DH considers cap on legal costs for negligence claims

In a letter to providers and clinical commissioning groups, DH finance director David Williams said the department is working with the NHS Litigation Authority and Ministry of Justice on the plans.

The letter outlines various measures to reduce NHS spending, including the previously reported cap on agency staff spending. But it also says work has begun to “review a number of issues including the potential to introduce fixed legal costs for clinical negligence”.

It will also review whether “after the event insurance” costs should continue to be recoverable from the defendant in a clinical negligence claim.

This refers to insurance that protects a client – usually a claimant – against costs they will be liable for if a legal action is unsuccessful.

Data published by the Litigation Authority showed the total clinical negligence bill for providers, including damages and legal costs, reached £1.1bn in 2013-14.

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Of this, claimants’ legal costs were £230m, while defence costs were £79m.

The authority’s annual report for the same year said there was an 18 per cent increase in new claims compared to 2012-13. The number had almost doubled since 2009-10.

The report said the authority already challenges “excessive” legal bills for claimants, which saved £74m. In one case a claimant’s solicitor sent a bill for £83,000 on a claim for damages worth £1,000. The judge awarded the solicitors just £5,000 after the fees were challenged.

However, Russell Levy, head of clinical negligence at law firm Leigh Day, said almost all cases are now taken under a “no win, no fee” arrangement. He added: “The scale of the problem is greatly overinflated, and in the context of the whole NHS budget, these costs represent far less than what most businesses pay for their indemnity insurance.

“The only claims the NHS pay costs on are the ones they lose, and bills could be cut enormously by settling cases earlier.”

He added that the DH “should be encouraging systems that investigate where things have gone wrong”.

A DH spokeswoman said: “Legal costs in clinical negligence claims are too high and take away vital funds which should be used for patient care. We are currently looking at ways to reduce these legal costs.”

The Litigation Authority handles clinical negligence claims for NHS trusts as part of its risk pooling scheme.