The cost of clinical negligence to the NHS – which has quadrupled over the past decade – will double again over the four years, the National Audit Office (NAO) has found, as it called on the government to take a “stronger and more integrated approach” across the health and justice systems to rein costs in.
With claimant legal costs in lower-value clinical negligence cases the fastest-growing element of the growing tide, it said NHS Resolution should also work more closely with the Solicitors Regulation Authority over firms found to be grossly overcharging.
The NAO found no evidence yet that the rise in clinical negligence claims was related to poorer patient safety, “but declining performance against waiting time standards is one factor which increases the risk of future claims from delayed diagnosis or treatment”.
Spending on the clinical negligence scheme for trusts scheme (CNST) has quadrupled from £400m in 2006-07 to £1.6bn in 2016-17, and is predicted to rise to £3.2bn by 2020-21.
The number of successful clinical negligence claims where damages were awarded has more than doubled in the 10 years, from 2,800 to 7,300.
The fastest percentage rise was in claimant legal costs, which have gone up 533% over the decade – from £77m to £487m – and was mainly due to an increase in both the number of low- and medium-value claims up to £250,000 and their average cost. Defence costs were £122m over the period.
In 2016‑17, the claimant’s legal costs exceeded the damages awarded in 61% of successful claims.
Over the same 10 years, the total damages awarded rose by 316% (from £330m to £1.4bn), mainly associated with the rising damages paid for a small number of high-value, mostly birth injury-related, claims.
In 2016-17, 590 claims with a value above £250,000 accounted for 83% of the total damages awarded.
The NAO said the cost of claims was rising at a faster rate year-on-year than NHS funding, which was “adding to the financial pressures already faced by many trusts, which can have an impact on patients’ access to services and quality of care”.
Between 2010-11 and 2015-16, the average percentage of a trust’s income that went to the CNST increased from 1.3% to 1.8%. The NAO said this figure was likely to rise to about 4% by 2020‑21.
Trusts spending a higher proportion of their income on clinical negligence were significantly more likely to be in deficit – all 14 trusts which spent 4% or more of their income on clinical negligence in 2015/16 were in deficit.
According to the NAO, the Department of Health and NHS Resolution’s proposed actions to contain the rising cost of clinical negligence claims – fixed costs for cases worth up to £25,000 and a new alternative process for birth injuries – “are unlikely to stop this growth”.
Even if successfully implemented, the watchdog said, these would only save some £90m a year by 2020-21.
There was no “coherent cross-government strategy, underpinned by policy, to support measures to tackle the rising cost of clinical negligence”.
The NAO said: “The Department [of Health] and NHS Resolution, working with others including the Ministry of Justice, have identified many of the factors contributing to the rising costs of clinical negligence.
“But some of the biggest factors influencing costs fall within the remit of more than one government department or are largely outside of the health system’s control. These include developments in the legal market, the increasing level of damages awarded for high-value claims, and changes in the discount rate used by courts to calculate lump sum payments for future damages.
“Although some actions have been taken to control costs, such as reforms to ‘no-win-no-fee’ agreements, ensuring that clinical negligence costs have the minimal impact on the NHS’s ability to deliver health services to patients requires concerted and fundamental action across the government, particularly the health and justice systems.”
The NAO’s four recommendations were first that, by September 2018, the Department of Health, together with the Ministry of Justice and others, should “clearly set out a coordinated strategy to manage the growth in the cost of the CNST”.
Second, NHS Resolution should work with its members and other bodies to promote “better and more consistent data for complaints, incidents and negligence claims across the system”.
Third, NHS Resolution “should build its capability to analyse and provide greater insights on the causes of clinical negligence claims”.
The NAO said: “It should work with trusts and the legal firms representing claimants to better understand what motivates people to make a claim, and clarify how it can best provide the information that trusts need and apply its resources accordingly.”
Fourth, it called on NHS Resolution to work more closely with NHS Protect, the Solicitors Regulation Authority and other regulators to ensure that “risks to its claims operations and to NHS resources are shared and addressed systematically”.
It explained: “NHS Resolution has achieved significant savings from contesting unmerited or excessive claims and legal charges. However, data are not always shared with or addressed by relevant regulators. NHS Resolution and the legal services regulators should routinely exchange information on risks identified, and feed back actions taken as a result.”
On excessive costs, the NAO reported that, in 2015-16, NHS Resolution successfully challenged costs in 2,600 claims (but failed in another 2,500), saving £144m, or a third of the costs claimed.
In one case, it successfully challenged an £8m bill from a single firm and settled the payment for £500,000.
The NAO said that part of the reason for escalating costs was cases taking longer to resolve and also budget restrictions.
Between 2010-11 and 2016-17, the average time taken to resolve a claim following notification increased from 300 to 426 days. “Our analysis indicates that, on average, an extra day taken to resolve a claim is associated with an increase in legal costs of more than £40.”
It acknowledged the need to strike a balance between resolving cases quickly and robustly defending unmerited or excessive claims.
“It is not clear whether or not the time taken to resolve cases is optimal. There are no data against which NHS Resolution’s performance can be benchmarked and the optimum time to take will vary on a case-by-case basis.
“Resolving clinical negligence claims is adversarial in nature, leading to differing views on whether the time taken to resolve cases is optimal. NHS Resolution has limited control over some barriers to resolving cases more quickly, such as the time taken by the court to process its cases.
“NHS Resolution is required to remain within its annual cash budget agreed with the department, and so must manage the pace of settlements to remain within this limit.”
Amyas Morse, head of the National Audit Office, said: “At £60bn, up from £51bn last year, the provision for clinical negligence in trusts is one of the biggest liabilities in the government accounts, and one of the fastest growing. Fundamentally changing the biggest drivers of increasing cost will require significant activity in policy and legislation, areas beyond my scope.”