Global healthcare insights: claims inflation and driving earlier resolution of claims

A panel of global healthcare experts from our Australia, Hong Kong, Ireland and UK offices explored key factors impacting quantum in medical malpractice claims, and differences in approach to the management of claims.

Here we reflect on the extent to which these jurisdictions are experiencing claims inflation and how a shift in approach at the pre-action stage can provide a blueprint for earlier resolution of claims.

Claims inflation: perspectives from across the jurisdictions

Economic inflation in the UK, Australia and Ireland has been significant during the last two years. By comparison in Hong Kong, inflation has been much more modest. This is reflected in the claims inflation experienced across the four jurisdictions.

For those dealing with medical malpractice claims in England, claims inflation has been extensive, particularly in the context of care and accommodation claims. We have also seen movement in general damages awards for the most catastrophically injured. In the recent decision in CCC (by her Mother and Litigation Friend MMM) v Sheffield Teaching Hospitals NHS Foundation Trust [13.07.23] the general damages award was £390,000.

Australia has similarly seen significant increases in respect of both heads of loss. Home care costs for one of the major private providers has recently increased by 22% (having last increased two years ago). Higher accommodation claims – often representing an increase of up to 50% - are driven by non-availability of materials, in part as a consequence of the pandemic, but also due to the considerable resources required following significant weather events in New South Wales (NSW) and Queensland.

Healthcare costs in Australia are tracking ahead of other elements of medical malpractice claims. The cost of most procedures has risen by approximately 10%, and in some cases by considerably more. The cost of total knee replacements, for example, has increased by up to 32%.

Other heads of loss have also risen in Australia, as average weekly earnings have increased by 5.5%, and general damages (linked to CPI) by 6.8%.

In Ireland, the claims inflation picture is similar to that of the UK and Australia. In the context of loss of earnings, there has been an increase of approximately 5% to the national minimum wage, and our sense is that salaries in some industries and sectors have increased by 10-20%. Whilst reforms to general damages have seen a 50% reduction in the lower level of general damages, for the most catastrophically injured the cap has increased from €500,000 to €550,000.

In comparison, claims inflation in Hong Kong has been modest. The latest figures on wages indicating on average an increase of 3-4%, representing a manageable increase in loss of earnings claims. Although for those in senior positions, the increase would be higher.

Similarly, whilst care costs in catastrophic injury claims are now higher, this has not significantly impacted the cost of claims. Many households in Hong Kong, particularly those with children, have a live-in domestic helper, at an average cost of HK$4,730 per month (approximately £473). If a claimant already has a live-in domestic helper, the cost of care will ordinarily not be recoverable, save for any additional costs where a second domestic helper and/or 24 hour care is required. There are also occasions where the experts jointly agree it is in the claimant’s best interests to be maintained and cared for in a public hospital’s setting and in that scenario, the cost of care for a claimant that requires 24 hour nursing care will be minimal.

Conduct of claims at the pre-action stage: driving a shift to earlier resolution of claims

In England the implementation and use of pre-action protocols (PAPs) and drive to deal with claims outside of formal litigation brought about by the Woolf reforms, marked a significant change in approach.

However, there is still more that could be done to facilitate earlier resolution of claims. Experience has shown that unilateral or mutual exchange of liability evidence at the pre-action stage is a game-changer. It requires a change of thinking, ideas and culture. Effectively, you are bringing the litigation forward.

NHS Resolution’s recently published annual accounts show that 80% of its claims are settled at the pre-action stage. A development of not only the current pre-action protocol but also driving the investigation and resolution of claims at that early stage.

Modelled on the approach in England, Hong Kong introduced a practice direction in 2009 encouraging the early exchange of documentation between the parties. The expectation is that the claimant will issue a letter before action with a supportive expert report on liability and causation at the pre-action stage. This occurs in most cases and represents a huge improvement, enabling an assessment of the claim at an early stage and often helping to reduce legal costs.

In Ireland, legislation allows for the introduction of pre-action protocols, however, they are yet to be introduced. There is no pre-action disclosure and exchange of evidence, and no formal case management.

The introduction of PAPs would be the single biggest change to the litigation landscape in Ireland, which we anticipate would see a dramatic reduction in litigated claims, and much earlier settlement.

In Australia, the approach varies. In NSW, there are no PAPs, however when proceedings are issued the defendant would receive all of the materials/evidence at that stage.

In Queensland the Personal Injuries Proceedings Act 2002 requires the exchange of evidence, a compulsory conference and exchange of offers over a 3-6 month period, before proceedings can be issued. This has assisted in reducing lower level claims but for complex claims it is difficult for the parties to have all the material in that timeframe.

In Victoria, thresholds for general damages provide a quasi pre-action protocol as it may be used to test claims where general damages are questionable. Plaintiffs must have an expert opinion on breach and causation prior to issuing proceedings but are not under an obligation to serve these at the time of serving proceedings.

Read other items in Australian Healthcare Brief - December 2023

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