWF(taken from DTI’s Report to Court December 2004)

HEADLINE STATISTICS

General Damages 22/12/03 19/03/04 29/07/04 20/12/04

Claims Received, excluding PL (i) 169,538 169,563 169,592 169,601Deceased % 11% 12% 12% 13%Settled by payment/denial 77,652 83,056 90,168 96,795General Damages Interims 41,617 44,125 46,707 49,444OVers Outstanding with Solicitors 6,099 4,698 4,678 3,663Settlement Value £612m £644m £707m £758mTotal Damages Cost £893m £933m £994m £1.041bnMAP examinations completed 107,921 109,290 109,778 110,277



Annex H

Breakdown of 25 coalfield areas that have received the highest level of total damages since the schemesinception in 1999.

Constituency Payments as of 31/12/04 Total (£ Millions)

Easington 11,813 82.7Barnsley East and Mexborough 13,452 78.9Hemsworth 11,999 68.7Bolsover 12,656 64.6Sherwood 12,714 62.7Mansfield 10,878 58.1Ashfield 11,269 57.4Bassetlaw 9,638 57.3Doncaster North 9,105 55.2Merthyr Tydfil and Rhymney 7,217 52.8Ogmore 7,188 51.3Rhondda 6,625 49.6Don Valley 8,199 48.2Cynon Valley 6,464 48.1Barnsley Central 8,559 48Wansbeck 7,381 46.7Pontefract and Castleford 7,481 42.6Caerphilly 6,083 40.9Barnsley West and Penistone 7,262 38.7Houghton and Washington East 5,320 36.6Islwyn 3,455 35.3Rother Valley 6,132 35.1Blaenau Gwent 5,521 34.3Wentworth 5,892 33.9Carrick, Cumnock and Doon Valley 4,745 28.8

APPENDIX 3

Supplementary memorandum by the Department of Trade and Industry

CONTENTS

Title pageIndexMinimum PaymentsSmall MinesNational Union of Mineworkers CorrespondenceFraud GuidelinesRebuttal of CSG’s additional reportAnnex A—Letter from the DTI to the CSG

Minimum Payments

Nigel GriYths oVered to supply a note supporting the DTI’s calculations of the costs of the CG proposalfor a minimum payment and setting out why the Department considered there would have been a shortfallon the basis of the CG’s proposal.

If the CG and DTI had been able to agree a minimum payment prior to March 2003 on the basis of halfof the RPI on solicitors costs, their current proposal, and the scheme had been brought into operation inApril 2003, the Department consider the fund would have been £400,000 short by end March 2004.

— At the end ofMarch 2003 therewere approximately 2,000 claims outstanding, which at an assumed£250 top up per claim would require £500,000 to clear.

— Over that financial year (2003–04) there were 5,600 low value settlements. At a top up rate of £250per claim £1,400,000 would have been required to top up these claims in the year.

— Therefore for new and outstanding oVers at least £1,900,000would have been needed over the year.This is a conservative estimate, if settlement rates increased as would have been expected morewould be required.



— Half of RPI on solicitors costs in that year would have yielded only £1,500,000—so the fund wouldhave been £400,000 short over 12 months, equivalent to 1,600 claimants at a top up rate of £250per claim.

The reality is that the DTI and solicitors were not in a position to implement the proposal in 2003–04.The formal proposal to use half of the RPI was not made until part way through the financial year—July2003, and would have taken some months to agree the detail and put into operation. It is unlikely thatarrangements could have been put in place much before the start of the next financial year, April 2004, atwhich point the backlog of unaccepted oVers would have been still higher.

In addition there were other elements of the proposal of concern to theDepartment, apart from the lack ofsuitable contingency arrangements should the fund run dry in year. The CG request for additional process, acheck for five years employment underground before a minimum payment could be made which is not partof the current process for these oVers, was of particular concern, as was the degree of solicitor support forthe proposal. The Department remains opposed to the introduction of additional process checks in regardto the minimum payment proposal (we want to focus on claims which have not yet had a full assessmentrather than revisiting completed ones), and seeks greater certainty about the extent of solicitor support.

Prior to July 2003 the CG’s proposal was that the Department should fund a minimum payment. Thiswas rejected on the basis that the Department believed the focus at that time should be the processing ofnew oVers in accordance with the CHA, rather than developing new processes and devoting resource tothose who had already had properly calculated oVers under the CHA. The Department also considered itwrong in principle to fund top up payments for low value oVers from the public purse, where low value oVerswere properly calculated in accordance with the CHA and were the result of discounting in regard to theclaimant’s smoking history, dust levels in the mines he was employed at, or for a limited period ofemployment with British Coal after the accepted date of liability. This discounting is consistent with theHigh Court judgment.

Small Mines

Private mines were not signatories to the COPD Claims Handling Agreement (CHA) that governs thepayment of compensation for respiratory diseases to miners and ex-miners in respect of British CoalCorporation (BCC) liabilities assumed by the DTI. Although it contained proposals for dealing with claimswhere there was a co-defendant element, representatives of the private mines initially rejected the approachsuggested and negotiation was required in order to reach a position where they would accede to the CHA.

There are two main groups of co-defendants. The first is the small private mines which existed during thenationalised period and which were licensed to mine coal alongside BCC. These have concurrent liabilitywith BCC. The other main group is the successor companies, such as UK Coal, who have consecutiveliability, ie post 1994. This note describes the position in relation to the small private mines. A small minewould have had only 30 employees or less underground at any given time. Conditions were often diVerentto BCC mines. Many small mines were much closer to the surface, allowing miners to walk in rather thandescend in a cage. They were in general less mechanised.

The negotiations for the accession of small mines to the CHA were lengthy and involved, being betweenthree parties, the small mines, the DTI and the claimants’ solicitors. Although there are relatively fewclaimants—compared to the overall size of the scheme—aVected by small mine issues (some 2,600) manyof them are elderly.

The key issues that needed to be determined by the parties were (a) how dusty were the small minescompared to BCC mines and (b) how was liability to be divided between DTI and the small mines. Theoriginal CHA suggested a simple “time-apportioned” basis (ie DTI and the small mines to pay aproportionate share of the total compensation, depending on how long the claimant had worked for each).However, this methodwas not acceptable to the small mines representatives, who argued that compensationshould be divided on the basis of the dust dosage the claimant was subjected to by each employer. Whilstlogical, this method was more complex and therefore took longer to agree and implement. The CGsupported this approach and the DTI therefore consented to adopt it also. It was not possible for theDepartment to pay its full share of compensation while negotiations were ongoing, as the final agreementwould aVect both the overall amount of compensation payable (because the amount of dust the claimantwas subjected to would aVect the overall recoverable portion of compensation) and the amount payable byeach party. However, because of the delay in reaching a settlement, the Department took the decision tomake interim payments, wherever possible, from December 2003.

Towards the end of 2003 the small mines representatives made proposals for accession, which theDepartment could accept. Certain key diVerences remained however between the small mines and the CG.These were susceptible to mediation and so this was arranged in January 2004. Although an agreement wasnot reached during the mediation, a good deal of progress was made and the parties were in a position toannounce agreement in February 2004.

SuYcient progress was made on the memorandum of agreement between the parties and on operationalarrangements to allow full and final oVers to commence calculation in October 2004.



A number of claims—those where the final period of employment was with the small mine rather thanBCC—are unable to receive a full and final oVer pending the amendment of the pension loss calculator toincorporate small mine cases. The DTI, CG and small mines are seeking to arrange a meeting on this issue.In relation to a number of issues, some of the factual information required for amendment to the calculatoris not available—for example on certain wage rates. Once agreed, instructions will be jointly drawn up forthe software to be developed It is not possible to give an accurate figure as to how many claims are likelyto be included in this group, as it will not become apparent until the work histories are confirmed.

Coalfield representatives have raised with the Department the issue of small mine claims pre-1972.Employer’s liability insurance became compulsory in theUK in 1972. Post 1972 themajority of SmallMineswere insured under a block policy initially with NEM and latterly with AGF. Although many were insuredprior to 1972 inmost cases the insurers are not known or are no longer in existence. Coalfield representativeshave asked the Department to consider accepting liability on behalf of the small mines pre-1972 where thereis no insurer, as well as paying for BCC liability. The rationale for this is that BCC would have licensed thesmall mines to produce coal, and should therefore accept the liability where no one else is available to payit. The Department is meeting representatives of the NUM in the near future to discuss the legal position,although the Department’s current stance is that it has no legal liability for the small mines, even in theabsence of an insurer. It is possible that the majority of the claims may have some pre-1972 employment.

Letter from Peter Hain MP, Minister of State for Energy and Competitiveness in Europe, to ArthurScargill, Secretary, National Union of Mineworkers

Thank you for your letters of 23 April, regarding the Claims Handling Agreement for the NUM.

As I have said before, I am in full agreement with you that the Department should enter into discussionswith your oYcials, with a view to signing Agreements for the settlement of both respiratory and vibrationrelated diseases. In fact, an oVer to enter into such discussions was made by Helen Liddell in her letter of5 July 2000. she also explained in her letter, however, that our understanding has always been, and continuesto be, that members of the NUM have chosen to be represented by solicitors, often on the advice of theirregional NUM branches, who in many cases are funding the claims. Notwithstanding this, Ann Taylor,Director of the Department’s Coal Health Claims Unit, is happy to meet you and your oYcials to takematters forward as amatter of priority. She and her team are better placed to discuss the detail of the schemeand how it was put together. Please feel free to contact her on 020 7215 5330.

As to the payment of compensation to the NUM, I cannot agree that oVering to sign an identicalagreement with the NUM as that for the UDM is tantamount to accepting that the NUM has beenfinancially disadvantaged.As detailed in previous correspondence, theUDMrepresentmany claimantswhohave chosen to pursue their claims via that Agreement, rather than via solicitors. This option was alwaysopen to the NUM, indeed both the Department’s claims handling agents have always advised miners whoenquire about making a claim to contact either their solicitor of their union. It would appear that manyregional NUM oYces are advising members to use union backed solicitors. I know, for instance, that theScottish NUM instruct Thompsons Solicitors, who have over 8,000 respiratory claims and nearly 4,000VWF claims, and are regularly represented in discussion with the Department over the procedures. I amalso aware that, in certain instances, regional NUM branches do recover some costs or charge a fee wherea claim is successful. Given this, I cannot agree that any compensation is due the National NUM for havingbeen discriminated against.

To reiterate, we are happy to sign an agreement with the NUM on the same terms as those signed by theUDMand the Claimants’ Solicitors Group. You have previously indicated that this would be unacceptable,but I cannot agree to a diVerent agreement from that already endorsed by the High Court, and one whichwould treat some claimants diVerently from others.

I hope this fully explains the position and you no longer feel it necessary to proceed with any legal action.

Peter Hain

8 May 2001

Letter from The Rt Hon Helen Liddell MP, Minister of State for Energy and Competitiveness in Europe, toArthur Scargill, President, National Union of Mineworkers

Thank you for your letter of 13 June, regarding coal health claims and UDM cases.

As I stated in my previous letters, the Department was ordered by His Honour Mr Justice Turner tonegotiate with the firms of solicitors acting on behalf of the 300 or so firms who belong to the ClaimantsSolicitors Group. These negotiations culminated in the signing of the Handling Agreement with them, onbehalf of the claimants, on 24 September 1999.

We signed exactly the same agreement, albeit with reduced fees, directly with the UDM because theyrepresent some 8,000 claimants who have chosen to pursue claims via their union, and not via solicitors.



if the NUMhas claimants in a similar position, we are happy to enter into discussions about settling theseclaims. I understand, however, that the vast majority of NUM claims are handled by firms of solicitorsinstructed on behalf of regional NUM oYces who form part of the Claimants’ Solicitors Group and whoare party to the 24 September Agreement. This is a litigation presided over by the High Court. We cannotsimply bypass the solicitors who represent NUM members.

As I stated in my last letter, I can see no reason to reconsider the Department’s position.

5 July 2000

Fraud Guidelines

The Select Committee requested to see the guidelines to which Capita’s fraud investigators worked andwith which claims handlers identify potentially fraudulent claims.

The judge has ruled that it is quite appropriate that these Key Fraud Indicators should not be shared withminers’ solicitors and the Committee is asked to keep them strictly confidential.

Rebuttal of CG’s Supplementary Report

Co-defended claims

TheCG state in their supplementary report that 15,000 claims have co-defendant involvement. Accordingto the DTI’s latest statistics, there are only 13,431 claims with potential co-defendant involvement. Thisnumber may reduce as periods of employment are clarified.

The CG further state that it is not known what steps the DTI have taken at a high level to encourageCMC / CMR co-defendants to deal with these claims as high priority. In fact, various initiatives areunderway and being run by Capita to engage with co-defendant insurers. These include the introduction ofthe insurer liaison manager role, liaison visits (some of which attended by the DTI), face to face filediscussions, operations notices/bulletins, all party meetings.

The CG also state that the terms of the DTI’s arrangement with CMC defendants or their insurers havenot been disclosed. We understood that the CG were aware of the 50% reimbursement in respect ofemployment at British coal mines and that a very small number of labour-only subcontractors do receive ahigher percentage. The co-defendant protocol, which the CG have seen, outlines the evidence that must besubmitted in order to receive these reimbursements. The department do not agree that the reimbursementagreement allows us to exert any greater pressure than we currently do through the liaison channelsoutlined above.

Group 3 Claims

Asdiscussedwith theCSG, re-planningwas undertaken in January 2005. The previous planwas producedin July 2004 since when investigations have been completed in respect of 2,396 claims. We also challengedthe assumptions made in respect of the previous plan.

The number of 6,600 is made of 5,400 certain (ready for investigation but not completed) cases and aconservative estimate of 1,200 or so additional cases that could arise by the cut-oV date of 30 June 2005.The current rate of submission of additional cases suggests that we have been pessimistic.

TheDepartment acknowledges that there is a need for increased performance and productivity. A numberof initiatives are underway, including the recruitment of additional investigators, that will support this need.There is still uncertainty about the number of cases that will require investigation.

The Department has confidence that these cases will be completed by the Aspirational Scheme End Dateof 30 September 2005.

Services Claims

A copy of the Department’s response to the CSG’s letter of 22 December 2004 is attached as Annex A.



Annex A

Letter from Department of Trade and Industry to Irwin Mitchell

Vibration White Finger

Services Claims: Throughput and aspirational Scheme end dates (ASEDs)

Thank you for your letter dated 22 December 2004. we apologise for the delay in responding.

Over the past year we have made a number of planning forecasts based upon potential claim volumes andprocessing times in order to determine our ability tomeet theASEDs.However, it has always been a forecastbecause of the uncertainty over the final population post cut-oV. As such, we anticipate being in a betterposition to provide you with a more robust analysis of our plans to meet the ASEDs early in Q2 2005 oncethe uncertainty over the population is resolved. In the meantime, we would like to provide a high levelresponse to your letter of 22 December 2004.

Offers

We enclose a copy of the key stage analysis as at 30 January 2005 that was shared with you in advanceof the Servicesmeeting of 7 February. Youwill see thatwe have now received 32,509 questionnaires of which9,355 are post oVer ie 29%.

Calculating our ability to meet the end dates is not as simple as dividing the revised total outstanding bythe number of oVers made each week, as this does not take into consideration the additional staV that havebeen recruited (and are currently in training) and those that Capita plans to recruit in the future.Furthermore, Capita continues to progress cases through the diVerent stages where it can, however, manyof these are currently awaiting action outside of Capita’s control:

— Of the 32,509 claims we have received to date, 29,936 fall within the Services process having hada General Damages interim payment.

— There are currently 20,581 claims in the process pre oVer (29, 936–9,355 (General Damages interimpaid—post oVer)). Of these:

— 7,364 are waiting for further information from the solicitor/claimant (query quality/employment).

— 1,197 have had several successful helper call attempts—Capita has written and is awaitinghelper/solicitor contact.

— 4,411 claims are in Capita control (either awaiting investigation to commence, underinvestigation or awaiting helper calls to be made).

— 3,703 claims are in the Services MAP queue.

— 3,906 claims are awaiting oVer post Services MAP.

Therefore, of the 20,581 claims that are pre oVer, 12,264 (60%) are not directly within Capita’s control.If we consider claims that are pre Services MAP, the percentage without Capita control increases to 74% ie12,264 out of a total of 16,675. Of particular concern are those claims where there is outstanding informationwith a solicitor, and we would ask that you encourage your members to process this backlog as swiftly aspossible, particularly in view of the impending cut-oV date.

Medicals

The planned staYng for medicals has been set to match the throughput from Capita. CHS is already ableto perform medicals in excess of current demand and the plan reflects the anticipated increased throughputfrom Capita. We continue to plan for the future, for example CHS has recently found a new location toincrease capacity at Kilmarnock. Again, we anticipate being in a better position to share with you our planto meet the ASED once the final populations are known.

We remain confident that the ASEDs can be achieved, however, we do require the co-operation ofyourselves and your members to provide accurate and timely information to Capita, so that claims canprogress swiftly to the MAP process.

Nabarro Nathanson

28 February 2005



APPENDIX 4

Memorandum by the Scottish Ministerial Monitoring Committee

1. We understand that a more comprehensive report is to be submitted on behalf of our EnglishMonitoring Committee colleagues and so will confine ourselves to a relatively brief addendum report onbehalf of the Scottish Monitoring Committee.

2. The Monitoring Committees were set up by the Minister (then Helen Liddell) at the Department ofState for Trade and Industry to oversee and report back to the Minister on the operation of the HandlingAgreements for coal health Claims (COPD and VWF) and to make recommendations to the Minister fromtime to time in regard to problem areas. Regular meetings are held to review progress of the compensationSchemes in Scotland (around six meetings per year) in the presence of the Monitoring Committee memberswho are presently Nicky Wilson, President/Secretary NUM (Scotland area); Rachel Squire, MP forDunfermline West; David Hamilton MP for Midlothian.

3. In addition to the regionalMonitoring Committee meetings, there are between three and four nationalMonitoringCommitteeMeetings per annumwhich are attended by all the representatives of theMonitoringCommittees and by the Minister himself (presently Nigel GriYths MP), with the Department andrepresentatives of Capita and the claimant’s group also present.

4. The role of the Scottish Monitoring Committee is perhaps of a diVerent nature to that of otherMonitoring Committees in England and Wales because the operation of the Handling Agreements andnegotiations between the parties are subject to oversight by Judges in the group litigation procedure Southof the Border. There is no such procedure in Scotland. The Handling Agreements themselves werenegotiated by NUM (Scotland Area) as lead negotiators. They are based upon the terms of the Agreementsapplicable South of the Border.

5. From time to time, issues arise that are peculiarly Scottish because of diVerences in the law betweenthe two jurisdictions. These appear to arise most frequently in regard to the handling of posthumous claims.The Monitoring Committee in Scotland has always encouraged a positive approach to these issues, becausewe are aware that the settlement with the Department of Trade and Industry is a negotiated Agreement andrequires a positive co-operative approach in order to ensure that the interests of miners in Scotland areproperly reflected in the agreements.

6. An initial period during which there was a good atmosphere and spirit of co-operation has graduallygiven way to a more diYcult phase with the parties being those who represent miners interest on the onehand, and the Department at the other, increasingly at loggerheads over issues such as the proper amountto be paid for a Loss of Society (bereavement) claim and the treatment of cases in which the miner diedbefore 16 July 1992. There is evidence that the handling of these issues by theDepartment has been less openin recent months than it would have been previously; our recommendations in regard to the means ofresolving these problems have not been followed.

7. This is a matter of regret and calls into question the role that we have as Monitoring bodies andadvisers to the Minister. Our function is not to “rubber stamp” the process. In order to have a positive roleit is necessary that we are in receipt of all relevant paperwork and oVered invitations to all relevant meetingsat which important points of principle and issues are likely to be discussed with the Minister. Whilst we donot say that the Minister should follow all of our recommendations in every case it seems to us thatrecommendations made should be considered by the Minister and if he disagrees with them then he shouldmeet with us and be able to account for his views and also take account of the views that are expressed tohim byMonitoringCommittee personnel. This has not happened and increasingly,Monitoring Committeesare not kept properly informed and so are not able to advise the Minister as they should. Indeed even whenadvice is given as in the episode relating to the attempt to introduce a compulsory Fast Track Procedure inthe Autumn of 2004, it is not heeded and so it required a special meeting at which a number of diVerentcoalfield interests were represented to persuade the Minister to a diVerent view.

8. Overall, it can be seen that the diYculties in dealing with a large volume of claims and addressing theneed to conclude those claims fairly and quickly have been largely tackled in a way that has given confidenceto coalfield communities, whose representative bodies have contributed to the process. The parties deservecredit for that and for the way that they have gone about their business in diYcult circumstances. Ourconcern is that as the claims begin to run down in number, and as we move towards the end of theseprocesses, problems will multiply if we cannot reinstate the spirit in which the early diYculties wereovercome.



APPENDIX 5

Memorandum by the co-ordinating groups of each of the Claimants’ Solicitors’ Groups

Introductory Remarks

This document is provided by the Co-ordinating Groups of the two Solicitors’ Groups representing menor the families of deceased men who claim compensation for:

(a) respiratory disease (RDL) caused by negligent exposure to excessive levels of mixed coal mine dust;and/or,

(b) vibration white finger (VWF) caused by negligent exposure to vibration from hand held tools;when working in the coal mining industry.

Litigation in respect of Vibration White Finger commenced in 1994 and in respect of Respiratory Diseasein 1995. In preparing this document we have endeavoured to provide information pertinent tomatters raisedin the Committee’s Notice in a succinct manner. We have not attempted to provide a report setting out thefull history of each scheme nor of all of the problems identified including the many which have beenovercome nor for that matter do we set out a full account of the successes.

Unprecedented numbers of Claimants, former miners and their families, submitted claims under eachscheme following successful litigation. This undoubtedly resulted in a substantial challenge for those facedwith the tasks of devising and implementing processes to achieve fair compensation for those entitled toclaim. Whilst there have been numerous issues that have had to be resolved some of which have taken sometime, both schemes have delivered compensation to significant numbers of individual Claimants moreeYciently than if assessment had been left for determination by individual claims brought before the Court.In the Vibration White Finger scheme 77,214 have now been settled with full and final payments and thefigure for Respiratory Disease settlements is 152,500.

Development of the Schemes

There are two separate Solicitors’ Groups. Membership of each group is open to any firm of solicitorsthat represents Claimants. Each group is represented by a Co-ordinating Group of member firms. ThoseCo-ordinating Groups have had responsibility for prosecuting the group litigation in each case, thereafternegotiating the terms of the respective Claims Handling Agreements with the Department of Trade andIndustry (DTI) and negotiating the implementation of the provisions of thoseClaimsHandlingAgreements.

The DTI personnel involved have with some exceptions, played their part for relatively short spells andhave then moved on to other areas of work within the service. Their number has been supplemented byseconded staV from external sources, such as PricewaterhouseCooper. An external consultant (MarkPyeman) provided project management advice to the DTI shortly after the RDL scheme was agreed. Therehave been six diVerent Ministers with responsibility for coal health claims to date: John Battle, HelenLiddell, Peter Hain, Brian Wilson, Stephen Timms, Nigel GriYths.

The VWF Solicitors’ Group existence is provided for by a Court Order made in July 1994. In RDL anOrder providing for the Solicitors Group was made in January 1996.

The active members of the VWF Co-ordinating Group are:

Hugh James, Irwin Mitchell, Thompsons (Scotland), Thompson & Co, and Watson Burton.

The active members of the RDL Co-ordinating Group are:

Hugh James, Irwin Mitchell, and Thompsons (Scotland)

In the VWF litigation there have been twoHigh Court trials, one of preliminary issues and one of medicalcausation and quantum of damages. In both trials the Claimants prevailed and in each case the Defendantappealed to the Court of Appeal, unsuccessfully. The VWF Claims Handling Agreement came before theCourt for approval in January 1999. It has thereafter been significantly amended and extended as issues havearisen in the assessment of claims.

The Respiratory Disease litigation progressed to one High Court trial. There was no appeal. The ClaimsHandling Agreement was concluded in September 1999 and approved by the Court. This, too, has beensignificantly extended and amended for similar reasons.

Copies of each of the Claims Handling Agreements will be made available to the Committee if required.Annex 1 provides an overview of each scheme.

The litigation of both claims was pursued before the Courts in England and Wales. In relation to both,once legal liability was established the DTI accepted liability for Claimants who had worked in collieries inScotland.

Parallel Claims Handling Agreements were negotiated on behalf of all Scottish Claimants by solicitorsinstructed by the Scottish area of the National Union of Mineworkers. These Claims Handling Agreementsare identical save where there are variations between the laws of Scotland and those of England and Wales(principally in relation to the assessment of posthumous claims).



In addition, the Union of Democratic Mineworkers subsequently agreed a similar Agreement on its ownbehalf in respect of RDL. No other trades union has such an Agreement.

That both the VWF and the RDL Agreements were negotiated after successful litigation establishing theClaimants legal right to compensation is significant. As a result both schemes are based upon what a mineror his family would recover if they brought a successful common law claim and consequently:

1. Damages are individually assessed based on evidence which means awards of damages varysignificantly (in a significant number of cases life-changing sums of money have been received byminers and their families);

2. Legal advice has been, and remains, an integral part of the process of delivering full and propercompensation to miners and their families.

In both cases the ClaimsHandling Agreements were achieved after extensive negotiation between the Co-ordinating Groups and the DTI. The amount of damages paid to any claimant under each scheme isdetermined by reference to tariVs of damages for various heads of claim which depend on the individualcircumstances of the man and in particular his age and level of disability. The tariVs under both schemesare updated annually in line with the increase in Retail Prices Index. The tariVs are in line with that whichwould be paid at common law following the Courts’ findings in the Judgments in the respective lead actions.The purpose of each Claims Handling Agreement is to provide for fair assessment of each claim, to payappropriate compensation to those so entitled and to ensure consistency in assessment.

Furthermore, in each case designated Judges of the High Court have continued to oversee the litigationreceiving regular Reports to the Court through written documentation and oral submissions at hearings (seeAnnex 2).

Scottish jurisdiction is of course separate from English and Welsh jurisdiction and there are certainsubstantive diVerences in the laws between the jurisdictions. The Agreements that govern the VWF andRDL compensation schemes have, so far as possible, operated on a national basis but there remainspecifically Scottish issues outwith the scope of the supervisory oversight of the Court in England and Wales(see also Annex 3).

The object of each of the Claimants’ Solicitors’ Group is to represent the best interests of the Claimantsin claims for damages. Neither the Co-ordinating Groups nor the Solicitors’ Groups have any disciplinaryor regulatory powers. These are matters for the Law Society or other relevant regulatory bodies. It is foreach firm to enter into appropriate arrangements with Claimants who instruct them and to ensure thatproper advice is given, tailored to the circumstances of each individual Claimant, and to comply withprofessional standards, for example in relation to client care.

In each case the Co-ordinating Group have issued regular Bulletins (112 in VWF and 96 in RDL) tomember firms designed to assist those firms in properly advising their clients as to their claims. Training hasalso been provided.

There has been some public controversy about solicitors charges. Both schemes provide that Claimants’legal fees will be paid by theDTI in successful claims but not in unsuccessful claims. In each scheme the legalfees are prescribed and for the most part agreed fixed sums are payable subject to individual circumstances.The Law Society of England and Wales issued guidance concerning solicitors charges in January 2004 andthe OYce for the Supervision of Solicitors has received a number of complaints. Where inappropriatecharges outwith the Society’s guidance have been queried we understand that repayments have beenprovided. Although this is a regulatory issue it seems to us appropriate that repayment is made in suchcircumstances.

External Oversight—Monitoring Groups

The schemes have been, and remain, immensely important to individual Claimants and have a high profilein coalfield communities. No doubt, as a consequence, at an early stage the Minister established MonitoringGroups to review the schemes and report to theMinister. There areMonitoringGroups for each of England,Wales and Scotland and in England there are a number of Regional Groups. The Monitoring Groups assessthe activities of the Claimants’ solicitors, the DTI and the various contractors. We believe they have madea positive contribution.

Implementation of the Schemes

In both schemes the claims assessment process has been streamlined when compared to the usual Courtprocess. Onemedical expert is jointly instructed in each individual claim and the extent and nature of factualevidence and the method of presentation of that evidence has been standardised. As indicated above muchwork has been devoted to providing for the eYcient assessment of the appropriate level of compensationdependent upon the evidence in each individual case. The process has been enhanced by the developmentof various computerised calculator models which include:

1. for VWF a programme that calculates services awards;



2. for RDL programmes that quantify:

(a) the extent of dust exposure over the working life of each Claimant dependent upon the collieryor collieries in which he worked and his job(s);

(b) the proportion of dust for which the DTI are liable;

(c) the extent of the contribution of smoking to causation of chest disease;

(d) the assessment of damages payable in each individual claim;

(e) the extent of any pension loss recoverable as part of the claim.

There are diVerences as between the two schemes which flow from diVerences in the nature of the diseasesin respect of which compensation is payable.

Vibration White Finger is a condition which aVects the hand or hands to varying degrees of severity withsymptoms falling within two broad categories, vascular, induced by cold intolerance and sensorineuralwhich include reduced dexterity, numbness and tingling. General damages are payable in respect of thecondition varying according to the age of the Claimant and the severity of the disease. In addition, whereproven damages may also be payable for handicap on the labourmarket, for the inability to undertake tasks(or services) for example, DIY, gardening, basic car maintenance and for wage loss.

Respiratory Disease encompasses Chronic Bronchitis (a non-disabling functional disorder), ChronicObstructive Pulmonary Disease (COPD) a disabling lung condition which can cause death, and temporaryexacerbation of asthma. Both Chronic Bronchitis and COPD can be caused by smoking. As the extent ofdisability caused by COPD can be much more extensive than that caused by Vibration White Finger therange of or heads of damage are more extensive and arise more frequently in individual claims. They includegeneral damages, loss of earnings, the cost of provision of care, loss of mobility, loss of pension andredundancy benefits and where death has been caused by COPD bereavement awards and loss ofdependency.

Both ClaimsHandling Schemes have closed to new Claimants. The number of VWFClaimants registeredis 169,6011 and the number of Respiratory Disease Claimants registered is 576,0002 The numbers ofClaimants for each scheme are unprecedented as is the amount of compensation paid to Claimants.

Delays caused by diYculties with the handling of claims or certain categories of claims have been acontinuing concern. In some instances the explanation may lie in the unprecedented volume of claims whichfor both schemes substantially exceeded most estimates. In both schemes the DTI’s desire to close thescheme by imposition of a cut-oV date for claims predictably served to produce a substantial influx of claimsin the run up to each of the closure dates. In VWF there was a substantial influx of claims both before theend of the limitation amnesty on 30 September 2000 and a further influx before the cut-oV dates of 31October 2002 for live claims and 31 January 2003 for posthumous claims. In RDL, as of 31 August 2003278,3603 claims had been registered—over 300,000 additional cases were registered by the closure date of31 March 2004.

There have been recurring concerns about the planning for claims handling and the organisation anddeployment of both IT and human resources and training of human resources by the DTI’s contractors. Wehave also been concerned about the eYcacy of arrangements between the DTI and its contractors and theextent to which the DTI has been able to manage its contractors and hold them to account. However, thecontractual provisions andmanagement control mechanisms have not beenmade known to us and thereforeour concerns arise from close external observation rather than intimate knowledge.

Numerous issues have arisen during the course of the implementation and operation of each of theHandling Agreements. Below, in separate sections for each scheme we set out what we believe to be thecurrent principal points of concern.

Historically, significant issues have included:

RDL

1. Delivery by the first medical report provider, Healthcall both generally and in particular in relation toRespiratory Specialist recruitment and in responding to questions raised on behalf of Claimants in relationto medical reports.

2. The apparent inability of IRISC (nowCapita) to respond toClaimants’ Solicitors’ correspondence andtelephone enquiries generally and specifically in relation to the resolution of queries raised in relation tosettlement oVers.

3. The frequently experienced failure by IRISC to match incoming documentation from Claimant’sSolicitors to files.

4. The lack of continuity of staV handling claims at IRISC and the absence of facilities to discuss claims.

1 The DTI report to the Court for Hearing 20 December 2004. 13% of claims are made on behalf of deceased mine workersestates. The figure excludes the small number of claims against mining contractors for which the DTI also have some liability.

2 There are 248,000 claims brought by living miners and 327,000 posthumous claims brought by family members.3 149,937 living miners, 128,423 posthumous.



5. Mineworkers who left the industry as a consequence of chest disease would, had they remained at workhave paid additional contributions into their pension schemes as would their employer. As a consequencethesemineworkers lost pension benefits as a result of their chest illness (the sums involved can be significant).The law provides that such losses are recoverable. The relevant Mineworkers’ Pension Scheme and StaV

Superannuation Scheme are complex and the benefits have changed over time. Recovery of pension loss wasprovided for in the Claims Handling Agreement and the parties began to work together with a jointlyinstructed actuary, expert in the relevant schemes, and a computer programmer to develop an agreed basisfor calculating the losses. This proved to be a long arduous process. By January 2001 a calculator for theMineworkers’ Pension Scheme (MPS) Living Claimants had been prepared. In order to ensure that oVersof settlement could be issued to at least some of the Claimants it was agreed that this rudimentary calculatorshould be operated on the basis that if a Claimant so elected he could, when the calculator was finalised,claim any additional amount of pension loss over and above the sum oVered provided it exceeded £500.00.There are four components to the pension calculator: live and deceased MPS and live and deceased staV

superannuation. The final component calculator was not distributed until October 2004. It should be notedthat not all claims include pension losses but nevertheless many claims have been delayed from finalsettlement as a consequence of the development of the pension loss calculator. This is a clear example of anissue which has taken a long time to resolve. However, calculation of pension loss is complex and withoutthe calculators the time taken to assess these losses would have been even longer.

VWF

1. Timely provision of miners training records and earnings records in respect of which there was a longperiod of unsatisfactory delivery—the records are relevant to job or occupational group which isdeterminative of entry to the scheme.

2. The apparent inability of IRISC to respond to Claimant’s Solicitors’ correspondence and telephoneenquiries generally and to progress claims. Items 3 and 4 above also arose in VWF.

3. The approach of IRISC to the investigation of Group 3 claims (see below)

4. The inability of IRISC to co-ordinate claims involving co-defendants (see below)

Vibration White Finger—Current Issues

Group 3 Claims

A summary of the approach adopted by the CHA to determining the issue of liability in individual casesprincipally by reference to the claimant’s occupation is set out in Annexe 4.

The original Claims Handling Agreement contemplated that claims would be brought by men in Group3 occupations. They would be required to establish actual exposure to vibration. It provided brief guidanceas to the information that such a Claimant would need to provide to enable the claim to be considered.

However, it appeared that IRISC did not have in place arrangements for investigating and assessingGroup 3 claims. In cases where claimants submitted evidence of exposure to vibration there was delay.

Subsequently, in March 2001 after negotiations between the CG and the DTI, prompted by the delay inthe assessment of Group 3 claims, the OccupationalGroup Procedure (OGP)was agreed. This was intendedto provide an agreed procedure to facilitate the speedy assessment of Group 3 claims.

It set out the evidence that was required to be submitted by the claimant and specific witnesses in astandardised questionnaire form. Provided such evidence submitted by the claimant confirming exposureto tortious vibration, was not deficient on its face or inconsistent withmining practice or other evidence thenin the absence of evidence to the contrary the claim would be accepted.

Although the OGP was intended to facilitate the handling of claims where evidence was submitted thatmet its requirements it was not intended to preclude consideration on its merits by IRISC of other evidenceeg in other cases. However, the requirements of the OGP have been used by IRISC as a procedural bar.Where they are notmet, in eVect, the claim is passed back to the claimant’s solicitor. There has been a refusalto consider cases in which the evidence submitted does not meet the OGP’s requirements without detailedexplanation as to why those requirements cannot be met and in some cases the approval of the DTI itselfis required before IRISC may consider the merits of a case.

IRISC employed a dedicated team, based in SheYeld, with mining experience to investigate Group 3claims in general and in particular to consider whether the claim as put forward by the claimant “mademining sense”. However, IRISC have found it diYcult to recruit and retain suYcient staV for that team.There has been longstanding concern about the adequacy of IRISC resources to assess claims timeously.

The rate of investigation has been slow and the approach of the investigators often controversial. Theirapproach particularly with regard to their application of “mining sense” has, caused disquiet amongmembers of the National and Regional Ministerial Monitoring Groups who themselves have miningexperience. So too has the relative (little) weight they have given to evidence from the claimant and hiswitnesses which will usually include mining oYcials.



Following agreement of the OGP, evidence was submitted in many thousands of claims. The DTIimposed the cut oV date of 31 October 2002 for submission of evidence in claims in which the denial wascontested. This aVected all but a small proportion of claims in which the denial was recent. The number ofclaims in which evidence contesting the denial has been submitted now exceeds 16,000.

IRISC statistics reveal that prior to the cut oV date of 31 October 2002 (approaching four years after theCHA was agreed) only 1,151 group 3 claims had been investigated.4 In 2003 2,292 investigations werecompleted. That number rose to 4,055 in 2004. Over 5,000 are currently with IRISC for investigation andall told some six years after agreement of the CHA and over two years after the “cut oV” date investigationshave been completed in only about half of the claims in which evidence disputing the denial has beensubmitted. Investigations in potentially over 7,500 claims are outstanding.

Of the claims investigated to date 1,923 (38%)5 have been accepted asGroup 1 or 2 suggesting that initiallyin many cases the claim was wrongly categorised by IRISC. 556 (10%) are accepted on the basis of exposurein a Group 3 occupation. 2,564 (51%) are denied.

A significant proportion of the denials are disputed and of the 752 disputes resolved by 31 October 20046

in 105 (14%) had been accepted on the basis that the claimant was exposed to tortious vibration in a Group3 occupation and in a further 132 (17.5%) it was accepted that the man had the necessary Group 1 or Group2 employment making a total of 31.5% of disputes resolved in the claimant’s favour7.

Services Claims

The major symptoms of VWF are numbness, loss of dexterity and cold intolerance. The latter isprincipally associated with the vascular component of the condition rather than the nerve damage(sensorineural) component. For claimants significantly aVected there are implications for their ability to doeveryday tasks such as gardening, decorating, DIY, car maintenance etc. (“services tasks”). At common lawan injured claimant can recover the cost of assistance with everyday tasks such as these that he is no longerable to do, whether such assistance is provided gratuitously (usually by family and friends) or byprofessional assistance.

In the lead actions a number of the significantly injured claimants recovered damages for this head ofclaim. Consequently, recovery for this head of damage was contemplated by the original CHA. However,initially no procedure for assessing such claims was agreed between the DTI and IRISC and IRISC did notmake arrangements to assess these claims.

Subsequently, following negotiations, in the latter half of 2000, a separate agreement was reached in early2001 between the CG and the DTI, which provided in detail for the handling and assessment of servicesclaims.

The Services Agreement provided for submission of factual evidence in standardised (questionnaire) formfrom the claimant and those who currently provided assistance with various tasks. It was expressly intendedto limit the factual evidence required to assess claims and provided for the assessment of claims by referenceto agreed tariVs, depending upon the severity of the claimant’s VWF, and after taking into account any co-morbid conditions that he suVered from which would have limited his ability to do the tasks in any event.

The Services Agreement was then partially implemented as IRISC began investigation of the factual basisof claims. There were concerns from an early stage as to their approach, which in many cases involveddetailed investigations of a nature not contemplated by the agreement and the relevance and focus of whichwas not apparent. There were also concerns about the adequacy and training of IRISC’s adjusters. It isconceivable that the terms of the arrangement between the DTI and IRISC played a part in this regard butwe have never been privy to these.

There was also delay in full implementation of the Services Agreement because of the need to put the co-morbid medical assessment out to tender.

Concerns about delivery of the Services Agreement remain. There are continuing concerns about theadequacy of the training of IRISC adjusters and the focus and relevance of their investigations in manycases. These matters may impact on the overall rate of investigations about which there are also concerns.

Cut oV dates by which claimants’ must intimate claims and lodge evidence in support have been providedfor, at the DTI’s request, by Court Order. They will result in an increase in the rate of claims in the periodpreceding the cut oV and may serve to adversely aVect the claims handling process.

However, although the cut oV dates will cap the size of the pool of claims to be assessed, recent analysisof available statistics suggested that the DTI’s aspirational end dates for settlement of all services claims areunlikely to be met by some margin.

4 In November and December 2002 a further 459 investigations were completed.5 This percentage will decrease as a number of completed cases accepted as Group 1 or 2 were identified following special review

exercises, now completed, and not part of the routine investigations.6 More recent figures for the outcome of disputes are not available to us.7 IRISC Group 3 figures.



The extent to which IRISC and the DTI are able to monitor delays in the processing of claims at IRISCis not clear. It is understood that key stage analysis showing the length of time claims sit at any key stagein the process is not yet available for claims for Services (although it has been used for some time for earlystages in the general VWF claims handling process). Following our suggestion this is now understood to beunder discussion between the DTI and IRISC.

Co-defended Claims

The approach of the VWF CHA and that of the RDL CHA diVer in the manner in which co defendantclaims are addressed. In the VWF scheme claims relating to exposure during periods of employment withmining contractors must be directed to the contractors (or their insurers) who deal with them in the firstinstance although the DTI contribute to meeting the contractors’ liability.

The VWF scheme was achieved in January 1999 and it was not until mid to early 2001 that the majorcontractors’ insurers and themining related defendants representing small mines and companies such asUKCoal (formerly RJB) joined the agreement after pressure had been exerted through a number of Courthearings. The number of claims in which there is involvement of mining co-defendants significantlyexceeds 10,000.

Under the CHA IRISC have the responsibility for co-ordinating claims involving co-defendants. The codefendant interests in the form of the various insurers and claims handlers have been disparate anduncoordinated themselves. It has appeared that initially IRISC focused on the bulk of claims in which therewas no co-defendant interest and declined to focus adequate resources on the more arduous task of dealingwith this category of claims. This has led to delays in dealing with claims with co defendant involvementwhich only comparatively recently have begun to settle in significant numbers.

Stalled Claims

In early 2004 theDTI raised the prospect of introducing a procedure to address claims that had been stuckor “stalled” within the claims handling process and indicated that they wished to focus on such claims thathad become stalled with solicitors. The CG indicated a willingness to discuss and develop such a proposal,providing that it was widened to also address claims that had become stalled with their contractors,principally IRISC.

At the end of July 2004 the DTI tabled a detailed proposal addressing only the problem of claims stalledwith claimants or their solicitors, which we were told they intended to proceed to implement despite the lackof agreement that they should do so and even though implementation represented a significant change tothe claims handling process. A number of detailed objections were raised to the procedure which weconsidered was unfair and unworkable.

As implemented, the procedure provided that following a request for information from a claimant (viahis solicitor) if the information remained outstanding for more than three months then IRISC could writegiving notice that the stalled claims procedure was to be invoked. If a substantive response was not receivedwithin a three month period, during which a further reminder would be sent, a claim could be closed. Onceclosed a claim could only be re-opened upon application to the Court.

Between 1 October and 20 December 2004 IRISC wrote out on over 4,000 cases informing the claimant’ssolicitor that the case was subject to the stalled claims procedure and therefore, as noted above, the timetabletowards closure of the claim within 3 months had begun to operate.

In view of the draconian consequences for Claimants in receipt of such notificationmeant that Claimants’solicitors were obliged to divert resources from other claims handling activities to focus on claims thatIRISC had identified as stalled. A high proportion of cases were put into the stalled procedure in error. TheDTI have subsequently agreed to a number of amendments that the CG had suggested to the procedureintended to make it more practical. Had they been in place from the start many claims to which theprocedure was applied would never have been subject to it.

The exercise revealed concerns about IRISC’s organisation and the training of their staV. It also raisedconcerns about their resources. They were unable to respond to replies from claimant’s solicitors regardingclaims to which the stalled claims procedure had been applied. Notwithstanding that the procedure requiredprompt response from the claimant’s solicitor IRISC, with the DTI’s agreement, did not plan to addresssuch responses until the beginning of 2005. This approach, driven by limited resources at IRISC, createduncertainty as to the status of cases to which the procedure had been applied. During this period althoughthe procedure had been implemented we sought to continue to negotiate with the DTI to improve its terms.Because of diYculties in its operation it was suspended between 20 December and beginning of February2005.

Its operation was the subject of detailed representations by the parties at a hearing on 21 January, bywhich time it had been substantially amended to make it workable. The major outstanding issues by thenwere as to when it should be introduced and whether it should be extended to apply to claims stalled withIRISC.



On 21 January the Court directed that the procedure should be re-introduced from 1 February 2005.However, the Court indicated that in future IRISC needed to exercise greater care in the operation of thestalled procedure and in particular to ensure that it was only applied to appropriate claims.

Introduction of the stalled claims procedure so far as claims “stalled” on the claimants side is concernedis largely a matter of recent history. However, it is significant because the episode illustrates the diYcultiesthat arise when the DTI have sought to unilaterally impose changes without proper consultation oragreement. It is also significant because although when the proposal was first raised it was made clear thatthe CG considered that a similar initiative was required to address claims “stalled” with the DTI’scontractors IRISC and notwithstanding that a detailed proposal was submittedmonths ago, that issue is onethat the DTI and IRISC are clearly reluctant to contemplate and have, as yet, to give serious consideration.

Respiratory Disease Litigation

Speeding Up The Scheme: Fast Track OVers

From 1 March 2005, live claimants under the RDL scheme will be able to obtain fast track oVers aftera spirometry test in four distinct categories of case. This extends the opportunity for early settlement andconclusion of claims within the scheme that was previously possible only in a smaller number of cases underthe expedited tariV. Damages are fixed by reference to the average payment made to date through thescheme, after a full MAP, to Claimants within each of the four spirometry categories.

In addition to live fast track oVers, the Court has ordered that in posthumous cases where there is noindication of COPD on a death certificate, called “category 3” cases, it will be possible for widows andfamilies of deceased miners to obtain modest “fast track” payments if they wish to do so (cases with suchan indication will proceed through the fullMAP process without a fast track oVer). It is not known yet whenthe posthumous “fast track” oVers will be introduced but it looks as though this will not take place until themiddle of the year.

It is thought that 100,000 live “fast track” oVers will be made within a year.

As many as two-thirds of the remaining posthumous claims might be eligible for a “fast track” oVer.

Themove towards introducing these “fast track” oVers, which is supported by the Judge with supervisoryjurisdiction over the RDL Claims’ Handling Agreement, Sir Michael Turner, took place at first in a spiritof co-operation as all parties and the Court were agreed that it was wrong to take no action in the face ofa projected end date for the scheme of December 2011. This distant end date arose as a consequence of thelarge number of claims registered by the closure date and the principal limiting factor upon “throughput”of Respiratory Specialists availability to carry out Claimants’ medical assessments.

By late September 2004, the DTI advocated—as it had done previously—a fast track option for minersto speed up their claims, or to allow them to proceed through the full MAP compensation process. Withina very short space of time however—a few weeks at most—the DTI’s position changed for reasons unclear;instead, it argued for a compulsory “fast track” oVer procedure that would have had the eVect of leavingvery few claims to proceed through the full process. It was only after a meeting at the House of Commons,in mid October, at which there was unanimous disapproval of the compulsory “fast track” scheme fromcoalfield representatives present, that the DTI altered its position and accepted that “fast track” oVersshould be optional.

The DTI appears to have been content to let the Court rule upon the substance of the “fast track” oVerand associated costs to be paid to claimants’ representatives, rather than to engage in substantivenegotiation, whether over the fast track tariV of payments or costs or over the important matters of detailthat require to be ironed out so that the “fast track” proceduresmight be introduced speedily and eVectively.

As a consequence, there remains even now doubt as to the level of “fast track” payment to be paid tocertain categories of live claimant and that only three weeks before the introduction of the tariV itself. Issueshave arisen over the way in which the average payment has been calculated for the category of claimant withFEV 1 greater than 90%. There also remain issues over the inclusion of withdrawn cases in the cohort ofclaims used to work out the average payment. There is moreover, uncertainty over the identification of menwho were medically unable to take the test as “avoidably unreliable” claimants or as men who were simplytoo ill to test properly.

As regards posthumous cases, the payment scheme will not be introduced for several months yet, andimportant transitional arrangements have still to be agreed. TheDTI proposed (and the Court has accepted)that the posthumous “fast track” oVer will be an “opt in” scheme. As the cut-oV point for eligibility to a“fast track” oVer in category 3 cases will be the production of a MAP report from the medical serviceprovider (ATOS), it is essential that claimants are able to postpone delivery of the MAP report to theirrepresentatives and to Capita until advice is given and instructions obtained in regard to the “fast track”oVer entitlement that they may have. Representations to the DTI on this point have so far been rebuVed,



save for an oVer not to commission any further MAP reports (beyond those already in the system) as at 21February 2005, until 21August 2005. This leaves the problem group—category 3 cases currently in theMAPqueue ı unaddressed.

These remaining issues will have to be resolved by the Court if not by agreement and it is to be hoped thata reduction in the overall life of the scheme is achieved.

Minimum Payment

The protracted discussion over the possible introduction of a minimum payment for claimants under theRDL scheme has caused frustration to a large number of claimants. At one point during discussions lastyear, the DTI intimated that these might be of the order of 3,500 claimants or so, but it now appears thatthere may be as many as 7,500 claims blocked pending resolution of the minimum payment issue.

The background is that in other compensation schemes such as that operated for industrial deafnessclaimants and pneumoconiosis claimants (and in other large settlement schemes overseas), a minimum levelof payment was set. No doubt there were good reasons for this and one was that a claim meritorious to anyextent should attract a value which should not be seen as an insult to the person to whom the payment wasoVered and so act as a disincentive to settlement.

The DTI would not accede to the suggestion that there should be a minimum payment when the schemewas first set up in England and Wales in 1999. They also rejected a proposal from the Co-ordinating Groupthat in the event that a revised Chronic Bronchitis Only TariV Scheme might be introduced, there would betransaction savings both in solicitors’ costs and in costs incurred by the DTI’s contractors and these mightbe used to create a fund for a minimum payment. These discussions broke down in 2002.

In July 2003, claimants proposed a minimum payment scheme to be wholly funded by money releasedfrom adjustment of solicitors’ costs. This required consultation and approval from the regulatory body ineach jurisdiction. There was then consultation with the wider Solicitors’ Group before a revised proposalwas advanced to the DTI in March 2004 to top up oVers falling below £500 by a reduction in the increasein solicitors costs that would normally have occurred through the Retain Price Index mechanism.

The rate of progress made on this issue has been slow and we believe that the DTI has been reluctant toimplement a minimum payment provision within the RDL scheme. Claimants frustrated at the delayexperienced in resolving this issue over several years might by now have opted to accept very low payments.In any event, a very large number of settlements is likely to be obtained at a stroke when this scheme isintroduced and it is to be hoped that it will not be delayed much longer.

The DTI have said that the mechanism for the finding of minimum payments is now an issue and that acase by case approach is favoured rather than the RPI fund referred to above which takes the debate backto where it was some 18 months ago. The members of the Claimants’ Solicitors Group are being consultedon this currently.

Surface Dust Exposure

The RDL was pursued on behalf of lead claimants all of whom have worked wholly underground.Following the conclusion of the trial and during negotiation of the Claims Handling Agreement both theCG and the DTI were aware that there were certain jobs on the surface which led to exposure to coal minedust. The CHA contained a Statement of Intent that the parties would seek to resolve liability for exposureto surface dust by agreement. Investigation of the likely extent of exposure to surface dust in certainoccupations was initially undertaken jointly. In 2000 it was thought by the CG that agreement would beachieved and indeed the DTI submitted a Treasury Minute to Parliament (see Annex 5). Within a week orso of the publication of this Minute the DTI disclosed to the CG evidence as to levels of dust exposure thatled to the conclusion by their appointed medical expert that no significant lung damage would result fromsurface dust exposure. This was not accepted by the Claimants and following further negotiation a mixedunderground/surface worker agreement was achieved whereby men who worked in certain definedoccupations on the surface and had also five or more years underground employment were compensatedfor that part of their respiratory disease caused not only by underground exposure but also by the surfaceexposure. The parties endeavoured to achieve agreement in relation to those exposed to dust in surface jobsonly (or for less than five years underground). The DTI declined to accept liability in February 2003. TheCG then investigated further the prospects of pursuing group litigation on behalf of the estimated 3,000 to5,000menwhohad registered claims. This involved extensive review of documents in the former BritishCoalCorporation archive and seeking medical and mining engineering evidence. The Court was advised, inDecember 2004, that group litigation would not be pursued. A significant factor was the risk of men havingto pay the DTI’s legal costs if the litigation was unsuccessful. The DTI were asked to waive this right butdeclined to do so. It is possible that claims may be pursued by some individual Claimants.



Both Schemes

Securities Investigation Department (SID)

The DTI has appointed a specialist unit to investigate claims which may have been made fraudulently.From the outset, the CG accepted the DTI’s right to do so, as it is plainly appropriate to seek to detect anddeter potentially fraudulent claims. However, we have asked that the DTI should carry out theirinvestigations into such claimswithin a reasonable framework, understood byClaimants and their Solicitorsand that such investigations are completedwithin a reasonable timetable in the interests particularly of thoseclaimants whose cases turn out after all to be genuine. In particular, we asked that Claimants should beadvised of the basis of the DTI’s concerns in any claim under investigation. We also sought clarification ofthe guidance or instructions given to investigative staV carrying out interviews of witnesses. Controversially,the DTI began to seek interview facilities in some cases with claimants themselves.

As to the first of these requests, it has proved a diYcult and slow exercise in cases under investigation toobtain from SID an account of their concerns. Initially, claimants’ Solicitors complained that reference wasmade in correspondence from SID to “anomalies” in the presentation of evidence but little else was oVeredby way of explanation of them despite requests. There were also complaints in some instances, of heavyhanded investigations of witnesses who were interviewed though unclear of the nature and purpose of theinterview.

The SID procedure appears beset by delay. Further, figures produced by the DTI suggest that only a verysmall number of cases under investigation do not return to the normal process eventually, to be assessed inthe normal way.

“Since May 2002, 1,470 potentially suspicious cases have been referred for additionalinvestigation. These claims have a total potential claim value of “£21.3 million. Approximately 60new cases are referred each month directly to the Security Investigation Department (SID). Themajority of cases still relate to VWF Services, but since the COPD cut-oV date the number ofCOPD claims being referred has increased dramatically. Currently 33% of all referrals relate toCOPD claims.

Of the 1,470 referrals, 737 are currently under investigation and 773 have had their investigationscompleted. Of those that have had investigations completed, 132 claims have been denied and 86claims have been reduced, with a total value of £2.6 million.

The remaining claims were returned for processing once it was confirmed that there was nofraudulent activity, a claim was valid within the remit of the schemes, or any anomalies wereclarified. Process streamlining and improvements are continuing to be introduced to minimise anyunnecessary delay to valid claims.

Where the Department is unable to complete its investigations (for example, where a witness or aclaimant declines to be interviewed), then such cases are held in abeyance until such time as theDepartment’s concerns are either confirmed or allayed. Currently in excess of 34 claims are inabeyance.”8

In themeantime theMinister has recently indicated that he does not think it appropriate to disclose detailsof the procedure under which SID operate, since thatmay assist those intent upon falsifying claims. A recentrequest to theDTI for information as to the number of claims currently under investigation by SID has beendeclined and of that number how many have been under investigation for over three and over six months.The DTI insist upon their right to interview claimants where required in certain cases, although this wouldnot be permitted in civil proceedings where a defendant would always have the right to cross-examine aclaimant in evidence but not to interview him.

Our continuing concern is that the public perception of the process will suVer if genuine claimants andtheir witnesses believe that procedures to investigate doubtful claims end up by stigmatising them and arecharacterised by secrecy and delay. In many of the cases under investigation, the CG believe that there arereasonable explanations that can be proVered for anomalies in evidence as regards dates of service provisionand the like. Solicitors are willing to assist in the process in their client’s interests and accept that if noreasonable explanation can be oVered to SID then matters may proceed further. The balance to be struckas between the proper interest of the DTI in weeding out false claims and the interests of claimants whomight be able to explain evidential discrepancies if given the chance to do so, is in our view in need ofadjustment.

Openness

We have been concerned, from time to time, as to whether or not the DTI has always been as open insharing concerns about issues in relation particularly to the implementation of schemes as perhaps mighthave been hoped for in the interests of the prompt resolution of those concerns. This has been a moresignificant concern over the last year or so. By way of example, at Annex 6 we attach an article from “The

8 DTI’s Report to the Court January 2005.



Guardian”.9 We make the point that the words quoted from the internal DTI document indicate anunwillingness to share the idea of introducing of the proposed technology with the Co-ordinating Group:indeed, their intent was to conceal it.

Concerns For The Future

Concerns for the future include:

1. The eVectiveness of the implementation of Fast Track OVers process and whether or not in practicethe introduction of such will reduce the time taken for the assessment of claims overall, and,

2. Themanagement of the closure of each of the schemes. This is currently in progress in relation to VWFand will have to be addressed in RDL in the not too distant future.

3. The recent deterioration in constructive dialogue aimed at resolving issues by agreement. Much ofwhat has been achieved has been as a consequence of, (often robust) discussion and agreement. It will hinderthe operation of each of the schemes if this does not resume.

4. The length of time it is likely to take for IRISC to complete their investigation of VWFGroup 3 claimsand the factual basis of services claims; and with regard the latter the extent to which information submittedin support of the claim will become out of date and thus require to be supplemented with obviousineYciencies in the claims handling process and frustrations for the claimants.

5. IRISC’s capability to make available adequately trained staV at appropriate points in the claimshandling procedure for both schemes so as to suYciently reduce delays in the claims handling procedurethat have been endemic to date.

6. The DTI’s capability to monitor the performance of IRISC and keep it to account.

7. The DTI’s willingness to always to share information required to monitor performance and to engagein constructive dialogue over proposed changes to the CHAs and claims handling process.

February 2005

Footnote

As indicated above both schemes arise as a consequence of litigation which is an adversarial process andin respect of which both the Claimants and the DTI are entitled to legal advice which it would not wish todisclose to the other and, of course, are not obliged so to do as a matter of law. Please note that this has notimpacted upon our ability to set out our views within this report.

Annex 1

OVERVIEW OF EACH SCHEME


1. The Claimant submits questionnaires giving information about employment history in the industry.

2. If allocated to Group 1 or 2 proceeds to Medical Assessment Process (MAP);

3. If found to suVer from VWF/CTS is entitled to an oVer of general damages;

4. In certain circumstancesmay be entitled to an additional award of damages for handicap on the labourmarket and/or for wage loss (in respect of wage loss there is a defined procedure).

5. Subject to extent of VWF disability may be entitled to claim for the value of lost services in respect ofwhich a defined procedure exists.

6. If not found to suVer from VWF claim denied.

7. If not found to fall within a Group 1 or 2 occupation claim denied but Claimant has right to seek toestablish either that he should be within a Group 1 or 2 occupation or that he was exposed to tortiousvibration as a group 3 Claimant in respect of which a defined procedure exists.

8. Where employed by employers in the coal industry other than BCC the Claimant to pursue claimsagainst those employers in accordance with CHA principles save to the extent that various employers donot accept some of the constituent parts of the agreement, notably services and wage loss.

9. There is a disputes procedure and the right to pursue a common law claim is retained.

10. There is a medical reference panel which provides oversight of the medical process.

9 Not printed.




1. The Claimant submits a claim indicating extent of ill health and work history and smoking habit;

2. Work history is relevant to calculating the extent and nature of the dust exposure;

3. A living miner attends for spirometry test and subject to the outcome may be entitled to an expeditedoVer of settlement;

4. If an expedited oVer is made and refused or if the man is not entitled to an expedited oVer he mayproceed to a full Medical Assessment after medical record collection (MAP);

5. In posthumous cases following submission of ClaimsQuestionnaires medical records are collected andthe claim proceeds directly to medical assessment (MAP);

6. Following MAP if a relevant respiratory condition is diagnosed then subject to proof of employmentan oVer of damages will be advanced in accordance with the relevant provisions of the CHA.

7. Proof of employment requires establishing the Claimant worked underground in a British CoalCorporation colliery post 1954 and if he worked in a defined dusty job on the surface that he worked formore than 5 years underground.

8. There is no need to pursue a claim against a coal mine contractor who employed a miner to work ina BCC operated mine prior to privatisation. For men employed in the privatised industry post 1994 thereis a need to bring a separate claim against that employer.

9. Small Mines employment (private licensed mines) is pursued separately and the block insurer, AGFfor the period 1972 to 1992, has accepted that claims will be handled in accordance with the CHA.

10. There is a disputes procedure and the right to pursue a common law claim is retained.

11. There is a medical reference panel which provides oversight of the medical process.

Both schemes contain procedural timetables for the advancement of individual claims. Unfortunately,these timetables were abandoned at an early stage in each scheme because theDTI’s contractors were unableto meet them.

Annex 2

JUDICIAL OVERSIGHT OF EACH SCHEME


The nominated Judge is Lady Justice Smith. Lady Justice Smith was not the trial Judge.

Last week Lady Justice Smith stood down and has been replaced by Mr Justice Mitting.


The nominated Judge is Sir Michael Turner. Sir Michael Turner was the trial Judge.

In both cases Review Hearings take place at a frequency of three or four per calendar year where formalReports are delivered to the Court and where necessary indications are given by the Judge as to how issuesmay be resolved. In a number of specific instances there have been hearings to resolve disputes betweenthe parties.

TheCourt hearings take place in public and are regularly attended bymembers of theClaimants SolicitorsGroup, by members of the Monitoring Groups, by Union oYcials and, from time to time, members ofthe press.

Annex 3

SCOTLAND

The Scottish version of the VWF Claims Handling Agreement was entered into after the English andWelshAgreement in 1999. TheRDLClaimsHandlingAgreement similarly, was negotiated after the Englishand Welsh Agreement, in 2000. Each Agreement was negotiated, with the NUM in Scotland taking the leadnegotiating role for Scottish claimants there (the Agreements are open to all Scottish Claimants irrespectiveof Union membership); there is no formal Court Order or supervision of Scottish issues that arise from timeto time and which are distinct from those dealt with by the Court south of the border. The role of theMinisterial Monitoring Committee (MMC) in Scotland in overseeing each Agreement assumes greatersignificance than that of MMCs elsewhere because of the lack of formal process.

Like any Agreement, goodwill on both sides is needed to make it work. We believe that such goodwill didexist in the first two to three years of operation of the Scottish version of the Handling Agreement despitethe enormous problems that were thrown up by the volume of claims, the complexities of the handlingprocedures and the initial lack of trained resource available to deal with cases in the numbers required. All



parties worked together to ensure that Scottish claimants and Scottish issues where they arose, as they didfrom time to time, were handled in a constructive atmosphere and in a fair way, having regard to both theinterests of claimants and of the public purse.

Regrettably however, it has appeared in recent months that the DTI has been less constructive and lesswilling to heed the views of theMonitoring Committee in Scotland on issues of principle between the partiesand on the best way of resolving them within a negotiated context.

Recent examples of this approach are the protracted discussions over the Loss of Society tariV(bereavement award) in Scotland and the sensitive issue that arises when a widow entitled to a paymentunder the Agreement with the DTI for her husband’s pain and suVering, whose husband died before 16 July1992, herself dies in process and before the payment is made to her. The DTI have dragged their feet overagreeing a reasonable procedure to ensure a fair outcome in these cases consistent with its stated intentionto see that no benefit should arise to the DTI from death in process. It continues to be diYcult to get theDTI to honour that commitment for this group of claimants.

The agreement with the DTI provides that the widow of a miner should receive his damages even thoughthe law in Scotland (as it then was) made no provision for transmission of the deceased person’s right togeneral damages (solatium) after his death. The lack of such provision in Scotland was clearly seen asindefensible, not least because of the approach of certain insurers in defending serious personal injuryclaims. Claimants who were dying from the eVects of a disease for which they sought damages (such asmesothelioma) might receive no oVer of compensation before their deaths and thus present the insurerconcerned with a windfall gain in a claim destined to settle, equivalent to the injured person’s damages forpain and suVering. The change made in the law has no retrospective eVect on deaths before 16 July 1992,but the Scottish RDL agreement records that damages will pass to a miner’s widow notwithstanding.

The problem now is that widows are dying in process and the question arises as to whether damages thatthey ought to have received and to which they had a right under the agreement with the DTI, should in turnbe allowed to pass to their estates in all cases. This is challenged by the department, which has dragged itsfeet over agreeing a reasonable procedure to ensure a fair outcome in these cases consistent with its statedintention—often repeated by the Ministers responsible—to see that no benefit should arise to the DTI froma death in process. It continues to be diYcult to get the DTI to honour that commitment for this group ofclaimants.

The position of co-defenders who have a joint liability with the DTI for coal health claims is one of theoutstanding issues still to be fully addressed for Scottish claimants. Whereas contracting companies such asThyssens (GB) Limited and AMCO have been largely willing to deal with VWF claims on the same termsin Scotland as apply south of the border, their position in regard to RDL claims is unclear. Purely Scottishcompanies such as Scottish Coal and Monktonhall Mineworkers Limited have still to confirm that they willaccede to the RDL handling arrangement on the terms applied to AGF (for the small mine interest) or UKCoal claims.

The DTI’s claim handling oYce in Scotland is at Capita (formerly IRISC), 40 Torphichen Street,Edinburgh. The oYce was established to deal specifically with Scottish claims but does not deal with allaspects of the VWF and COPD Handling Agreement. Some matters such as Group 3 cases in the VWFScheme and Fast Track OVers, are dealt with from Capita’s SheYeld OYce. There has from time to timebeen an unsure grasp of Scottish issues (such as the pre-16.07.92 issue referred to above) and there were fora time, resource issues as IRISC (as they then were) sought to recruit staV to deal with the large volumesof claims.

It has appeared that Capita are very much a target driven organisation which may simply reflect the termsof their contract with the DTI (unknown and unseen on our side). In 2002–03, Ministerial targets for oVersin the COPD Scheme were met but as there were no targets set for oVers that required to be reviewed byCapita before a settlement could be obtained, considerable delays were experienced at that time before thenecessary reviews were carried out.

Capita in Edinburgh have beenmore responsive of late, particularly to the issue of old claims in theCOPDScheme that were not being addressed despite assurances from Capita in SheYeld that the “priority points”system would always work eVectively to find such cases. This was not always our experience. To their credit,Capita in Edinburgh responded finally to our eVorts to have them identify old claims “Stalled” at Capitaand this has seen good progress made in recent months.

In posthumous cases, title to a deceased person’s estate needs to be formally completed before finalsettlement. In Scotland, the procedure required is to obtain a Confirmation from the sheriV court (a Probatein England andWales).Whilst this in itself causes no undue delay, obtainingmultiple Confirmations in caseswhere there is a “chain” of succession and deaths (fromminer, to widow, to son/daughter, and on) is causingsignificant delay in a number of claims, especially those where the miner died a long time ago. DiYcultiesin tracking down relevant documents (old Wills and title deeds) and in tracing all relatives who may beentitled to succeed to compensation payable, are the cause of further delays. Insurance policies must betaken out in certain cases where no Will can be found. It would assist in speeding the process up—and bemuch less costly to the public purse ı if the rules could be relaxed for the more modest settlement amountsdue, say up to £1,000.



There are continuing reservations over Capita’s resourcing and application of such resource in VWFclaims. The national picture on group 3 claims reflects the Scottish position as there is no separate serviceallocated to these cases in Capita Edinburgh’s oYce. Services’ claims have taken a very long time to beginto move through the procedure designed for them. Co-defended cases have simply not been handled as theyought to have been by Capita as the lead Insurer and continue to suVer from relative neglect at the handlingstage, though allowance must be made for the diYculties in co-ordination of claims with reluctant co-Insurers. These have also attended upon the resolution of wage loss claims in the VWF Scheme. Lookingto the short and medium term, concerns persist over the approach to the outstanding issues which may yetresult in litigation in Scotland, aVecting the management of the run down of each Scheme; these wouldbenefit from a more constructive joint approach than has been evidence of late.

Annex 4

VWF GROUP 3 CLAIMS

The original High Court ruling has established that British Coal should have known the risks of VWF by1 January 1973 and within two years taken steps to warn the workforce, put in place a system of medicalsurveillance for employees who were exposed to vibration and take steps to reduce the vibration exposureofmen exposed to vibration beyond a limited extent. In failing to take those steps BritishCoal were negligentand significant subsequent exposure was tortious.

To avoid the need to investigate every claimants exposure to vibration (a lengthy and costly exercise) anapproach was adopted whereby for certain occupations in which use of vibratory or percussive tools waseither a substantial part of the job of use was likely to have been significant, time spent in that occupationwould be taken as surrogate for establishing actual exposure to vibration. Jobs were categorised intooccupational groups, “Group 1” being those in which use of tools was recognised as a substantial part ofthe occupation, eg face workers, development workers, blacksmiths and 12 months employment post 1January 1975 in such an occupation was required to establish entitlement of compensation. “Group 2”comprised those jobs in which use of pneumatic or percussive tools may have been less than Group 1occupations but nonetheless was likely to have been significant and 2 years in a Group 2 occupation post 1January 1975 would establish entitlement of compensation . Examples of Group 2 occupations are face ordevelopment deputies, general underground labourers, salvage workers.

This left a third group of occupations “Group 3” occupations for which there was no assumption as touse of vibratory or percussive tools and evidence of tortious exposure would be required to substantiate aclaim. That group included transfer point attendants, deputies other than those on face or developmentwork, loco drivers andmen engaged on haulage supplywork andmany other occupations including all thosenot included in Group 1 or 2.

Annex 5

Letter from the Department of Trade and Industry to Irwin Mitchell

Coal Health: Surface Dust

I attach a copy of the Minute laid before Parliament yesterday advising the House that, subject to noobjections being raised, theDepartment proposes to accept liability for disability caused by exposure to dustin surface jobs.

Ann Taylor

11 July 2000

Non-statutory Liability to Pay Compensation to Miners for Exposure to Surface Dust

1. It is normal practice when a Government Department proposes to take on a liability in excess of£100,000 for which there is no specific statutory authority, for the Department concerned to present toParliament a Minute giving particulars of the liability created and explaining the circumstances.

2. This minute explains the liability the Department of Trade and Industry proposes to accept in respectof exposure to surface dust for employees in British Coal mines.

Background

3. In 1998 the Court found British Coal liable for exposure of mine workers to excessive dust whichcaused lung diseases. The DTI. Which had shortly before taken over the health liabilities of British Coal,was instructed by the judge to set up a Scheme to provide compensation for miners suVering lung diseasesas a result of employment with British Coal. A Claims Handling Agreement to deal with compensation wasnegotiated with solicitors representing miners and signed in September 1999.



4. The Court case and the Handling Agreement dealt with dust exposure underground. There arecurrently nearly 110,000 claimants and compensation is expected to amount to approximately £1bn. It willtake around three years to deal with these claims.

Surface Dust

5. Many of the existing claimants also have potential extended claims for exposure to dust in jobs on thesurface at mines. In addition, some surface only workers have test claims pending. Exposure to dust on thesurface leads to the same lung diseases as dust underground. The DTI has investigated the levels of dustprevailing in surface jobs in British Coal mines, measures which could have been taken to reduce dust andthose which were taken. The DTI proposes to accept that British Coal did not fully meet its responsibilitiestowards certain categories of workers in dusty jobs on the surface. (If the liability is not accepted these issueswill be put to the Court to decide.)

6. In accepting this liability, the DTI would propose to miners’ solicitors that compensation for surfacedust exposure be handled within the current Agreement for underground exposure. How this would workwould need to be negotiated in detail. Agreement would be needed on what jobs would be covered and onwhat levels of dust could reasonably have been avoided.

7. Until these details have been agreed it is not possible to make any firm estimates of the likely costs ofthe new liabilities for surface dust. But it is likely to be substantial (perhaps upward of £100 million).provision for any payments to discharge these liabilities will be sought through the normal supplyprocedure.

8. Acceptance of this additional liability will mean that current claimants can extend their claim to covertime spent in dusty jobs on the surface and men who have only worked on the surface will be able to put ina claim.

9. The Department will keep the House informed of the extent of these new liabilities as they becomeclearer.

10. The Treasury have approved in principle the acceptance of this liability. If during the period of 14days (exclusive of Saturdays and Sundays) beginning on the date on which this Minute was laid beforeParliament, a Member signifies an objection by giving notice of a Parliamentary Question or by otherwiseraising thematter in Parliament, final approval to proceed with accepting the liability will be upheld pendingan examination of the objection.

Ann TaylorDirector of Coal Health Claims Unit, Department of Trade and Industry

10 July 2000

APPENDIX 6

Supplementary paper submitted by the Claimants’ Solicitors’ Group

IN THE HIGH COURT OF JUSTICECLAIM NO: 960177QUEEN’S BENCH DIVISION

BETWEEN:BRITISH COAL VIBRATION WHITE FINGER LITIGATION

Claimant

and

BRITISH COAL CORPORATIONDefendant

Prepared by the Co-ordinating group for the Claimants’ solicitors

This document is prepared by way of addendum to the report already submitted to the DTI SelectCommittee and to supplement that report by addressing the issue of theDepartment’s aspirational end datesfor the VWF Scheme which were raised at the hearing before the select committee on 23 February.

The DTI’s aspirational end dates are:

1. General Damages: settle all general damages claims by the end of the third quarter 2005, subject t co-defendant co-operation.



2. Services Claims: conclude services MAP by the end of 2006 and settle all services claim by end of 2007.

3. Group 3 Claims: complete investigations of Group 3 Claims by the end of the third quarter of 2005.

We comment on each of these below.

General Damages: Co-defendants

In the overwhelming majority of claims oVers for general damages have been made and either that headof claim has settled in its entirety or agreement has been reached and a substantial interim payment made.

However, there remains two substantial cohorts of cases in which settlement of the general damageselement of the claim remains outstanding. These are Group 3 claims (see below) and claims involving co-defendants.

It is understood that there are currently approaching 15,000 claims in which there is co-defendantinvolvement. That is to say in addition to the claim against British Coal. (DTI) there is also a claim againsta co-defendant who may be liable to make a contribution to the compensation payable to the Claimantunder the terms of the handling arrangement.

The contribution will vary from case to case depending largely upon the length of the claimant’s periodof exposure to vibration with the co-defendant when compared to that of his period of exposure with BritishCoal. In several thousand claims involving co-defendants agreement has yet to be reached with all co-defendants as to the contributions what they will make to the Claimant’s compensation so as to ensure thathe receives his full entitlement under the CHA.

The vast majority of co-defended claims involve other mine operators (CMR defendants) or miningcontractors (CMC defendants). The CMC and CMR defendants were not initially parties to the handlingarrangements when it was achieved in January 1999. However, by the spring of 2000 most had indicated anintention to accept the handling arrangement and had formally confirmed that acceptance by the late springof 2001 (after detailed consideration of the medical assessment process).

Under the CHA, the Claimant makes separate claims against each co-defendant and IRISC arecommitted to use their best endeavours to persuade other defendants (or their insurers) to accept the termsof the CHA and to co-ordinate claims so that compensation is oVered (paragraph 11.2)

The CMR defendants (or their insurers) are responsible for paying to the Claimant directly in full theircontribution to his compensation. So too are the CMC defendants (of their insurers). However, as the DTIwould also have a liability in respect of the exposure which occurred in British Coal Mines during theClaimant’s employment with the CMC defendant, the DTI subsequently refund to the CMC defendants (ortheir insurers) a proportion of the sum that they have paid. This is usually 50% of more of the compensationpaid by the CMC defendant to the claimant.

As noted in our report (page 11). Initially IRISC focused on the bulk of claims in which there was no co-defendant interest and declined to focus adequate resources on the more arduous task of dealing with co-defendant claims. Although latterly IRISC have shifted their attention and more resources to address theproblem of co-defendant claims settlement of the general damages element remains outstanding in severalthousand co-defendant claims.

It appears that may CMC and or CMR defendants (or their insurers) have also given these claims a lowpriority and the co-ordination and handling of claims involving CMC and CMR co-defendants have beenplagued with continuing diYculty.

It is not known what steps (if any) the DTI have taken at a high level to encourage CMC or CMRdefendants and their insurers to give dealing with these claims the priority that they deserve. The DTI willhave contact with CMC and CMR defendants or their insurers as a result of the other aspects of the DTIoperation and area of responsibility.

Neither have the terms of theDTI’s arrangement with the CMCdefendant or their insurers been disclosedto us and it is not known to what extent, if any, those arrangements adequately enable the DTI to exertinfluence on the co-defendants handling of claims, particularly bearing in mind the financial contributionthat the DTI are making to the co-defendant liability, indicated above.

There is significant concern that by the aspirational end date of 30 September 2005 a settlement of thegeneral damages element of a significant number of co-defendant claims will not have been achieved.

Group 3 Claims

Group 3 claims were addressed in our report from page eight onwards and on page nine figures are givenfor the number of completed investigations to date. It is noted that the investigation remains to be completedin potentially over 7,500 claims.

It is understood that the DTI estimate that the number will in fact turn out to be lower and for planningpurposes have assumed the number to be about 6,600.



Targets for the quarters to the aspirational end date for completion of all investigations (30 September2005) have now been set and these are:

— First quarter—1,700

— Second quarter—2,275

— Third quarter—2,647

Achieving those targets would require a substantial increase in the rate of investigation to date. The latestfigures made available to us reflected the position as at 31 January 2005. From then, eight months remaineduntil the aspirational end date. To achieve the target would require 825 investigations to be completed onaverage each month. This would represent a significant increase in the target figure to date. Attached atAnnexe 1 is an extract from the Group 3 statistics produced by IRISC dated 30 January 2005. The first sheetgives in the “total” column, monthly figures for the number of investigations completed. The target figureis indicated in the far right hand column. It is readily apparent that the target is rarely achieved.

The second sheet illustrated the position graphically.

Despite the continuing failure of IRISC to achieve target, the DTI have expressed a high degree ofconfidence that the aspirational end date for completing investigations in outstanding Group 3 cases will beachieved. We are less sanguine.

Services Claims

The Department acknowledged in its report to the Court for the hearing on 20 December that there hadbeen some slippage in the timetable for processing claims. It was suggested that the slippage was aboutsix months.

Our analysis of the available figures suggested that the slippage was greater and gave us real concern thatthere appeared little prospect of achieving anything close to the aspirational end date for completion ofservices claims (end of 2007). Subsequently, we wrote to the Department’s solicitors setting out our analysisand concerns and inviting a response. A copy of our letter of 22 December is attached at Annexe 2. We haveyet to receive a substantive reply.

Annex 1

IN THE HIGH COURT OF JUSTICECLAIM NO: 960177QUEEN’S BENCH DIVISION

BETWEEN:

BRITISH COAL VIBRATION WHITE FINGER LITIGATIONClaimant

and

BRITISH COAL CORPORATIONDefendant

Month England Wales Scotland UDM Total Cululative TargetTotal

December 2001 19 4 0 1 24 24January 2002 18 4 0 4 26 50February 2002 93 8 0 16 117 167March 2002 60 4 1 18 83 250April 2002 61 1 3 19 84 334May 2002 78 6 1 14 99 433June 2002 46 5 1 8 60 493July 2002 92 31 1 28 152 645August 2002 79 16 0 27 122 767September 2002 88 11 1 26 126 893October 2002 180 25 4 49 258 1,151November 2002 205 32 3 33 273 1,424December 2002 133 29 2 22 186 1,610January 2003 185 17 10 27 239 1,849February 2003 201 42 7 53 303 2,152March 2003 132 21 7 49 209 2,361April 2003 214 28 10 60 312 2,673May 2003 225 15 15 80 335 3,008June 2003 81 13 3 17 114 3,122



Month England Wales Scotland UDM Total Cululative TargetTotal

July 2003 49 9 5 5 68 3,190August 2003 57 6 4 4 71 3,261September 2003 28 4 1 7 40 3,301October 2003 31 5 6 8 50 3,351November 2003 19 10 4 6 39 3,390December 2003 32 9 4 8 53 3,443January 2004 48 7 8 12 75 3,518 224February 2004 191 19 18 41 269 3787 256March 2004 231 26 17 63 337 4124 368April 2004 173 35 21 60 289 4413 296May 2004 166 53 26 54 299 4712 342June 2004 257 56 15 76 404 5,116 512July 2004 198 57 11 38 304 5,420 390August 2004 228 61 10 23 322 5,742 521September 2004 253 75 15 34 377 6,119 459October 2004 226 44 9 77 356 6,475 489November 2004 384 70 25 133 612 7,087 617December 2004 267 32 16 95 410 7,497 595January 2005 222 33 9 100 364 7,861 527Not Classified 12 1 0 8 21 7,882Totals 5,262 924 293 1,403 7,882

Group 3 Completed Investigations

0

100

200

300

400

500

600

700

July

- 20

03

Aug

ust -

200

3

Sep

tem

ber -

200

3

Oct

ober

- 20

03

Nov

embe

r - 2

003

Dec

embe

r - 2

003

Janu

ary

- 200

4

Febr

uary

- 20

04

Mar

ch -

2004

Apr

il - 2

004

May

- 20

04

June

- 20

04

July

- 20

04

Aug

ust -

200

4

Sep

tem

ber -

200

4

Oct

ober

- 20

04

Nov

embe

r - 2

004

Dec

embe

r - 2

004

Janu

ary

- 200

5

Not

Cla

ssifi

ed

Period

Volu

me

EnglandWalesScotlandUDMTotalTarget

Annex 2

Letter from Irwin Mitchell on behalf of the British Coal VWF Litigation Solicitors Groupto Nabarro Nathanson

Re: British Coal Vibration White Finger Litigation Services Claim: Throughput and aspirational enddates

Your clients have previously given aspirational end dates for services claims of end of 2006 for completionof all medical assessments and end of 2007 for all settlements. In your client’s report to the Court it wassuggested that there may have been six months slippage in relation to the timetable for completion ofmedical reports.



We have been reviewing the latest statistics that have been made available to us. These are the VWFServices Key Stage Report as at 14 November 2004 and the figures that we have been given at the meetingon 29 November which show throughput together with the information contained in your client’s report tothe Court.

Paragraph 7 of the report to the Court shows that some 30,452 claims questionnaires had been receivedat IRISC. Of these 28,155 are being worked by IRISC and 2,297 are “parked” pending completion of thegeneral damages stage.

This is broadly in line with the figure in row four of the VWF Services Key Stage Report which recordsthe number of cases in which questionnaires had been received as 30,004. the diVerence between the twofigures is presumably explained by the diVering dates at which the count has been raised. There is a three tofour week gap and questionnaire receipts appear to have been running up to the 15 November at 122 perweek on average.

Offers

If the figure for questionnaires received is taken as 30,452 and this is then reduced by the figures containedin the services key stage report of 14 November 2004 for

— OVers outstanding 2,258

— Claims denied 522

— Settled with outstanding issues 4,309

— Settled in full 4,104

— Withdrawn 749

which together total 8,252.

This leaves 22,200 cases on which an oVer still has to be made if only those cases in which questionnaireshave not yet been received are considered. Over the 12 weeks to 15 November oVers were running at 119per week.

22,000 divided by 119 gives a figure of 186—the number of weeks it would take, at that rate, tomake oVersonly those cases in which questionnaires have been received to date. The potential pool of outstandingclaims is some 22,227 greater (paragraph 7 of the DTI’s Court Report) which would require an additional186 weeks making a total period to oVer on the two pools of 372 weeks or seven years all of which makesthe aspirational end date for the scheme look optimistic. According to paragraph 6(b) of the report for theDTI for the July Hearing this was end of 2007.

Medicals

If the number of cases being worked by IRISC (30,452) is reduced by the number settled, denied etc 8,252this gives a figure of 22,200. if that figure is further reduced by the number of medical reports in progress2,995 and claims where medical reports have been received but an oVer has yet to be made 3,846 this leavesa figure of 15,159, most of which will require a medical. (The exception being a small proportion denied orwithdrawn pre MAP).

Medical reports were running over the 12 week period to 15 November at an average of 152 a week andat that rate it would take 99.7 weeks to do medical reports in the existing cases in which questionnaires havealready been received. That is virtually two years instead of one year to the end of year 2006, from whichthe DTI acknowledged they are six months behind schedule.

It appears that the slippage in relation only to the cases in which questionnaires have been submitted isgreater.

It is understood that CHS have been recruiting with a view to increasing capacity. They have recruitedsome sessional doctors and a second wave of recruits was scheduled to undergo training starting last week.I do not believe that we have had details of the numbers and/or likely capacity yet, but clearly it will takesome fairly dramatic increase in capacity to complete all medical reports within two years (a year after theaspirational end date) if a significant proportion of the 22,277 claimants who are eligible to pursue a servicesclaim but have yet to submit questionnaires. Such claimants have a further six months to the cut oV date.

MAP Throughput

Overall, looking at the statistics, there must be concern about the throughput for MAPs, but perhapsmore significantly concern about throughput at IRISC.

Throughput

From the services key stage report there are over 9,000 claims at the initial stages of investigation withIRISC and a further 2,101 at the helper call stage.



Conclusion

On the basis of the information available it appears that there is little prospect of achieving anything closeto the aspirational end date for completion of medical reports (end of 2006) or settlements (end of 2007).This is a matter of some concern and we should be obliged if your clients would share their latest projections(together with the figures and assumptions upon which they are based) with us so that we can discuss theseissues when we next meet in January next year.

Irwin Mitchell

22 December 2004

APPENDIX 7

Supplementary memorandum by Claimants’ Solicitors’ Group

EVIDENCE GIVEN BY THE MINISTER, DTI OFFICIALS, CAPITA AND ATOS PERSONNELON 1 MARCH 2005

Note: references below to the OE and page numbers are to the uncorrected transcript of oral evidencegiven on Tuesday 1 March, and to the pages where the relevant evidence may be found. Use is also madeof question numbers (Q then the number) for ease of reference.

In this addendum report to the Committee, we have prepared a commentary upon the evidence given on1 March, where it appears to us that the evidence was factually incorrect. Whilst we take issue with someof the opinions expressed, the extent and nature of our disagreement with them is set out in the writtenmaterial we have submitted and in the evidence that we have given.

Scheme Capacity

The Minister gave evidence that all parties including the unions and solicitors under-estimated the totallikely numbers of claimants who would present themselves through the compensation schemes (OE, p.27,Q 119).

CG comment:Neither the unions nor claimants’ solicitorswere involved initially in estimating likely claimvolumes and capacities in either scheme. It appeared to the Claimants’ Group after agreeing the COPDclaims’ handling agreement, that there had been inadequate planning and provision for what was likely inour view, to be verymanymore claims than theDTI envisaged. By around 2000, it was clear that themedicalcontractor Healthcall was struggling to cope with volumes. They disclosed that they had been instructed tocater for around 70,000 COPD claims in total. We accept that volumes have been diYcult to predict but theinitial under-estimation was achieved without the involvement of unions and solicitors.

Minimum Payments

The Minister gave evidence that he was not against the principle of a minimum payment funded bysolicitors, only against such payment funded by the Department. His objection to the RPI method was thatthis would not provide suYcient funds. He indicated that his oYcials had advised of a shortfall of £400,000on the CG’s original proposal to fund by half the RPI for the year. He also objected that there was noguarantee that the proposal would be “self funding” for all claimants going forward (OE, pp.38-42, Q141-145).

CG comment: In formulating our proposal, we relied entirely upon information provided by the DTIconcerning the numbers of oVers not accepted below the proposedminimum payment threshold of £500.Wecalculated that the fund needed to ensure that £500 could be oVered to the 3,500 claimants whom we wereadvised were then outstanding, would be less than a sum yielded by one half of the RPI due to be addedonto solicitors’ costs for 2004. TheDTIwere plainly opposed to thismethod of funding aminimumpaymentscheme but that was not because there would be insuYcient funds yielded by the RPI; rather, they wishedto impose their own preferred method of funding the payment case by case instead.

Just before the end of 2004, we were advised that the numbers had grown to 7,500, and so the RPI fundwe proposed would not be enough. This is hardly surprising, since it can be anticipated that numbersoutstanding will continue to increase unless and until the minimum payment is introduced, resulting insettlement of claims. Once the first RPI fund is exhausted, funding for claims subsequently falling below theminimum payment level can be considered in light of the numbers that can be safely predicted (in prospect),or the numbers known (in retrospect).

The DTI has exacerbated the problem by resisting the minimum payment. The Department’s position,which is that they do so because the eventual numbers are unknown, would result in no decision being maderegarding theminimum payment until the value of the last oVer is determined, which at the very least, wouldlead to unacceptable delay in concluding cases aVected.



The Chairman’s summary of the position reached in regard to minimum payments (OE, p.40 ) which theMinister accepted as an accurate summary, is incorrect in two particulars. First, minimum payment casesdo not require any less work of the solicitor than other cases within the process. Claims are fully appraisedand valued on each occasion and it is only when that exercise is completed after due application of the CHAprocedures, that it may be appreciated that a claim is worth less than £500. Second, the departmentmaintains that it has refused to fund a minimum payment not because the judge would not permit itsintroduction were it proposed to pay for it through public funds, but for the reasons set out by the Ministerin his answer to Q 137 (concern over the setting of a precedent by overruling a court formula).

Surface Dust Claims

The Minister said his responsibility was to ensure that people who were injured by dust get compensatedand this could either be done by civil action or bringing them into the Scheme. The Minister gave evidencethat he had “opened the records for inspection” to claimants’ solicitors and then pointed out that a numberof extensions to the court’s timetable for proceeding with surface dust litigation had been granted. The CGhad eventually withdrawn the group litigation on the 14 of December 2004. He had written about this tothe CG but had yet to receive a response (OE, pp.42-45, Q 148-154).

He suggested that unions did not enforce the sampling regime on the surface and said that spirometry andother tests showed little evidence of damage. He added that there was no evidence of measurable lungdamage to surface-only workers. He confirmed however that further discussion would be helpful and thathe would maximise co-operation to resolve the issue.

CG comment: As the Respirable Dust Regulations (RDR) did not apply to the surface, mining unionscould not seek to enforce a regime which did not exist. The absence of regime is one of the main reasons forthe sketchy nature of the dust readings now available to claimants looking for proof of the excessive levelsof dust. As Mr Clapham said (p.44), samples were rarely pursued on the surface but that does not mean thatthis was because there was no hazard.

The Minister and his oYcials have invited further litigation from the mining communities on the issue ofsurface dust exposure despite the terms of the Minute laid before Parliament in 2000.The access granted tothe surface dust “archive” was in reality, access to a huge amount of documentation that was not indexedor arranged so as to permit searchers to find surface dust records separately from underground records, orindeed from other unrelated documents. The search itself would have taken several more months tocomplete satisfactorily.

The Department were not willing to allow that to be done without (a) pressing for the surface dustlitigation to be commenced and (b) ensuring that claimants proceeding with litigation would require to paythe Department’s costs in the event of failure. Six volumes of material yielded by the search were producedto the Department’s solicitors, including records which contain evidence of excessive dust exposure.

Fast Track Offers/Compulsory Scheme

The Minister and his senior civil servant (Ann Taylor) gave evidence that it was the Judge’s idea for theDepartment to advocate a compulsory scheme, and that this had only been intended for people with lowlevels of disability, not for people at higher levels of disability. Ann Taylor commented that they werelooking at a compulsory scheme only for people with normal spirometry (OE, pp.36-37 Q 135-136).

CG comment: TheDepartment did not confine themselves to such claims in formulating their compulsoryscheme proposal. Relatively few claimants would have been able to escape the compulsory tariV (men unfitto test at spirometry, and some widows). The judge did not advise the department to argue for a compulsoryscheme; rather, he encouraged the parties to consider all the options, of which a compulsory schemewas one.It was for the department to determine their position. The judgemade no comment when the department didnot proceed with their proposal for a compulsory scheme at the court hearing which followed.

The department also abandoned their earlier advocacy of fast track oVers in posthumous claims basedupon the average damages paid out to a given cohort of claimant. Thus, the average damages actually paidwithin the fast track scheme to category 3 claimants (no COPD on death certificates) is of the order of£9,000-£10,000, whereas the flat rate amount payable under their fast track proposal is £1,200 (widows) and£1,000 (estates).

Stalled Claims

The Minister said there was some confusion as to where claims are in the chain, with solicitors or withCapita. Although he said he was grateful for suggestions on speeding up the process on both sides from theCG, the Minister added that it wasn’t in Capita’s interest to stall claims as they were paid by meeting targets(OE, p.34). There was earlier evidence from ATOS (Ms Gibson) that they were not penalised in theircontract for delays or late handling (OE, p.3); and there was evidence from Martin Trainer (Capita) thattheir reward is based upon the achievement of targets (OE, p.13) ; hemade no reference to penalties for poorperformance (Q 131-134, and Q 66-68, Q 85-87).



The Department were asked about the 4,000 letters sent out that Capita could not deal with whenresponses were made by solicitors. Christine Chamberlain did not answer this question but gave evidencethat it was proper to look at blocked claims and then said that the onus is on solicitors to tell theDepartmentwhere a claim is blocked. The Department claimed credit for suspending the process which the Judge had“endorsed” (OE, pp.35-36 Q 133-134).

CG comment: Given that the DTI maintain that they are actively managing their contractors, it issurprising that Ms Chamberlain should express the view that the onus is on solicitors to advise theDepartment what the problem is, even if the claim is stalled at Capita. As to the Minister’s observationsregarding Capita’s financial incentive to ensure that claims progress, it is identical to the incentive whichexists for solicitors to do likewise: they will not get paid for their work until settlement. Nonetheless, thedepartment has required no persuasion (as it does in respect of its contractor) to pursue claims stalled withclaimants or their solicitors by additional means.

The Department has resisted tackling its contractor Capita over claims languishing in their oYces,whether contractually or in terms of the process. That it appears that no penalties may be visited upon thecontractor for unacceptable delays in handling is a major diYculty. This may also explain the reluctance tosupport a stalled claims procedure designed to address claims stuck at Capita. The underlying problem heremay be under-funding or resourcing of the claim handling contract.

TheDepartment did not promote the suspension of the stalled claim procedure designed to address claimsstuck within solicitors’ oYces which it activated in VWF claims in October 2004; suspension was requestedby the CG in correspondence dated 16 December 2004, in view of reports from solicitors as to the chaoticmanner in which implementation had proceeded up to December 2004.

Securities Investigation Dept

During Kate Roy’s evidence it was said that there required to be a robust process in place to vet claims.She said that there were 1,500 claims referred for SID consideration. 800 investigations had been concludedand in 300 cases there had been deductions from compensation or nothing at all had been paid (OE, p.22-24 Q 107-113). In Ms Roy’s evidence a distinction between an intention to mislead and exaggeration wasaccepted, but the distinction was not further explained or developed.

She said that the investigation process was to correspond with the solicitor and seek an interview and givean option to solicitors to attend or to be copied in on correspondence. When pressed as to whether solicitorswere told of the reason for the request, Ms Roy’s evidence was that they were advised of “the potential forfurther investigation”. This was done to internal guidelines based on FSA standards. Capita had noobjection to release of these documents to the Committee for appraisal.

TheMinister’s evidence was that there were 1,549 claims referred to SID or about 2% of the schemes (OE,pp.47-48Q 161-164). AnnTaylor indicated that in 156 denied claims there had been a saving of £1.85millionand the reduced value claims (132 cases) had resulted in a saving of £1.25 million or a total of £3.1 million.Investigation costs were given as £0.5 million and it was confirmed that this was an annual cost. Thisappeared to be confined to the costs of running SID rather than the knock-on transaction and processingcosts.

CG comment: Ms Roy’s evidence confirms that claimants’ representatives are still not being made awareof the nature of the department’s concerns even in cases where there is a request for claimant interview.

Claims made that settle for less than the full amount sought should not be regarded as necessarilyfraudulent or exaggerated. Many claims settle for less because the evidence adduced in support is alleged tobe unsatisfactory, causing them to be queried. By no means are all such queries valid or properly raised.Claimants may be willing to accept oVers for part only of their claims for various reasons, including thediYculties experienced in tracing reliable witnesses, and the frustration occasioned by protracted delays inconcluding their cases.

The annual expenditure on the SID (£0.5 million) does not represent the full cost of the unit’s work. Extraprocess and handling costs arise as claims are investigated both at Capita and within solicitors’ oYces. TheDepartment have agreed to meet the extra costs payable to claimants’ agents where cases are concluded bypayment following investigation. There was no evidence as to how long the unit has been operational. Thishas probably been for longer than two years.

Withoutmore precise information as to whether theDTI/Capita view of exaggerated or fraudulent claimsexcludes claims where there is no reasonable basis for suspecting deliberate misrepresentation, it is diYcultto say whether the savings quoted by the Minister (£3.1 million) represent a reliable guide to the benefit tothe taxpayer derived from the work of SID. It seems that most cases are returned to Capita for normalprocessing.

The Minister’s evidence that potential fraud accounts for some 2% of claims within the schemes, shouldbe 0.2% (about 1,500 claims from 750,000).



Services

Inept questioning by Capita staV of services’ questionnaire formswas put down by JeV Wilson to the pilotproject experience and his position was that his team are constantly discussing problems and that there isrigorous training to improve performance. There was a continuing need to review eVectiveness. Feedbackfrom solicitors about problem areas was very helpful (OE, pp.20-21 Q101-104).

CG comment: The services’ pilot took place four years ago. Our experience has been that the problemsencountered in agreeing the extent of service provision and the periods of time involved, have continuedsince then to the present day albeit there are fewer reported instances of mis-handling. It appears that thetraining given to Capita staV proceeds while they are working on claims, which may explain some of themistakes encountered.

Capita Performance

Kate Roy answered a question about this primarily by reference to the meeting of targets in the COPDscheme rather than Capita’s ability to meet targets in the VWF scheme as it winds down. However, Capitasaid that they are able to cope with the various aspirational end dates in the VWF schemewhich they and thedepartment have formulated (OE, pp.14-17 and 24-25 Q 90-96, and 114-115). Capita referred to a businessimprovement programme and said that there were a number of initiatives agreed with the departmentparticularly as regards the high turnover of staV (25% loss in 2004) to retain staV, reward and recognise themfor their performance; pay best market rate and bonuses and improve their surroundings.

CG comment: There are signs of significant slippage in Capita’s progress towards meeting the group 3aspirational end date of concluded investigations by September 2005. Moreover, there are concerns thatother work required of Capita to bring claims to a conclusion (for example, attention to claimants’ wageloss schedules and services’ claims) may suVer as pressure mounts to meet the targets set. The sometimesterminal consequences visited upon claimants who are not able to comply with the end dates fixed, may becontrasted with the apparent lack of any sanction against Capita for delays that may follow from jugglingand shifting resource from one area of the process to another to meet the Department’s demands (or evenfailing to meet them).

Relations/Dialogue

TheMinister gave evidence that it was not his impression that there had been deterioration in constructivedialogue. He said that there might be frustration for solicitors in the CG because of the lack of success insome areas and did not accept that there were fair criticisms of his oYcials in the CG evidence (OE, pp.30-31 Q 125-126).

Sir Robert Smith asked if it was not a symptom of problems in the negotiating forum when theDepartment had to rely upon the Judge asmuch as it did in the “fast track” context andAnnTaylor’s answerwas that the Judge was drawn into that process (OE, p.32 Q 128).

Christine Chamberlain said that the department were no less transparent or open than they had been.There were sticky issues now to resolve towards the back-end of the schemes and the impression given wasthat this was only to be expected (OE, ibid.).

Ann Taylor at the end of the session objected to the chairman’s comments in the CG session aboutoYcials’ alleged lack of transparency, and said that oYcials had all tried very hard to share information andthere was a mass of it produced for all sides (OE, pp. 48-49).

CG comment: There have been many fewer meetings than required in past months in the context of theconstruction of a new fast track process. The Department have in our view, abandoned the notion that theCourt is a last resort and have preferred to leave it to the court to deal with many of the diYcult issuesattendant upon the introduction of this procedure while (a) there continues to be a full process available toclaimants in tandem and (b) a large number of claimants are and were at various stages of progress throughthe full process and (c) many claims have been concluded without a fast track process. We have seen a moretraditional adversarial approach taken by the DTI in preparing its position before the court, that has beeninimical to the consultation and discussion processes the parties had previously fostered.

There has also been absence of transparency which contrary to Mrs Taylor’s evidence, is not vouchsafedby provision of a mass of data (much of which is unilluminating in regard to key matters, such as theperformance of the Department’s contractors), but which requires instead an open approach to the meansby which each side seeks to resolve problems. Examples of the use of stealth and attempted imposition ofthe DTI view have been cited in the CG evidence to the Committee.

Finally, there is no reason why problems that cannot be resolved between the parties should naturallyincrease as the schemes begin to wind down. It might be thought that with relatively little at stake, andagainst a background of large sums of damages paid and the volumes processed, parties would be able tobring the schemes to a negotiated conclusion instead of leaving over the prospect of further litigation. As



one Monitoring Committee member of parliament has observed outwith these proceedings, that seems anunfortunate and unnecessarily acrimonious way to bring an end to two remarkable compensation processes;and it may tarnish the credit that should otherwise reflect upon those responsible for them.

APPENDIX 8

Memorandum by the members of the English Monitoring Group

1. Following the Court Judgments which determined a liability upon British Coal (DTI) for injuries tohealth caused by exposure to COPD and VWF, and after the Handling Agreements had been determinedby the parties, the Minister, Helen Liddell MP, by personal invitation (26.10.99) invited Mr MichaelClapham MP, Mr Peter McNestry (retired General Secretary of the National Association of CollieryOvermen, Deputies and Shotfirers), and Mr Vernon Jones MBE (the Chief Executive of the Coal IndustrySocial Welfare Organisation) to become members of the English Monitoring Group. Similar monitoringgroups were established for Wales and Scotland.

2. The original remit was:

“To review on a regular and transparent basis and to advise the Minister for Energy of progresswith the implementation of the Handling Agreement on COPD so that communities concernedcan be confident everything possible was being done to ensure a sensitive, rapid and eVectivedelivery of compensation to ex miners”.

3. The motivation for the Minister to establish an independent structure to monitor the activities of theDepartment’s oYcials in delivering the compensation schemes is a question for the Minister and not for ourspeculation.

COPD

4. The Courts determined that there were likely to be so many claimants under both compensationarrangements that a method should be found for determining individual levels of compensation for specificlevels of disability outside of a common-law procedures within Court because the legal system could notcope with the volumes. A Handling Agreement was negotiated by the parties for both schemes but they stillfall within the jurisdiction of the Courts. There are regular reporting back hearings reviewing progress anddirectional hearings when the Judges, Mr Justice Turner for COPD and Dame Janet Smith for VWF areasked to issue orders when the parties cannot agree on solutions to specific problems. The HandlingAgreement for COPD was based upon anticipated volume claims in the region of 100,000, although theEMG have never been able to understand from whom advice was taken to produce such a calculationbecause it was obvious to those with considerable experience in the industry that the potential claims frommineworkers, widows and estates would be considerably higher as the liability upon the DTI commencedin 1954 given the number ofmen employed in the industry on a cumulative basis since that date. The 100,000estimated claims had been surpassed by the 26 March 2000 at a ration of two thirds live claims, one thirddeceased.

5. From the outset the EMG asked the Department for details of the contractual arrangements with thevarious service providers, excluding confidential financial information, but this was denied and it has alwaysbeen impossible for the EMG to comment upon whether delivery targets were or are being met. The EMGhave not been involved in any subsequent re-tendering procedures.

6. From initial separate meetings with the DTI and the Claimant Solicitors Group (CSG) it was obviousthat the whole arrangements were underpinned by an adversarial arrangement, presumably left over fromthe Court process. The EMG took the view that this extraordinarily complicated and large compensationarrangement would require co-operation between all parties including service delivery organisations and theEMG were actually the first to call a meeting to which all parties were invited. This was to try to obviate ablame culture which had developed whereby at any meeting where there was a problem this was attributedto the party which was not present at the meeting. The EMG was not established until after the HandlingAgreement and the registration process of claims having commenced. The EMG had meetings with allservice providers who were then Hayes (employment record collection), IRISC, (the claims processingorganisation), Health Call (providing medical record collection services, spirometry, and subsequentmedical examinations by respiratory consultants, whether for live claimants or purely record based forwidows and estates claims. Business Health Call were visited, the former privatised Medical Department ofBritish Coal, and in relation to Health Call the EMG visited their Head OYce in London to examineprocesses and procedures but also visited all of the major English Spirometry Centres. Complaints had beenreceived that a number of the technicians were being over zealous in what they were requiring elderly menwith respiratory problems to do ie to breath harder than their capacity allowed which in one instance it wasalleged had led to an individual suVering a heart attack. The EMG designed a form to be used whenmonitoring the spirometry appointments and all of the visits were made on an unannounced basis althougheach claimants was informed of our role and asked whether he wished us to observe or did not. Only one



individual declined to allow the EMG to observe. The EMG successfully insisted that Health Call had aduty of care for all claimants whilst on their premises and suitable instructions to that eVect were issued toall spirometry centres.

7. The EMG reported that as a result of these visits they could find no evidence of any technician beingover zealous in the breathing tests, although we did comment on a number of other issues of concernwhich were:

(a) One centre (Leicester) was not disabled friendly in terms of access to the actual building andHealthCall had declined to send out a map making the location rather diYcult. Advice that it was locatedsome 300 yards from the main rail station did not also say that this was up a fairly steep rise. TheManchester centre had concentrated entirely on domiciliary visits to ensure that the most elderlyand ill were assessed first, whereas in complete contrast there were very few domiciliary visits inSouth Yorkshire due to the fact that the technicians at SheYeld had no vehicles. We alsocommented upon the suitability of some of the places being used ie Pontefract Hospital where carparking was extremely diYcult and the actual Spirometry Centre was located after travellingthrough very lengthy corridors.

(b) Questions were also raised as to the rather excessive travelling requirements of claimants based inLeicestershire and despite repeated requests for the mobile units to visit Coalville such requestswere refused. As the spirometry test involved two separate tests 20 minutes apart it enabledmembers of the EMG to discuss claims with the claimants. One such claimant interviewed inBarnsley did not understand why he was using a solicitor based in Manchester other than thesolicitors had written to him at his home address oVering their services but he had never had anycontact with this firm but his letter was received some twoweeks after attending his annualmedicalat the DSS.

8. Complaints had already been received about the operation of a number of claims handling companiesor claims farmers, one in particular named theMiners’ Welfare and Compensation Agency which was usinga title implied to suggest that it was linked to a charity because there are over 300 Mining RecreationalCharities that are colloquially referred to asMiners’Welfare Schemes. However, complaints were also beingreceived about solicitors, particularly in relation to non-communication once claims had been submitted.From the outset solicitors were concentrating upon the business activity associated with the HandlingAgreement ie encouraging as many claimants as possible through both TV and press advertising. Thecorollary of this is that many solicitors were not investing in their own infrastructure (staV and IT facilities)until they had determined what volume business they had. One firm of Solicitors even sent out a letterrequesting claimants not to ring the oYce. When Brian Wilson MP was the Minister responsible hepersonally witnessed the antagonism felt by claimants because at a public meeting in Barnsley TownHall (19July 2002), there was no criticism as such of theDepartment, only of Solicitors not providing information onthe progress of claims.

9. The fee structure for solicitors provides no incentive to check or query the calculations forcompensation, other than a solicitor’s own professional conduct. Concern is expressed about the ability ofsome solicitors to check accurately compensation levels when they have high volume claims with fewqualifies solicitors. One firm with 80,000 claims only has three qualified solicitors. There is a marked trendof variance between the average claims on a solicitor by solicitor basis. This is a cause for concern.

10. The business nature of the Handling Agreement which had encouraged the development of claimsfarmers, solicitors with advertising and publicity measures which included fly leafleting whole estates wasexacerbated by recent changes in Legal Aid and the emergence of “no win no fee” agreements. Aconsiderable number of claimants had signed up to various arrangements whereby additional fees werebeing charged or a proportion of a settlement could be deducted by the solicitor even though the solicitorshad their fees paid by the DTI through a fee structure initially negotiated through the Handling Agreementand subsequently updated. The Ministers subsequent letter to all solicitors who had received fees from theDTI stating that additional fees should not be charged, and if they had, should be paid back was mostwelcome. However, the willingness of the Law Society to examine complaints brought by MP’s has led tothe paying back of additional fees but these requirements are not of a generic basis.

11. The EMG maintained that it was important within mining communities for there to be anappreciation that themost vulnerable, frail and disabled should be dealt with first as a matter of priority andalthough a priority points system was introduced this was not operated either by solicitors feeding claims ina priority or being dealt with by IRISC on that basis. Having invested what was then believed to be theappropriate resource levels, IRISC were keen to maintain volume activity and were not particularlyconcerned that the priority system was being adhered to. When Peter Hain MP was the Minister he re-aYrmed the need to ensure that the priority cases were dealt with first and foremost following home visitsmade to claimants in theKentCoalfield, organised by theEMG,when theMinister saw the level of suVering,frustration and lack of progress with the system.

12. An initial major diYculty concerned the employment records because the Handling Agreement wasbased upon an erroneous assumption that the employer would have perfect employment records on everyindividual that British Coal had employed. Perhaps the saddest example of this is when the EMG werecontacted by a widow who had received a letter from IRISC stating that there was no record of her



husband’s employment in the industry when she stood possessed of a 51 year Long Service Certificate signedby SirDerekEzra, the thenChairman of theNCB. TheEMGsaw this Long Service Certificate. The problemwas also compounded because from the outset when IRISC were requesting employment records fromHayes they were only being sent the front and back cover of a training record, if one so existed, whereas fora fee of £50 solicitors were obtaining from Hayes the entire training record. Solicitors therefore felt thatIRISC were either hiding or not disclosing information. This tended to add to a generally held view that thesystem was designed to slow down settlements on the basis that men would die before their claims could besettled and this would in turn save Government money. This slightly erroneous view was not held by theEMG because the claim could continue in the widow’s name and had the man died a bereavement awardwould also have been payable. All Ministers up to that time, namelyHelen Liddlell MP, Peter Hain MP andBrian Wilson MP publicly stated that financial limitations on the amount of money involved to settle theclaims was not and had not ever featured.

13. The issue of employment records, or the lack of them or their incompleteness, was beginning to causeconsiderable blockages and both on moral and practical grounds the EMG suggested a significant change.The feeling in the Coalfields was that the issue of employment records and the need to evidence employmentwas producing a culture of “blaming the victim”. Following representations made by the EMG the MinisterBrian Wilson MP accepted that when no evidence existed to the contrary the statement by the claimantwould be accepted in relation to his employment history. The Minister announced this at the public meetingin Barnsley on 19 July 2002, and it had an immediate eVect upon unblocking the system. In the early daysof the COPD compensation arrangements much criticism was made by IRISC and the DTI of solicitors inthat there was a considerable time delay between the registration of the initial claim and the subsequentreceipt of claims questionnaires. The EMG blamed solicitors for this delay in that there was no personalisedservice or assistance given to claimants, particularly widows, in filling in the claims questionnaires, whichincluded certain questions by definition, which awidowwould not necessarily know. To prove that this non-personalised service was a problem because up until that date most solicitors had been acting or dealing withclaimants in writing was tested in Yorkshire when four public venues were booked in Bentley, Dodworth,Pontefract and Maltby, to which the three major firms of solicitors, namely Irwin Mitchells, Raleys, andTowells were appraised of seating capacity of each venue and asked between them to agree which of theirclaimants should be invited to attend these public meetings. The constituency MP’s attended each meeting.

14. Each firm of solicitors was represented at the public meetings and Andrew Tucker from IrwinMitchells addressed each one on how the claims questionnaire had to be completed and the most importantcomment he made was that if a claimant particularly a widow, did not know the answer to a question theycould put “don’t know”. With the help of volunteers who had been provided many of the claimantscompleted their claim questionnaires there and then and the solicitors acknowledged that amore personableservice was required if the whole systemwas to runmore eYciently. The EMGattended a number of trainingsessions provided by the CSG for solicitors and although some of these were organised long after the systemhad started it was evident that many local small firms of solicitors did not understand the HandlingAgreement, the processes involved, or what was expected of them and their clients.

15. At meetings of the EMG when the CSG, DTI and Minister were present often delays in settling caseswere attributed to outstanding policy issues. The EMG insisted upon a list of all the outstanding policyissues, and the name of one lead individual from theDTI and one lead individual from theCSG chargedwiththe responsibility of negotiating an agreement, and by a specific date or if no agreement could be reached anearly referral to the Judge. It became obvious to theDTI that themanagement of the process was in diYcultyand to their credit they seconded a logistics expert from Shell, Mr Mark Pyeman to undertake a review ofsystems procedures and management accountability. The EMG insisted that he could only fully understandwhy systems had to be improved if he met some of the claimants and witnessed their frustrations with theprocess. Arrangements were made for Mr Pyeman to visit several claimants, both former mineworkers andwidows in the Yorkshire Coalfield. Mr Pyeman informed the EMG that without their involvement thoseimprovements which had been introduced would not have been introduced on the time-scale, if at all, andhe was going to recommend to the Judge that the role of the EMG should be expanded. He stated that theMonitoringGroups in Scotland andWales were performingwell because of their smaller geographical areasand less solicitors involved, albeit with high levels of claims. He suggested that the EMG, through the DTI,establish smaller regional sub-groups to address perhaps more localised issues and bring them to theattention of the EMG.These sub-groups were formed and amember of the EMGhas attended each regionalmeeting. In addition the EMG wrote to 572 English solicitors dealing with claims informing them that theEMG could be used as a vehicle for examining points of principle but not individual cases. The DTI havebeen faced with a number of technical problems, particularly in relation to the development of the twopension fund calculators which were considerably delayed and held up settlements or involved settlementsproceeding with manual calculations. They have also been severely hampered because the HandlingAgreement did not embrace mining employers other than British Coal Corporation, mining contractors,other co-defendants and licensed mines. There has therefore been considerable delay, not of the DTI’smaking, in trying to settle a whole raft of claims which involved these latter employers. Although this istechnically not the Department’s responsibility they have tried to resolve all co-defendant cases byembracing the mining companies and contractors within the general principles determined in the HandlingAgreement but some of the Insurers have been extremely diYcult to deal with, primarily because theirtraditional role in common-law has been from an adversarial background. The insurance provision or lack



of insurance details relating to small mines has been more problematic although recently resolved for thoseclaimants with post 1972 small mines employment. There are still, however, problems for those with pre 72employment.

16. Mr Justice Turner has been concerned for some considerable time about the length of time settlementsare taking, and will take, to settle all the COPD claims. To this eVect he accepted that there had to be somealternative to the Handling Agreement and the principles contained therein which were that in accordancewith common-law the level of compensation received should be based on individual assessments of thedamage caused to health for which British Coal/DTI were liable. The CSG and DTI, at a workshop withthe Judge on 22 September 2004 were asked to consider the issue of an alternative and in negotiationsbetween the parties the principle of an alternative fast-track option for both live and deceased claims(widows and estates) was agreed. At the hearing on 4/5October theDepartment proposed that the fast-trackoVer for both live and deceased claims should be mandatory and if unacceptable then the claimants couldresort to common-law. When the Judge asked if this was approved by the Minister, following a short recesstheDepartment’s Counsel reported that the principle of a fast-track oVer had been accepted by theMinister.This could be interpreted as theMinister having approved the principle or themandatory scheme as outlinedby the DTI. The hearing was adjourned until 18/19 October and the Department had cancelled aMinisterialMonitoring Group which was due to have taken place on Tuesday 12 October on the basis that the Ministerwas unavailable. As a consequence of the discussions in Court on a mandatory fast-track solution the EMGdecided that the meeting should continue even if the Minister was unable to attend. The Department saidthe room was no longer available so the EMG arranged for the meeting to take place in the House ofCommons. The meeting took place with a considerable number of MPs from mining constituencies present,and oYcials from the DTI and to the surprise of the EMG the Minister attended despite his allegedunavailability. Members of the EMG, supported by coalfield MPs spoke passionately that any mandatoryfast-track systemwould not be well received in the coalfields because it would be seen to be taking somethingaway and a fast-track system should be a choice whereby a claimant had the opportunity of going throughthe entire process, recognising that this would take some time, or electing to go on a voluntary basis throughthe fast-track process. The Minister accepted the EMG’s recommendations and instructed the Departmentto inform the Court that the fast track arrangements were to be of a voluntary nature.

17. Recognising that the lead cases did not involve any question of liability for surface workers in relationto COPD the Department’s opposition to any arrangements to compensate a limited number of surfacemen, with respiratory problems, has surprised the EMG given that the number of men who worked inenclosed dusty environments were primarily confined to those employed in coal preparation plants. It issuggested that the opposition to considering the position of thesemen ismore related to the perceived impactupon other former nationalised industries where coal handling took place although it is suggested very littleof this would have taken place in a confined environment.

18. Sheer volumes have obviously caused logistical problems particularly in relation to the impact upontime-limited CRU certificates, many of which initially had to be renewed, blockages at probate registries,and the availability of respiratory consultants to conduct the full map or for deceased cases review medicalnotes. The volumes also caused diYculties in relation to medical record collections, particularly given thenumber of GPs and hospitals involved.

19. However, it is suggested that insuYcient logistical planning was given prior to or during thenegotiations of the Handling Agreement. The first erroneous assumption related to the number of potentialclaims, which had an impact, as did assumptions about employment records and their detail and availability,and dust records being available for all collieries over the appropriate time-scale, a fact which required theestablishment of a dust reference panel to work averages in certain coalfields where local colliery records nolonger existed. Considering that the judgement of the Court took place in January 1998 and the HandlingAgreement was signed on 24 September 1999, it is a criticism of both the CSG and the DTI that certainpolicy issues remain outstanding which are prohibiting settlements.

20. One issuewhich caused theEMGsome considerable consternationwas the non-disclosure by theDTIthat a separate Handling Agreement had been given to the Union of Democratic Mineworkers’, dated 17November 1999, particularly as they had not been involved in any of the lead cases. TheUDM, however, hadestablished a company (Venside), a claims handling arrangement, incorporated in May 1997. Presumably,because the UDM had no representatives in Court during the trial they had been informed that the CSGwere confident of success and had put measures in place to enable special treatment to prevail. It is alsopresumed that the UDM’s own Handling Agreement had Ministerial approval. When the EMG found outthat the UDM had their own Handling Agreement they asked the Department why similar arrangementshad not been oVered to the otherMiningUnions andwere told that such oVers had beenmade, subsequentlydenied by the Trade Unions and the DTI were never able to evidence such oVers. This has caused particulardiYculties in the Nottinghamshire, Derbyshire and Leicestershire coalfields, although there is one issue thatthe EMG do not understand and despite requests from the DTI no adequate explanation has been received.Based upon a statistical comparison, using the post codes of claimants across all coalfields, there wouldappear to be 20,000 less deceased claims in these regions than would have been expected if the ratio ofdeceased to live claimants was common across all coalfields.



A Respite Centre

21. Recognising that compensation for COPD did not improve the quality of life of a respiratory suVererthe EMG undertook a review across South Yorkshire of the range of statutory services available, theknowledge of such services within a claimant group and ready access to such services. The results of an initialquestionnaire revealed poor knowledge of service availability. A one day conference was held attended byclinicians, statutory service providers and individuals suVering from respiratory diseases, together with theircarers. The results of the survey and one-day seminar supported the EMG’s contention that a respite centreinvolving short stays, day care and from where community services could be delivered would have adramatic eVect on quality of life initiatives. Rotherham PCT agreed that their level of service provisionneeded to be fully re-examined and they, together with the EMG, and Coalfields Regeneration Trustembarked upon a project to develop a Respite Centre with a subsequent evaluation, which if successful,could lead to the rolling out of a number of centres of excellence in those parts of the country where highlevels of respiratory illness are recorded.

22. The project development has involved discussions with Ministers in the Department of Health andthe ODPM. A building design has been completed, with a site secured in Rotherham, for which the capitalcosts have bee found. Discussions are continuing to secure the initial two years’ revenue funding after whichRotherham PCT will become responsible for all ongoing costs. A detailed report on the development of thisunique respite centre is available on request.

VWF

23. Despite the Handling Agreement having been signed in January 1999 the terms of reference whichapplied to the Ministerial Monitoring Groups for COPD were not extended to VWF until 18 May 2002.This was primarily because the Ministerial Monitoring Group were asked to concentrate on COPD(Minutes 5.6.2000), which with hindsight was an error as an input in the early days of establishing processescould have avoided some of the problems subsequently experienced. The Handling Agreement determined,for the purposes of paying compensation, 3 occupational groups.

Group 1

Where vibratory tools were generally recognised as a substantial part of the occupation.

Group 2

Where vibratory tools were not necessarily a substantial part of the job but may well have been used.

Group 3

Where there should have been no use of vibratory tools and evidence of exposure would be required tosubstantiate a Group 3 claim.

24. As with COPD most of the original activity of the Monitoring Group was not in relation todetermining whether individuals had or had not been exposed but the process by which a claimant actuallywas able to reach a medical, which by definition would determine whether he had suVered from exposure.

25. The EMG’s late entry into the monitoring of VWF claims, which involved considerable less volumesthan COPD, actually resulted in the first major issue being the cut-oV date for claims. The CSG and DTIwere primarily arguing as to whether a cut-oV date on the 31 October 2002 should end at 4.30 pm ormidnight. The EMG argued that the cut-oV date should be extended, particularly for deceased claims as theprotocol for dealing with deceased claims had not even been agreed and as an advertising process had beenimpossible the EMG stressed that a number of potential claims had yet to be registered. The Ministersubsequently agreed to extend the closing date for posthumous claims until the 31 January 2003 and thatin order to register a claim a lower initial evidential base would be accepted. The EMG’S position was fullyjustified in that during the additional three months over 6,000 posthumous claims were registered.

26. Problems were associated with time-scales within theHandling Agreement which were not beingmet,for example, there were cases where records had been requested by solicitors but were outstanding for upto two years. The EMG were particularly concerned with VWF claimants who had a limited life expectancybecause the crucial test would be the actual medical whereas for COPD if a claimant died in process medicalrecords would still be available for examination by aRespiratory Consultant. The EMG successfully arguedthat claimants, irrespective of age, with confirmed limited life expectancy should be allowed to proceed tothe medical irrespective of liability being established. It was also argued that those over a minimum age of71 subject to certain satisfactory evidence within the OGP being established should also proceed to MAPwithout liability being confirmed. Solicitors were providing the EMG with considerable complaints aboutdelayswithin the process and the alleged ineYciency of IRISC. The EMGundertook a number of audit trailsfor examples provided by one firm of solicitors. These audit trails showed that there was some considerablediYculties around process and that the time-scales within the Handling Agreement were totally unrealistic.



Progress with claims had been encouraged by the actual request to undertake audit trails, implying that therewas no systematic file review system. The quality of claimants’ records was poor with no evidence of periodicreview or progress chasing. Audit trails were also undertaken of solicitors’ records which were in markedconstrast, with notes of telephone calls, copies of e-mail, and monthly file reviews. In one case the solicitorshad sent, at IRISC’s request the same information three times. The contrast in case management recordsbetween IRISC and solicitors was stark.

27. EMG were concerned, based on evidence provided by Solicitors of the volume of Group 1, 2 and 3denials and the basis uponwhich denials weremade. It appeared to be that many rejection letters were basedon quotations from “manuals” without a proper examination of witness information or records. As withCOPD the EMG requested the DTI to prepare a list of outstanding policy issues, identify the leadindividuals from the DTI and the CSGwhose responsibility it was to resolve these issues with in a time-scale(letter to DTI 06.01.2003). The evidential base for a Group 3 claim require two witness statements, one ofwhom should be an oYcial. It appears that many of these witness statements, made by oYcials were beingdiscounted mainly on the availability of the oYcial. In one rejection letter the term “could not have been aneye witness” was used and in another “the opportunity to work together on a regular basis is required forat least one of the witnesses, is not there”. None of these requirements were specified in the HandlingAgreement yet IRISC were prepared to rely on telephone conversations with their rebuttal witnesses evenwhen the witness said that while they knew of the individual and the general work performed they had notbeen on the same district or shift.

28. At an exploratory meeting with IRISC on 11 December 2002 it was admitted that in relation toGroup 3:

“the initial decision is left to an adjuster, therefore it is an individual decision”.It was also stated that “initially only assessors are involved”

and “in July 2000 IRISC did not have the expertise they now have on Group 3 claims”.

29. This is yet another example which pervades the compensation processes of investment in staV and ITinfrastructure following volumes and causing delay and the subsequent duplication of work. Because of theconcerns raised by the EMG, at a meeting held on 12 November 2002, the Minister directed the EMG toreview a number of cases and report their findings. Initially a total of 16 individual cases were examined,which had not been selected by the EMG but had been received from solicitors who did not understand therationale for the claims being rejected. This review was undertaken at the oYces of IRISC and while a fullreport wasmade to the Minister onWednesday 11 February 2003, a copy of which is available, the principleconclusions were:

1. Group 1 andGroup 2 denials had beenwronglymoved by IRISC to theGroup 3 process, thereforeunnecessarily increasing the evidential basis (two witnesses as opposed to one) which had not beenchallenged by the Solicitors aVected.

2. Claims handlers placed undue reliance upon the importance of a limited evidential base.

3. Some denials demonstrated a distinct misunderstanding of mining practice and amisunderstanding/disregard of some of the evidence provided, compounded by a solicitor’sincapability to question such judgements, either through an inability or unwillingness to engageprofessional advice.

4. The use of the vibration calculator for 9 claims to deny exposure was inappropriate.

5. The number of employees wrongly assigned a Group clarification, and despite the requirementsof the Handling Agreement for full disclosure evidence had been wrongly withheld.

30. The recommendations to the Minister were that

(a) all denied Group 3 claims should be reviewed by an independent panel,

(b) the role of the claims handlers was to be re-assessed,

(c) the principle of the balance of probabilities was to be restored to the process as it was meant tounderpin common-law,

(d) all claims denied using the vibration calculator be reinstated,

(e) all evidence used by IRISC on which to make a decision be disclosed to the claimants solicitors,

(f) delays to the process be avoided as some claims were now entering their fourth year.

31. In addition to the report that was tabled to the Ministerial Monitoring Group on the 11 Februarythe EMGwrote to theMinister on 3March 2003 concerning not only the report but the lessonswhich shouldbe learnt from the review and a request that they now be translated into practical instructions for theassessors and adjusters.

32. In examining a number of individual cases it became apparent that notes were being taken oftelephone calls to claimants witnesses which were not being disclosed or kept in any agreed format. Inaddition, witnesses for IRISC, involved telephone conversations where the witness did not sign to confirmthat the noteswere a true record of the telephone call. A number of complaints were received from claimants’witnesses saying that the telephone investigation was of a badgering nature and from the outset manywitnesses had the impression that they were not believed. Although the Department reacted to these issues



with an arrangement in February 2003 by arranging for telephone training techniques for IRISC staV andNabarros were to prepare a template for the writing up of telephone statements, this was some years afterit should have been introduced ie from the outset of the claims process.

33. The DTI reported back on 15 January 2004 in relation to the results of the 16 case review. Six hadbeen accepted and damages paid, one involved liability being accepted but the claimant was waiting to goto the MAP, three were parked due to an outstanding policy issue—pre 1975 exposure, and six remainedwith denials but pending further action from the claimants Solicitors. In the review of the 16 cases the EMGhad been extremely critical of a number of the processes involved, the way in which witness information hadbeen interpreted, concerns about the interpretation of mining practice and that decisions should be basedon the balance of probabilities.

34. At a meeting of the Kent Monitoring Group on 13 October 2003 IRISC informed the members ofthe Regional Monitoring Group that they had to work within the guidelines laid down by the DTI. At ameeting of the Groups on 10 December the EMG members asked the Minister for copies of all guidelinesand desktop instructions issued to IRISC and that the current copies should also indicate where revisionshad been made against any original and the originals also provided. Despite the protestations of theDepartment the Minister agreed that the guidelines could be made available. It is worth recording thatduring 2003 Messrs Ernst and Young audited the processes of IRISC in relation to VWF which, despitecertain minor criticisms, basically produced a clean audit, but Messrs Ernst and Young were by the termsof their remit excluded from commenting upon issues of mining sense and this was the first external auditingof processes since the signing of the Handling Agreement in January 1999.

35. Based upon the lessons learnt from the EMG’s review of cases, the Minister requested a review of allGroup 3 denied cases. Following ameetingwith Capitas the (claims handlers) on 15 June 2004 of those casesinvestigated 57% had been restored for consideration. As at the 20 June 2004 there were a total of 20,788denied or withdrawn claims (excluding those that had been denied for a 12 month period and had exceededthe time period allowed for within the agreement for the submission of additional evidence (10,000). Of this20,788, 15,567 were contested as Group 3 claims with liability. 5,037 had been investigated of which 2,299(46%) had been accepted as Group 1 or Group 2. 628 (12%) had been accepted as Group 3 with liability toexposure. This showed an extraordinary high level of incorrect assessments either at the initial stage orthrough the informal appeals procedure. The amount of resources undertaken in order to complete thesereviews and more accurately determine Group classification or in the case of Group 3, liability to exposure,could have saved significant sums of public money had the appropriate procedures, personnel andinvestment been in place at the appropriate time.

36. Despite the Minister determining that the guidelines and desktop instructions could be disclosed tothe EMGtheywere not received until the 24 June 2004 ofwhich sections had to be subsequently re-circulatedbecause of poor copy quality and indeed parts were subsequently revised. The time delay is perhapsattributable to the fact that there had never been a systematic procedural manual (guidelines and desktopinstructions) and one had to be rather hastily put into place on a retrospective basis.

37. Having eventually received the guidelines, the EMG spent over 200 working hours reviewing thedocumentation, particularly the job descriptions quoted, or the functions of a job so described. This wasdeemed critical as adjusters were comparing what a claimant and/or witnesses said in relation to tasksperformed and were concluding whether this was feasible given the individuals job title and description. TheEMGtook the view that the appraisal of claimants statements should be on the basis of “is what the claimantand/or his witness saying possible/likely” whereas it appeared that adjusters were taking a view that thespecific description for a particular job heading would have precluded an individual from using vibratorytools or prohibited him using them on the time-scale alleged. The task involved the review of legislation,rules of the mine, NCB/British Coal production instructions, and an intrinsic knowledge of specific changeswithin the industry namely the revision of the old grading structure (Black Book) and changes in miningproduction techniques with the introduction of the incentive agreement in the late 1970s.

38. One member of the English Monitoring Group spent 18 months during 1975 and 1976 reviewing allof the then job titles and job descriptions in order to produce a sophisticated grading system withappropriate pay diVerentials for diVerent classes of underground and surface workmen. The jobdescriptions which emerged from this process were more generic, listing areas of broad responsibility andexperience (skills and/or training), to identify comparable tasks to be banded in the diVerent pay grades.These job descriptions were never meant to be an exhaustive list of all the tasks which a man was meant toperform, according to his job title, or for which he was trained to do. Having analysed their findings theEMG met with Capitas and the DTI on 24 November 2004 and during their presentation they wereinterrupted by the DTI who said the job descriptions in the guidelines were “meaningless”. They had onlybeen produced as:

(a) An aid memoire for staV involved in the process who did not understand certain tasks performedby a colliery workforce; and

(b) to help phrase rejection letters.

39. At a meeting the following day (Thursday 25 November) of the English and all the English RegionalMonitoring Groups, the EMG reported that having initially blamed the assessors and adjusters forerroneous decisions, then subsequently believe that the fault lay with the guidelines and desktop instructions



prepared by the DTI, it now emerged that the fault was back with the assessors and adjusters as the jobdescriptions, weremeaningless. However, it is argued that a knowledge of aman’s job and the potential tasksto be performed is a crucial part of an evaluation process.

40. Most of the adjusters are unknown to the EMG although their collective experience in terms ofcombined years and range of activities has periodically been recorded. However, it is know that one adjusterwas not even employed in the industry or of employable age, during the initial period when exposure appliedwhich is critical for determining mining knowledge. Equally one of the lead adjusters who reached the levelof Deputy was not employed in the industry in 1975 and only worked in a limited number of coalfieldoperations.

41. The position of Overman and Deputies is particularly bizarre in that either claims by these categoriesof men or their witness statements in support of the workmen, have tended to be rejected with the rejectionletters quoting their statutory duties which would have precluded them from either doing the work claimedor observing other workmen. For those in the industry this is diYcult to comprehend and is best evidencedby a statement from a Colliery Manager where he clearly states that he would not have employed anOverman who was not prepared to “get stuck in”, or “take a lead”. Equally the long-running argumentwhether face trainees would have used pneumatic tools during their training is incomprehensible. It appearsto be based on one adjuster who claims that he did not use such tools during his face training whereas thereare a number of representatives on the Ministerial Monitoring Groups, and the Regional English Groups,who have confirmed that the use of such tools was an integral part of their training and at the end of thattraining their employment records confirmed that they had undergone all aspects of face work. There wereno separate authorisations for other workmen to use pneumatic tools which would have been identified ontheir training records. This can be exemplified by a Group 3 claimant who’s exposure was denied on thebasis that he would not have used vibratory tools, and had not been authorised so to do, despite the recordswhich were disclosed to the Solicitor which included the report of an accident investigator in 1983 whichdetermined that the claimant, who was a surface worker, had sustained an accident while using a jigger pickbreaking up concrete on the colliery surface and this individual had been part of a surface team for 30 yearsdoing similar work throughout South Yorkshire collieries. The name of the claims investigator in 1983 wasMr J Hinde, who is currently a Senior Manager with Capitas involved in the VWF claims process.

42. The statistics produced by Capitas for monitoring the Group 3 review/disputes progress has recentlyincluded a new heading namely “VRP finding would have altered the original denial but the Departmentfound the VRP’s finding perverse and we have maintained the original decision”. The Handling Agreementwhich was negotiated by both parties and accepted by the Court does not support the Department in beingJudge and Jury.

43. Capitas have now started producing statistics, at the request of the EMG, on Group 3 claims whichenables the EMG to monitor progress. Given the introduction of an informal disputes resolutionarrangement in order to try and reduce the volumes being referred to the Vibration Reference Panel (VRP),as at the 5 December 2004 there had only been 12 referrals to the VRP but five had resulted in a decisionbeing changed from denial to acceptance. This high level of positive outcomes, bearing in mind the reviewsthat were undertaken following the lessons learned from the EMG’s review of 16 cases, raises seriousquestions about issues of mining sense as interpreted by Capitas’ investigators.

44. Given the evidential base required for disputed Group 1 and Group 2 claims, and Group 3 claims,the Department’s willingness to establish a national witness database was most welcome, although theirsubsequent decision that this should only include witnesses to date for claimants, and exclude their ownwitness database on grounds of data protection was disappointing. The Department’s witnesses could havebeen asked in writing for their agreement to publicise their names and addresses which would have over-ridden the requirements of the Data Protection Act. The most alarming position was when the Departmentsaid that this database could not be used for those claims which had been denied when claimants could notprovide witness details. As most of the early claims were from elderly men, whose witnesses, by definition,would have been even older it was surprising that the Department could not seen that such a policy wouldnot be well received in the coalfields. They eventually agreed to re-consider this position and either they didnot understand the perception within the coalfields, or it was not an issue of concern to them.

45. As with COPD there are problems endemic in the system, some of which the DTI have been tryingto resolve although technically it is not their direct responsibility, ie the issue of co-defendants who are notpart of the Handling Agreement and the insurance issues relating to licensed mines. There are, however, anumber of current issues which are causing concern. The long term failure of the DTI and CSG to agree oncrossover claims, (service claims where a claimant has both COPD and VWF claims) will lead to a directionof the Court through a joint hearing heard in front of Dame Janet Taylor and Mr Justice Turner. There arealso particular concerns about referrals to the Special Investigations Department (SID), ie on what basisreferrals are made, the nature of investigations and interviews, and the non-disclosure of information toSolicitors which is contrary to the principles of criminal law. Many of the complicated issues aroundcalculations for services will be very dependent upon settlements resulting from a review of the oVers andcalculations underpinning those oVers by Solicitors and where firms have volume claims the same concernsare expressed as are those for COPD whereby some Solicitors have a large number of claims with limitednumber of qualified Solicitors.



Conclusion

46. The EMG believe, with some justification, that they have tried to fulfil their remit and certain keyrecommendations accepted by Ministers during the course of both schemes have helped and resolveblockages, and enhance to a limited degree the perception within Coalfields of how the compensationprocess is being delivered.

47. However, our role regrettably has tended to have been reactive to problems and blockages, some ofwhich could have been avoided had there been prior consultation. Information on proposed policy/processchanges has rarely been volunteered and our role has tended to be more of a detective rather than advisory.The claims initially started as an adversarial process, improved significantly but has reverted to a moreadversarial approach which may be partially explained by the introduction of end dates for various stagesof the process, designed to conclude the compensation arrangements at the earliest possible opportunity andtherefore relieve Departmental oYcials from what may be regarded as a deflection from the current overallpolitical remit of the DTI. However, the Department stands in place of British Coal and the Courtsdetermined that miners whose health had been adversely aVected by COPD and/or VWF were deserving ofcompensation as measured by the individual impact on their quality of life.

48. One could be forgiven for thinking that the DTI and their Legal Advisers were still fighting a casewhich they lost. Having accepted at the outset Ministerial statements that delays, particularly in relation toCOPD, were unrelated to the financial costs of the compensation arrangements one could also be forgivenfor concluding that costs now are of paramount importance. This is evidenced by the arguments in Courtover the solicitors fees for the COPD live and deceased fast-track oVers, the fast-track arrangements beingsought on a compulsory basis by the Department with the only recourse being common-law; the resourcesbeing applied to the Special Investigations Department which have shown relatively low levels of fraud. Itis interesting to compare that what may be regarded as exaggeration in relation to services claims is fraudwhereas exaggeration by the adjusters in terms of mining sense is regarded as either errors or diVerencesof opinion.

49. Although the EMG have tried to follow the entire Court process through attending both formalreview hearings and directional hearings this has not always been possible for VWF in that the Departmenthave on occasions chosen not to inform the EMG of where and when Court hearings were to be held normade available copies of their submission to Court. There is quite a stark contract between the courtesyshown in relation to the COPD Court process as compared to VWF. Despite the success which the EMGclaim there has been little progress or improvements achieved during the last six months and given that theDTI now appear to hold the EMG with some disdain, the members of the EMG are currently consideringtheir position.

50. In addition to the specific points there are a number of broader conclusions emerging from theprocess:

(a) Given that the COPD claims have involved the widest collection of medical records from anindustrial workforce these should be examined, particularly in relation to co-morbid conditionsamongst miners which are higher than the national average. For example, the incidence of bowelcancer is five times higher amongst mine workers than the national average.

(b) There could be lessons to be learnt for GPs in relation to the diagnosis of respiratory diseases. Anumber ofminers who have been treated formany years for asthma did not have asthma accordingto their spirometery test, but COPD. Conversely, a number of men had been diagnosed withCOPD by their GP but in fact have asthma.

(c) There is inadequate regulation of claims farmers who often raise expectations of compensationlevels and their cold calling techniques often cause distress, particularly to the elderly.

(d) While the Law Society’s decision to vary the normal complaints procedure has been welcomed,their subsequent decisions where a proportion of the compensation has been deducted from aclaim, or that an additional fee was charged should be repaid, were confined to individualcomplaints. These decisions should have been of a generic basis and the firms concerned instructedto repay all claimants where fees/a proportion of compensation were inappropriately deducted,rather than just in response to individual complaints channelled through constituency MPs.

(e) The Law Society should conduct sample reviews of case files for those solicitors with large volumeclaims to ensure that claimants have received a professional service for the fee paid by the DTI.

(f) Given the extraordinary sums of money paid to solicitors, including the Department’s own legaladvisors, and contracted service providers the Public Accounts Committee should be asked tosatisfy themselves that value for money has been obtained even though the cost of deliveringcompensation for a significant number of claimants has exceeded the value of the individualcompensation received.

(g) The independent monitoring of an activity of a Government Department has been fraught withdiYculties, given that this was undertaken by volunteers who were not resourced by the DTI.However, it has had some positive eVect and potentially has some future policy considerations forGovernment.



APPENDIX 9

Memorandum by The Law Society

REGULATION OF CLAIMS HANDLING COMPANIES

The Law Society is responsible for regulation and representation of solicitors in England and Wales. TheLaw Society saw the transcript of the oral evidence given by Mr Andrew Tucker and colleagues on 23February, and in particular the exchanges concerning claims handling companies. Following discussionwith the Clerk to the Committee, the Law Society submits this note for the information of the Committee.

The Law Society recognises and shares the widespread public concern about the activity of claimsmanagement companies. The Society knows that there is concern that some claims management companiesattract business in undesirable ways—such as by cold calling on prospective clients. There have also beensuggestions in the past that some claims handling companies have encouraged prospective claimants falselyto exaggerate their injury, although the Law Society has no direct evidence of that.

The Law Society has for some years been pressing Government to introduce eVective regulation of claimshandling companies. The Society has suggested that this could be done by amending the definition oflitigation in the Courts and Legal Services Act 1990, so as to cover advice given in contemplation oflitigation. This would have the eVect of meaning that only those who were qualified to conduct litigationcould operate claims handling businesses on a commercial basis. Alternatively, the Society has suggestedthat regulation could be achieved through the OYce of Fair Trading. The Law Society has raised this withMinisters on a number of occasions, and in the context of Sir David Clementi’s review of regulation of legalservices. We hope that the Government will decide to introduce regulation of claims handlers as part of theprocess of implementing Sir David Clementi’s recommendations.

Before March 2004, solicitors were not permitted to pay third parties for the referral of cases. The rulewas designed to ensure that there were no improper influences constraining the independence of advice givenby solicitors to their clients. However, the rule was subject to significant criticism from the OYce of FairTrading (and some solicitors’ firms) as being anti-competitive, in that it went further than was necessary toachieve the legitimate objective of ensuring that solicitors could advise clients entirely in the client’s bestinterest. Accordingly, the rule was changed in March 2004.

Under the current rules, solicitors are permitted to pay claims handlers (or other third parties) for thereferral of cases provided that:

— full information about the charges is given to the client, both by the introducer and by the solicitor;

— the introducer does not itself attract business in an unacceptable way (for example through coldcalling);

— no constraints are placed on the solicitor’s freedom to advise the client in the client’s best interests.

This new rule is currently under review, as agreed with the Master of the Rolls at the time of the rule’sintroduction.

The Law Society’s powers of regulation apply only to solicitors, and (to a limited extent) to othersemployed in solicitors’ practices. The Society through its current rules tries to curb undesirable activities ofclaims handling companies, such as cold calling, by prohibiting solicitors from accepting referrals fromthose who act in an unacceptable way, but the Society does not have power directly to regulate the claimshandling companies themselves. There are also limits on the obligations that the Society can place onsolicitors to “police” claims handlers when accepting referrals as it would be unrealistic—and would be seenas undermining the liberalisation of the rule which OFT sought—to make solicitors totally responsible forthe activities of claims handlers.

The Society would be happy to answer any particular questions the Committee may have about theseissues.

APPENDIX 10

Supplementary memorandum by Capita IRISC

Inquiry into the Coal Health Compensation Scheme

Capita Group plc welcomed the opportunity to contribute to the Select Committee’s Inquiry on the CoalHealth Compensation Scheme and its administration.

When we saw the supplementary evidence which other witnesses had submitted we felt that it would beappropriate and helpful to submit a short additional memorandum.



This short memorandum complements themore detailedmemorandum submitted by theDepartment forTrade and Industry and our oral evidence. It seeks to explain Capita’s role and responsibilities in respect ofthe Scheme and to address specific issues raised in other supplementary evidence.

Capita assumed responsibility for the administration of all of the claims handling process and themedicalexaminations for claimants for the VibrationWhite Finger (VWF) element of the Scheme in February 2004.Capita had had no involvement with the Scheme prior to this date.

As a service delivery partner for the Department of Trade and Industry, Capita has defined contractualroles and responsibilities. However, as in its other major public service delivery partnerships, Capita seekswherever possible to draw on its wider expertise, experience and values to work with the Department andthe other stakeholders to ensure the development and the success of this critical Scheme.

Capita IRISC—Claims Handling—Key Responsibilities

— claims handling of all British Coal personal injury claims arising from a range of identifiedindustrial diseases

— maintenance of eVective working relationships with all the stakeholders to ensure the smoothoperation of the services, and to avoid where necessary, resolve disputes

— provision of generic legal advice as instructed by the DTI

— support to the DTI in the management of responses to Parliamentary Questions, Ministerial andoYcials’ correspondence and media relations, and the provision of an advice and support serviceto coalfield MPs

— establish and maintain electronic links with all parties to the Claims handling process

— the management of all financial matters to a high degree of probity and the provision of internalaudit systems agreed with the DTI and its auditors

— contribution to the anti-fraud management for the Scheme together with the provision of aninternal anti fraud audit programme which agreed with the DTI

— provision of policy support and advice in relation to claims handling required by theDTI includingcontributions to the continuous policy review and the development of policy particularly in respectof future of the Schemes

— the development and implementation of the ‘World Class Programme’ of service improvementsand eYciencies

— upgrading the IT systems and business process re-engineering to support the claims handlingprocesses

Capita IRISC employs 1339 staV in SheYeld (961), Manchester (178), CardiV (112) and Edinburgh (88)

Capita Health Solutions (CHS)—VWF medical assessments

Capita Health Solutions (CHS) is the DTI’s service provider for the VWF Services Medical examination,where a Co-Morbidity Assessment is carried out as part of a compensation claim against the former BritishCoal Corporation.

The medical assessment has been designed to concentrate on the claimants well being and how they areaVected in their everyday life, by any health problems they may have. Medical examinations are conductedwith the claimant and the results passed on to Capita IRISC.

Services examinations are undertaken at centres in:

Barnsley, Stapenhill (Burton), Stretton (Burton), Canterbury, Doncaster,Mansfield, Seaham, St. Helens,CardiV, Swansea, Glenrothes, Kilmarnock, Livingston and Prestwick

CHS role is limited to the medical assessment process. It does not have any claims handlingresponsibilities

Services Claims

The CG has questioned JeV Wilson’s evidence that inappropriate questioning by Capita staV of services’questionnaire forms was due to inexperience whilst the pilot project was underway.

Capita comment:

— We would re-iterate the evidence given by Mr Wilson. Capita measure performance on a regularbasis across all claims in terms of quality assessments and checking. We constantly reviewperformance and provide training and advice based upon this. In addition, issues which arise frommonitoring group meetings and feedback received from the Claimants’ Group are built into ourtraining programme.



— In addition, Ms Roy’s subsequent evidence went on to inform the Select Committee (OE p21Q103) that Capita have fairly rigorous internal audit procedures and processes where, by checkingindividual claims and looking at the quality of claims handling decisions being made within thoseclaims, we analyse the outputs from that, and feedback, not only to built into our trainingprogrammes, but also to the individuals concerned and subsequently shared with the claimsadjusters . . . There is a need for us to constantly review how eVective our decisions are. Feedbackfrom solicitors is exceptionally helpful in these instances.

Stalled Claims / Capita Performance

Stalled Claims

Reference was made to the evidence given by Martin Trainer on behalf of Capita that Capita’s reward isbased upon achievement of targets (OE,p.13), that there is no reference to penalties for poor performance(Q131-134, and Q66-68, Q 85-87).

The CG states in its addendum that “The Department has resisted tacking its contractor Capita overclaims languishing in their oYces, whether contractually or in terms of the process. That it appears that nopenalties may be visited upon the contractor for unacceptable delays in handling is a major diYculty. Thismay also explain the reluctance to support a stalled claims procedure designed to address claims stuck atCapita. The underlying problem here may be under-funding or resourcing of the claim handling contract”.

Capita Performance

The CG has referred to the evidence given by Kate Roy in relation to meeting targets on COPD andaspirational end dates in the VWF scheme which Capita and the DTI have formulated (OE, pp 14-17 and24-25 Q90-96).

The CG states in its addendum that “there are signs of significant slippage in Capita’s progress towardsmeeting the group 3 aspirational end date of concluded investigations by September 2005 . . . The sometimesterminal consequences visited upon claimants who are not able to comply with the end dates fixed, may becontrasted with the apparent lack of any sanction against Capita for delays that may follow from jugglingand shifting resource from one area of the process to another to meet the Department’s demands (or evenfailing to meet them)”

Capita comment:

— It is not accurate for the CG to suggest that the current Capita contract does not contain anypenalty provision. Capita can confirm that there is provision within the current contract forfinancial penalty relating to specific areas of claims handling performance.

— The CG has put proposals to the department regarding sanctions when delays are due to thedepartment’s or its contractors handling of the claim. A response is due by the end of March.Capita are currently in dialogue with the DTI on this matter.

— We are contractually measured on both volume and quality targets, set each quarter by the clientand independently verified by PwC. The volume targets are always shared and discussed with theCG at monthly operational meetings and the COPD targets are reported upon publicly by theDTI.

— Our contact with the DTI has in place reward mechanisms dependent upon delivery of short andlong term volume targets in accordance with the DTI’s plans and with continually improvedquality levels. Failure to achieve these targets would result in a significant reduction in profit.

— Resource levels are planned on all aspects of the scheme by Capita using a sophisticated modelimplemented in July 2004 as part of the business improvement programme. These plans are basedupon the requirements of the DTI and recruitment programmes are put in place to meet the plans.There is a constant need to balance capacity with all contractors and solicitors, as steadythroughput is reliant upon this. For example for VWF Services (ie services pre MAP), only 27%of cases are within the control of Capita and there is now a real risk of work drying up untilsolicitors submit outstanding info. In addition, Capita as an organisation has over 23,000employees, 5,000 of whom are employed in the general insurance (majority claims handling)environment. Finally there is no financial benefit to Capita to restrict resource on the contract. Thereverse is actually the case.

— The aspirational end date for Group 3 investigations is to be completed by the end of September2005. The appropriate resource is in place to support this. With the full cooperation of all partiesCapita believe this date can be achieved.



Security Investigation Department

Reference has been made toKate Roy’s evidence in respect of this Department. It is said that 1,500 claimswere referred to SID for consideration, 800 investigations had been concluded and in 300 cases there hadbeen deductions from the compensation or nothing at all had been paid (OE, p 22-24 Q107-113). She saidthat the investigation process was to correspond with the solicitor and seek an interview and give an optionto solicitors to attend or to be copied in on correspondence. When pressed as to whether solicitors were toldthe reason for the request, Ms Roy’s evidence was that they were advised of “the potential for furtherinvestigation” . . . internal guidelines based on FSA standards.

Ann Taylor (DTI) indicated that in 156 denied claims there had been a saving of £1.85 million and thereduced value claims (132 cases) had resulted in a saving of £1.25 million or a total of £3.1 million.

The CG state in their addendum “that claimants’ representatives are still not being made aware of thenature of the department’s concerns . . .” Without more precise information as to whether the DTI/Capitaview of exaggerated or fraudulent claims excludes claims where there is no reasonable basis for suspectingdeliberate misrepresentation, it is diYcult to say whether the savings quoted represent reliable guide to thebenefit to the taxpayer derived from the work of SID.

Capita comment:

— The Security Investigation Department is in place to investigate potential discrepancies ormisrepresentations, be that deliberate or otherwise which to date has resulted in compensationsavings of £3.1 million. The claims handling arrangements require the claimant to substantiatetheir claim. (with evidence where available)

— It is accurate to say that the costs quoted relate specifically to the SID costs and do not include“extra process and handling costs” as these would arise in any event, when discrepancies occur inthe process.

— We would also point out that, in relation to “FSA standards”, as detailed in the evidence given byMs Roy (OE p 23 Q111), our investigators are an external organisation, part of the Capita Group,who are compliant to FSA standards.

— The SID team has been operational for no more than two years.

— Following the VWF Court hearing of 20 December 2004, and Dame Janet Smith’s comments, weare taking steps to ensure suYcient information is included within the initial letter of contact tothe solicitor.

John TizardDirector of Policy and Public AVairsThe Capita Group Plc

21 March 2005

Printed in the United Kingdom by The Stationery OYce Limited5/2005 303028 19585

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