Abstract
Car insurance premiums have been rising annually, but at last, in these more austere and cash careful times, politicians and others are voicing alarm at some of the causes. In particular, the costs generated by claims for personal injuries, of which 70% are (probably minor and trivial) described as “whiplash” that can be made and paid with little hard proof of injury and damage suffered. Many claims are prompted by cold calling from people who benefit either directly or indirectly and have a link to the insurers. They may include claims farmers, lawyers, hire car companies and other service suppliers for this end of the business. The insurers simply pass on any extra costs to their customers in the form of increasingly high premiums.
To coin a phrase: “something must be done” to outlaw and perhaps criminalise such practices and that “something” needs to done quickly and stop spurious claims being encouraged and/or actually generated and then paid out. First of all there should be a higher bar set for any claim with clear and more stringent requirements of the evidence and proof needed to substantiate a claim. There needs to be an independent body set up to make random checks on a significant percentage of claims that are being made and paid out; this body would in this way be able to monitor the system and should have the power to refer any suspect or obviously spurious claims and/or processes for encouraging them to the courts.
It could be argued that the pendulum has swung too far in allowing or condoning outright ambulance chasing, clumsy advertising and cold calling for personal injury claims. Perhaps the time has come to restrict or more carefully control and monitor such practices?
Let us now turn to insurance of a very different kind: the National Health Service (NHS). Reportedly, NHS Trusts will have to pay an extra 10% this year to insure themselves against the rising costs of clinical negligence claims, with some of the larger hospitals having to set aside sums in the region of £11 million for the NHS Litigation Authority, the institution that deals with negligence claims against the NHS.
Previous attempts to curb litigation against the NHS by drastically reducing the availability of legal aid seem to have backfired as solicitors and barristers have taken on a substantial number of large no-win no-fee cases with the current maximum uplift of 100% to compensate for the very real financial risks involved in funding such actions. It is worth pointing out that clinical negligence cases can be very expensive to investigate let alone pursue and there is usually a lot to spend in the process of finding out what and why things went wrong and whether negligent treatment was the cause of any injury claimed and indeed the extent of that injury, etc. There is currently new legislation going through the Lords that aims to remove legal aid from those clinical negligence claims that still qualify from April 2013 (the Legal Aid, Sentencing and Punishment of Offenders Bill). Further, having recognised that removing access to legal aid by itself will not protect the NHS from expensive negligence claims the government is also proposing to outlaw uplifts to fees in no-win no-fees cases, instead requiring claimants to hand over 25% of their damages as an uplift to their lawyers. Understandably, this is very unpopular and smacks of unfairness to all. Solicitors and barristers are fiercely resisting this proposal which would certainly make running low or moderate value clinical negligence claims much less attractive. We may perhaps assume that solicitors and barristers would not be obliged to accept the whole 25% or any part of a claimant's damages if they feel so uncomfortable about it, but of course without this cushion they will find it more difficult to fund cases, which can look good only to turn sour at a later stage – or vice versa. The costs rule provides that a winning party has his costs paid by the losing party; where there is a substantial fees uplift, often 100% in medical negligence actions, this massively inflates the total to be paid out by the defendant NHS. The costs of such actions and also the pay outs when cases are successfully settled or damages are awarded by the courts have spiralled upwards in the last few years (e.g. increasing from a total of £10 billion to £16 billion in only the last 5 years). Catastrophic injuries that would have been settled at £3.5 million a few years ago are now attracting awards of nearly twice the size at around £6 million. Larger awards are the result of annual payments for claimants who are on average living longer because of medical developments. About one-third of the money paid out by the NHS Litigation Authority is spent on lawyers, with claimant lawyers costing about four times as much as those representing the NHS. Only about 2% of cases make it to trial. Last year some 5398 cases were closed with more than £257 million paid out in legal costs, of which £200 million went to claimants’ lawyers, mostly solicitors claiming success fee uplifts on a no-win no-fees basis.
The most obvious way of reducing claims is not to shoot the lawyers but to improve the standard of medical care and treatment that is provided by doctors and the NHS generally. What is not taken into account are the huge further fiscal and social costs that frequently result from negligent medical treatment. For example, there are people of working age who are rendered unfit to work or can only work in a reduced capacity or who have to stop full time work, or work at all, to care for an injured spouse, partner, child, parent, friend who may also have been employed or would in time have been employed but who will need to be supported by family and the state. There are the concomitant costs of lost earnings, spending power and the loss of tax revenue along with the cost of further medical treatment that would not otherwise have been needed (e.g. a longer stay in hospital, frequent re-admissions, prostheses, therapies, medication, devices, adapted housing, special schooling and so forth).
The real cost of clinical negligence is thus much greater than the £16 billion paid out by the NHS Litigation Authority (which does not of course include claims against the private sector or claims against general practitioners who pay premiums to their defence societies). The whole constitutes a terrible drain on our financial resources and casts a blight on thousands of people's lives, including many of the medical and nursing personnel involved who may have been poorly trained or supported by the NHS or simply not up to the job for which they were hired or retained.