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Health secretary climbs down on clinical negligence costs

Lawyers tentatively welcome proposals, but critics call for ‘root and branch reform’ of law

30 January 2017

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In a major climbdown, the Department of Health has announced it is limiting its plans for fixed recoverable costs in clinical negligence claims to cases worth less than £25,000.

A consultation on the mandatory system has been launched, closing on 1 May. The document states the total cost of claims against the NHS increased from £1.2bn in 2014/15 to £1.5bn in 2015/16. For claims under £25,000, recoverable legal costs are on average 220 per cent of damages awarded.

The DoH has estimated that fixed fees will save the health service £45m a year by 2020/21.

Several options are put forward in the consultation document for the level of fees, including staged flat rates, a percentage of damages to fees, and a cost analysis approach.

‘It’s important that when significant mistakes happen in the NHS, patients are able to have an open dialogue with a trust about what went wrong, receive reassurance of what is being learnt, and can discuss what form of recompense or redress may be appropriate. Legal action should only be part of this process,’ the secretary of state for health, Jeremy Hunt, told the Mail on Sunday.

‘Unfortunately, what we often see in lower-cost claims is a deeply unfair system where unscrupulous law firms cream off excessive legal costs that dwarf the actual damages recovered. We believe this creates an adversarial culture of litigation, which is inflating insurance premiums and drawing away resource from the NHS at a crucial time.’

Described as ‘truly shocking’ by the Law Society at the time, the DoH had originally proposed that fixed fees should be applied in claims up to £250,000. Considering the government’s earlier proposals, today’s news received a cautious welcome from Chancery Lane and other stakeholders.

‘We remain concerned that the draft plans could see harmed patients denied the correct level of compensation unless the proposed scheme excludes complex cases and includes exemptions for unusual circumstances,’ said the Law Society’s president, Robert Bourns. ‘It is also critical that fixed costs are set at a level which is sustainable for expert solicitors to continue to operate in this area.’

He continued: ‘It is critical that those patients harmed by negligent care get the compensation to which they are entitled to get them back on their feet. What is important now is that complex claims are excluded from the proposal and that the fixed costs payable are suitable to enable expert solicitors to continue to advise. If not, patients won’t be able to get the expert legal advice they need.’

First4Lawyers’ managing director, Qamar Anwar, applauded the government for considering concerns over access to justice, but warned that it must also get its own house in order.

‘This still captures serious cases, however, and the DoH needs to see this process through by adopting an evidence-based approach to what the costs should be – they must be set at a realistic level, rather than one that makes it uneconomic to pursue a claim,’ he said.

‘Lawyers’ fees are an easy target, so it is vital that the department shows the same vigour in delivering the underlying culture change required in the NHS to learn from past mistakes and become a more open and transparent organisation.’

Neil Sugarman, the president of the Association of Personal Injury Lawyers, said the toning down of government plans will come as a relief to injured patients.

‘Earlier ideas to fix legal fees in cases up to £100,000 or even £250,000 in value were far too radical, and would have put injured people into legal straightjackets when all they desperately want is to get their lives back on track after needless medical blunders,’ he remarked.

‘A fixed fee regime for more straightforward cases could be workable but the priority has to be the development of a quick and efficient system. It should then be possible to fix legal costs to reflect the speed and efficiency of the new process.’

Sugarman added there was a need to end the ‘deny, defend, and delay’ tactics of those defending claims, which, he said, was an all-too-common approach employed by medical professionals. ‘It makes legal proceedings take far too long [and] generates unnecessary cost and untold human misery for those who have been injured.’

However, the Medical Defence Union has argued the reforms do not go far enough. Dr Matthew Lee, the MDU’s professional services director, said fixed costs were ‘long overdue’, and in low-value claims the fees claimed by claimant lawyers were well above the damages awarded.

‘We are disappointed the caps are proposed only for claims where the level of compensation paid is between £1,000 and £25,000. The original pre-consultation by the DoH proposed introducing fixed costs for claims up to £250,000 which would have had a more immediate impact on disproportionate legal fees seen by the NHS and medical defence organisations.

‘Patients who believe they have been negligently harmed must have access to justice, but fixed costs are fairer and would make claimants’ lawyers’ legal fees more affordable and proportionate.’

Lee also called for ‘root and branch reform of personal injury law’ to address the rising cost of compensation claims themselves, which he said are reaching unsustainable levels.

Mike McKenna, a member of the Forum of Insurance Lawyers, welcomed the consultation. 'While the debate will rightly cover all sides of the arguments, any measures which can streamline the process, support timely resolution of claims whilst achieving savings for the NHS and contribute to lesson learning is to be welcomed; it also correctly reflects a need to streamline the litigation process, in line with other personal injury claims, where possible.'

John van der Luit-Drummond is deputy editor of Solicitors Journal

john.vanderluit@solicitorsjournal.co.uk | @JvdLD

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Personal injury Funding & Costs Clinical negligence

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