Introducing Fixed Recoverable Costs In Lower Value Clinical Negligence Claims A Consultation

Transcription

1 Introducing Fixed Recoverable Costs In Lower Value Clinical Negligence Claims A Consultation Response from Leeds Law Society 62 Wellington Street, Leeds LS1 2EE Response composed from meeting 29 th March 2017, in attendance:- 1. Abigail Telford, Barrister, ParkLane Plowden Chambers 2. Andrew McAuley, Costs Lawyer, Clarion 3. Jonathan Godfrey, Barrister, ParkLane Plowden Chambers 4. Lisa Swales, Clinical Negligence Solicitor, Simpson Millar LLP 5. Paul McNab, Senior Civil Clerk, Zenith Chambers 6. Richard Paige, Barrister, Park Square Barristers 7. Ruth Nicholson, Clinical Negligence Solicitor, Switalskis, Representative of Huddersfield & Dewsbury Law Society 8. Sarah Coles, Clinical Negligence Solicitor, Irwin Mitchell 9. Sue Harris, President of Leeds Law Society, Director Commercial Litigation, Walker Morris LLP 10. Victoria Clark, Clinical Negligence Solicitor, Simpson Millar LLP Page 1 of 13

2 Question 1: introducing Fixed Recoverable Costs Do you agree that Fixed Recoverable Costs for lower value clinical negligence claims should be introduced on a mandatory basis? If not, what are your objections? Whilst understanding that the Department of Health is desirous of reducing the costs of clinical negligence claims on the public purse, the unanimous opinion of the group was that fixed recoverable costs (FRC) in clinical negligence claims should not be introduced. Our principle concern is that of access to justice where Claimants have already felt the overwhelming impact of the withdrawal of Legal Aid in the majority of cases and now see deductions from their damages to fund non-recoverable After The Event (ATE) insurance premiums and Success Fees. It is considered that the cost-saving effects of Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) have not yet had the opportunity to fully bed-in or be analysed. In Clinical Negligence, we have seen the introduction of costs budgeting and it is the opinion of the group that this system of costs budgeting should continue to be worked with and indeed, has the potential to be developed further We would suggest that the current costs budgeting system could be streamlined, for example the production of a number of template costs budgets, with options "to escape" if a case is out of the norm. Such a system would build upon arrangements already in place and would thus be far less disruptive than the introduction of yet another costs régime. However, should the decision be made that fixed costs will be introduced we would favour a model similar to that seen in New Zealand to ensure that there are a number of different factors that can be taken into account to increase the flexibility of any scheme. The assumption made in the consultation document is that all Claimant rates are too high. As a direct comparator to the totality of successful Claimant costs however, the Department of Health fails to take into account the costs of the NHSLA and NHS Trusts administering clinical claims. Even with the exclusion of the former, Defendant costs (where the Defendant is unsuccessful) equate to 36% of damages after claims have been issued. This is where Defendant panel solicitors work on a fixed fee basis and have lost the case. In total, about 1.25% of the NHS budget is spent on litigation. We therefore contend that the very premise of the FRC proposal, that costs are disproportionate, is incorrect and reflects the bias of it essentially being the tortfeasor both making the proposal and conducting the consultation. Page 2 of 13

3 The current FRC proposal fails to take into account when or how much work takes place in clinical negligence claims. Further, in such claims, there is not necessarily a correlation between costs and the value of the claim rather, similar to the previous test applied by the Legal Aid Agency, it is about the importance of the claim to the Claimant. These are not unimportant claims including, for example, fatality claims. The NHS pays compensation on 76% of issued claims, lending credence to the opinion held by many, including the entirety of this group, that Defendant behaviour is in serious need of being addressed. It is generally accepted that in respect claims against the NHS in particular, the Defendant strategy is to deny, delay and defend no matter whether this is reasonable and thus accruing costs. Where over 75% of issued claims see compensation being paid, this strategy urgently requires addressing. It would also appear that neither the impact flowing from the threat of litigation, nor the strain that will be placed upon the NHS in treating victims of clinical negligence, whose compensation would have covered private treatment has been considered. We would repeat that it has been from a false starting point that FRC has been proposed in clinical negligence claims. What can only be described as paltry costs being offered are simply not reflective of the work involved in these cases and the proposal fails to take into consideration Defendant behaviour. It must also be remembered that in these successful claims where costs are paid, the claim itself has been triggered by clinical negligence if the rate of clinical negligence is reduced, successful claims and therefore costs paid will also reduce. If you prefer a voluntary scheme instead, please explain how this would fulfil the same policy objectives as a mandatory scheme. N/A Page 3 of 13

4 Question 2: Fixed Recoverable Costs Range Do you agree that Fixed Recoverable Costs should apply in clinical negligence claims: Option A: above 1,000 and below 25,000 (preferred) No Option B: Another proposal No We refer to our response at Q.1 above. We are unanimous in our opinion that FRC should not be introduced into clinical negligence claims. There was the suggestion made that Legal Aid could be re-introduced where funding was only available where the merits test was satisfied. Question 3: Implementation Which option for implementation do you agree with: Option 1: all cases in which the letter of claim is sent on or after the proposed implementation date. Majority preferred this option. Option 2: all adverse incidents after that date of implementation. Minority preferred this option Another proposal N/A Whilst unanimous in their opinion that FRC should not be introduced in clinical negligence claims, if introduced, all members of the group were in agreement that implementation should not be retrospective. Page 4 of 13

5 A minority considered that the implementation should be based upon date of incident considering that this offered certainty. However, the majority considered that it should be based upon the date of the Letter of Claim, as termed by the Claimant lawyer. The majority felt that this was the preferred option where, if based upon the incident date, there would be years before us of differing régimes running parallel to each other. Question 4: Fixed Recoverable Cost Rates Looking at the approach (not the level of fixed recoverable costs), do you prefer: Option 1: Staged Flat Fee Arrangement Option 2: Staged Flat Fee Arrangement plus % of damages awarded: do you agree with the percentage of damages? Option 3: Early Admission of Liability Arrangement: do you agree with the percentage of damages for early resolution? Yes. Option 4: Cost Analysis Approach: do you agree with the percentage of damages and/or the percentage for early resolution? Option 5: Another proposal N/A It is repeated that the group was unanimous in their opinion that FRC are not appropriate in clinical negligence claims and should not be introduced. Of paramount importance should be the Claimant s right to access to justice. The group were in agreement that it would not be economical to run any claim valued at less than 25,000 if FRC applied, whichever of the options above were used and this would therefore pose a significant obstruction to Claimants access to justice. Page 5 of 13

6 The concern for the group was that in such cases, (those valued at less than 25,000), to make any profit, law firms (and other companies running the cases) would be forced to turn to under-qualified claims handlers. Such claims handlers often do not have the correct level of skills, qualifications, knowledge or expertise in correctly assessing and progressing such claims. This will not represent true access to justice that Claimants are entitled to. Furthermore, the result will be that claims reaching trial will not be prepared to the correct standard requiring more and indeed, we would argue, wasting far more of the Court s precious time, already in short supply. The alternative is that these claims handlers will seek more support from Counsel however, Counsel are not in the business of claims handling and they will not receive costs for such actions either, so will be reluctant to accept instructions. The costs associated with such work has not been taken into account by the proposals, for example the costs associated with regulation, compliance, indemnity etc. Costs accrue in poorly run cases; those that are run by claims companies utilising under-qualified claims handlers without consideration to the appropriate skill-set required. A further consequence flowing from the use of junior fee earners/under-qualified claims handlers running these claims will be the increase in professional negligence claims which, in turn, will lead to increased Professional Indemnity Insurance premiums for law firms. For example, the time analysis approach only allows a practitioner of at least four years experience to spend 40 minutes on a claim up to trial. This is wholly inadequate. Of course, further litigation (in respect Professional Negligence) will again add to the time-pressure felt by the Court. In support of the opinion held that it would not be economical to run such claims, using those figures supplied in the consultation documentation, applying option 2 above to a claim valued in the region of 20,000, where costs in the region of 35,000 would be awarded currently, these would be slashed under FRC to about a third. Costs in a claim valued at 10,000 would be slashed to a sixth. None of the options allow for the proper investigations required in pursuing a clinical negligence claim and thus, the proposals, if introduced, do not provide access to justice for Claimants. The NHSLA s own conduct is central to increasing legal costs in clinical negligence claims. They often fail to engage in the REHAB code (alongside ADR and mediation) and they have now said that their own mediation scheme has been abolished. This behaviour has to be addressed and, if addressed, this would result in a decrease in legal costs. Page 6 of 13

7 The basis of the comparative costs used in the FRC Consultation document is not like for like where Defendant solicitors tender for contracts and some charges are excluded, for example travel. Guideline rates used have not been increased since The starting point used in the FRC Consultation documentation is therefore fundamentally wrong. There has been a concerted effort by the judiciary in respect of costs budgeting to ensure that, where possible, experienced, specialist judges are determining budgets resulting, in most cases, in budgets that are reasonable, proportionate and fair. Costs budgeting is specific to each case whereas FRC disregards the individuality of each case. Even in cases where there has been seen a substantial reduction in costs claimed, for example Hobbs, Grade B rates have been awarded. There has been a failure to appreciate the complexity of clinical negligence claims by proposing fixed fast track fees at trial no matter which track the claim has been allocated to. Furthermore, the group envisaged an increase in satellite litigation, and therefore costs, as Claimants seek to escape FRC and Defendants seek to maintain a claim within the FRC régime. Again, satellite litigation will place further time-pressure upon the Court. Whilst fundamentally not agreeing to the concept of FRC in clinical negligence claims, the group were of the opinion that option 3, offering an incentive to the Defendant for early admission was the preferred option of those offered. Question 5: Expert Witness Costs Do you believe that there should be a maximum cap of 1,200 applied to recoverable expert fees for both defendant and claimant lawyers? No Experts of any quality will not review the multitude of records frequently obtained in clinical negligence claims for the figure proposed, let alone prepare a report on the complex issues that arise whether in respect breach of duty, causation or condition and prognosis. This has previously been evidenced when a great many experts stopped undertaking Legal Aid work when fees were restricted in those cases. It was recently noted by SCIL (Society of Clinical Negligence Lawyers) that 35% of those experts on AvMA register were unaware of these proposals, on that basis the group therefore questions where the figure proposed has come from. Similar to the point made above that FRC will mean that clinical negligence claims will be run by under-qualified claims handlers, if the fixed fees proposed for experts are introduced, it will result in only junior professionals being prepared to report and they will not have the experience required. Page 7 of 13

8 The group s concern was also in relation to how such a cap could be enforced against the Defendant who frequently will obtain initial opinions from the physicians, which are the subject of the claim. Appendixed to this response are the replies of experts of varying specialisms approached on the question as to whether they would accept instructions under the capped fees proposed. Similar to the concerns expressed of this group in respect under-qualified claims handlers being utilised in these claims, experts have expressed concern that less qualified experts will emerge to do this work (Manolis Gavalas, Consultant in A&E Medicine) and that their work in such claims will not therefore be of an appropriate standard; You pay peanuts you get monkeys!!! (John K Webb, Consultant Spinal Surgeon). A vast majority of responses pick up the theme not only of the amount of work required in such clinical negligence claims but also of the complexity of the work; For example cases involving elderly or disabled claimants are typically low value, due to pre-existing needs in any event, no loss of earnings, no child care/dependency issues, and shorter life expectancy; however, from a care/occupational therapy expert perspective they are indeed complex and unravelling the issues can be significant. (Alison Somek, CEO, Somek & Associates). We note that Somek & Associates represent approximately 200 experts. A minority of experts have suggested that they might prepare a short-form report within the capped fees proposed however, it has also been stated The problem with short-form reports for the claimant is that this format often does not suit such an initial, exploratory investigation well (Jon Hardman, Consultant Anaesthetist). Overall, whilst an extremely small minority of experts suggested that they might be willing to prepare just a short report, the majority were absolute that they would reject instructions on the proposed capped fee basis. Question 6: Single Joint Experts Expert fees could be reduced and the parties assisted in establishing an agreed position on liability by the instruction of single joint experts on breach of duty, causation, condition and prognosis or all three. Should there be a presumption of a single joint expert and, if so, how would that operate? Whilst still maintaining that FRC are not appropriate in clinical negligence claims, the group were of the opinion that, in some cases, SJE could potentially be appropriate however, there should not be a presumption of a SJE. Page 8 of 13

9 There were questions raised as to when it would be decided that an SJE was appropriate in a case and who would be making the decision. In respect the early disclosure proposed under the new protocol, there was great concern that it could be prejudicial to the Claimant and further, the clinician s witness evidence could be based upon the expert evidence which would, again, be prejudicial to the Claimant. Essentially, whilst SJE is potentially appropriate in some cases, the group were unanimous in their opinion that this should be decided on a case by case basis supporting the group s opinion that costs budgeting remains the most appropriate option in clinical negligence claims, again as it considers cases on a case by case basis. Page 9 of 13

10 Question 7: Early Exchange of Evidence Do you agree with the concept of an early exchange of evidence? If no, do you have any other ideas to encourage parties to come to an early conclusion about breach of duty and causation? There was concern expressed by the group that early exchange of evidence could be prejudicial to the Claimant. The Defendant has knowledge of the allegations of breach of duty and causation from the Letter of Claim and, presuming the same is drafted correctly, this should state whether expert evidence has been obtained. This is the current position and the group was of the opinion that this is exactly where the behaviour of the Defendant resulted in costs being accrued unnecessarily. It is generally acknowledged that the NHSLA adopt a deny, delay and defend approach to claims therefore increasing costs unnecessarily. Question 8: Draft Protocol and Rules Do you agree with the proposals in relation to Trial Costs (paragraph 5.6) The proposed Trial Costs are less than those currently available in RTA claims even though clinical negligence claims require far more work and expertise. Furthermore, the costs have been calculated from figures from 2007, already being 10 years out of date. It is clear from this proposal that it is assumed that specialist practitioners will be excluded from acting for Claimants, and it is expected that inexperienced claims handlers will run claims without preparation, failing to pay consideration either to the injured party or their family and having a serious effect on access to justice. As Professor Fenn has noted in his report, the claims subject to this consultation are not a minority but rather, account for 64% all clinical negligence claims (Section 3.1, Page 8-9) Page 10 of 13

11 Multiple Claimants The group were of the opinion that each Claimant in a claim involving multiple Claimants should get costs that ensured that the case could be run properly so that they could produce the evidence needed to succeed in the case (subject to the submission that FRC are not appropriate in Clinical Negligence Claims). Exit points If FRC are introduced for clinical negligence claims, which would be entirely inappropriate in the opinion of the group, all fatality claims, not just child fatality claims should be excluded from any new régime. Technical Exemptions paragraph 6.9) The group would wish to see an exemption around Defendant behaviour however, practically, it was considered that this would be a difficult exemption to phrase and would in fact be one of those issues where satellite litigation would arise. This further supports the contention of the group that the current regime of costs budgeting should continue and that Defendants should adapt their behaviours accordingly, which would in of itself reduce costs. Where the number of experts reasonably required by both sides on issues of breach and causation exceeds a total of two per party. (paragraph 6.11) Whilst, if FRC are introduced, the group agreed in such circumstances, the claim should escape the regime, they had their concerns for example, whilst there may be just one expert reporting on issues of liability, they may be covering extremely complex issues. The group was of the strong opinion that all experts, for example those reporting on condition and prognosis and quantum, should be considered not just those reporting on liability. The group was also concerned that this was another area which could create satellite litigation, where the Claimant seeks a further expert (SJE) and the Defendant rejects this so as to preserve FRC in the case. Child Fatalities (paragraph 6.12) As previously stated, the group is of the opinion that if FRC is introduced, any escape clause should be extended to all fatalities, not just child fatalities. Interim Applications The group considered that, in the event of FRC being introduced in clinical negligence claims, interim applications/satellite litigation will be significantly increased. This will only serve to increase costs and place more pressure on the Court s time. Page 11 of 13

12 London Weighting As outdated as the Guideline Rates are, they are at least regional and the group considers that the region should continue to be a consideration when assessing costs. Please explain why (See comments above) Question 9: Behavioural Change Are there any further incentives or mechanisms that could be included in the Civil Procedure Rules or Pre-Action Protocol to encourage less adversarial behaviours on the part of all parties involved in lower value clinical negligence claims, for example use of an Alternative Dispute Resolution process (ADR)? This would include both defendant and the claimant lawyers, defence organisations including NHS LA, the professionals and/or the organisations involved. As stated above, the group were all concerned at the continuing costs-accruing behaviours exhibited by Defendants in many cases. For example, members of the group had numerous experiences of attending Joint Settlement Meetings where the Defendant would attend without any genuine intention to settle. The deny, delay and defend tactics adopted have also been discussed, above. It was felt by the group that there should be conduct penalties whereby parties can be placed on notice that their behaviour is considered by the other party to cause the case to fall out of the FRC regime. Overall, it was considered that the current FRC proposals go against the Woolf Reforms and will simply serve to promote litigation and satellite litigation. Again, there appears to have been a fundamental disregard of the requirement of specialists and the amount of work required in clinical negligence claims. Page 12 of 13

13 Question 10: Evidence Please provide any further data or evidence that you think would assist consideration of the proposal, particularly for other than NHS provision. In particular, we are interested to gather data from private, not-for profit and mutual organisations delivering healthcare. Please identify your organisation in your response. We would be interested in hearing views on: the scale of expected savings if Fixed Recoverable Costs outlined is introduced; the expected growth in the number of claims received and settled over the next 10 years to help in modelling the impact of the proposals; any details on the number and size of legal firms involved in clinical negligence (primarily as claimant lawyers), any information on the likely administrative savings and set up costs due to introduction of Fixed Recoverable Costs. Please indicate whether your organisation would be willing to work with DH in providing more details on the impact for future IA analysis. This would be provided in confidence and anonymised in any future analysis. Please provide evidence Experiences of the group have been discussed above and responses of experts approached are appendixed. Question 11: Equalities, health inequalities and Families The Government has prepared an initial assessment of the impact of Fixed Recoverable Costs on equalities, health inequalities and families. This assessment will be updated as a result of the consultation. Please give your view on the impact of these proposals on: Age; Gender; Disability; Race; Religion or belief; Sexual orientation; Pregnancy and maternity; Carers; Health inequalities and Families Please provide evidence. The group expressed concern as to the adverse impact on the elderly and other vulnerable groups, specifically in respect of the increased deductions from damages that will be seen if FRC are introduced in clinical negligence claims. It is also noted that there has not been a consideration of the loss of CRU recoupment and VAT receipts on the exchequer. Further, if the FRC proposals are implemented, it will certainly lead to a significant number of redundancies amongst specialist practitioners leading to a loss of income for the HMRC through tax and National Insurance contributions. It is stated in the response to Question 1 that of paramount concern is the Claimant s ability to obtain access to justice. If these proposals are effected, lowvalue clinical negligence claims simply will not be economically viable and therefore will not be accepted by law firms and other claims companies. Consequentially, access to justice will be denied not just to vulnerable groups but to any victim of clinical negligence with a claim worth up to 25,000. Page 13 of 13