A MINING union that has earned millions of pounds in fees from miners’ compensation claims is facing a High Court battle over its actions.

A firm of City lawyers is preparing a group action that could force the repayment of several million pounds taken from compensation payments.

The move comes as the Government prepares to demonstrate a “zero-tolerance approach” to any misconduct linked to its £7.5 billion coal health compensation scheme.

Malcolm Wicks, the Energy Minister, is understood to have been appalled by revelations in The Times, which detailed alleged abuses linked to the world’s largest personal injury compensation scheme.

He is expected to make a written statement to the House of Commons this morning, outlining the “very robust” action that the Government intends to take. At Prime Minister’s Questions yesterday Tony Blair emphasised his concern that miners should receive their compensation properly.

“Compensation should only go to those who are entitled to it,” he said. The Times revealed this week that a criminal inquiry has been launched into senior officials and employees at the Union of Democratic Mineworkers (UDM).

Detectives are investigating the financial relationship between Beresfords, a South Yorkshire law firm, and two companies associated with the UDM. They are also looking at the finances of Mick Stevens, the UDM’s vice-president, and Clare Walker, who earned £260,000 last year as head of claims at Vendside, an industrial claims-handling company, which is owned by the union. Both deny any wrongdoing.

The pending High Court action will focus on the fees that have been deducted by UDM/Vendside from the compensation payments to individuals. Greene Wood & McLean, a London-based firm of solicitors, issued a formal letter of demand to the union last night. The union has been been given three days to agree to repay the money that Vendside received from miners whose claims were settled under an exclusive agreement the union signed with DTI officials in 1999. If no such agreement is forthcoming, the tort specialists will lodge an application for a group litigation order seeking authorisation for legal proceedings to recover the money.

Every miner who has been asked to pay a fee to Vendside will be invited to sign up to the group action. A letter of demand has also been sent to Doncaster-based Beresfords, which earned £890,000 from miners by charging a success fee for every coal health claim it settled before 2002.

Mark Farrell, the managing director of Beresfords, said that his firm had already volunteered to repay the £890,000 as “a goodwill gesture”. All but £32,000 had already been repaid, he said.

A spokesman for the UDM said last night that its practice of charging non-members a nominal sum of between £50 and £500 plus VAT, was “to ensure that there was no disadvantage to subscription-paying members of the union”. Wynne Edwards, senior partner at Greene Wood & McLean, said that other solicitors’ firms that have deducted “a success fee” may also be targeted by the group action. In other cases, he said, the cause of action may be founded on there being an alleged conflict of interest for firms of solicitors that have been acting both on behalf of the UDM and also for individual UDM claimants.

As the UDM has only 1,300 members nationally, the majority of its cases have involved claimants who are not union members. In addition to charging a fee from such claimants, Vendside has earned £19 million in DTI fees for settling thousands of claims under the government scheme, which covers chronic lung diseases and vibration white finger, a crippling hand condition.

The union has also chosen to pass on more than 10,000 cases to a select group of solicitors who have received £25 million in DTI fees for settling UDM claims. The DTI website states: “If a claim is successful there should be no need for solicitors or other claims-handling organisations to charge a fee or deduct any compensation from the claimant because the legal fees will be paid by the DTI.”

Mr Edwards said that his firm had already instructed barristers to mount the action. A series of public meetings will now be held at which miners “who have paid fees unnecessarily” will be invited to join the case. The first meeting will be held tomorrow evening in Harworth, Nottinghamshire.

“Many millions of pounds have been paid out unneccessarily,” said Mr Edwards. “Certain lawyers and claims firms appear to have behaved unconscionably and where this is found to be the case we will do all we can to secure justice for the thousands of people who have been exploited by them.”

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