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NHSLA's Annual Report - Uncertain times ahead
NHS Resolution, (formerly NHSLA), has presented its Annual Report and Accounts for 2016 -2017 to Parliament. The annual report is the first following the expansion of its remit and change of strategic focus and argues NHS Resolution’s case for a greater role in helping NHS organisations learn from their mistakes, and in resolving, settling and defending claims, in order to preserve funds for patient care.
In the Chairman’s welcome, the report refers to the good news that for the third year in a row, the number of clinical negligence claims reported to NHSLA has fallen by 10% – a claim that appears to contradict the previous suggestion in its business plan that claims were increasing in frequency: “ There has been significant growth in both the frequency and severity of liabilities being reported to the CNST scheme in recent years. The increasing frequency reflects in part increased treatment activity, but also changes in the legal environment…” However, the cost of payments continues to rise, increasing NHS Resolution’s financial provision in its accounts for the future.
NHS Resolution’s rising costs are attributable not only to the number of clinical negligence cases which arise from avoidable harm to NHS patients each year, of which 50% (in terms of financial value) arise from maternity claims. The economic and financial climate, including low interest rates which determine the valuation of NHS Resolution’s future financial obligations as a current liability, has also had an impact on the balance sheet. Meanwhile, the reduction in the personal injury discount rate from 2.5% to minus 0.75% earlier this year has increased the multipliers applied to future loss elements (such as the cost of future nursing care and loss of earnings) of severely injured claimants’ claims, significantly increasing the compensation payable in those cases. Whilst the report acknowledges the additional £1.2 billion allocated by the government to help meet the increased cost of claims resulting from the reduced discount rate, NHS Resolution repeatedly speculates as to the impact of “a change in claimants’ behaviour” although it can report no evidence of significant change so far.
Aside from discount rate concerns, part of the difficulty arises from the increasing cost of NHS Resolution’s future liabilities for settled claims in which it remains responsible for the disabled patient’s lifetime care costs. In cases of maximum severity where the disabled claimant patient’s life expectation is long or uncertain, unless there are high capital costs or other factors which demand a lump sum settlement, many claimants and their families prefer their compensation to be paid, at least in part, with a periodical payment order(PPO). A small lump sum is paid for contingencies and essential capital costs but the remainder of the patient’s compensation is met by the defendant at an agreed rate as a guaranteed, annual payment for the rest of the patient’s life. The claimant, who is unable to work and usually has no other means of financial support, now has the certainty of lifetime financial provision for their essential needs which have arisen from the disability caused by the negligent medical care.
NHS Resolution acknowledges in its report that there are also benefits to the NHS in deferring payment for the severely disabled claimant’s future needs via a PPO to a future date. Funds remain available to the NHS for patient care rather than being paid out to the claimant as a lump sum for cautious investment and protection in the hope that there will be enough to last for their lifetime, however long that may be. However, these future liabilities remain on NHS Resolution accounts for the uncertain lifetimes of all settled PPO claims. Over time, the payments will come due. Meanwhile, NHS Resolution tells us, 200 new claims are settled by way of PPO each year – a greater number than come to an end as the patients reach the end of their lives. The certainty here is that the cost of these lifetime care responsibilities will increase, exponentially.
So how could “a change in claimant’s behaviour” make this situation any worse?
The claimants’ injuries and lifelong dependency has arisen from the clinical negligence which gave rise to the claim. The feared change of “behaviour” assumes that higher lump sum settlement values, boosted by the negative discount rate, and the possibility of an increased lump sum payment, will lure claimants away from PPOs, leaving NHS Resolution with 200 high value, lump sum compensation awards to meet in full each year.
At Boyes Turner we specialise in achieving maximum value compensation awards for patients who have suffered brain injuries and severe disability from negligent medical care. Many of our clients are children who were injured at birth and will be totally dependent on others for as long as they live. Over 20 years’ of helping these clients, we have seen first-hand the concerns and fears of their families. NHS Resolution tells us that it wants to understand injured patients better – particularly these claimants who account for nearly 50% of its payments – but at least in relation to these claimants, it has failed to understand what many defendants, insurers and the Department of Health (DoH) seem unable to grasp. Their compensation is not about windfall money. They have been dealt a devastating blow which has left them severely disabled and permanently dependent and as NHS Resolution accepts in its report, they are entitled to their full compensation. But in our experience, once the child’s essential capital needs are met, (e.g adapted housing to enable the disabled child to participate in family life), the certainty of lifelong future care and financial provision for their child overrides all other considerations. The reduction in the discount rate reflects the genuine difficulty faced by necessarily risk-averse claimants who struggle to invest their damages in the current financial climate in a way that guarantees that the money will provide for all their needs for an uncertain lifetime. Once essential capital costs are met, then given the option of certainty via a PPO, we don’t foresee many of our most severely injured clients risking the prospect of lifelong security in order to capitalise their compensation.
For NHS Resolution, and for claimants alike, there remains a great deal of uncertainty in the foreseeable future. The Ministry of Justice’s response to the consultation on the discount rate has still to be determined, as does the DoH’s response to the consultation on RRR. Lord Justice Jackson’s final word on fixed costs for lower value medical negligence claims has still to be implemented, and may bring about a change in behaviour of claimants in meritorious lower value cases as they struggle to meet the cost of bringing their claims.
And of course, NHS Resolution awaits the outcome of the National Audit Office’s review of how government manages the cost of clinical negligence in trusts, “the publication of which was delayed by the general election” in which the spotlight will be turned on its own “behaviour” in handling claims.
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