Clinical Negligence Payouts Soar

During the financial year 2017/18, NHS compensation payments to claimants rose to some £1.63 billion. This upward trend looks destined to continue, at least in the short term, according to NHS Resolution’s annual report. The organisation handles legal claims against National Health Service care providers in the event of negligence cases. 

Similarly, The Pulse reported expectations of an increase in legal damages to £2.3 billion per annum. Although the overall number of clinical compensation cases had stabilised or reduced, according to the leading publication for UK general practitioners, a rise in the mean amount claimed meant that the total claimed actually rose. Astonishingly, one award reached £21 million. 

Concerned experts blamed these increases on the Personal Injury Discount rate (PIDR), a judicial rate of interest set by the Lord Chancellor and the Exchequer. In February 2018, Chancellor Philip Hammond announced its most recent adjustment. Insurance companies use the discount rate to calculate future income projections for lost earnings compensation. In other words, it is a percentage used to calculate the interest income that serious injury claimants can expect from investing their damages awards. To simplify the arithmetic, a lower rate places upward pressure on the sums awarded to claimants in clinical negligence cases, because the claim amounts have to be high enough to provide monthly income to meet living expenses, medical needs, ongoing care and other costs. 

Grouped together, emergency medicine and orthopaedic claims accounted for approximately a quarter of the year’s total actions. In 2017/18, 1,395 new casualty (Accident and Emergency) cases against the NHS represented an almost breathtaking increase of around 88 per cent in comparison to the previous year’s figures. In the same period, orthopaedic surgical patients filed an aggregate of 1,281 new claims. Correspondingly, financial provision for future indemnity payouts rose by £12 billion, from £65 billion to £77 billion. 

On the positive side, there was a minor reduction in claimant legal costs of just under £32 million. Also, nearly seven in ten claims reached an agreement without court proceedings. Notably, only a tiny minority (of less than 1 per cent) proceeded to a full trial. Of this latter fraction, most judgements favoured the NHS, according to information published by the National Health Executive. 

Expert Views: Civil Liability and the Future

Emma Hallinan, legal director of the Medical Protection Society, welcomed the small reduction in the number of new claims filed. However, she expressed concern at the escalation in overall costs, quoting statistical findings that of the £520 million increase in costs experienced during the last fiscal year, more than £404 million (nearly four-fifths of the total) was due to the change in the PIDR. 

Likewise, Dr Christine Tomkins, Chief Executive of the Medical Defence Union, commented that in her opinion, clinical claims payouts were spiralling out of control. Although she viewed compensation for medical negligence as being reasonable in principle, Dr Tomkins stressed the importance of striking a balance between victims’ needs and insurers’ ability to pay. Moreover, she considered that legal reform was necessary. 

To this end, a new Civil Liability Bill will change the underlying structure of the PIDR to more closely reflect rates of return from what a Ministry of Justice spokesperson portrayed as the general public’s preference for low-risk investments, instead of very low-risk investments. Such a change would bring a marginally higher rate of interest into the equation than the current figure. In turn, financial awards would tend to moderate, instead of continuing at the current levels which some commentators see as somewhat inflated.