A leading neurologist has called for a dramatic cut in damages payments to help stem what he says is the growing threat to the UK economy posed by clinical negligence claims.
Dr Paul Goldsmith, writing for the free market thinktank Centre for Policy Studies, said the current system for assessing and paying medical claims is expensive, unsustainable and can cause more harm than good.
A study of the sector found the cost of claims is rising by 10% every year and costs per head twice as much as in the USA.
Goldsmith is demanding urgent action to overhaul a system in which GPs report it is too expensive to work as their indemnity payments are so high.
The professor said the root cause of the problem is a section of the Law Reform (Personal Injuries) Act 1948, which quantifies compensation based on the cost of private healthcare to correct and manage mistakes. Goldsmith called for this section to be repealed.
‘Nowadays we have a level of care which is unrecognisable from 1948,’ said the report. ‘The act did not foresee that some recipients of financial awards would continue to use state-funded care, or find that their disability improved after the conclusion of the case.’
Goldsmith also recommended that for all personal injury awards, lost earnings should be fixed at the national living wage, or a multiple thereof, or a multiple of the victim’s salary.
The report highlights the problem of no reappraisal for damages payments: if the award is paid as a lump sum and the patient gets better, the money apportioned for subsequent years cannot be reclaimed.
Goldsmith said it was ‘naïve’ to think claims would fall if the incidence of errors came down, and he suggested there was no concept in law that personal injury litigation was intended to improve standards. He pointed to a World Health Organisation review concluding the standard of healthcare provided by doctors working in the UK remains among the best in the world, whereas medico-legal claims have steadily risen.
The UK government currently estimates that liabilities for clinical negligence total £65bn, with £1.4bn paid out in the year ending March 2016. NHS Resolution estimates that £24 per person is paid out every year for clinical negligence.
The rising cost of claims has already been addressed in recent weeks by the National Audit Office, which called for urgent intervention by the government to prevent costs spiraling further.
Many of Goldsmith’s recommendations echo the calls of the Medical Defence Union, the doctors’ insurance group, which has backed the repeal of the 1948 Act and a cap on damages.