Fixed costs in clinical negligence claims

The government will consult on plans for the introduction of fixed recoverable costs in clinical negligence claims i.e. the introduction of a scheme such as exists for the majority of personal injury fast track claims, but, as revealed on 12 January 2016 in a reply by Ben Gummer MP, Parliamentary Under-Secretary to the Department of Health, to a written question from Andy Slaughter MP, the government’s intention is clear.  That is, to introduce fixed recoverable costs (FRC) for clinical negligence claims from 1 October 2016 once the consultation is out of the way.  This follows a delay in the consultation process.  The formal consultation has not yet been published, but the implementation date remains the same.

There have been suggestions that the FRC regime may be applied in all clinical negligence claims with a value of up to £250,000.  It would on that basis include many claims involving life-changing injury.  Outside clinical negligence a system of imposed fixed costs exists only in relatively straightforward personal injury claims with a value up to £25,000.  FRCs are set at levels which generally allow streamlined legal practices to carry out necessary basic work on a claim in straightforward cases.  Such a regime if imposed on clinical negligence claims is likely to have significant implications for the viability of bringing such claims on behalf of injured patients, and to have knock-on effects on the fees which can be paid for expert evidence, particularly in the more complicated type of case.

For claimant lawyers who will be bringing such claims under conditional fee agreements (no-win, no-fee agreements), the paring down of costs recovered on successful claims will affect the economics of investigating difficult or complicated claims (which will include obtaining advisory reports from medical experts) where there is a high risk of recovering no costs at all.  In the past the costs recovered from cases which are won have been used by claimant lawyers to help fund the work necessary for investigating and then abandoning, or pursuing and in the end losing, other claims.

It is argued that fixed recoverable costs are necessary in order to control the cost of defending such claims incurred by the NHS.  Victims’ organisations argue that those costs would be avoided if more effort were to be put into avoiding the incidents which give rise to the claims in the first place.

Medico-Legal Minder will keep you informed once the government’s consultation documentation is available.

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Why should an injured person recover damages from the person at fault?

The ‘Spending Review and Autumn Statement 2015[1] (26th November 2015) may have had some surprises for the economists and political commentators.  But it was a surprise that it had a surprise for the personal injury practitioner.  Whiplash claims below a certain value will be abolished, if the government and the ABI (Association of British Insurers) have their way.

You may think that ‘whiplash claims’ are just a way of building up a holiday fund or a nest egg for most claimants.  But even the ABI recognises that a whiplash injury is a neck injury and often the result of a road traffic accident.[2]  However according to the Autumn Statement (para 1.143) compensation must stop because:

  1. The government is determined to crack down on the fraud and claims culture in motor insurance” and to “end the cycle in which responsible motorists pay higher premiums to cover false claims by others”;
  2. Whiplash claims cost the country £2 billion a year, an average of £90 per motor insurance policy, which is out of all proportion to any genuine injury suffered”.

Of course, we have not been provided with the evidential basis for fraud in this area or of the need to crack down on it, or of this so-called “cycle” and none is presented.  And the source for the quoted cost of whiplash claims and the claimed cost to every motor insurance policy is given in the Autumn Review as the ABI’s own assertion available on its website.  To give credit to the ABI, in the reference referred to they go on to state that “we are actively working with the insurance industry and the government to … make the system more efficient for genuine claimants” although that appears to have fallen on deaf ears as that end result is not obviously behind the government’s plans to abolish claims for some genuine claimants and make more claimants bring the claims to court by themselves.

We will no doubt hear in due course how the assertion that the proposed changes will “remove over £1 billion from the cost of providing motor insurance” is calculated and we will not hold our breath for the heralded “average saving of £40 to £50 per motor insurance policy to be passed onto consumers”  i.e. motorists.

The plan proposed is two-fold.  Firstly to remove the right to any damages at all for the injury itself (damages for pain and suffering and loss of amenity) for a class of “minor soft tissue injuries”, although consequential losses (loss of earnings, medical costs) will be recoverable.

How that class will be defined we wait to see.  If it is by what would be the value of such general damages, and it is difficult to see what else it could in practice be, then we can expect interesting claims at around the level imposed where the value will be argued up and down by the respective parties.

And in the absence of a medical report how will it be known how significant the injury is, but if the consequence of the report, and following appropriate skilled advice, the value of the claim is considered to fall just below the decreed claimable value, who will pay for that report?

Further it would be strange if no damages were to be recoverable for a ‘minor’ whiplash injury but damages would be recoverable for a finger fracture or a laceration to the arm, and what about ligamentous damage to the shoulder or severe bruising to the chest?

Secondly, personal injury claims with a value up to £5,000 will be dealt with in the small claims court where legal costs are not recoverable, and therefore in practice legal representation is not available for claimants.  (The current level of damages for pain and suffering and loss of amenity is £1,000.)

The current Judicial College Guidelines for the Assessment of General Damages in Personal Injury Cases gives a range of awards between £3,630 and £6,600 for whiplash injuries to the neck and soft tissue injuries to the shoulder where a full recovery takes place within a period of about one to two years, so it can be seen that a £5,000 limit will put claims where there have been significant consequences for an individual into a court system where they will be unrepresented and will work out how best to present their claim on their own.  In contrast an insurer defending such a claim will decide as a commercial matter whether or not it would wish to spend policy-holders’ money in seeking to defend or minimise such a claim using a professional with experience of such matters, or, perhaps more likely, make offers of settlement on which the claimant will be unable to obtain independent legal advice.

The government will consult on the details in the New Year.  For anyone who considers that if they are negligent when driving a car and cause injury, then their insurer should pay appropriate compensation to the injured party, it will be important to keep an eye out for the consultation when it appears as, on past form, there is unlikely to be much time in which to respond.

Meanwhile bear a thought for the potential consequences for the injured road user. As Andrew Ritchie QC has suggested:  “So when the elderly and the retired suffer a rear end car crash which is not their fault and thereafter suffer intense neck pain and reduced neck movement for 3-6 months, they will recover no damages, not a bean, nothing.  This change does not improve the state of the nation, it undermines safe driving and puts more profit into the pockets of the same insurance companies who paid hundreds of thousands into the Conservative Party’s election funds before the last two elections.

[Who or what is medico-legal minder?  Terms and conditions apply]