November 15, 2016

MedCo - MedCo removes 134 “shell” companies

Following the implementation of the new "qualifying criteria" MedCo have suspended 134 "shell" companies from the register.

Under the revised criteria, Medical Reporting Organisations (MROs) now have to show they are fully functioning entities in their own right and must have a principal function of providing medical reporting services. Prior to the criteria MROs were creating "shell" companies purely to gather instructions and forward them to another related organisation.

Due to the revised criteria, the MedCo search now generates twelve results (an increase from seven); two from tier-one and ten from tier-two.

The qualifying criteria is currently in place for new applicants to the MedCo system and existing "shell" companies, however it will only be in place for all other MROs in three months' time on 25 January 2017.

Whilst the move is a step in the right direction to combating the number of companies undermining the scheme, the suspension will only take effect if the companies have not been instructed prior to the revised criteria being implemented. This means they can continue to operate in relation to those historic instructions.

Whilst this protects claimants' access to justice, these MROs are still being permitted to flout the rules in these historic cases. Given the noble aims of MedCo and in light of several problems with the system it would have been opportune for the regulator to show their teeth and prevent commercial advantage being gained from this illegal behaviour. It is to be hoped that the new rules are implemented more robustly.