The cost of Medical Negligence Claims
The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) comes in to force 1 April 2013 and brings with it provisions which mean that litigation will no longer be completely free for Claimants. Is this fair? There has been much discussion about free litigation creating an increase in damages claims. Clearly a balance must be struck between the legitimate interests of Defendants (insurers and the NHS) and a Claimant’s access to justice.
As discussed in our previous blog 13 July 2012, from 1 April 2013, Claimant’s will not be able to recover success fees or insurance premiums from the Defendant, if their case is funded by conditional fee agreement. This means that Claimants will have to contribute to their own costs by paying any such success fees and premiums out of their damages. This comes hand in hand with provisions which prevent the recoverability of referral fees bringing in to question the continued availability of before the event insurance policies, which have been increasingly available to Claimants to fund their personal injury litigation (such insurance is often now automatically attached to house buildings and contents insurance products). If the before the event insurance market decreases, the conditional fee (or contingency fee – DBA’s) market is likely to increase, becoming an even more common way of meeting the cost of litigation.
It is anticipated that Qualified One Way Costs Shifting should reduce the requirement for “after the event” insurance thus preventing or reducing the insurance premiums payable. However, success fees will remain an issue for Claimants and insurance premiums may well remain payable for products designed to protect a Claimant from exposure to their own legal expenses (disbursements) in high expense cases (such as clinical negligence cases).
Doubtless the reports of large multi-million pound settlements have fuelled the argument that litigation should not be free for Claimants.
Levels of Compensation – How much is my claim worth?
Claimants are awarded two types of compensation (otherwise known as damage). The first is general damages and this is a notional award to compensate for pain and suffering. Such awards are low in the UK, perhaps in part because Claimants have not traditionally had to pay significant legal costs. The second is special damages, this is an award to compensate for past or future expenses or financial loss which the Claimant has and will incur as a result of their injury.
Where one reads about large damages awards, most of the award is made up of Special Damages. Multi million pound settlements occur in cases where the Claimant has suffered a catastrophic injury and requires a huge amount of care (often 24 hour), adapted accommodation, adapted cars and other equipment and is highly unlikely to ever be able to work. In such cases the damages must be carefully invested in order to ensure that the Claimant has enough money to meet their future needs.
The way that damages for future loss are calculated (including, amongst others, increasingly unrealistic credit which a Claimant must give for earning interest on their damages, and a failure to give adequate provision for the increase in the cost of future care), means that there is already often an insufficient fund to meet the Claimant’s future needs. A Claimant must often dip in to their general damages to buy adapted accommodation or even to contribute to the cost of future care. Very often, the Claimant must settle their case for a reduced figure to account for the risk of litigation especially if their case is difficult. This is enforced by court rules which encourage early settlement and punish those who do not settle where they could/ or should (Part 36 of the Civil Procedure Rules).
If the Claimant also loses part of their damage to costs, it is easy to see that in many large cases, the Claimant will simply be unable to meet their future needs from their damages.
Is it therefore right that a Claimant must pay the cost of their litigation? A Claimant who cannot meet their future needs will end up turning to the state to fund these needs.
With this in mind, it was intended that awards for pain and suffering should increase by 10% from the date that LASPO comes in to force. This was given force by the Court of Appeal in the case of Simmons v Castle (2012). The court ruled that from 1 April 2013 awards for general damages should be increased by 10%. It has recently been confirmed that this will apply to all Claimant’s whose case settles after 1 April 2013 and who bring their claim under a post 1 April 2013 funding arrangement.
Will a 10% increase in general damages awards do much to help out the Claimant with a significant legal bill and insufficient damages to meet their future needs? With the cost of care increasing substantially, it is difficult to imagine how this will make much difference in high cost/ high value cases.