Costs News

07 September 2017
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Government urged to act to curb clinical negligence costs

The government needs to take a “stronger and more integrated approach” across the health and justice systems to rein in the fast-growing costs of clinical negligence claims, the National Audit Office (NAO) said today.

In a major report on how the costs of claims are managed by NHS trusts, the NAO recorded how NHS Resolution – what used to be the NHS Litigation Authority – was increasingly challenging claimant costs and saving significant sums as a result.

In 2015-16, it challenged the costs in more than 80% of claims and successfully reduced them in more than half of cases. It saved £144m, a third of the costs it challenged, as a result. In one case, NHS Resolution settled an £8m bill from a single firm for £500,000.

The NAO called on NHS Resolution to work more closely with NHS Protect, the Solicitors Regulation Authority and other regulators to ensure that “risks to its claims operations and to NHS resources are shared and addressed systematically”.

It explained: “NHS Resolution has achieved significant savings from contesting unmerited or excessive claims and legal charges. However, data are not always shared with or addressed by relevant regulators. NHS Resolution and the legal services regulators should routinely exchange information on risks identified, and feed back actions taken as a result.”

Overall, spending on the clinical negligence scheme for trusts (CNST) has quadrupled from £400m in 2006-07 to £1.6bn in 2016-17, while the number of successful clinical negligence claims where damages were awarded has more than doubled, from 2,800 to 7,300.

The fastest percentage rise was in claimant legal costs, which have gone up 533% over the decade – from £77m to £487m – and was mainly due to an increase in both the number of low- and medium-value claims up to £250,000 and their average cost. Defence costs were £122m over the period.

In 2016‑17, the claimant’s legal costs exceeded the damages awarded in 61% of successful claims.

But, over the same 10 years, the total damages awarded rose by 316% (from £330m to £1.4bn), mainly associated with the rising damages paid for a small number of high-value, mostly birth injury-related, claims.

In 2016-17, 590 claims with a value above £250,000 accounted for 83% of the total damages awarded.

The NAO said the cost of claims was rising at a faster rate year-on-year than NHS funding and the Department of Health and NHS Resolution’s proposed actions to contain the rising cost of claims – fixed costs for cases worth up to £25,000 and a new alternative process for birth injuries – “are unlikely to stop this growth”.

Even if successfully implemented, these would only save some £90m a year by 2020-21.

By contrast, the spending on clinical negligence was expected to double to £3.2bn by then.

There was no “coherent cross-government strategy, underpinned by policy, to support measures to tackle the rising cost of clinical negligence”.

The NAO said: “The Department [of Health] and NHS Resolution, working with others including the Ministry of Justice, have identified many of the factors contributing to the rising costs of clinical negligence.

“But some of the biggest factors influencing costs fall within the remit of more than one government department or are largely outside of the health system’s control. These include developments in the legal market, the increasing level of damages awarded for high-value claims, and changes in the discount rate used by courts to calculate lump sum payments for future damages.

“Although some actions have been taken to control costs, such as reforms to ‘no-win-no-fee’ agreements, ensuring that clinical negligence costs have the minimal impact on the NHS’s ability to deliver health services to patients requires concerted and fundamental action across the government, particularly the health and justice systems.”

The NAO noted that costs were also escalating due to cases taking longer to resolve and by budget restrictions. Between 2010-11 and 2016-17, the average time taken to resolve a claim following notification increased from 300 to 426 days. “Our analysis indicates that, on average, an extra day taken to resolve a claim is associated with an increase in legal costs of more than £40.”

However, it acknowledged the need to strike a balance between resolving cases quickly and robustly defending unmerited or excessive claims.

 

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