Tackling the problem of spiralling medical compensation

Posted On: 
11th March 2015

The Medical Defence Union’s Head of Professional Standards and Liaison, Dr Michael Devlin explains why the organisation is fighting against spiralling compensation payments in clinical negligence cases. 

The MDU launched their Fair Compensation Campaign three years ago amid concerns over increases in clinical negligence inflation, which has seen rises of around 10% in recent years. Dr Michael Devlin is calling on the Government to act now before the situation reaches crisis point. 

What does your role for the Medical Defence Union entail?

I liaise with professional organisations to ensure they are aware of the MDU's views on medico-legal issues affecting our doctor and dentist members. I am also involved in our campaign for legal reform to ensure that patients who are negligently damaged are compensated in a fair and affordable way.

Why did you start the campaign, and how long has it been running? What progress have you made?

We started this campaign in 2012, although we have been raising our concerns about spiralling compensation payments in clinical negligence cases for many years. The problem has become more acute recently. The current system is no longer sustainable so we decided to campaign for legal change.

Patients harmed as a result of medical negligence should be compensated so they can be properly cared for.  But clinical negligence inflation has been rising at 10% for the last few years. Society cannot afford to keep paying compensation awards which double in value every seven years. Legal reform is needed urgently.  

We have made good progress in raising the profile of the issue in the media, with policymakers and with our doctor and dentist members. But we are asking for major legal changes which can’t happen overnight.

What action would you like to see from MPs on this issue?

All MPs have at least one NHS hospitals in their constituency, many of which are facing huge bills for compensation payments. You can see the scale of the problem when you consider that the NHS Litigation Authority's liabilities for known and future claims were estimated at £25.6bn for the financial year ending 31 March 2014, and that was a rise of 13% from £22.6bn the year before.

The main political parties have made the NHS a key issue in the run-up to the election. With MPs' support, we would like to see the problem of spiralling damages awards being raised as part of the debate about how money can be retained in the NHS for the benefit of all patients.

We have already had some interest from individual MPs but we would like as many as possible to
support our campaign for a change in the law.

Why is the cost of medical compensation rising so quickly?

The main reason for this is the cost of providing future care for patients with severe and long-term injuries.

Bodies like the MDU and NHSLA are required to provide compensation on the basis that care will be provided by independent sector providers.

This is the position even if patients have received a high standard of NHS and social care before the award.  For example, the MDU paid £9.2m to compensate a patient rendered tetraplegic following spinal surgery. In one NHS case, a child who suffered severe brain damage as a result of negligence has been awarded compensation that could amount to £24 million.  

Is there a particular area of healthcare that is driving this trend?

Not really. We see claims arising in all healthcare specialties, against general practitioners and hospital specialists. The size of the award reflects the seriousness of the damage and the life expectancy of the patient. It is possible for a high value award to arise in any clinical specialty. The claims that tend to hit the news are those where, for example, a baby has brain damage as a result of obstetric negligence and needs a high level of care for a life expectancy of 40 or more years.

However, even in a specialty such as psychiatry, doctors could face a multi-million pound claim. Take the example of a patient who has brain damage as a result of self-harm, and it is alleged that the psychiatrist failed to spot their deteriorating mental health and take action to prevent the incident.

How long can compensation costs keep rising at this level until the NHS reaches crisis point?

For some specialties of doctor such as obstetricians, neurosurgeons and spinal surgeons, indemnity costs already affect their ability to practise in the independent sector.  If nothing is done, doctors in other specialties may soon be unable to afford independent practice and there would be a knock-on effect for the NHS in terms of increased demand. In addition, with future NHS claims liabilities rising so fast, the situation simply cannot continue any longer.

In other countries which have experienced a similar problem, such as Australia, the government was forced to act because there was a crisis when indemnity became unaffordable. We don't believe the UK government should wait until there is a crisis. It should act now.

Why aren’t the public and the medical profession aware of the high cost of clinical compensation?

You are probably only aware of the cost of claims in which you are directly involved. However, we believe everyone should know because all taxpayers are paying for NHS claims and should know how their money is being used. Just using the NHSLA’s 2014 liabilities, English taxpayers are facing a potential bill for NHS compensation payments of more than £1,000 per person.

We carried out a survey of the public, MPs and doctors, and the majority of respondents thought the £25.6bn NHS estimated liabilities were higher than they had expected (60% of the public,  71% of MPs and 76% of doctors)*.

If people were better informed on this issue how do you think they would react?

We hope they would support our campaign and encourage their MPs to raise this matter. We are calling for a fairer system so that more patients can benefit from NHS funds, not just those who can prove negligence.

We believe the answer lies in finding a way of retaining money within NHS and local authority budgets, to benefit all patients with serious conditions or disabilities, not just those who receive compensation.  Under the current law, defendants must disregard care that can be provided by the NHS or local authority and a patient can claim for the cost of care on a private basis, even if they have previously received good NHS care before receiving damages . Currently these awards are used to set up bespoke independent sector care arrangements for each patient who proves negligence but if the legal changes we are suggesting were introduced, those funds could be used for NHS care instead.   

How much political support exists already for reform?

Some politicians are aware of the problem and it is discussed by MPs in both Houses from time to time.  Senior government officials are also aware of this subject.  For example when giving evidence to the Public Accounts Committee in October 2014 about the Whole Government Accounts, Treasury Permanent Secretary, Sir Nicholas Macpherson, said that NHS litigation was one of the two items that had focused his mind. He described NHS litigation as one of two ‘really challenging issues’.  We believe discussion should turn to action.

Are there any MPs/parties that are especially sympathetic to this campaign?

This isn't a party political issue but we have found interest among MPs from all parties.

What effect will a cap on payments have – on overall costs and for individual claimants?

We are proposing that an independent body such as NICE, should define a health and social care package that provides an appropriate standard of care for all patients with a particular injury, irrespective of the cause. Compensating bodies such as the MDU should be able to fund a defined standard of care package from any provider including public sector health and social care providers.

We hope these proposed reforms would provide additional funding to the public sector because it would free up for public use much of the money currently spent funding large compensation awards.  Increasing the level of public funding should lead to improved care for a greater number of patients.  

Is there a link to ‘no win, no fee’ cases?

Legal reforms were introduced on 1 April 2013 with the aim of addressing the disproportionate fees that claimant’s solicitors can charge in ‘no win, no fee’ cases. Those changes have not yet had the intended effect but even if they do, they have no bearing on the size of compensation awards. This is a separate problem caused by the cost of providing long-term future care to severely injured patients.

Why is the cost of pay-outs higher in England than in other countries? 

English damages awards are higher than most countries in the world, including many states in the USA. The main reasons for this are because in England:

  • there is no cap on the cost of providing future care
  • compensation has to be calculated on the basis that the patient's future care will be provided privately, rather than through public providers of health and social care
  • the courts do not have to consider whether compensation payments are affordable, only the treatment and care needs of the individual patient.
  • there is no cap on the loss of future earnings.The MDU has paid over £6m for a patient's loss of earnings but we believe such amounts should be capped each year at three times the average salary.

All of these changes could be made through legal reform, as has happened in other countries such as Australia and many US states.

*  On behalf of the MDU, ComRes interviewed 2,070 British adults online between 23rd and 24th July 2014 and 150 MPs between 13th October and 14th November 2014. Further details about the survey and full data tables can be found at
www.comres.co.uk.

The MDU surveyed 220 doctors in August and September 2014, a 5% response rate.