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Negligence claim costs increasing - again

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Following a Freedom of Information Act request made by the BBC, it has recently been confirmed that the current bill for outstanding clinical negligence claims is going to be in the region of £4.3 billion. This figure includes “all current unsettled claims and projected estimates of ones in the future.”[1] The “total cost of outstanding compensation claims”, which presumably means legal costs and damages, is estimated to be £83 billion.

These figures certainly seem very high, but there are various aspects to this news article which do not provide a complete picture and explanation for some of these high costs especially to readers not familiar with clinical negligence work.

It is not unusual for claims often involving serious injury and which have to involve many experts to be defended but which are settled shortly before trial. Had those representing the healthcare providers made a more prompt admission of liability or explored a possible compromise earlier this would result in a significant saving of costs to both sides.

Granted, lawyers can be pedantic, but a genuine question to ask is, what is meant by a ‘current unsettled claim’? Is it a case which has been issued at Court? Is it a case which the Trust has received formal notification of by way of a Letter of Claim? Or is it a request for medical records where only a potential claim has been intimated? Claims that are not supported by the medical records and/or expert evidence quite rightly do not go any further with no costs to the state. Turning to the overall figure of £83 billion, there are other issues to consider. Firstly, cases involving injury to children at birth are often very high value because the child’s entire future has to be considered, along with the care and adaptations they may need to live a full life. Further, these cases often take many years to settle, because certain neurological injuries may not become apparent until the child is older. This figure will encompass costs relating to cases where the negligence took place some years ago, before the NHS brought in various measures to try and improve maternity and obstetric care, such as the Early Notification Scheme for incidents involving brain injury at birth. It is too soon to tell whether these measures will have a positive impact in years to come in bringing down rates of injury at birth and consequential claims for damages.

Crucially, the changes in the discount rate must be taken in to account as part of this figure. The discount rate is the percentage deduction which applies to future losses to take into account the fact that the Claimant would likely invest their compensation, and earn an investment on this sum. It had been set at 2.5% since 2001, however in 2017, it was reduced to -0.75%. As a negative figure, this essentially meant that future loss claims were suddenly inflated by a large degree. This change in the discount rate accounted for a 33% increase in damages paid out between 2016/2017 and 2017/2018.[2] The discount rate is changed by the Lord Chancellor, over which both Claimant and Defendant solicitors have little or no control.

The principal of proportionality is also key here. The costs of a claim must be proportionate to the value of the case, otherwise serious penalties are likely to be imposed upon Claimant solicitors. This is why so many lawyers have stopped taking on low value claims, because the costs involved cannot be justified. If cases are on a No Win No Fee Agreement, the lawyer takes on a significant risk that the case won’t be successful and that all of their work will be written off. This is also why so much risk assessing goes into cases right from the beginning, and at each and every stage. The cases that are incurring costs are cases where there has been negligence and deserve to be settled.

The NHS has taken strides in the right direction; changing its name from NHS Litigation Authority to NHS Resolution in 2017, and having a permanent mediation scheme in place since 2016. Unfortunately, change in the culture away from litigation has only been a recent thing on the part of Defendants, and still seems an alien concept to some. Letters of intention are frequently sent to Defendants very early on before significant costs have been incurred, in cases where there is strong evidence of negligence obtained from an internal Trust enquiry, but all too often these are met with denials until many months further down the line, just as in the case of baby Hayden’s death reported by the BBC. This is the main scandal from this story – how can taking three years to reach a decision on whether there was even negligence in the first place help anybody?




[2] – NHS resolution presses ahead with mediation as litigation decreases but claims costs continue to rise