Fixed recoverable costs in clinical negligence claims

Fixed recoverable costs in “low value” clinical negligence claims

The strategy of a Fixed Recoverable Costs regime is to reduce the cost of clinical negligence claims to the NHS.  Here Hannah Carr considers what impact the current proposals will have on “access to justice”

Background

It has often been asserted that clinical negligence claims are usually lengthy and often adversarial resulting in increased legal costs.  Arguably, this is not in the interests of the patient; healthcare professional; or indeed the tax payer.

The Department of Health (DoH) said awards of between £1,000 and £25,000 – around 60% of all claims settled by the NHS – encompassed the greatest disproportionality between Claimant legal costs and damages (compensation), with Claimant recoverable legal costs representing 220% of the damages awarded.

However, it is worth making the point that Claimant legal costs are inevitably higher than Defendant costs because it is the Claimant who carries the burden of proving their claim.  Claimants have to pay for medical records, expert opinions and ever increasing Court fees etc.  Defendants, on the other hand, have access to in-house medical and legal expertise, the cost of which is not taken into account when reporting on Claimant and Defendant legal costs gaps.

The DoH estimates that a regime applying to clinical negligence claims with a value below £25,000 would “release a saving of approximately £45m per annum by 2020/21”.

This begs the question: how is such a proposed saving achievable?

Scope of the fixed recoverable cost proposals

It is proposed that a Fixed Recoverable Costs (FCR) Regime would apply to:

• Clinical negligence cases;
• Involving awards of between £1,000 and £25,000; and
• Brought against the NHS, not for profit and private healthcare providers in England and Wales, including dentists.Proposed exemptions include, inter alia:

• Cases where two or more experts on issues of breach and causation are required; and
• Child fatalities (possibly).Proposed fee options:

The DoH has put forward four possible methodologies to sit behind the fees:

1. A staged flat fee where the amount is fixed irrespective of settlement value and is based on the stage at which the claim is settled;
2. A lower flat fee, with an additional percentage of the final damages awarded;
3. A staged flat fee (as per Option 1) where the rates are reduced by 10-15% if the Defendant accepts liability, for example, within the Protocol period; andAa cost analysis approach based on the mean relationship between current costs and damages using data from Costs Lawyers.

Where there are two or more potential Claimants, the intention is that the regime will apply in relation to each Claimant.

Whilst the Court may entertain an amount of costs greater than the Fixed Recoverable Costs, it will do so only if it considers that there are exceptional circumstances and the additional costs increase the amount by 20% or more.

Experts’ fees, Trial costs and the costs of approving settlements are dealt with separately.

Is it fair to impose fixed costs on every case?

The consultation has received a mixed response. While some Claimant Lawyers have welcomed the £25,000 limit, others have complained that the consultation should not conclude until after the National Audit Office has completed its review of how the NHS manages clinical negligence cases and their costs, as well as Lord Justice Jackson’s review of Fixed Recoverable Costs; and the Ministry of Justice’s review of the effect of the LASPO reforms.

Law Society president Robert Bourns has stated “ draft plans could see harmed patients denied the correct level of compensation unless the proposed regime excludes complex cases and includes exemptions for unusual circumstances .”

In my opinion, there will be some cases that are simply not suitable for Fixed Recoverable Costs and failing to pursue them will likely lead to injustice. At the very least, exemptions must be carefully considered and applied to cases that are particularly complex, or those that involve still-birth and bereavement.

It must be acknowledged by all stakeholders to the consultation that the level of damages is not necessarily an indicator of the complexity of the matter.  Factual and legal complexities need not be proportional to the damages claimed.

So far as bereavement damages are concerned, if exemptions are not applied then there will be a restriction upon the ability of families who have lost a loved one to pursue a claim.

Do the potential benefits outweigh the potential problems?

There will be some benefits to a Fixed Recoverable Costs regime:

• Predictability (although it could be said this is largely achieved by Costs Budgeting);
• Streamlining (presumably with the aim of achieving a more timely resolution of the case); and
• Improved cash flow – by ensuring that costs are paid swiftly at the conclusion of the case without the need for formal Costs Assessment;

However, the proposals for the Fixed Recoverable Costs regime do not, of themselves, suggest that cases will be resolved more rapidly.

Potential problems with the proposed regime could include:

• Potential bias – this should be an exercise which is led by the MOJ and not the DoH.  Surely it cannot be right that the potential tortfeasor (the DoH) is responsible for setting the fees which they themselves will be liable to pay?  Further, proposals 1-3 are based on time analysis and recommendations from an advisory group appointed by the NHS Litigation Authority on behalf of the DoH.

• Arbitrary assessment of costs by reference to the amount of damages recovered – the proposals singularly focus on just one aspect of proportionality – compensation recovered. The Civil Procedure Rules (CPR 44.3(5)) is clear that proportionality is not as simple as a purely monetary analysis – complexity, public importance and the conduct of the parties are just some other relevant factors.  Complexity, not value, drives costs.

• Methodology concerns – these include the application of insufficient hourly rates to proposals 1-3; proposal 3 appears to offer only a minimal incentive for the Defendant to admit liability and / or settle early; and there appears to be no provision to automatically increase the amount(s) annually by reference to inflation.  Further the amounts allowed for expert evidence would appear insufficient potentially leading to experts unwilling to undertake work at the proposed rate.  Defendants could arguably be placed in a more advantageous position of being able to pay as much as they like to an expert, leading to an inequality of arms.

Although a Fixed Recoverable Costs regime limits the amount of costs that may be recovered by a Claimant from the Defendant, Lawyers could charge their clients “top up” fees.  However in a system where clients have to pay the success fee and the non-recoverable element of their after-the-event legal expenses insurance out of their compensation, this is arguably undesirable on many levels.

If a regime is introduced, exemptions should also include:

• Fatal claims;
• Adult protected parties; and
• Claims where the patient has a very short life expectancy.

Should the government be considering improvement to other areas?

The Government has not addressed how the NHS Litigation Authority contributes to increased legal costs by unreasonable approaches to claims, such as resisting payments on account of damages where liability has already been admitted or continuing to use the ‘ deny, defend and delay’ approach, increasing the costs incurred by the Claimant’s Lawyers.

Last year, a major NHS inquiry found that hospitals are failing to investigate far too many deaths and frequently ignore the concerns of bereaved relatives.  A year later the Care Quality Commission (CQC) carried out its own review.

This review looked at the processes and systems hospital trusts use to identify, investigate and learn from the deaths of people in NHS care.  According to the CQC the ‘system-wide problem’ means that hospitals are not learning from their mistakes.  The CQC goes on to explain that “ learning from deaths needs to be a much greater priority for all working within health and social care.  Without significant change at local and national levels, opportunities to improve care for future patients will continue to be missed ”.

Would it not be better to look to reduce the number of mistakes in hospitals, by providing better training, adequate staffing levels and robust procedures?  Notwithstanding the potential to save lives, this would surely result in a reduction in claims levels; damages and costs paid?

Conclusion

In the context of an NHS where previous CQC and Government reports have identified pervasive failures to learn from patient safety incidents, it is imperative that individuals and their families have access to justice; that the NHS can learn lessons and improve patient safety; and so that individuals are properly compensated.

Whilst I agree in principle that there must be a better way of dealing with lower value clinical negligence claims, one size does not fit all.  Clinical negligence claims are usually complex. Defendants can be slow to investigate and admit their failures – increasing costs on both sides; and the courts are too busy.

If a Fixed Recoverable Costs regime is to be implemented for claims which settle at below £25,000 then it must make relevant exemptions as outlined above.

The consultation is due to last for a period of 12 weeks, closing on 1 May 2017.   Responses are key and so I would strongly urge you to consider and respond to the consultation at: https://www.gov.uk/government/consultations/fixed-recoverable-costs-for-clinical-negligence-claims