Managing the costs of clinical negligence claims: an update

Date published

20/11/2018

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This article was co-authored by Will McGregor, Litigation Executive, London.

Medical defence organisations (MDOs) have grown accustomed to a consistent rise in the overall costs of clinical negligence claims, however, it is now widely regarded to be at an unsustainable level.

Background

NHS Resolution’s Clinical Negligence Scheme for Trusts saw a four-fold increase in annual cash spending between 2006-07 and 2016-17 (from £0.4 billion to £1.6 billion). This figure is expected to double again by 2020-21 to £3.2 billion.

Despite an apparent plateauing in the number of claims being received by NHS Resolution, damages and legal costs continue to rise and increasing calls have been made for fundamental government intervention to stop further growth.

A September 2017 report from the National Audit Office on managing such costs, followed by specific recommendations from the Public Accounts Committee (PAC), have led to intensive work within the government, leading to the Department of Health and Social Care, together with the Ministry of Justice, responding to the recommendations.

Government strategy

1. A review of whether current legislation remains adequate

The government is reviewing whether the Law Reform (Personal Injury) Act 1948, which allows claimants to claim private medical treatment for their injuries even if such treatment is available on the NHS, realistically reflects the 21st century landscape. Bearing in mind the increased strain on the NHS with an ageing population.

Reform in this area would allow MDOs to purchase NHS and local authority care packages for damaged patients, which in theory result in more funds for front-line care.

2. Further focus on actions to reduce patient harm, in particular to maternity patients

A range of initiatives, including the government’s National Maternity Safety Strategy and NHS Resolution’s Early Notification Scheme, have already helped improve the handling of incidents and reduce time to resolution. However, with obstetric harm representing upwards of 70% of NHS Resolution’s £77 billion provision, the government is keen to continue its focus in this area.

3. Investigating further measures to reduce the legal costs of claims

The government has attributed the rise in legal costs to the increase in the number of claims up to £25,000 in value. A strong focus on mediation and pre-action resolution of claims continues to be key, whilst the government has also consulted on extending fixed recoverable costs (FRC) to such low-value clinical negligence claims. The complex nature of clinical negligence claims has become a stumbling block and the consultation has, unsurprisingly, polarised opinion in the market. However, the Civil Justice Council has set up a working group to devise a grid of FRC for these cases and is expected to report in March 2019.

Another significant factor in increased damages is the personal injury discount rate, an adjustment of lump sums to take account annual income from claimants investing their damages. The reduction of the rate from 2.5% to -0.75% in March 2017 added £404 million to the cost of damages settlements in 2017/18. The government has already confirmed the rate will be reviewed, this time using a calculation that will more accurately reflect injured claimants’ investment behaviours as ‘low risk’, instead of ‘very low risk’. Claimants will in general receive more on their investments this way, and accordingly a higher rate is expected to be set, so that future lump sums are decreased accordingly. The new rate is expected to be announced in 2019.

Comment

The government is notably aware of funds being spent on clinical negligence claims that are not available for front-line services. The much anticipated cross-government strategy will complement the work already being done both in and outside of government, representing a step forward to those campaigning hard for reform of the law and civil litigation system.

This is encouraging not only for defendants - who will start to see a light at the end of the tunnel regarding increasing damages and costs - but also UK citizens whose NHS will have more money to improve patient safety.

This article was co-authored by Will McGregor, Litigation Executive, London.

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