VHI Undertakings - 2003
Practitioners will be aware of previous practice notes issued by the Society advising members of ongoing difficulties with the new form of undertaking which VHI is issuing to practitioners for completion.
The issue giving rise to the difficulty is VHI's requirement that solicitors undertake, subject to any court order to the contrary, to repay to VHI, out of the proceeds which come into the solicitor's hands - all monies paid by VHI on behalf of the client/subscriber. Previously, the solicitor undertook to reimburse to VHI whatever sum had been recovered in respect of monies paid out by VHI.
The Society considers the new requirement to be inequitable and unreasonable. For example, if a subscriber sustains injuries due to his own fault, then all monies paid out by VHI in respect of that subscriber will be discharged by VHI. However, if damages are recoverable from a third party, VHI demands to be reimbursed all the monies it has advanced even where a subscriber has recovered only a proportion of it in the litigation. If, for example, twenty five per cent is recovered in the litigation, the subscriber will have to pay the seventy five percent balance out of damages. The subscriber could be left with little or no compensation as a result.
The Society is aware of instances where clients are pressuring solicitors into giving the undertaking, notwithstanding the fact that it may be against the client's best interests in the long term. Solicitors are faced with clients who have been refused cover for future treatment unless the undertaking is signed. It has also been reported that VHI has refused to pay hospital bills unless the undertaking is signed. This resulted in the hospital referring the matter to a debt collection agency.
The Society recommends that solicitors do not furnish the VHI undertaking in its new format.