Tuesday, 11 October 2016

Picking Over The Bones

On 9 October 2016 the Mail on Sunday's front page story, with its mixed metaphor headline, was directed at "grasping" clinical negligence lawyers. Warning: I am a clinical negligence lawyer. So is the author of this guest post, Alan Mendham, partner at Gadsby Wicks. Following Michelle Obamas advice, "When they go low, we go high", Alan rationally explores the actual rise in costs and the reasons behind it. I would be more than happy to publish a guest post in reply from anyone who works for clinical negligence defendants or the NHSLA.

Guest Post By Alan Mendham

The NHSLA published its 2015/2016 annual report which, although more measured than in previous years, informed the reader that costs paid to Claimants had risen from £292m to £418m, a rise of £126m that has been seized upon by the press.

What the NHSLA Annual Report does not explain is that it is comparing apples with oranges which, coincidentally, is to its own benefit when making the argument for fixing costs.

Have Costs Risen to £418m?

No, they have not.  The figure of £418m includes both payments on closed cases and payments on account of costs in cases that have not yet been closed.  

The Civil Procedure Rules were amended in 2013 to include a presumption that when the Court makes an order for costs, the order should include a payment on account of costs.  Lawyers and Courts were slow to utilise payments on account, with the NHSLA routinely opposing requests for payments on account, but in the last year they have become common.  

Payments on account of costs are a pre-payment against costs in cases that will be closed the following year.  To see if and by how much costs have risen, one needs to strip out the payments on account and look at the costs paid in closed cases.

Curiously, the figures paid in closed claims do not appear in the NHSLA Annual Reports.  Instead, they appear in separate “Fact Sheets”.  In 2014/2015, it was £249m.    In 2015/2016 it was £279m.  The rise in costs therefore is from £249m to £279m, a rise of £30m.

Why Did Costs Rise?  

It is multifactorial, but it is likely to be a combination of NHSLA behaviour, increases in Court Fees and Insurance Premium Tax and, of course, the NHSLA increasing its membership with numerous private sector organisations joining the scheme and increasing the NHSLA’s income but now producing claims that it must meet.  Claimants cannot control any of those factors.

The costs paid to Claimants include Court fees, which the Government have increased to raise revenue and to make the civil justice system profitable.  The fee for issuing a Claim Form has risen by up to 620% and the fee for commencing detailed assessment proceedings has risen by up to 2,700%.  Those increased fees are included in the costs paid to Claimants, but the Claimant can do nothing to reduce them.

Insurance Premium Tax has been doubled by the Government to raise revenue; that increased tax revenue is included in the costs paid to Claimants, but the Claimant can do nothing to reduce it.

The seemingly universal experience of Claimant lawyers is that the NHSLA deny, defend and delay, forcing Claimants to issue Court proceedings before the NHSLA will admit liability or make or accept a sensible offer of settlement.

Figures obtained from the NHSLA through the Freedom of Information Act show that in 2016 it settled fewer cases before the issue of proceedings than the previous year (3,451 in 2014/2015 versus 3,281 in 2015/2016) and that the number of cases in which damages were paid following the issue of proceedings increased (2,430 in 2014/2015 versus 2,514 in 2015/2016). 

The figures seem to bear out the complaints of Claimant solicitors: the Claimant received damages in almost 76% of cases in which Court proceedings were commenced (a rise from 72% in 2014/2015).  They also demonstrate that the average costs in closed cases are £20k if resolved before the issue of Court proceedings and £85k if resolved after the issue of Court proceedings.

Managing The Early Stages of Cases

The NHSLA introduced a fixed costs scheme for their own panel of lawyers which, for a claim valued at up to £50,000 requires them to undertake all work up to and including the service of a Defence, including paying experts and counsel, for the sum of £2,000.  If the claim is valued at between £50,001 and £100,000, the NHSLA allow £4,000 for the same work.  The question has to be asked, are the NHSLA causing so many cases to be settled late in the litigation process by failing to pay enough to enable experienced lawyers and medical experts to carry out an adequate investigation at an early stage?  Fixed fees do not work if the fee is fixed so low that the work cannot be carried out with appropriate attention and skill.

It is laudable that the NHS is now taking steps to learn from the clinical mistakes uncovered by claims in order to reduce patient harm, which will of course reduce the costs paid by the NHSLA.  What Claimant lawyers would like to see is a similar approach to the management of litigation within the NHSLA, to focus on why they settle so many cases so late on.  The NHSLA are either receiving bad advice, or ignoring good advice.  If it addresses its own performance and reduces the number of cases resolved only after the issue of proceedings from its current 76%, significant costs savings can be made.  

Alan Mendham is a solicitor and partner at Gadsby Wicks specialising in clinical negligence claims and is a member of the Society of Clinical Injury Lawyers Public Affairs and Patient Safety Group.