The National Maternity Review’s Rapid Resolution and Redress scheme model: A comparison with other worldwide compensation schemes

Process

The proposal is that an administrative scheme would provide a non-compulsory alternative to litigation for eligible families.

In England the average time from incident to notification of a claim is 1.79 years (1.72 years for claims with damages valued at over one million pounds): the average time from incident to resolution for all maternity cases is 4.32 years (8.57 years for claims valued at over one million pounds). ⁴ The average time for resolution of a claim following notification is 2.53 years (6.85 years for claim over one million pounds). This is painfully slow.

It has been argued that the complexity and high value of maternity claims necessitates a long time frame. However, NICA, the Florida Neurological Injury Compensation Association, ⁵ requires that hearing must be arranged between 60 and 120 days from the filing of a claim, ⁶ and a determination on eligibility under the programme and levels of compensation due follow rapidly. The Virginia Birth Related Injury Fund ⁷ determines claims within six months of them being filed with the Virginia Workers Compensation Commission.

The Maternity Review recommends that an insurance assessor works with appropriate professionals and legal advice to settle the claims. Using straightforward and unambiguous eligibility criteria, as they are in the US systems, makes determining eligibility simple, the only remaining element is quantification. This simplification of eligibility, combined with an investigative non-adversarial process, is what enables the US systems to have a rapid time frame and low costs.

Administrative costs as a percentage of compensation can be used as a rough guide to relative efficiency of a compensation mechanism. In 2014/15, the NHS Litigation Authority (NHSLA) spend on clinical negligence expenditure including interim payments was £395,142,823 on legal costs (£103,232,994 on defendant legal costs, £291,909,829 on claimant legal costs) and £774,444,135 on compensation. ⁸ So costs are 51% of compensation. The actual figure will be higher as the administrative costs of running NHSLA are not included in with the legal costs expenditure. For £1,000,000+ claims NHSLA becomes more efficient, with legal costs as a percentage of compensation of 22% (defence costs 5%, claimant costs 17%). ⁹ These figures are impressive for a tort-based resolution service. However, they simply do not compare with the efficiency of administrative systems. For example in 2015 NICA’s operating expenses of $1,928,367 was only 5.3% of their claims expenses (compensation) of $36,474,262. ¹⁰ This is 10-fold less than NHSLA’s overall clinical negligence figure and fourfold less than their high value claims figure.

Eligibility

To qualify for the scheme the baby must have been:

considered healthy prior to labour

Both US schemes only cover live births with neurological injury, caused by oxygen deprivation or mechanical injury during labour, delivery or resuscitation in the immediate postdelivery period in a hospital. The resulting injury must cause both physical and mental impairment. The Maternity Review does not define ‘serious injury’, and it is unclear whether it would incorporate stillbirth. This would need to be carefully ascertained; draw the limits too widely and the scheme risks being unaffordable, too tightly and it will be non-functional.

The Florida Scheme includes a minimum weight requirement. ¹¹ The Maternity Review has opted for gestational age to allow for small-for-gestational age infants. Infant weight is administratively simpler and entirely objective. Using birthweight removes the potential for argument or need for expert evidence. This speeds up the process, but at the risk of being unfair. That said, is a 36 weeks 6-day-old baby any less worthy of compensation than one a day older? The difficulty is selecting criteria that are both broadly ‘fair’ and expedient.

The Maternity Review does not give a limitation period for claims. Presuming that eligible children will be severely mentally impaired, this reflects the current reality for tort-based claims where the three-year limitation period does not start for such claimants. The US Schemes both have limitations: claims must be lodged before a child is 10 in Virginia and before the age of five in Florida.

Thresholds

Traditionally to achieve compensation a family would have to show that the damage to the child resulted from negligent care. Under the proposed scheme the family will have to show that the damage was a ‘probable consequence of the treatment provided or not provided during birth’.

Neither US scheme has thresholds. The child must meet the eligibility criteria and have been delivered by a participating healthcare professional or in a participating hospital. The Maternity Review’s ‘avoidable harm’ threshold comes from the Swedish Patient Injury scheme. Any threshold has to have absolute clarity in meaning and application. Sweden’s patient insurance started in 1975 and it has proved very workable. The challenge in England will be defining ‘avoidable harm’ and changing mind-sets so that ‘negligent harm’ is not substituted for ‘avoidable harm’.

Exclusivity of remedy

This scheme is a non-mandatory alternative to tort-based litigation. The claimant is able to pursue a tort claim at any point. If their claim succeeds any money already paid under the scheme is to be deducted from any damages awarded.

Compensation recovery after successful claims will prevent double recovery. It is not specified, but presumably this would involve the Compensation Recovery Unit (CRU). ¹²

Currently, the Court of Protection oversees court-based compensation awarded to children. The Maternity Review is mute on this point, despite the potential implications. There are two main issues which need addressing. First, the protection of the child’s funds, which is essentially the role of the Court of Protection. Second, there is the potential interaction between the new scheme and existing court processes. Should claimants be permitted to use their scheme award to fund litigation? Successful litigation carries the reward of additional compensation, but should litigation fail the claimant has nothing.

The American Birth Injury schemes are both exclusive remedies, there is no right to litigate in tort if you are enrolled in the programme. There is no precedent for a birth-injury scheme which allows a claimant to claim and then litigate, nor one which allows an unsuccessful litigant to then claim against the scheme.

In Sweden the right to litigate is preserved; the use of the Patient Insurance Scheme is voluntary. Litigation in Sweden is extremely rare and is usually on a point of law or quantum.

Compensation primacy, quantum and form

The scheme proposed is loosely based on the Swedish system of patient insurance. ¹³ Under the Swedish Patient insurance compensation for treatment injuries are capped. ¹⁴ In Sweden there is free state-provided healthcare as well as generous Social Security payments, which cover ongoing care needs such house-modifications or carers. The Patient Insurance payments are intend to top-up these other sources of ‘compensation’ and are, in any event capped at 1000 times the base amount for serious injuries under the National Insurance Act, ¹⁵ which is roughly equivalent to €1 million. ¹⁶ This is considerably less than would be awarded under a UK tort-based claim. ¹⁷ The Maternity Review considers that the UK has a comparable social security system, which combined with speedier redress and enhanced learning possible under a scheme, could make lower compensation payments an option worthy of the Department of Health’s consideration. The Review also explores the option of staged payments to families, with payments at key stages in the child’s life.

The American Schemes are payers of last resort. The compensation is calculated and any moneys received from private health insurance, public health insurance, charities and all other sources are deducted from the compensation sum and the schemes pay the difference.

In Sweden there are generous social security benefits and free healthcare. Patient insurance is intended as a top-up system and even then is capped.

In the UK, tort compensation is primary. It is intended to cover all losses, without deductions or caps. Claimants can claim private healthcare costs ¹⁸ and then utilise free NHS treatment. ¹⁹

The Maternity Review proposes care packages in lieu of the private care costs available in tort. There is a substantial financial imbalance between these options. A care package does not give any financial stability or any long-term guarantees over care providers. A tort award gives financial stability and allows the choice of care provider.

The Maternity Review maintains that the UK system of social security benefits and free healthcare is comparable to that offered by Sweden, where such a system works. However, there is a major difference in the primacy of payment. An individual in Sweden can elect to sue or use their scheme, but both are secondary payers and will provide exactly the same compensation value. The differences are that a court award in Sweden is not capped, the patient has to prove negligence (which is not required under the patient insurance) and that if a claimant loses they have to pay the winner’s expenses. Using the patient insurance is risk free to the claimant.

Without parity, even similarity, between the quantum awarded by any English Scheme and the Courts it is difficult to envisage a voluntary scheme being widely used. The scheme could quantify damages at court levels. Reforming section 2(4) of the Law Reform (Personal Injury) Act 1948 would lessen the discrepancy. Alternatively, the CRU remit could be expanded to ameliorate the difference. The CRU currently clawback NHS costs from clinical negligence claims at a fixed rate and retrospectively. ²⁰ If the clawback rate was equalised to the private care rates awarded in litigation settlements, the financial advantage to the claimant in pursuing litigation for healthcare costs disappears. Additionally, funds would not be diverted unnecessarily from the NHS. As these settlements are for children with lifelong disabilities, presuming they are held by the Court of Protection, or the scheme itself as in the US, ongoing retrospective claims are possible using a pay-as-you go reckoning.

Social care costs would need similar consideration.

Scheme administrators

The Review specifies that it would expect the scheme to be administered by a distinct public body with expertise in medical indemnity insurance.

The Review does not attempt to explain why the scheme must be run by a public body. Elsewhere different models are used. In Sweden, the scheme is run by a not-for-profit captive insurer owned by all the health boards. In Finland, the Pharmaceutical Insurance is a private company, again a captive. ²¹ The US Schemes are both governed by statutorily underpinned independent bodies. ²²

The Review is also silent on the interaction with the NHSLA, which currently handles all claims for clinical negligence in England. NHSLA acts a pay-as-you-go self-insurance for healthcare Trusts. In 2014/15, obstetrics made up 10% of NHSLA claim numbers, but 41% of the total compensation awarded. ²³ Obstetric claims are comparatively expensive. NHSLA calculates the premium for each trust based on previous experience. Birth injuries are low-frequency, high-value claims. Because of this a scheme dealing solely with birth injuries could be more volatile than NHSLA, which also has the steady throughput of lower value claims. Theoretically any volatility in trust premiums to a Birth Injury scheme should be balanced by corresponding changes in the trust’s NHSLA CNEST premium, providing similar calculations are used. As claimants may not want to use the Birth Injury scheme, NHSLA will not be able to reduce the premium offered to a trust until uptake figures are reliably known. If a birth injury scheme is implemented, care should be taken to ensure that trusts are not paying their high-value claims premium twice over.

NHSLA could encompass the new scheme, reducing the double payment and premiums aspects. However, would claimants trust a litigation agency, with a heritage of litigation, to approach this from anything other than a tort-based standpoint? Would healthcare professionals open up to NHSLA? The Maternity Review doubtless considered NHSLA as a scheme administrator but did not recommend it.

… we believe this insurance based scheme is a critical part of a framework to improve the effectiveness of learning because it will significantly reduce the anxiety associated with the need to prove an individual clinician negligent, a requirement for a court to award financial redress.

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Graph 1.

LÖF data showing the frequency of settled claims involving serious birth injuries expressed as the number of serious avoidable birth injuries per 100,000 babies born, Q1 2000 to Q4 2015. Births are recorded in the graph at the time they occurred, not when the claim was settled. (Graph courtesy of Pelle Gustafson Chief Medical Officer, LOF, Sweden.)

The Safe Delivery Care campaign results are impressive. However, it cannot be assumed that findings in one country can be automatically transposed to another. There are notable differences in behaviour between the United Kingdom and Sweden; for example only 0.1% of births in Sweden were home births, ²⁴ compared to 2.3% of births in England. ²⁵ A straight copy of one model of compensation will not achieve a similar reduction, but it ought to enable similar learning, which could drive a reduction.

An insurance-based scheme has been proposed. This should match the income from premiums with expenditure, presumably on a not-for-profit basis. This is more flexible and less limiting than some of the other schemes. The US schemes are run on levies, fixed by statute. This has led to mixed fortunes: Florida is financially solvent, whereas Virginia is currently able to meet demand, but is not expected to remain solvent in the longer term unless the statutory constraints on raising levies are removed. The Maternity Review option for an insurance-based system seems sustainable.

Both the Florida and Virginia Schemes have a small fee $15 to file a petition. This is the only charge to users.