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The Costs of Clinical Negligence

Last year the headlines were flooded with news on Brexit, the migration crisis and most notably, the US elections. The ongoing struggles of the NHS has also emerged as the hot topic of the day with various charities, organisations and even NHS employees sharing their opinions on the matter. It comes as no surprise then that, in the legal world, the spotlight has shifted to clinical negligence claims brought against the NHS each year.

I would like to take a step back from the headlines in the media and focus on what a clinical negligence claim entails from the perspective of an injured patient and the changes in the legal framework in which clinical negligence law now operates. But first, a bit of history…

Clinical negligence claims, which are known to be complex and challenging in most cases, find their roots in tort law (the law of civil wrongs) which provides legal remedies to those who have unfairly suffered loss or harm as a result of negligence. It all started with the case of Donoghue v Stevenson (1932) in which a decomposed snail was found in a bottle of ginger beer: "The rule that you are to love your neighbour becomes in law you must not injure your neighbour”

About 30 years later the case of Bolam v Friern Hospital Management Committee (1957) established the test for negligence (i.e. whether there has been a breach of duty of care) in the context of patients receiving medical treatment. The so-called Bolam test provides a defence for medical professionals if they have ‘acted in accordance with a practice accepted as proper by a responsible body of medical opinion’. In other words, they have taken the same action that their peers would have taken. The ‘10 per cent rule’ applies here: if 10 per cent of the doctors in the country would have taken the same course of action and that action is logical, then it will not be negligent. If negligence is established, the Claimant then has to prove that those actions (or omissions) caused the injury on the balance of probabilities. Claimant lawyers normally instruct medical experts to advise on this.

To deal with clinical negligence claims, the government set up the NHS Litigation Authority (NHSLA) in 1995 to defend cases. Claims brought against GPs and private medical professionals on the other hand are dealt with by medical indemnity organisations such as the MDU or MPS.

In 2003 the Department of Health published a paper ‘Making Amends – Clinical Negligence Reform’ which set out to prevent clinical negligence by reducing risks, preventing harm to patients and promoting best practice. The NHS Redress Scheme also proposed a more predictable and affordable system for legal claims.

The review highlighted the lengthy time it took for cases to conclude and the significant costs incurred in doing so. However clinicians also professed to practising ‘defensive medicine’ and avoiding certain high risk procedures for fear of being sued. Whether this can be considered as acting in the best interests of the patient is another matter.

On the other hand, one can take the view that litigation can drive the development of better practice and hold institutions accountable for mistakes made. It can also help to identify systematic failings and lead to improvements in healthcare.

It all sounds well in theory, but the practice of litigation is where the problems begin. The NHSLA has been criticised for denying liability too readily and driving up significant legal costs, even where an admission could be made earlier. A National Audit Office review in 2003 found that the costs of bringing a claim exceeded the damages in the majority of claims valued under £45,000; 95 per cent of cases were settled out of court, with only 5 per cent of claims reaching trial.

The Department of Health has acknowledged the serious shortcomings within the NHS. It is thought that this is down to a lack of funding, a shortage of doctors, population growth and an ageing population.

Presently there are many reports in the press of clinical staff working in less than ideal conditions due to shortages of staff, no time for breaks, overuse of locum staff and a lack of proper training and supervision. This year A&E departments need at least 8,000 doctors, 50 per cent more than the number of staff currently employed to deal with the demands of emergency admissions.

NHS figures show that between 2005 and 2015 the number of patient Hospital attendances caused by ‘unintentional cut, puncture, perforation or haemorrhage during surgical and medical care’ rose from 2,193 to 6,082. Peter Walsh of charity AvMA stated that more complex procedures and a better reporting of incidents may account for this rise in figures but not account for figures trebling and suspected that inadequate staffing and increased pressure at work were also factors. There is particularly concern among surgeons that their training is not as thorough and adequate as it used to be.

If mistakes are made, it is often overlooked that organisational problems may have contributed to the events. For example, where a serious incident leads to an avoidable death, an investigation is started during which staff are suspended from duty and, if found to be negligent, face disciplinary action, a report to their professional bodies and potentially being struck off the register.

It is also concerning that almost a quarter of midwives are considering leaving the profession in the next year because of resentment over pay and conditions. The Royal College of Midwives found that staff were ‘demoralised, disillusioned and burnt out’ due to excessive workloads and shortage of staff - there is currently a shortage of 3,500 midwives across the NHS. More worryingly, it was also reported that midwives were not satisfied with the quality of care provided to patients.

The focus of the government and the media has therefore shifted to what is hyperbolically referred to as an ‘out of control claims culture’ with ‘escalating costs’ driven by ‘vulture lawyers’. It comes as no surprise then that Lord Justice Jackson proposed substantial reforms to the area of personal injury and clinical negligence. The reforms took effect from April 2013 and mark a historic turning point in litigation.

The Legal Aid Sentencing and Punishment of Offenders Act (LASPO) 2012 was enacted by Parliament and essentially withdrew legal aid, with exception to certain birth injury cases.

The claimant’s lawyer’s success fee (an uplift on the base costs to reflect the risk of losing a case) is also no longer recoverable from the opponent and is now deducted from the Claimant’s damages, subject to a cap of 25 per cent of all damages (excluding future losses).

The part of the insurance premium that is in place to cover expenses such as medical records, court fees and barrister’s fees (but not the costs of obtaining a medical report) is no longer recoverable from the opponent and is also now deducted from the Claimant’s damages.

The reforms also require the parties to file costs budgets, essentially budgeting for the total amount of costs spent in a given case. Litigation is very unpredictable and it is difficult to assess what a client’s exposure to costs will be at the outset of a claim.

The Jackson reforms were criticised for being weighted too heavily in favour of defendants. Not all Judges have experience in clinical negligence cases and there is a resulting lack of consistency in the management of costs. The situation is not helped by the strain on Court resources, with Courts already understaffed and overburdened leading to substantial delays in getting a court hearing.

A new test of ‘proportionality’ was introduced within the package of Jackson reforms, but with very little guidance in the Civil Procedure Rules and interpretation from the Courts as to how this is applied on practice. In a recent case Albert Carder v The University of Exeter EWCA Civ 790 the Court did offer a helpful comment on the ratio of damages to costs:

“… I recognise that Mr Carder has been awarded a sum which is small when compared with the costs of this litigation. That is regrettable.  But litigation of this kind is often necessarily factually complex.  Defendants faced with claims whose costs are likely to be out of proportion to the damages likely to be awarded after a trial should try to settle them early.”

Whilst the NHSLA has always challenged excessive costs, the Courts now have the power to strike out further costs if it takes the view that the costs are excessive or disproportionate.

So what is the real driver behind the costs of clinical negligence cases?

In its 2015-16 report the NHSLA stated that the costs paid to Claimants had increased from £292 million to £419 million. This new figure however includes both cases that had concluded and payments made on account of costs in cases that were due to be closed the following year. Differentiating between the costs awarded on payment of account and total costs paid in closed cases results in different figures: £249m in 2014/2015 and £279m in 2015/2016, a very different scenario to the one above.

The rise in costs could be better explained by the lack of early admissions of liability, a 600% per cent increase in the Court fees and increase in Insurance Premium Tax.

When the NHSLA denies liability on a case, this forces lawyers to issue costly Court proceedings before the NHSLA admits liability or makes an offer of settlement where negligence is established.

It was also shown that the Claimant won damages in about 76 per cent of cases where proceedings were issued, rising from 72 per cent in 2015/16. Average costs were £20,000 in cases settled before the issue of Court proceedings and £85,000 for cases settled after the issue of Court proceedings.

Is there any explanation for the delays caused by defendants dragging a case out to the issue of court proceedings in complex and high value claims?

The NHSLA instructs its own panel of solicitors who work on a fixed costs basis. Solicitors undertake work up to and including service of the Defence for £2,000, including payments made to medical experts and barristers. They operate on a budget of £4,000 for claims valued over £50,000 but under £100,000.

Although Defendants generally incur less cost than Claimant lawyers, the above budgets are quite low and it begs the question as to whether the NHSLA has the means to conduct an adequate investigation at an early stage of a case.

The notion of having fixed costs in place for claimant lawyers has been widely debated and would also be problematic. This is particularly problematic for serious but low value clinical negligence claims where the costs of running the case far outweigh the damages awarded. It is unfortunate that the most challenging of cases and yet low in value involve the elderly, the disabled and psychiatric victims.

After a long fought out period of consultations and discussions, the government is considering setting the limit for fixed fees to apply to cases valued up to £25,000. The Department of Health has confirmed that a final decision has not been made and the issue of limit will be one of the questions in a future consultation, the date of which is currently unknown.

Given that the recoverability of fees is already limited and tightly controlled by the Jackson reforms, this is likely to have an impact on the sorts of cases that firms take on resulting in a ‘cherry picking’ culture. It is feared that this in turn will lead to injured patients attempting to take matters into their own hands, causing additional strain on court time and resources.

There is also an alarming increase in the number of non-specialist law firms entering the clinical negligence field, racking up unnecessary costs as well as being to the disadvantage of claimants. Clinical negligence claims should be dealt with by accredited specialist clinical negligence solicitors.

There appear to be, then, many factors contributing to the escalating costs of clinical negligence claims. It is a question of balance but perhaps more thought is needed to address the areas which have not always received as much attention in the press and where better lessons could be ‘learned’…