Comment on the NAO’s report into rising medical negligence costs

The National Audit Office has today published its long-awaited report into why costs to the NHS associated with medical negligence cases continue to rise, despite several initiatives designed to lower them.

Entitled “Managing the Costs of medical negligence in Trusts”, the report seeks to explain reasons for the increase in the NHS’s spend on medical negligence cases from £0.4 billion in 2006-7 to £1.6 billion today, while also predicting that this figure will continue to rise.

The need for the report is obvious – the more money spent on claims, the less there is to spend on patient care, in what is already a difficult financial climate. For most claims against the NHS, damages and legal costs are paid from NHS funds directly, rather than any private insurance or indemnity scheme, so the cost of claims has a direct impact on the NHS budget. The report gives detailed figures about the increase in costs, mainly sourced from data provided by NHS Resolution, the body responsible for managing NHS claims litigation.

Somewhat unsurprisingly, the report concludes that the overall increase is down to the following:

  1. Increased damages. This is due to longer life expectancy, increases for heads of claim such as care and treatment, and the reduced discount rate for future loss (although the latter may be tempered somewhat by today’s announcement of a change in the way these rates are reviewed in the future.
  2. A higher number of claims. This is due to increased NHS activity and more patient awareness of their rights and the claims process.
  3. Increased legal costs. While there is little analysis of the reasons for this, the blame is predictably and firmly placed at the door of claimant lawyers.

This is not a new debate, and those of us who have been working in this field for some time will recall a similar report by the NAO as far back as 2001. Since then, and particularly in recent years, there have been a large number of initiatives designed to curb costs, such as limiting Legal Aid, and the removal of the ability to claim so-called additional liabilities in “no win, no fee” agreements – from paying defendants, costs budgeting and the use of alternative dispute resolution. Whilst the report acknowledges that the impact of these reforms might not yet be fully apparent, it makes clear that it regards such measures (alongside the recently announced proposal of a fixed recoverable costs scheme for low-value cases), as mere tinkering around the edges. According to the report, what is needed is “fundamental change” and a “coherent cross governmental strategy” to manage the growth in the cost of these claims.

It is not entirely clear what this means, and in fairness, formulating such a strategy is outside the report’s scope. However, it does highlight a number of new measures being undertaken to further address the issues. To seasoned clinical negligence solicitors and practitioners, some of these seem like common sense – early involvement by NHS Resolution, and using the latter’s vast database of claims information to assist trusts in learning from their mistakes. There is also a suggestion that information relating to “excessive claims and costs” should be shared with other regulators, such as the Solicitors’ Regulation Authority, though the reports neglects to spell out which circumstances might prompt such an action.

The report also fails to analyse the unfortunate tendency of NHS Resolution to delay reasonable settlement negotiations to the last possible minute, though it is acknowledged that this is a concern frequently cited by claimants and their advisors. Tellingly, but hidden away in the report, there is an acknowledgement that NHS Resolution staff are often coping with greater than recommended caseloads, which in itself is likely to contribute to delay, and therefore costs.

Perhaps most disappointingly, the report does not focus a great deal on what can be done to reduce the amount of incidents which bring about medical negligence cases in the first place. This is not an easy subject to tackle, but is fundamental to the debate about the costs of litigation.

After all, most claimants would rather such things did not happen, than spend years involved in stressful litigation – the outcome of which is rarely certain.