Progress to reform our flawed litigation system has stalled, but the clock is ticking - and it's getting louder as costs start to rise again.

We've become sadly familiar with the extreme strain on our health service in recent years, amid media images of crowded waiting rooms, crumbling buildings and exhausted staff. And now, another unwelcome pressure on health resources has returned.

After an all-too-brief respite during the pandemic, the MDU is again seeing a rise in claims frequency and costs. Last year, the number of claims made against our private practice and dental members (who are not covered by NHS indemnity) was, once again, creeping steadily upwards.

Meanwhile, the rate of claims inflation has increased over the last two years to nearly 10%, fuelled by higher economic inflation and pay growth. These metrics are used to calculate various components of compensation awards, like general damages, loss of earnings and the cost of care.

Our experience has been echoed by the NHS. According to NHS Resolution's most recent Annual Report, clinical claims numbers rose in 2022/23 by 8.6%, compared to an increase of just 0.03% between 2020/21 and 2021/22 (after accounting for the impact of the existing liabilities scheme for general practice).

Damages payments for settling claims across all indemnity schemes increased to £2,690.9 million (up 9.5%) "driven by an increase in the number of high-value clinical claims falling due for settlement."

What's more, it will be some time before we see the full impact of the pandemic on rising cases, given the long tail that applies to clinical negligence claims. As the NHSR points out, "The coronavirus pandemic has had a significant impact on the NHS over the last three years, which has the potential to affect the value of the liabilities covered by NHS Resolution."

It notes that while, "claim numbers received to date are towards the lower end of ranges previously considered," there remain, "risks and potential sources of claims from a further year of clinical activity, as well as additional potential claims arising from misdiagnosis and delay."

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However, in the context of existing financial constraints on the health service and the public purse (the Office for Budget Responsibility forecasts a public sector deficit of £131.6 billion in 2023-24), we simply cannot afford to ignore the potential impact of claims in the coming years. This means addressing the fundamentally flawed, unfair and unsustainable clinical negligence system.

Regrettably, we have yet to see any meaningful progress on this front, despite the Health and Social Care Committee report on NHS Litigation reform in 2022 concluding that, "The system for compensating injured patients in England is not fit for purpose. It is grossly expensive, adversarial, and promotes individual blame instead of collective learning."

One of the Committee's recommendations was to replace the adversarial system of litigation with a no-fault compensation scheme, in which an independent administrative body would investigate cases and determine eligibility for compensation on the basis that correct procedures weren't followed and the system failed, rather than meeting the legal threshold for clinical negligence.

The notion of no-fault compensation resurfaced in February when it was endorsed by the chancellor of the exchequer Jeremy Hunt (sometime chair of the health and social care committee and most notably, secretary of state for health and social care) in an interview with The Times [paywall] to coincide with the launch of The Times Health Commission.  

The MDU is sympathetic to the principle of no-fault compensation in cases of serious neurological birth injury, but we have doubts about the complexity and cost of a wider NHS scheme - which would realistically have to apply to non-NHS claims too.

Action is desperately needed to tackle the unsustainable cost of clinical negligence and ensure there is more money in the system to provide safe and effective frontline care.

Such a profound change to the legal system carries the potential for satellite litigation by those unhappy with the scheme's implementation and outcomes, as well as removing the voice of the clinicians involved in the care in question who witnessed the events first-hand.

But the bigger danger is that a debate about no-fault compensation could become a prolonged exercise in procrastination, when action is desperately needed to tackle the unsustainable cost of clinical negligence and ensure there is more money in the system to provide safe and effective frontline care.

In particular, the government needs to make headway on several fronts, as set out below.

  • Meaningful action on disproportionate legal costs: fixed recoverable costs for lower value clinical negligence cases are due to come into effect from April '24, but the details have yet to see the light of day. We also want the government to be more ambitious and expand that scheme to claims up to £250,000.
  • Repeal of the archaic section 2(4) of the Law Reform (Personal Injuries) Act 1948, which requires courts to make awards based on the costs of private care. Instead, special damages awards for future care needs should be required to take in to account the state-funded health and social care available to all at no cost to themselves.
  • Cap damages for loss of earnings: under the current rules, high earners are able to claim significantly more in damages than a claimant with similar needs on a lower income, while parental earnings are used to assess the likely future earning potential of child claimants. To make compensation fairer, loss of earnings should be capped at three times the average wage, annually and parental education, earnings or wealth should play no part in the assessment of damages awarded to minors.
  • Introduce absolute limitation periods within which clinical negligence claims must be notified: in line with the position in many other countries, a provision which would stop claims being pursued 10-20 years after an incident when those involved in the care in question are unlikely to have any recollection of events (if indeed they and the historic clinical records can even be traced).

Despite political recognition that the clinical negligence system is flawed and in urgent need of reform, we are in a costly limbo. With a general election in all likelihood less than six months away, the MDU is calling on the government to seize the chance to address this long-standing issue, or risk a major financial headache for the NHS, taxpayers and doctors.

A fair and sustainable way of compensating injured patients would be a notable achievement and legacy for any health secretary.

This page was correct at publication on 04/04/2024. Any guidance is intended as general guidance for members only. If you are a member and need specific advice relating to your own circumstances, please contact one of our advisers.