On 13th April 2018, the Ministry of Justice confirmed that the Civil Procedure Rule Committee had approved a new fixed costs scheme that aims to tackle fraudulent package holiday sickness claims, which was implemented on 16th April.
A scheme of fixed costs was already in place for low-level UK personal injury claims, but this left a loophole allowing cases arising within foreign jurisdictions to be brought forward without being subject to fixed costs.
Critics argued that this encouraged fraudulent activity from claims management companies and diminished the ability of tour operators to defend themselves against false claims. This was because it became common for claims of a fraudulent nature to be settled outside of court, since it was not economically viable for tour operators to defend themselves against the costs of damages being awarded.
As the changes are brought in, tour operators will pay fixed costs dependent firstly, on the value of the claim and secondly, on the length of the proceedings. This aims to combat the 600% increase in claims being made, rising from 5,000 in 2013 to 35,000 in 2016 as reported by the Association of British Travel Agents (ABTA), despite the global trend for reported incidence of illness in resorts declining. The total cost of these claims was £240 million in 2016, which in turn has threatened an increase in the price of package holidays for, as the Ministry of Justice described, "an honest majority".
The new fixed costs scheme is being implemented to tackle illegal activity and create room for the credibility of those with genuine claims. The changes will provide a large obstacle and deterrent for bogus claim makers, whose claims lack legal merit, by limiting the profitability of their claims. People who make fraudulent claims could face up to three years in prison.
We can assist with a wide range of legal issues relating to personal injury, for more information or to discuss your individual requirements in further detail, contact us by calling 01603 693500 or email us using the 'Make an enquiry' form. Appointments available at our Norwich, North Walsham and Sheringham offices.
*This article is provided for general information purposes only and does not constitute legal advice or other professional advice.
