Keoghs Insight

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The perfect storm in stressful times

AWARE15/08/2014
Disease Aware Issue 5

A Government study, based on an evaluation of statements for fitness to work, or ‘fit notes’, issued by GPs between October 2011 and January 2013, revealed that one in three absences from work was the result of mild to moderate mental health disorders. The study concluded that there is, “some evidence that mild to moderate mental health disorders are a growing cause of sickness absence.”

The results of this survey coincided with one commissioned by the mental health charity, Mind. This found that work is the most stressful factor in people’s lives with 34% saying their work life was either very, or quite stressful.

Most of us will probably suffer from some form of stress during our working lives at one time or another. In a few individuals that stress can be the mechanism that leads to mental injury - a ‘stress-related injury.’

The economic crisis of the last few years has seen increased pressure on employers which has inevitably impacted on working practices and conditions. In both private and public practice, cuts in expenditure have had the unfortunate effect of trying to obtain more with less resources. This can create situations where employees having increased workloads, fewer breaks, work longer hours or feel more anxious about their job security and prospects. The current economic situation is not news. However, when the effects of the Jackson reforms are added to this mix, stress claims are likely to result in greater expenditure of time and resources for defendants and their insurers.

To succeed in a claim for work-related psychiatric injury, the claimant must demonstrate the following (as set out in the leading Court of Appeal case of Hatton v Sutherland):

  • The illness must be a recognised psychiatric illness (as distinct from stress)
  • The illness must be attributable to stress at work (as distinct from other factors)
  • The employer must have known (or ought to have known) that the employee was at risk of becoming ill as a result of stress at work, taking into account, for example, the nature and extent of the work done by the employee, signs from the employee of impending harm to health and/or a particular problem or vulnerability on the part of the employee
  • The signs of impending harm to health to the employee must have been plain enough for a reasonable employer to realise that they should do something about it
  • A failure on the part of an employer to take identifiable steps which were reasonable in the circumstances, bearing in mind the risk of harm occurring, the severity of the harm

which may occur, the costs and practicability of preventing it, and the justifications for running the risk

Stress claims are notoriously difficult to win. The question of foreseeability is usually the hurdle at which most claimants’ cases fail. There are often significant factual disputes and questions of medical causation that pose further difficulties for a claimant.

Obtaining ATE insurance for stress cases before 1 April 2013 was difficult. Most insurers insisted that a claimant must have better prospects of success than for other types of personal injury claims before offering terms. Some refused to consider insuring any stress at work claim at all.

The recent changes to the way in which personal injury cases are funded will provide new opportunities for claimants to pursue stress claims by reducing some of the financial difficulties. The introduction of Qualified One-way Costs Shifting (QOCS) means that (save where exemptions apply), claimants will not be liable for the defendant’s legal costs if the case is unsuccessful.

Whilst much maligned, ATE Insurers played a valuable role in litigation, either refusing to fund a claim with limited prospects of success, or withdrawing funding in cases where it later appeared that the prospects were limited. This was a filtering process for unmeritorious claims that reduced costs and court time. A claimant now no longer needs to worry about the costs consequences in pursuing a claim for stress as they may have done before the implementation of the Jackson reforms.

With the introduction of QOCS, defendants fighting a stress at work claim will incur large legal expenses and often commit significant time and resources to a defence. These cases will often include very wide factual allegations to be addressed. The legal costs will be largely unrecoverable.

The courts are already seeing more litigants-in-person. Stress is perhaps one area of personal injury law, more than any other, where this is likely to occur and such claimants are often particularly emotive. The likelihood of mediation offering a solution is therefore, likely to be limited. This could bring a further distinct group of claims for insurers.

Judges have already raised concern about the impact of litigants-in-person on the court system; cases are taking longer as judges need to go more slowly through case management and hearings. Emotive claimants seeking their day in court often raise what they consider to be a multitude of sins, many of which are irrelevant to the legal issues.

Claimant solicitors may also sense greater opportunities. They will know that an insurer may no longer be willing to expend significant time and resource on a claim where costs will not be recovered. Any victory at trial where a defendant has expended several thousands of pounds on a defence can only be described as Pyrrhic. This may lead to issues between insurers and their policyholders.

Insurers will need to develop an effective strategy to deal with stress claims. Front-loading investigations, so that detailed statements in respect of breach of duty are taken at the time of initial notification is one tactic. Cases that are well-prepared at the outset will increase pressure on the claimant and reduce expenditure.

Tactics that commit the claimant to greater time and expense can be an effective deterrent; detailed Part 18 or Part 35 Questions; demanding full disclosure of all records be obtained by the claimant - such as GP, Hospital, DWP and counselling records (rather than providing mandates and making such enquiries directly); and ensuring all directions are complied with, agreeing no extensions of time and applications to court as and where necessary.

Both claimants and insurers must feel their way forward following the Jackson reforms. Insurers may find that stress claims merit particularly careful attention.