House of Lords rules pleural plaques not compensable

Insurers have won a key victory after the House of Lords ruled that plural plaque were not compensable. But claimant lawyers have warned that they will pursue alternative routes to compensation.

The Lords’ decision to uphold the 2006 ruling of the Court of Appeal not to compensate claimants with pleural plaques – benign cysts that form on the inside of the lungs following exposure to asbestos – could save the industry almost £1.5bn.

But legal experts said the decision raised the prospect of claimants suing for breach of employment contract.

The government has not ruled out legislating to overturn the ruling.

Brendan Baxter, partner at Reynolds Porter Chamberlain said: “Unfortunately for insurers and employers, today’s judgement is unlikely to be the end of the story.

“If claimants assert that the usual limitation period on claims for breach of contract should not apply then we could see new arguments relating to asbestos exposure start all over again in the lower courts.”

Fiona Gill, partner at Davies Arnold Cooper said the level of damages for such a claim was not clear. “The Law Lords are raising something that has not been raised before. It is not clear what the quantum would be.”

Insurers, however, have moved to dispel fears of contract-related compensation.

Steve Thomas, head of technical claims at Zurich – one of the two insurers involved in the original case – described the pursuit of breach of contract as “a red herring.”

He said that the legal team at Zurich had looked into the possibility before the judgement was passed. “It is the one straw they were going to grasp. On the grounds of forseeability and limitation, they wouldn’t even get off the ground.”

Thomas warned that if claimant lawyers starting submitting claims to Zurich, they would be rejected. He said: “If they try, we will resist.”

The other option would be for the government to overturn the decision. Last year, it did so in a case to assist mesothelioma sufferers.

A spokesman for the Ministry of Justice said: “The government will carefully consider the Lords’ judgement before making any comment.”

Commenting on the feasibility of government intervention, Thomas added: “I would like to think the government will leave it alone. Seven out of eight senior judges have said no.

“If they overturn two decisions in two years, what would that mean for the Lords?”

The government already pays out more than the insurance industry in disease-related claims, although at present pleural plaques victims are not entitled to state benefits.

Nonetheless, actuarial estimates suggest that over the next thirty years insurers stand to pay out up to £8bn in asbestos-related claims.