Ladies and gentlemen, let’s play the Compensation Game. In front of you are
pictures of three people. One broke his leg. One was raped. One was falsely
accused of murder. Each received compensation. Now, your starter for 10: is
it fair that one got £4.5m, one got £11,000 and the third got £706,000?
This is not the latest television satire. In recent days we have learnt that
promising footballer Benjamin Collett, 23, is to receive £4.5m after
breaking his leg in a violent tackle that ended his chances of playing for
Manchester United.
Colin Stagg, 45, was awarded £706,000 after he was falsely accused murdering
of Rachel Nickell, who was stabbed to death on Wimbledon Common, London, in
1992.
And “Helen”, a 25-year-old beautician, was awarded £11,000 after she was
raped. Her award was initially reduced to £8,250 because she had been
drinking on the night of the attack, although this decision was later
reversed.
In recent weeks it has also emerged that squaddie Jon Le Galloudec, 27, was
granted an award of £35,000 after being shot in the spine on the streets of
Basra, Iraq, leaving him paralysed in both legs; yet an army colleague sued
privately and received £250,000 for losing his/ her job after undergoing a
sex change. Jan Hamilton, 43, who was head of army media relations, had
formerly been paratrooper Ian Hamilton; she was given the compensation in an
out-of-court settlement after claiming sexual discrimination and unfair
dismissal.
The vastly different awards have left many asking whether our compensation
system, far from being fair, has become a matter of luck. Stagg himself
seemed to think so. On hearing of his award, he said it felt “like winning
the lottery”.
His comment has prompted many to ask whether the system needs an overhaul.
How, they ask, can one broken leg on the football field be worth 130 times
more than a two paralysed ones on the battlefield? How can being falsely
accused of a violent crime be worth 65 times more than being the victim of
one?
Charles Heyman, a defence analyst and former army major who campaigns on
behalf of injured troops, describes the difference between payments to some
civilians and military personnel as “absolute madness – the people who
decide these matters should stand up and be counted”. The public seems to
agree. A recent poll revealed 92% of voters thought the government “has a
responsibility to support those who fight for their country”; only 58%
agreed that the Ministry of Defence (MoD) “valued all of its people”.
Studies also show that voters blame the rise of “compensation culture”,
fuelled by ambulance-chasing lawyers working on a no-win, no-fee basis, for
the proliferation in claims that generate controversial payouts and
headlines. On the face of it there appears to be little rhyme or reason to
some awards. But is there a good explanation why some people get far more
than others? THERE are, lawyers explain, two types of compensation claim and
each works in a different way. One is the personal injury or negligence
claim that comes before a court. The other is a claim for state compensation
for the victim of a crime or for a soldier injured on the battlefield.
“The key difference between these two is that the first is a ‘fault’ case and
the second is a ‘no-fault’ case,” says Neil O’May of Bindmans, a leading
firm of lawyers.
In a fault case there is somebody to blame – a negligent employer, a careless
surgeon, an overzealous police officer. If a court finds that the victim
suffered because of the wrongful actions of the culprit, it may award
damages that punish the culprit. The court also takes into account the
victim’s circumstances such as loss of earnings or damage to reputation.
If the victim is a high earner or has suffered particularly egregiously, the
compensation reflects that. The huge sum awarded to Collett reflected the
view that if he had not been injured in a violent tackle he would have gone
on to substantial earnings.
One reason why Stagg received such a large amount was the court’s finding that
his reputation had been so damaged by false accusations of his involvement
in the murder that he had suffered great distress and been rendered
unemployable. He had been rejected for every job he had applied for since he
was wrongly arrested and charged with murder.
In a no-fault case, by contrast, there is no individual or organisation to
blame – or at least not one from which recompense can be expected. Examples
include injuries suffered in war or an assault where the attacker is not
caught. In those cases, compensation is granted not by a court but by the
state through the Criminal Injuries Compensation Authority (CICA) in
criminal cases and the MoD in military cases.
The CICA and the MoD work on a tariff system that assigns a maximum
compensation value to injuries to every part of the anatomy. A fractured
tibia is rated at £3,800, while quadri-plegia is worth £250,000. The CICA
takes into account the severity of injuries and individual circumstances;
but there is a limit on compensation for loss of earnings of £250,000 and an
overall maximum payment of about £500,000.
The result is that even if the victim is badly injured, the final sum can seem
low but at least there is a payout. Many countries have no system of
automatic compensation for the victims of violent crime. Some of those that
do – notably Italy – offer compensation to the victims of crime only when
the criminal is convicted. If “Helen” had been raped in Sicily, rather than
England, she would have received no compensation because her attacker was
not convicted. UNDERSTANDING how the system works, however, does not mean it
is without problems. Are lawyers, who can double their fees if they win a
case, turning us into a writ-happy mob of gold-diggers? Does this push up
the costs of compensation and insurance? Google the words “clinical
negligence” or “no-win, no-fee” and you will turn up a clamorous pack of
legal agencies and law firms who trade on the idea that every accident must
be someone’s fault. Some websites even provide interactive body maps showing
the estimated compensation for everything from an injured finger (£1,000 to
£75,000) to serious brain damage (millions). What are you waiting for, the
firms urge: sue.
Many of us do. Overall claims are running at more than 700,000 a year and were
up by almost 40,000 last year. Worst affected is the National Health
Service. The cost to the NHS of claims settled in 2006-7 was £579.3m. In the
same year it was hit by 5,426 new cases. The NHS Litigation Authority
estimates the combined cost of settling all outstanding claims will be £9.09
billion.
Small organisations are suffering, too. Critics say the price of taking out
insurance to cope with negligence claims is forcing local sports clubs and
riding schools out of business.
Should no-win, no-fee be abolished? Critics say litigation or the threat of it
can lead to seemingly strange awards. Remember the boy who broke into a
primary school who got £5,700 compensation because he injured himself on a
gate during the break-in? Or the police marksman who received £5,000 for
“hurt feelings” after a more senior officer jokingly referred to him as “a
serial killer”?
Gary Slapper, professor of law at the Open University, argues that on the
whole the courts do a good job and the no-win, no-fee system is not widely
abused. “The standard of proof to secure a claim is pretty high,” he said.
“There are far fewer silly cases than people think because bringing one is
time-consuming and it’s not worth the risk if lawyers know they won’t get
paid if they lose. Where awards seem high there is usually a good reason,
like the person was a high earner.”
In his view the problem is not that awards like those to Stagg and Collett are
too high, but that they make those provided by the state appear too low. The
CICA, for example, has far less leeway to take personal circumstances into
account than private compensation claims do. Under a barrage of criticism,
the MoD recently increased the amounts it pays in compensation. Reforming
the CICA, however, might turn out to be more unpopular than leaving it the
way it is.
O’May explained: “Unlike personal injury cases where payouts are covered by
insurance, the CICA and the MoD are, of course, funded by the taxpayer.
Taxpayers might complain about the odd iffy award but something tells me
they will probably be less keen to dip into their pockets to pay more tax so
that more people can get more compensation.”
In the compensation game, then, it comes down to whether or not you are a
victim of someone you can blame. Perhaps there is an element of lottery
after all.
