Legal actions are becoming an increasing menace for the health service. Hot on the heels of last year's House of Lords landmark ruling on the way compensation is calculated - which led to a jump in awards for lifetime care costs - Law Commission recommendations on increasing damages payments for pain and suffering may be increasing the cost of legal actions further.1
'Damages for non-pecuniary loss (that is, for pain and suffering and loss of amenity) in cases of serious personal injury should be increased,' says the Law Commission report, published in late spring.2
The report adds that: 'For injuries where the current award for non-pecuniary loss would be over£3,000, the recommendation is foran increase by a factor of at least 1.5 (ie 50 per cent), but by not more than a factor of two (ie 100 per cent).'
The report goes on to recommend that the proposed increases should be achieved by the higher courts issuing guidelines, but that if levelsof awards have not altered within 'three years after publication of this report' legislation should be enacted to achieve the commission's aims.
Taken together with increasing compensation resulting from the House of Lords ruling (which was further raised in June) the effect is substantial.3
'It is difficult to assess the exact effect of the Law Commission report,' says Jane Chapman, chair of the Association of Litigation and Risk Managers. 'But in cases where overall negotiations for awards are now starting at between£5m and£6m, the figure would have been from£2m to£3m a couple of years ago.'
To rub salt into the wound, according to the Association of British Insurers, because of rising damages for personal injury generally, insurance premiums for employers' liability cover are likely toincrease by between seven and 18 per cent.
Although damages for pain and suffering and loss of amenity are usually the smaller part of awards for more serious clinical negligence (compensation for lifetime care and living expenses making up the bulk of the compensation in most larger claims), the Law Commission's proposals will have the effect of taking an even larger slice of the already over-stretched health service budget. This is leading some to ask fundamental questions about the aims and results of legal actions.
'The practical impact of the Law Commission's report is just beginning to show itself,' says Dr Christine Tomkins, professional services director of the Medical Defence Union.
'We must consider whether these damages payments are the best use of public money. A person injured in an NHS hospital is compensated on the basis of being treated privately. The courts should be considering any treatment they could get on the NHS in the future. Wouldn't it be better if the money going to the few in damages awards now went to the many in terms of the whole health service? This would reduce the strain on the system and, therefore, hopefully mistakes.' She points to improving management of hospitals and the clinical governance regime as crucial in achieving this.
Controversially, the Law Commission report also questions some non-pecuniary damages awards. 'Non-pecuniary loss shouldbe rationalised in terms of mental suffering and loss of happiness caused to the claimant,' says the report. 'On this view a person with no awareness of his or her condition should not receive damages for non-pecuniary loss.'
The public, however, has a different view and this was recognised by the commission as a legitimate reason to retain non-pecuniary damages for coma victims. Public opinion would be unlikely to accept a reduction in awards, let alone the complete removal of general damages for coma victims. Such patients and their relatives elicit understandable sympathy from most people.
This sympathy is voiced by Action for Victims of Medical Accidents chief executive Arnold Simanowitz. 'We have to recognise that a person in a coma may not be aware of their condition, but non-pecuniary awards should also take account of their family's continued suffering. Also, to suggest that people injured at the hands of an NHS hospital should rely on it for his or her continued care is unreasonable.
'Unfortunately the NHS hasn't got the resources to always give people the choice of, say, having an injured relative in the nearest hospital. The only way to protect choices such as this is through compensation, which gives the injured person the opportunity to take the private route.'
As far as the Law Commission's report is concerned, Steve Walker, chief executive of the NHS Litigation Authority, thinks there is no need to panic. 'All that the report has done is to open up an avenue for judges to award more in particular cases,' he points out. 'It is a question of interpretation by the courts and we will contest individual claims. Nothing has changed yet.'
Although Gay Wilder, a partner with law firm Browne Jacobson, agrees that the cost emphasis is on compensation for care and future lost earnings, she does not see any relief from the continued increase in awards. 'There is a public perception that awards will keep going up,' she says. 'I don't see awards going down. The only way is up.'
Jane Chapman advises that in order to minimise legal claims as a whole, NHS trusts need to concentrate on management strategy. 'Trusts need to settle claims earlier. This is compassionately better and it also costs less. The NHS needs to invest more in training people to go for early reports, investigation and settlement of claims. If potential claims aren't investigated early on, by the time a claim is made the level of evidence available to the trust may often be so poor that taking the case to court is too risky.'
Although the Law Commission report may not be a disaster for the health service, damages awards are clearly going to keep rising, leaving better management as the only route to containing the cost.
1 Dyer, C. Legal briefing. HSJ 1998; 108 (5617): 28.
2 The Law Commission report, number 257. Damages for personal injury: non-pecuniary loss. 20 April 1999.
3 Dyer, C. Legal briefing. HSJ 1999; 109 (5661): 37.
4 Clinical Risk 1998; 4 (5): 170.
A case in point
An illustration of the proportions of awards allocated to pain and suffering and loss of amenity as compared with lifetime care and living expenses can be seen in the case of Hind v Doncaster health authority, reported last year.4
A 20-year-old expectant mother was booked into the hospital at 12.30pm for her delivery that night. A nurse noted heavy blood stains as well as a possible small abruption. An epidural was administered. At 5.20pm the foetal heart had dipped to 90 beats per minute, and the baby was born by forceps delivery at 5.48pm in bad health.
The baby, who was to become the claimant (then called plaintiff), suffered severe perinatal asphyxin and was left with serious cerebral damage. It was alleged on behalf of the claimant that hospital staff were negligent in allowing the labour's second stage to be unreasonably prolonged (it was over four hours).
Although liability was admitted, damages were not quantified until three years later. They then totalled£1,435,856, of which only£130,000 was a general damages claim. The total claim was eventually settled for£1,300,000.