Lawyers commissioning medical experts for whiplash claims may have to pay a membership fee to plug a major funding gap in the accreditation body.

MedCo, which facilitates the sourcing of medical reports for soft tissue injury, faces a £2.2m loss this year after a dramatic downturn in its income, it revealed last week.

In 2016, the year after it was created by the Ministry of Justice, MedCo reported more than £5.8m in turnover from medical reporting organisations paying to be accredited and allocated work in the scheme.

But clampdowns on ‘shell’ companies, set up to ensure the biggest providers gained more instructions, have caused funds to dry up.

Unaudited accounts for 2019 show income has fallen to £2.15m, with expenses now almost £3.2m (an increase of 67% compared with 2016). The draft budget forecast for 2020 shows income falling further to £1.7m, while expenses surge to £3.85m.

Martin Heskins, executive chair of MedCo, said: ‘It is clear that the future sustainability of MedCo cannot be guaranteed without taking action to increase forecasted income and reduce expenditure. 

‘With this in mind MedCo’s board of directors have decided that a new charging policy should be introduced in 2020 in conjunction with a review of the current service levels it provides and associated operating costs.’

One option now being discussed is the introduction of an ‘all users’ pay policy. This would mean solicitors and claims management companies pay into the system to keep it sustainable, although there is no indication yet what the charge would be.

MROs have been traditionally responsible for more than 90% of MedCo’s income. Annual fees paid by direct medical experts are the only other main source of funding. Authorised users – those lawyers instructing the experts – do not currently pay any upkeep fee.

Heskins said operating costs have increased year-on-year due to the provision of additional services, IT upgrades, increase in staff resources due to operational requirements, and the MRO audit programme.

The financial burden on MedCo could become worse from April, when the government’s Civil Liability Act is due to be implemented. This will ban insurers from making any offer to settle an RTA case without the claimant undergoing a medical examination – effectively meaning MedCo is at the vanguard of all claims being pursued. A new portal for claims worth less than £5,000 will mean more litigants in person handling their own case, and it is still unclear what changes, if any, will be made to MedCo to prepare.

Even if a new funding stream from lawyers can be opened, there are doubts how many will still do low-value RTA work and therefore be eligible for charges.

A consultation on how to fund the scheme in future closes on 13 February.