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Managing the costs of clinical negligence: A claimant’s perspective on the NAO report

The eagerly awaited report from the National Audit Office (NAO) has recently been published and provides an interesting read for claimant and defendant solicitor practitioners, as well as NHS staff. Seamus Kelly, Costs Consultant, reports.

The focus of the report was to assess the government’s efforts to understand and manage the rising costs of the Clinical Negligence Scheme for Trusts. In particular, the report examines what is causing the rising costs of clinical negligence claims and whether the NHS Resolution and the Department are taking effective action to understand and control the costs.

The report has spurned a number of headlines exclaiming the ‘surge’ of clinical negligence costs, hinting that avaricious claimant solicitors are to blame. The reality, of course, is much more nuanced and interesting. To try to unpack all of the issues touched upon in the report would be akin to opening Pandora’s box. As such we would recommend that the full report be considered. This article looks briefly at some of the main points.

As a starting point the report outlines three contributing factors to the rising costs of clinical negligence as follows:

  1. Increase in number of claims;
  2. Increase in damages awarded;
  3. Increase in legal costs.

 

These issues are of course inter-connected and feed into each other. The reasons for the increase in claims and damages are varied and include factors such as increased NHS activity, and the types of cases brought. These are issues which deserve their own consideration but do serve to provide a context for the overall expenditure.

Legal costs

The NAO report recognises that the NHS’s expenditure on legal claims includes an increase in legal costs. The report attempts to look at some of the reasons for this. In amongst the various findings and observations, there are various points of interest for Claimants. These observations are more indictments of failings within the NHS system, rather than faults on the side of claimant practitioners.

NHS approaches to cases

Throughout the report the NAO gives examples of criticisms raised by Claimant practitioners as to the NHS Resolution’s tactics and approaches. One of the common issues, which Claimant practitioners will of course be familiar with, is the belief that ‘the NHS Resolution increases the costs of clinical negligence cases by refusing to settle early, even when the stakeholders believe there to be clear evidence that the NHS is liable to pay damages’. (para 3.7 on p40).

This sentiment is echoed later in the report where it is stated that ‘in 2016-17 some 80% of all legal costs are accounted for by the 34% of claims that are settled through court proceedings’.

The NHS Resolution provides potential reasons for the need to enter court proceedings, and whilst there is some merit to these, there still prevails amongst many claimant solicitors the view that the NHS Resolution refuses to settle early, thereby requiring the need for proceedings to be issued and further costs being incurred. Further the report states that the average time taken to resolve a case ‘has risen by four months since 2010-11′ (p44 para 3.16). This, the NAO finds ‘can lead to higher legal costs for the NHS’.

Claimant costs

The report draws attention to the fact that the NHS has managed to obtain decreases on a claimant’s costs in the last few years. An example is provided where the NHS Resolution successfully challenged an £8 million charge for a single legal firm and settled the payment for £500,000.00 (p41 para 3.9). Whilst this may initially appear shocking, there are 2 things to take away from this. Firstly, the decrease obtained on this matter appears to have been the exception rather than the norm and would have had an impact on the average figures. There are evidently some ‘bad apples’ who have claimed excessive costs; however, these are not typical. It would be wrong to hold such an example to be indicative of a normal case. The second point of note is that the decrease obtained by the NHS Resolution would suggest that the procedure utilised to challenge such costs is evidentially effective. Further the implementation of Costs Management, and recent case law dealing with proportionality should help eradicate such exceptional instances.

Despite this, the report goes to highlight that ‘lessons learned from these cases are not consistently shared with other relevant regulators and bodies‘. (p41 – para 3.10). This appears to be a theme running through the report – that bodies are not communicating, and that lessons are not being implemented.

Access to Justice

In terms of legal costs specifically the report briefly touches upon Lord Jackson’s recent proposals, in particular the possibility of a bespoke process for handling clinical negligence claims up to £25,000.00. Most parties will acknowledge, however, that the majority of clinical negligence cases are worth more than that.

The report appears to draw attention to the increase in claims and what can be done to mitigate this. Interestingly however, the report highlights (on page 10) that ‘only a small proportion (less than 4%) of people experiencing a harmful incident will make a claim’.

Claimant solicitors are, therefore, providing a vital role for access to justice. Whilst the headlines will inevitably be used to criticise claimants, the conflicting view is that the report is more an indictment on the NHS Resolution’s approach. It is clear that more work needs to be done at the NHS level to mitigate the number of claims, and to deal with matters promptly where they do arise.

The report highlights that the most common report causes of claims related to ‘failures to perform a treatment or a delay in performing it’ (amounting to 22% of claims). This is an issue which needs to be addressed to help mitigate the overall expenditure.

Clinical negligence claims are now subject to the Costs Budgeting regime, meaning that the Court determines what is reasonable and proportionate from a costs perspective. As cost practitioners we regularly provide representation at CCMCs and will see NHS budgets which are significantly less than the claimant. This is not to say that claimant practitioners are excessive, however, a like-for-like comparison with the NHS Resolution is simply not possible. The report highlights that in its 2013 procurement of its legal defence panel, NHS Resolution negotiated a 5% cut in the price it paid to its legal panel firms. Individual claimants simply do not have this luxury.

The costs of bringing a clinical negligence claim can of course be significant. Claimant solicitors play an integral role in seeking redress where clinical negligence has occurred. The important thing to bear in mind that whilst the report focuses on statistics, each claim represents a person’s life and it is all too easy to get drowned in the statistics.

The report acknowledges that costs are increasing, however, there are a number of interlinked and complex reasons – many of which will take years to properly address. Further the funding available to the NHS and the cuts in this regard inevitably have an effect.

Steps such as the Costs Management regime and Lord Jackson’s recent recommendations serve to help curb spending on cases, however on the other side of the fence, the report would suggest that there is more that can and should be done by the NHS to help mitigate costs (such as ‘tactics’ and learning lessons). Whether the NHS is given these resources is of course another issue in itself.

This report has highlighted many of the issues already known across the industry but it would be wrong to use the report as a weapon to attack claimants. In the meantime, claimants deserve the right to seek redress where a wrong has been done and claimant solicitors should be enabled to do this at the highest possible level.


Seamus Kelly is a Costs Consultant at PIC. 

To contact him about any matter raised in this blog or for help with a costs law matter, please click here.

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