Fixed Costs in Clinical Negligence Cases – the Die is Cast

Proposals

In August 2015, the Department of Health announced a proposal to introduce a fixed recoverable costs regime for clinical negligence claims worth up to £250,000. That proved unpopular with most Claimant lawyers who argued that a Claimant’s access to justice would be restricted as the cases falling within the proposed category would simply be unsustainable to run as the amount of fixed costs was unlikely to enable a proper investigation of the claim to be undertaken.

At that stage, it was intended that the fixed costs regime would be implemented by 1 October 2016. That was postponed and the latest proposal (seen as a significant victory for claimant lawyers) was announced in July 2016.

The new proposal seeks to place a cap on legal fees that can be recovered in clinical negligence claims worth up to £25,000. In cases that go to trial, a flat fee of £7,150 is proposed and for those cases that settle before proceedings are issued, a flat fee of only £3,000 will be recoverable.

The consultation regarding the proposal was launched in January 2017, entitled Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims. The consultation closed on 2 May 2017. Further announcements are now awaited.

Background

The Department of Health is keen to tackle the issue of the rising legal costs burden on the NHS. To put the figures into some sort of context, in 2015/2016, the National Health Service Litigation Authority paid out nearly £1.5 billion in clinical negligence claims. Of that figure, damages amounted to £950 million, claimant’s legal costs fees £418 million and defence costs £120 million, certainly making legal costs appear disproportionate. That was a rise on the previous year where claimant legal costs were £291 million.

Unsurprisingly, given the news about shortage of NHS funds, the public are in favour of attempting to reduce legal spend and in particular the introduction of a fixed costs system.

A recent survey of over 2000 adults commissioned by the Medical Protection Society showed that 80n per cent were in favour of the introduction of a fixed costs system. The Medical Protection Society have called on the Government to be “bold” when considering the proposed changes to the system and in particular the threshold which is to apply.

Discussion

Will the introduction of a fixed fee system really reduce legal costs significantly, allowing huge savings to be made for a cash strapped NHS?

It is said that the proposed changes could save the NHS as much as £45 million a year. According to the chair of the Civil Procedure Rules Committee, Amanda Stevens, clinical negligence cases worth up to £25,000 account for approximately 60 per cent of all such claims. An accurate assessment at the outset by Defendant lawyers of the maximum liability for legal costs must surely be a good thing.

Claimant lawyers however disagree, arguing that the proposed changes are flawed, being based on the view that lower value cases are less complex, which is not always the case. They further argue that it is the existing underlying system itself that needs fixing referring to the “delay, deny, defend” culture that is typical of NHS Resolution (formerly the NHSLA).

The Association of Personal Injury Lawyers (APIL) have suggested that fixed costs should only apply in those cases where liability has been admitted and only one expert discipline is required. If that is the case then a substantial amount of cases are likely to be excluded from the fixed costs regime and the anticipated costs savings will not be as large as forecast.

Summary

It is clear from the questions posed and representations made in the consultation period that there are likely to be changes made to the proposal before it is implemented and those changes could be significant. What criteria will be applied in deciding which cases are covered by the regime is, as yet, unknown.

The Department of Health have indicated that they wish the fixed costs regime to be implemented as soon as possible, although it remains unclear exactly when the changes will be implemented. What is certain however is that Defendant lawyers can expect a spike of claims prior to the introduction of the regime.

Of course, looking at controlling the ever increasing costs of medical malpractice in the NHS by imposing fixed costs does beg the question as to whether this is closing the door after the horse has bolted. Currently the NHSLA is informed of claims – often years after the events that lead to the claims have taken place. Would it not be better investing in a regime that allows the notification of incidents and allows early interventions to explore resolution and risk improvement around the events that occurred? That way perhaps all costs would be reduced and patient outcomes improved.