The NHS Litigation Authority has saved more than £6m by challenging ‘unreasonable’ after-the-event insurance premiums over the past year, it has asserted.
The authority said it believed district judges were becoming more willing to slash ‘excessive’ ATE premiums, citing two recent cases in which premiums had been reduced.
In Mewis v Burton Hospitals NHS Foundation Trust in Worthing County Court last month, a circuit judge upheld the earlier decision of District Judge Ellis to disallow a ‘block-rated’ - rather than staged - premium of £1,802.
DJ Ellis had ruled that the premium was not reasonably and proportionately incurred, noting that no medical evidence relating to breach of duty or causation had been produced, and the hospital trust had apologised in full.
The circuit judge also awarded the NHSLA its costs of £4,763.
In a second case, Martin v Queen Victoria Hospital NHS Foundation Trust, Judge Belcher in Leeds County Court upheld a district judge’s decision to reduce an insurer’s block-rated premium from £3,843 to £2,500 after applying the new proportionality test.
The claimant was awarded £7,000 after treatment was delayed because the NHS trust had lost a biopsy sample. A medical report had been obtained for the claimant at a cost of £3,591, which was reduced to £2,400 on assessment.
Judge Belcher said: ‘The real issue between the parties is whether the question of proportionality applies to the costs figure for the case as a whole as opposed to individual cost items, specifically in this case the ATE insurance premium.’
Belcher said he accepted the submission of Roger Mallalieu, counsel for the hospital trust, that ‘the district judge was plainly considering the issues of proportionality and exercising his judgement that the cost of the ATE premium was not proportionate’.
He added: ‘The district judge has found, in effect, that it was open to this claimant to bring the claim using a cheaper insurance product. That decision was made in the context of proportionality, not in the context of whether the premium charged was a reasonable amount for a block-rated policy.
‘The latter would have required either expert evidence or evidence of premiums in other block-rated policies, before the district judge could have made further enquiry into that issue. However, I do not consider the same is true when the district judge was exercising his discretion in relation to proportionality.
‘In my judgement the district judge was entitled to exercise his discretion in the way he did, and was well within the ambit of his reasonable discretion in doing so. It would not be open to me on appeal to interfere with that exercise of his discretion even if I thought it was appropriate to do so.’
Judge Belcher added: ‘It is open to a claimant to choose a block-rated policy, in the same way as it is open to a claimant to instruct leading counsel even if the case could perfectly well be done by a junior.
‘The claimant has those choices, but that does not mean the costs associated with them are necessarily proportionate. That is the test the court has to apply.’
A spokesman for the NHSLA said district judges are ‘increasingly willing to disallow or reduce excessive ATE premiums’.
He added that during 2015/16, the authority had faced ATE premium costs amounting to £38.3m, in 2,849 cases. It challenged the premium costs in 1,437 of these, and achieved costs reductions in 846 cases. This amounted to savings of more than £6m, the spokesman said.