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06:30 PM Saturday September 04, 2010
Clinical Negligence Costs Under the Microscope
The Jackson Report: Clinical Negligence Costs Under the Microscope
In his comprehensive review of costs Lord Justice Jackson considered the full spectrum of civil litigation costs, including clinical negligence cases. Lord Jackson's radical conclusion was to abolish the recoverability of success fees and ATE premiums. In their place, Lord Jackson recommended a system of qualified one way costs shifting where the Claimant only pays the Defendant’s costs if their financial resources or conduct merits such an order. The proposed regime imitates the ‘legal aid shield’[1] and whilst the proposals appear to give the court a wide discretion to order costs, in practice Lord Jackson noted that they almost provide complete immunity.
Claimants will, however, have to fund disbursements up to trial or pay an ATE premium out of their own pocket. Whilst CFAs may still exist, success fees will be paid from the Claimant’s general damages, capped at 25%. In order to accommodate this additional burden Lord Jackson recommended a 10% increase in general damages across the board.
The impetus behind these proposals was Lord Jackson’s damning conclusion that solicitors and insurers had unduly profited at the Defendants’ expense. The report raised concerns that some solicitors “cherry pick” only the best cases and “blackmail” Defendants with grossly disproportionate costs on a CFA. Meanwhile, Claimants with a CFA and ATE premium in place have little financial interest in controlling costs. Even the underlying principle behind CFAs came under attack; i.e. that success fees and ATE premiums in successful cases are used to fund unsuccessful cases. Lord Jackson concluded “I do not see why either the NHS or medical practitioners should bear the costs of investigating allegations against themselves, which are unfounded. That is neither right in principle nor a wise use of NHS resources”. As a result of these proposals, however, many clinical negligence cases will struggle to get off the ground.
Lord Jackson envisioned solicitors charging an upfront fee for ‘screening’ a clinical negligence claim and, thereafter, viable cases either proceed on legal aid or a CFA. Yet an upfront charge will inevitably deter Claimants and limit access to justice. It also completely underestimates the substantial upfront costs of assessing the merits of a clinical negligence claim, most notably, the cost of an expert’s report. Only the richest can afford these costs and only the poorest fall within the ever narrowing scope of legal aid; everyone else has to go fish. Without an expert’s opinion, however, Claimants will be fishing in the dark.
It is also unclear whether the ATE insurance market will survive if the premium is not recoverable from the Defendant. Where the injuries are modest or causation is difficult, the harsh reality is that the expert fees are often disproportionate to the damages which are recovered. If so, the insurer’s initial outlay may exceed the premium which the Claimant can afford to pay even if successful. In these circumstances, ATE premiums may not be palatable for Claimants or commercially viable for insurers. Conversely, if the Claimant has to fund their own disbursements or the ATE premiums are staged then there is a perverse incentive for Defendants to fight cases knowing that Claimants may not be able to afford to run the case to trial, even if successful.
The only glimmer of hope for those likely to be excluded by these reforms is Lord Jackson’s recommendation to implement a scheme under the NHS Redress Act 2006 to resolve lover value clinical negligence claims without recourse to litigation. There is a lack of independence under the scheme and if a patient is unhappy with the level of redress offered they are back to square one. Nevertheless, many patients will settle for less than they are entitled to faced with the unpalatable prospect of financing a claim.
You would, however, be mistaken for thinking that Lord Jackson’s proposals are the end of the matter. The proposals require further legislation [2] and it is unclear whether the new coalition government has the appetite for reform or the stomach for the fight which may ensue. Lord Jackson’s report demands political time, effort and money when these commodities are in short supply. The Justice Minister is currently grappling with extensive budget cuts and the report was commissioned by the Master of the Rolls not the Government. For the foreseeable future Lord Jackson’s magnum opus may to be left on the shelf but it would be foolhardy to be complacent. Lord Jackson has also proposed a number of more modest civil procedure reforms which will overturn much of the case law surrounding CFAs and ATE premiums. As a prominent member of the Civil Procedure Rules Committee Lord Jackson is likely to have more success in implementing these proposals and I will consider them further in my next article. In the meantime, whilst Lord Jackson’s diagnosis is clear, the prognosis remains uncertain.
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