Medical Agency Fees | “Proportionality Demands Transparency”

Ena Aminu-Edu v Esure Insurance Company Limited involved a claim by Ms. Aminu-Edu against Esure Insurance Company Limited for damages for personal injury arising out of a road traffic accident on 16 November 2018. The claim began in the MOJ portal, with proceedings valued at £80,000. Before allocation, Ms. Aminu-Edu accepted a Part 36 offer from Esure in the sum of £40,000.

The issue before the court related to a dispute over the cost of a pain management medical expert report in the sum of £2,916 (inclusive of VAT), which included both the fee of the expert witness and the fee charged by the medical reporting organization (MRO) that obtained the report. Esure refused to pay the full amount because the MRO referral element of the invoice had not been disclosed.

Relevant chronology:

• 16 November 2018: The road traffic accident occurred
• Claim began in the MOJ portal, with proceedings valued at £80,000
• Ms. Aminu-Edu obtained a pain management expert report at a cost of £2,916 (inclusive of VAT and the MRO fee)
• Ms. Aminu-Edu accepted a Part 36 offer from Esure in the sum of £40,000 before allocation
• 6 June 2022: Esure made an application for disclosure of the breakdown of the expert’s fee and the MRO fee
• 23 March 2023: The MRO, Premex, informed Ms. Aminu-Edu’s solicitors that it would not disclose the breakdown of its fee, citing commercial sensitivity
• 20 January 2023: Ms. Aminu-Edu applied for a determination of her fixed costs and disbursements under CPR 36.20(11)

The key issues to be determined by the court were:

1. Whether Esure was entitled to disclosure of a breakdown of the pain management expert’s fee, separating the sums payable to the expert and to the MRO.
2. The amount of the pain management expert’s fee that was recoverable by Ms. Aminu-Edu from Esure, considering the reasonableness and proportionality of the fee under CPR 45.29I.

Regarding the first issue, Esure argued that it was entitled to know what it was being asked to pay and to whom. It submitted that the lack of transparency around the MRO’s fee made it impossible to determine if the overall fee was reasonable and proportionate under CPR 44.3(5).

Ms. Aminu-Edu argued that disclosure of a breakdown was unnecessary under the fixed costs regime in CPR 45, which was designed to avoid disputes over individual items of costs. She submitted that the court could assess the proportionality of the expert’s fee as a whole, without knowing what portion comprised the MRO’s charges.

On the second issue, Ms. Aminu-Edu sought recovery of the pain management expert’s full fee of £2,916 under CPR 45.29I. Esure disputed this sum on the basis that the MRO’s fee had not been disclosed and the proportionality of the fee could not be determined.

Judge’s findings

The judge rejected the idea that inclusive costs (medical + referral fee as an undivided sum) can always be considered as a whole as a percentage of the recovered value in an action or otherwise as part of a broad-brush assessment:

“I reject the idea that inclusive costs (medical + referral fee as an undivided sum) can always be considered as a whole as a percentage of the recovered value in an action or otherwise as part of a broad-brush assessment. I reject the idea that such a process is ever justified. This grimly arithmetical approach does violence to the very concept of multi-factorial proportionality [CPR 44.3(5)]. If proportionality was only about money a successful personal injury claimant with neck ache for 12 months could never recover costs exceeding £2,000.00.” [20]

The judge found that transparency is a matter of some importance, and that commissioning solicitors should assess the reasonableness of agency fees rather than simply assuming someone else will pay for it:

“In my judgment, transparency is a matter of some importance, not least of all because commissioning solicitors should, and are certainly entitled to, assess the reasonableness of the agency fees rather than simply (metaphorically) shrugging and saying: “that’s the system”, assuming someone else will pay for it. This would be, and is, a recipe for fee-farming by the agencies and is to be deplored.” [13]

The judge rejected the submission that the process of disentangling the agency fee from the total is disproportionate based only on the assertion that it is disproportionate “because we say so”:

“It is something of a question-begging proposition. The submission that the process of disentanglement is disproportionate is based only on the shaky foundation that it is disproportionate “because we say so”. There is no evidence other than this assertion. No doubt the production of evidence itself would have been disproportionate.” [8]

The judge found that in the absence of transparency, the courts’ powers to control costs become a mockery:

“In the absence of transparency, the courts’ powers to control costs in the various ways applicable to the “Any-Track” become a mockery.” [19]

The judge rejected the notion that identifying the administrative fee within the undivided expert evidence invoice is a process of such fiendish complexity as to defy clarification:

“I also reject the notion that identifying the administrative fee within the undivided expert evidence invoice is a process of such fiendish complexity as to defy clarification – even in general terms. If, in the unlikely event that it is, the agency fee must be redolent with the stench of presumed disproportionality. I do not accept that, however sophisticated the algorithm, it cannot be reduced to a tolerable explanation even for a judicial bonehead like myself. If it is so complex, it is time that it wasn’t.” [21]

The judge drew several propositions, including that in principle medical agency fees are recoverable, the court is entitled to require transparency from those whose fees form part of claimed costs, and that transparency is no more likely to impede the brisk application of fixed costs regimes than obfuscation:

“40.1 In principle medical agency fees are recoverable [CPR 45.29I and 2(a)]. It is referrable to the obtaining of medical reports within the relevant Protocol.

40.7 The court is entitled to require transparency from those whose fees form part of claimed and potentially recoverable costs.

40.11 Transparency is no more likely to impede the brisk application of fixed costs regimes than obfuscation.” [40]

The judge ultimately ordered that unless the breakdown of the medical agency fee is provided, the Claimant’s costs in respect of the disputed disbursement would be limited to £750 plus VAT (£900 total), erring on the side of caution in the absence of the necessary information to fully assess proportionality:

“Accordingly, doing the best I can, I will Order that unless the breakdown information is forthcoming the Claimant’s costs in respect of the disputed disbursement be limited to £750.00 plus VAT making a total of £900.00.” [51]