Monday, 27 February 2017

Discount Rate: In Case of Emergency....

Today's announcement of a change in the discount rate from 2.5% to -0.75% (that's minus 0.75%) was a shock, although the Lord Chancellor has said it was the "only legally acceptable rate". If so, one wonders about the legality of the 2.5% rate that applied up to today.

The change comes into effect on 20 March 2017.  There may be a legal challenge to prevent that. Nevertheless litigators should treat this change as an emergency.

It has immediate implications for practitioners. Gordon Exall has been quick of the mark with sensible advice. Have a look.

Here is a link to tables of multipliers using the -0.75% rate produced by Rebmark. I cannot vouch for the accuracy of the figures.

Future claims could double or even treble in value. In some cases multipliers could be over 100.

The implications of this change are far-reaching. The cost to insurers and the NHS could be very high.

For litigators, immediate attention should be given to:

  • Existing Part 36 Offers
    • Any that depend on an assessment of future awards need to be immediately assessed. 
    • Claimant's must consider withdrawal as a serious option. It might be professional negligence not to do so. However
    • If a Defendant sought permission to accept a Part 36 Offer which would now manifestly undervalue a claim, surely the Court would refuse permission. 
    • Consideration by Cs to make offers based on the new rate - might the new rate be challenged by insurers so that it does not take effect? How should Ds respond to offers based on the new rate but when the time for acceptance expires only a day or so after the new rate is due to come into force?
  • Existing non-Part 36 Offers
    • ditto
  • Ongoing negotiations/settlements
    • Radical reassessment is required.
    • Court unlikely to approve settlement that did not reflect new rate
  • Schedules and Counter Schedules
    • Need to be re-written. All future claims, and claims for loss of earning capacity that are based on the Ogden Tables, need to be re-calculated.
    • Discounts for early receipt would become enhancements for early receipt using a negative discount rate. Is that how they should be used or should there simply be no allowance either way for early receipt.
  • Costs budgets
    • If more work needed, for example re-writing schedules, or obtaining further financial advice, then this needs to be factored in to a costs budget
  • Court fees
    • Some claims will have doubled in value overnight. This might affect the proper issue fee.
  • PPO vs lump sum 
    • The balance of benefits and disadvantages of a PPO or lump sum award has just changed. Financial advice is required to address the new position
  • Interim Payments
    • The assessment of the likely lump sum, insofar as it depends on certain future losses, requires reconsideration.
  • Accommodation Claims
    • Is the Roberts-v-Johnstone calculation still applicable? It would result in a negative amount (Additional cost of accommodation x -0.75% x multiplier). Are new ways of assessing the value of an accommodation claim now required? See this blog from John de Bono QC : Roberts v Johnstone is dead
    • Will there be an early test case on how accommodation claims should be calculated?
    • In the meantime how do litigants deal with this uncertainty?
Of course, this rate will not last forever. In particular, will there be a legal challenge by the insurance industry? Might they succeed in staying the implementation of the new rate so that it does not take effect as planned on 20 March? Or, will there be a short "window" in which claims have a value well in excess of what has come before, and will ever come again?

I am sure there are other implications that will sink in with further reflection. Let me know of any thoughts about what they are and how to deal with them.

Friday, 24 February 2017

Whiplash Muddle

The government has swiftly considered the responses to its consultation on reforming the claims process for whiplash injuries. Indeed it has drafted legislation, including provision for a tariff system of compensation that throws up some bizarre anomalies.

The small claims limit for all road traffic injury claims, including but not exclusive to whiplash injuries, will be increased to £5,000. All other PI claims up to £2,000 will be dealt with as small claims. So, a claimant will be able to recover costs of legal representation for a claim for a knee injury for which damages are £3,000 only if it was suffered otherwise than in a road traffic accident.

For whiplash injuries (the definition of "whiplash" yet to be published) and psychological injuries (suffered on the same occasion as a whiplash injury), Judges are no longer to be trusted to assess the level of compensation. Instead the government will impose a tariff of damages.

Tariff for whiplash and psychological injuries set out in the Government's Response to the Consultation on reforming the Whiplash claims process.

Injury Duration
2015 average payment for
PSLA – uplifted to take account
of JCG uplift (industry data)

Judicial College Guideline (JCG) amounts (13th edition)
Published September 2015
New Tariff
0-3 months
A few hundred pounds to £2050
4-6 months
£2,050 to £3,630
7-9 months
£2050 to £3630
10-12 months
£2050 to £3630
13-15 months
£3,630 to £6,600
16-18 months
£3,630 to £6,600
19-24 months
£3,630 to £6,600

The new tariffs are therefore the same whether the injury is a physical whiplash injury alone or a whiplash injury with psychological injury, and however long the psychological injury lasted (the tariff is set by the duration of the whiplash injury).

This throws up some interesting anomalies:

  • The new tariff is set at 13% of the existing average award for 0-3 months injuries and 83% of the existing average for 19-24 months injuries. 
  • There are increasing marginal tariff awards for each additional 3 months of injury are: £225, £315, £425, £630, £840 and £1065. In fact the severity of symptoms tends to be at its highest in the initial period, tailing off. Thus the marginal tariffs should diminish.
  • An additional month of injury from 15 to 16 months results in £840 in additional damages - more than for a full nine months of injury.
  • The tariff awards proportionately more
  • The severity of symptoms is irrelevant to the tariff. So a very severe injury that fully resolves in 6 months attracts an award less than a minor injury lasting 9 months.
  • Unless the regulations carefully define psychological injury, someone who suffered disabling PTSD for the rest of their life would be restricted to the tariff if they suffered a 20 month whiplash injury at the same time. 
Nailing my own colours to the mast, I would have raised the small claims limit for all PI to either £2,500 or £3,000 and left the courts to determine damages for all injuries, to whatever part of the anatomy and however caused.

Having gone down the route of introducing a tariff for certain injuries suffered in certain circumstances, the government was likely to get itself in a terrible muddle. And so it is proving.

Monday, 6 February 2017

Bolam under the Microscope

For a more in depth analysis of Muller and other clinical negligence cases, subscribe to my 2017 Quarterly Reports


Are there cases of clinical negligence in which the Bolam test has no application?

We know that in the field of informed consent the Supreme Court in Montgomery v Lanarkshire recently emphasised that the Bolam test is not an appropriate yardstick for ensuring that patient autonomy is respected. Now, in Muller v King's College Hosptial NHS Foundation Trust [2017] EWHC 128 (QB)  Kerr J has addressed the applicability of the Bolam test to cases of purely diagnostic error, where there is no question of the exercise of professional judgment in relation to management or treatment.

The Claimant alleged that there was a negligent error by a histopathologist in reporting what was a biopsy of a malignant melanoma as a non-malignant lesion.

Defendant's counsel submitted that Bolam should be applied "unvarnished". The admitted error in reporting: 

"... could easily be made by a histopathologist acting with reasonable competence, i.e. with reasonable skill and care. Mr Gibson submitted that Dr Foria's expert opinion was founded on acceptable reasoning and not outside the bounds of respectable medical opinion. 

"Mr Gibson submitted, therefore, that Professor Wright's contrary view - that Dr Goderya committed a plain breach of duty - should not be preferred; Dr Foria's opinion was sufficient to exonerate Dr Goderya from the charge of negligence. Applying the Bolam doctrine, the court should not choose between these opposing experts' views; Dr Foria's view should carry "substantial weight" and should not be rejected unless Professor Wright's evidence cast it in "such an altogether negative light that it should be rejected" (per Green J in C. v. North Cumbria University Hospitals NHS Trust, at paragraphs 25(i) and 73)."
[paras 44 and 45]

In contrast Claimant's counsel argued 

"that the application of the Bolam principle did not provide the answer here. He proposed that the governing authority was the Court of Appeal's decision in Penney v. East Kent Health Authority [2000] PNLR 323, in which Lord Woolf MR gave the judgment of the court. That case, he pointed out, was like this one a case of interpreting objective data wrongly.

"He submitted that Penney showed that the court must determine the objective facts about what pathological features were there to be seen on the slides - which in the present case is a matter of agreement - and then decide for itself whether, in the light of the differing experts' views, the misdiagnosis was one that must have been made without the use of reasonable skill and care. The court could not abdicate its responsibility to resolve the conflict of expert opinion by resorting to the Bolam-derived notion of a respectable body of medical opinion."
[46 and 47]

The Judge considered the context in which Bolam and other cases had been decided and concluded at [75]

"In a case involving advice, treatment or both, opposed expert opinions may in a sense both be "right", in that each represents a respectable body of professional opinion. The same is not true of a pure diagnosis case such as the present, where there is no weighing of risks and benefits, only misreporting which may or may not be negligent. The experts expressing opposing views on that issue cannot both be right. And the issue is, par excellence a matter for the decision of the court, which should not, as a matter of constitutional propriety, be delegated to the experts."

However ....
"I am bound by the law as it currently stands, to approach that issue by reference to a possible invocation of the Bolitho exception. I must not, therefore, reject Dr Foria's view unless I am persuaded that it does not hold water, in the senses discussed in Lord Browne-Wilkinson's speech in Bolitho and developed in other cases: that is to say, if it is untenable in logic or otherwise flawed in some manner rendering its conclusion indefensible and impermissible." [79]

This might point the way to future appellate consideration (perhaps not in this particular case) of the approach that should be taken to cases involving errors of reporting and diagnosis.