Changes to Clinical Negligence Costs and the Impact of the Coronavirus

Fixed Costs and Other Reforms

In accordance with Lord Justice Jackson’s recommendation in his 2017 Review of Civil Litigation Costs: Supplemental Report – Fixed Recoverable Costs, preparations have now been underway for a number of years for the implementation of a fixed costs process for clinical negligence claims up to £25,000 in value. The new fixed costs scheme has been developed against a background of rising overall cost (that is, combined damages and legal costs) of clinical negligence, and desire in government to reduce the amount paid out of the public purse as a result of clinical negligence claims.

The Civil Justice Council Working Group provided recommendations for the new fixed costs process in its October 2019 Fixed Recoverable Costs in Lower Value Clinical Negligence Claims Report, which included mandatory, but non-binding, neutral evaluation in claims which do not settle. The Working Group was not able to reach agreement on what the fixed recoverable costs should be.

Meanwhile, further government reforms to clinical negligence have been indicated, with Conservative peer Lord Bethell stating that ‘the costs of clinical negligence continue to rise every year at an unsustainable rate… We are working across government on solutions to address this and will bring forward a publication in due course’ (Hansard HL Deb Vol 802 Col 503 03 March 2020). The contents of the forthcoming publication are a matter of speculation, but it is to be hoped that the focus is on improving the manner in which claims are dealt with by the NHS and those who represent it, rather than simply further reducing the costs that successful Claimants can recover. Indeed, NHS Resolution’s own annual report for 2018/19 recorded a £24.3 million (5.2%) fall in Claimant costs and £10.7 million (8.3%) increase in defence costs.

Update to Guideline Hourly Rates

There has, however, been some good news for Claimant practitioners when it comes to costs. While the Guideline Hourly Rates are routinely departed from in clinical negligence cases, they remain the starting reference point for assessment of the appropriate hourly rates in a given claim. The enduring problem presented by the Guideline Hourly Rates is that they have remained unchanged for a decade, as was addressed candidly by Mrs Justice O’Farrell in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC) (paragraph 14):  

It is unsatisfactory that the guidelines are based on rates fixed in 2010 and reviewed in 2014, as they are not helpful in determining reasonable rates in 2019. The guideline rates are significantly lower than the current hourly rates in many London City solicitors, as used by both parties in this case. Further, updated guidelines would be very welcome.

After Lord Dyson’s review in 2014 failed to yield the expected change in the rates, it appears that a long overdue revision is now on the horizon. A sub-committee of the Civil Justice Council has been established to review the Guideline Hourly Rates and will present its recommendations before the end of the year, with a view to the rates being updated.

Budgeted Allowances Will Be Recovered, Even in the Event of an Underspend

Separately, a decision of Master Brown in Utting v City College Norwich [2020] EWHC B20 (Costs) has confirmed (contrary to His Honour Judge Dight’s judgment in Salmon v Bart Health NHS Trust (2019, Unreported) that an underspend in a Costs Budget phase does not amount to a ‘good reason to depart’ from the Costs Budget upon detailed assessment per CPR 3.18(b), such that the court is free to make further reductions to the costs presented. Master Brown’s decision extricates receiving parties from the no-win situation of facing reductions to their costs whether or not they exceed the Cost Budget, and removes the counter-productive penalty that might otherwise be imposed upon solicitors who conduct cases efficiently within the budgeted allowances approved by the court.

The Coronavirus and Clinical Negligence

The coronavirus and associated lockdown has had a radical impact on all areas of legal practice. Some anticipate that one of the knock-on effects of the pandemic will be an increase in the number of claims brought against the NHS. The Medical Defence Union weighed into this emotive issue in April with a call for the UK to follow certain US states in granting healthcare professionals immunity from civil liability during the crisis. According to the MDU, the indemnity implemented by the Clinical Negligence Scheme for Coronavirus is not a complete solution, as it will be costly to the public purse and does not protect doctors from the fear of being ‘unfairly judged’ (Dr Christine Tomkins, 19 April 2020).

While there is currently no indication that such a sweeping removal of patients’ legal rights is contemplated by the government, public finances are under severe strain. Given Lord Bethell’s comments that the current clinical negligence arrangements are ‘completely unsatisfactory’ and that a ‘substantial government review’ is forthcoming (Hansard HL Deb Vol 802 Col 503 03 March 2020), serious changes are to be expected, with defence costs in particular likely to be in the spotlight.

Reviewing the current state of affairs in relation to clinical negligence costs therefore presents a mixed picture: fixed costs are on the way for claims under £25,000, but when this will be and the amount of those fixed costs remains open. The review of the Guideline Hourly Rates can be expected to lead to changes being implemented in 2021, with some rates anticipated to increase. Meanwhile, litigators in budgeted cases can proceed with greater confidence as to the level of costs recovery in light of the decision in Utting. The spectre of further reform has appeared once again, however, and the government’s review may lead to further significant changes.