Clinical negligence: Bills of Health

So far this millennium, the NHS bill for clinical negligence payouts and legal fees has routinely set a new standard for what constitutes ‘soaring’ and ‘unsustainable’. That continues to be the narrative promoted in the media and official reports from concerned parliamentarians.

‘The National Audit Office,’ the Gazette reported 21 years ago, ‘has voiced fears over the way clinical negligence claims are handled by the NHS – and patients’ groups have warned that it should not be left to its own devices given its record.’

At that time, claims cost the health service around £503m a year, of which £150m was paid out in legal costs. Tony Blair’s government therefore sought to introduce legislation to help keep disputes out of court by providing early apologies and compensation.

The NHS Redress Act 2006 failed to stall the upward trajectory in the overall bill for avoidable failings in patient care. ‘Hospital bills for negligence quadruple’, ran one Times headline a decade later. The story alluded to a report from government spending watchdog the Public Accounts Committee (PAC), which expressed alarm that the annual amount paid out by NHS trusts had grown from £400m in 2006/07 to £1.6bn in 2016/17.

MPs also warned that the government had been ‘slow and complacent’ in its response. Moreover, there persisted a ‘prevailing attitude of defensiveness in the NHS when things go wrong, and a reluctance to admit mistakes’, which was ‘likely to be leading to more clinical negligence claims’.

These two reports sound depressingly familiar, with the same issues making almost identical headlines today. The only difference is that the numbers are now even larger.

Priorities

Perhaps inevitably, policymakers’ views on clinical negligence reform were, and are, coloured by the need to reduce the cost to the NHS of both payouts and fees. As Guy Forster, vice president of the Association of Personal Injury Lawyers (APIL), notes, the issue has been ‘looked at through the lens of NHS resources… cutting damages, or erecting barriers to access to justice or to full redress’. Care failings appear less of a priority.

PAC demands

The issue returned to media prominence once again in January, when another PAC report related that the government’s liability for clinical negligence (the amount set aside for claims) had ‘quadrupled’ over the past 20 years, reaching £60bn in 2024/25. Annual settlement costs tripled to £3.6bn over the same period.

Despite ‘warnings from the committee dating back to 2002’, the report complained, the Department of Health and Social Care (DHSC) was unable to show any ‘meaningful action taken to address the soaring cost of mistakes’, while the NHS ‘has not done enough to tackle the underlying causes of patient harm’.

The committee went on to portray ‘a system overwhelmed by safety recommendations that it cannot action’. Despite the NHS having a ‘plethora of data on patient harm’, this is ‘fragmented, which means that identifying and addressing underlying causes of clinical negligence remains an acutely difficult task’.

The PAC chair, Conservative MP Sir Geoffrey Clifton-Brown, commented that the ‘government has been in unacceptable stasis on the issue of clinical negligence for the majority of my political life, as numbers have continued to creep up’.

PAC also enumerated what it described as ‘disproportionate legal costs’. In real terms, claimant legal fees more than tripled in under 20 years, from £148m in 2006/07 to £538m in 2024/25. They now represent 15% of the cost of all settled clinical negligence cases. The NHS’s legal costs increased in real terms from £76m to £159m, but fell as a share of total settled costs, from 7% to 4%.

NHS Resolution (NHSR) is the arm’s-length body of the DHSC that deals with clinical negligence disputes. NHSR told the committee that it had broadly kept the increase in defence costs level with inflation by using fixed and capped rates for its external legal support. The agency also claimed to have saved over £138m in 2024 by challenging the bills presented by claimant lawyers. Over the past 10 years, NHSR said, it had introduced alternative dispute resolution to keep more cases out of court, which meant that in 2024/25 a ‘record high’ of 83% of claims were resolved without litigation.

MPs on the committee were particularly concerned by the amount spent on legal fees in lower-value claims. In cases involving compensation below £25,000, the legal costs were on average almost four times the damages awarded to victims. Claimant lawyers argue that this fails to take proper account of contributory factors such as the impact of how defendants approach claims.

Among a raft of recommendations, the MPs gave ministers two months to come up with a plan to tackle clinical negligence, a national framework for improving patient safety and a national system for sharing data between NHS trusts. They also called for urgent reform of the way compensation is calculated and limits on the costs that can be recovered for work on lower-value cases.

The department was urged to develop alternative dispute mechanisms to speed up decisions and reduce costs for less complex cases, looking to international examples of non-adversarial and ombudsman models, such as those deployed in New Zealand and Sweden.

The PAC also called on the government to clarify its position on a fixed recoverable costs scheme for lower-value clinical negligence cases at the earliest opportunity. The previous government planned to limit how much lawyers receive from claims worth under £25,000, but the required legislation was never introduced.

The historical position that clinical negligence claims are settled on the basis of the cost of care provided by the private sector, without preventing claimants from getting their treatment or social care through the NHS, also troubled the committee. To tackle so-called ‘double recovery’, which the committee suggested inflates the costs of claims, the committee recommended that ministers assess the cost of care being provided exclusively on a private basis and implement measures to guard against the risk of taxpayers paying twice – including introducing any necessary legislation.

Responding to the PAC report earlier this month, the DHSC said the government will set out its reform proposals later this year. The department warned there would be no single ‘quick fix’, but pledged to write to the committee by the autumn ‘to set out the case for change, and its workplan including to describe key milestones, and the likely areas of focus for reform’.

While the DHSC said it is already working on some of the recommendations, it was less forthcoming on others. A review by David Lock KC, commissioned as part of the NHS 10-Year Health Plan, investigated ways to reform the escalating costs of claims, but the government rejected calls to publish it. The suggestion that the department should estimate and track the costs to the NHS of treating avoidable harm was also rebuffed, on the ground that this would not be ‘financially or logistically feasible’.

Proposals for alternative dispute resolution and a fixed recoverable costs scheme, and addressing the issue of double recovery, are said to be ‘under consideration’.

Charge sheet

Claimant lawyers remain cool on wholesale change. ‘The key driver of clinical negligence costs is the avoidable harm arising from patient safety incidents,’ stresses APIL’s Forster. ‘There are factors to look at beyond the negligence which play a part in the cost of trying to put it right, including the response to harm, adherence to the duty of candour and delays in delivering justice to injured patients.’

Forster calls for ‘proper engagement with patient representatives including the legal profession’. APIL advocates ‘refinement’ of the process rather than a root-and-branch overhaul. ‘The focus should be on preventing the harm occurring in the first place, and this comes from culture change within the NHS and not changes to the compensation system,’ he insists.

Delay is certainly a key driver of cost. Forster suggests this is ‘largely within NHS Resolution’s power to resolve’. He points to APIL’s analysis of NHSR data showing a 51% increase in the average time between claim notification and settlement.

Forster attributes this rise to ‘defendants seeking an extension of time to delay responses to claims, or defending the indefensible’, adding: ‘Delay and deny is still a tactic we see all too frequently, leading to cases being issued where they should not necessarily have to be.’

A key patient safety sticking point, he adds, is lack of transparency in the initial response to harm: ‘Arduous legal battles are avoided when NHS trusts admit that they have caused harm.’

‘We need to stop blaming claimant lawyers, and look at the reality behind the statistics,’ argues Nina Ali, a former NHS nurse and now a partner at claimant firm Hodge Jones & Allen.

Ali argues that the focus on tackling legal costs, especially those of claimant lawyers, means the PAC ‘is looking at things completely the wrong way round’. Inviting MPs to spend a week in her office, she tells the Gazette: ‘All of these suits in Westminster just don’t have any idea.’

Removing legal aid for clinical negligence claims in 2013, when the Legal Aid, Sentencing and Punishment of Offenders Act came into force, and replacing it with ‘no win, no fee’ agreements was, says Ali, a ‘catastrophic mistake’. She gives a hypothetical example of two clients suffering the same medical injury that put them out of work for three years.

Mr A earns £10,000 a year and Mr B £1m. ‘The same amount of work will need to be done for both clients,’ she says. ‘Very few lawyers will touch the case worth £30,000, but many will be queuing up to represent Mr B in the case worth £3m. After three years of the defendant fighting tooth and nail, both cases settle. The legal costs will be the same. Let’s say £100,000. No one bats an eyelid over the £3m case, but people will complain about the disproportionate costs in the £30,000 case.

‘I’m not going to stop fighting for Mr A’s £30,000 because, to him, that sum could be life-changing,’ Ali adds. ‘And I don’t want to feed into a system where we reward people who already have plenty with more access to justice and health care.’

Claimant lawyers, she insists, are anxious to settle cases as soon as possible. That is so clients can get the treatment they need and move on with their lives, but also because working on a ‘no win, no fee’ basis means lawyers do not get paid until the end of the case. By contrast, she says, defendant lawyers are paid an hourly rate from the moment a file lands on their desk and do not have an incentive to run cases efficiently. Rather, ‘it is in their interests to string things out as long as possible’.

The fact that injured clients cannot access rehabilitative care until cases are settled, points out Hugh Johnson, head of clinical negligence at Osbornes Law, acts as another incentive for claimants and their lawyers to settle as soon as possible.

Costs budgeting

Another driver of cost and delay, suggests Johnson, has arisen as an ‘unintended consequence’ of the introduction of costs budgeting – which was brought in to control costs. ‘It has meant that every case has a hearing on budgets and timetables,’ he notes.

On the proposal to repeal section 2(4) of the Law Reform (Personal Injuries) Act 1948, which provides for claimants to receive compensation to fund private treatment, Forster argues that it would have a minimal impact on the overall compensation bill and further strain NHS resources, as well as risk depriving victims of the treatment they need. The answer, Johnson adds, could be to have some form of indemnity in place, so that a claimant does not have the option of receiving damages to fund private care and then use the NHS. This does happen, he says, but could happen more often.

Only one defendant solicitor was prepared to talk to the Gazette. He confined his thoughts to observations on statistics on claims in different areas of medical practice.

A spokeswoman for NHSR, meanwhile, noted the PAC’s observations about its progress in keeping cases out of court. She stressed that fewer than 1% of the cases go to trial and 83% of claims are resolved without litigation. NHSR is working with claimant firms to improve collaboration, she added.

Collaboration would no longer seem to be enough.

Catherine Baksi is a freelance journalist