Private health insurance policies and PI compensation claims
In any successful personal injury compensation claim, the claimant will usually recover damages for the actual injuries reflecting pain, suffering and loss of enjoyment of life experienced as a direct consequence of the accident.
They will also be entitled to claim for any financial losses suffered as a result. Such losses will include, but not be limited to claims for loss of earnings, care and assistance, travel expenses and prescription charges. In addition the claimant can claim for the reasonable costs of medical treatment recommended either by their treating consultant or a medical expert.
Claimants may have private health insurance with Bupa, AXA PPP, Simplyhealth or PruHealth to name but a few for which they, or in some cases their employers, pay a premium. Under the terms of such insurance much-needed treatment which may not be available on the NHS (or immediately on the NHS) and which cannot be funded as part of a personal injury claim is often paid for by the health insurer.
There is a contract between the health insurer and its policyholder which enables a claim to be made on behalf of the health insurers if a claim for compensation is brought against a third party, to include the cost of the treatment that was funded under the health insurance policy. The health insurers also have a right to bring a “subrogated claim” in these circumstances. The principle of subrogation was clearly set out in the case of Napier and Ettrick (Lord) v Hunt in 1993.
Where damages have been recovered which include a subrogated claim, the health insurers hold an “equitable lien” (a right of ownership) over the sum for any treatment cost included in the compensation.
In accordance with the case of Horse, Carriage and General Insurance Co v Petch back in 1916, health insurers would be entitled to recover the full amount expended by them even in cases where the claimant has received a global sum without any part being apportioned for the medical insurers outlay. However, most health insurers are amenable to accepting a reduced payment in cases where a claimant has not been 100% successful.
Often defence lawyers try and argue that claimants should not be able to claim private medical expenses as they have a right to use the NHS. However, under section 2(4) of the Law Reform (Personal Injuries) Act 1948, claimants are entitled to recover reasonable medical expenses and the availability of such treatment on the NHS is to be disregarded.
Confusion about whether the health insurers’ outlay should be included in a claim can arise in cases being brought against the claimant’s employer, who is the corporate policyholder of the health insurance policy. In such circumstances it would appear that as the third party against whom the claim is brought is the actual policyholder, perhaps the cost of treatment funded under the scheme should not be included. However, it will usually be the employers’ liability insurers that meet the actual personal injury claim including the health insurers’ outlay, subject to the corporate members’ agreement. This can vary between insurers and clarification of the contractual obligations will be required in such cases.
Claimants and their solicitors are under a duty to check for any such policies to ensure that the health insurers’ outlay is included as part of the claim and also that the correct amount is included at the date of settlement. It is important to note that whilst the claimant may have other treatments at the same time as their personal injury claim, only the cost of the treatment that is connected to the material accident will be recoverable. A breakdown of treatment cost together with supporting invoices can assist in separating medical costs related to the accident and those that are not.
It is essential to include the health insurers’ outlay as failure to do so could lead to a potential breach of contract and a claim for recovery from the claimant or their solicitors if they have not been advised properly. The only exception is in claims that are made to the Motor Insurers’ Bureau (MIB) under its Untraced Drivers’ Agreement. In such cases, the claimant cannot make a subrogated claim for the health insurers’ outlay. This is because the MIB is not a third party insurer; it is an organisation funded by various members of theUKmotor industry and is effectively a fund of last resort meeting claims where the driver responsible for the accident cannot be traced.
With the NHS facing more and more financial crises, private health insurance is becoming increasingly prevalent and is often the only way scheme members can access treatment that can cost thousands of pounds. Members need to be aware of their rights and obligations.