Crackdown looms on ‘double win’ clinical negligence payments

The potential for clinical negligence claimants to effectively ‘win twice’ through care awards is coming under scrutiny from parliament as a way to slash costs.

The National Audit Office last month raised concerns that claimants who receive statutory funding for private health treatment as part of their compensation may access free NHS services and pocket the money. It was confirmed by health officials at the Public Accounts Committee evidence session on Thursday that this issue – among others – is being looked at as part of an ongoing review being carried out by David Lock KC on the rising legal costs of clinical negligence.

Helen Vernon, chief executive of the defence organisation NHS Resolution, told the committee that private care costs are a ‘major contributory factor’ to the costs of high-value claims. She stressed she did not want to influence policy decisions but pointed to other jurisdictions for examples of where these double costs are reduced.

‘In Australia, which has a, broadly-speaking, tort system, although it is different state-by-state, they certainly introduced a cap for things like average care costs, care rates and what is considered to be reasonable,’ said Vernon. ‘They have put caps on loss of earnings recovery [which] is pegged to average loss of earnings rather than with reference to the evidence of family members and various other caps and limits that have been applied.

‘The Scandinavian countries which have avoidable harm systems work on the basis of a top-up of state-available care so that there is no duplication and damages are minimised because there is an additional cost over and above what that individual can access from existing state services.’

The NAO report recommended that the Department of Health and Social Care should examine whether to review patient records to understand the extent claimants have used NHS and social care services for treatments covered under compensation packages.

Vernon said NHSR had in some cases negotiated a reverse indemnity so that claimants accessing state service receive a deduction in their annual payments.

But she added: ‘Other than those agreements, we are not able to ask for information as to either how the patient spends their money or whether or how they access state-funded services. Unfortunately we are not allowed access to that information. There might be mechanisms which could be put in place to get a better record of that, but at the moment that is certainly not the case.’

Another area likely to be examined by the Lock review will be the extent to which claimant costs are disproportionate to the compensation levels in lower-value cases.

For claims settling at £25,000 or less in 2024/25, £143m of the £183m total cost was for legal costs, meaning that lawyers received £3.70 for every pound that claimants took away.

In its written evidence to the committee, the Medical Defence Union reported that legal costs regularly exceed compensation paid in lower-value claims. It cited one case where the claimant received £1,400 whilst their legal fees cost £60,000.

The Lock review may revisit the principle of fixed costs for these claims and any cost-cutting measure would likely have the support of the Public Accounts Committee, whose chair Sir Geoffrey Clifton-Brown told the session: ‘I can’t stress [enough] how unsatisfactory this system is where claims are of £25,000 and legal fees can be up to £100,000 – four times [higher] – this is just a nonsense and I am just wondering whether we will need to mandate some form of alternative dispute resolution for these low value cases.’