7 July 2016Print This Post

NHSLA targets ATE costs as proportionality test makes it mark again

Clinical negligence: ATE not needed where hospital had apologised

Clinical negligence: ATE not needed where hospital had apologised

The NHS Litigation Authority (NHSLA) has reduced after-the-event (ATE) insurance premiums in 30% of cases in the past year, saving more than £6m, it has revealed.

The authority released the figures as it highlighted two recent circuit judge rulings that upheld reductions – one on the basis of the proportionality test, and the other because the insurance should not have been taken out in the first place.

The NHSLA said that during 2015/16, it faced ATE premium costs of £38.3 million in 2,849 cases. It challenged those costs in 1,437 cases (50.4%), resulting in cost reductions in 846 cases (59% of those challenged, 30% of the total).

The combined savings totalled just over £6 million, a saving of 16%.

An NHSLA spokesman said that it was anticipated that the cost of ATE insurance to the NHS would fall “significantly” following the LASPO reforms, which only retained premium recoverability for the cost of initial medical reports.

“However, over the last three years ATE premiums have fallen only marginally,” he said.

In Martin v Queen Victoria Hospital NHS Foundation Trust, The defendant had lost a biopsy sample which resulted in a claim for damages due to the delay in treatment. The case settled for £7,000. A medical report costing £3,591 had been obtained, the cost of which was reduced to £2,400 on provisional assessment.

District Judge Wildsmith also reduced the claimed £3,843 ATE premium to £2,500.

The claimant’s solicitors, Pryers, operated a block-rated scheme with Allianz. On appeal, Her Honour Judge Belcher in Leeds said that in the absence of expert evidence on the underwriting evidence and/or evidence of comparable block-rated policies, the defendant had merely asserted that the premium was unreasonable.

“Based on the authorities… I conclude that on the facts of this case, it is a case where something more is required from the defendant, before the claimant could be required to justify the premium as a reasonable [one], and before it could be properly concluded as a matter of law that the ATE premium for the block-rated policy in this case was unreasonable.”

However, she then went to look at whether the premium was proportionate, ruling that the test could apply to individual items and not just the overall total. “In my judgement, even if costs are proportionate overall, it could still be the case that an individual item of cost is disproportionate,” she said.

HHJ Belcher said the district judge found, in effect, that it was open to the claimant to use a cheaper policy. “That decision was made in the context of proportionality, not in the context of whether the premium charged was a reasonable amount for a block-rated policy.”

By contrast, she ruled, this did not require further evidence, and it meant that the district judge acted “well within the ambit of his reasonable discretion”.

The judge concluded: “I am conscious that the use of proportionality in this was could be said to undermine the principle that the use of block-rated policies cannot be said to be unreasonable. However, that is the result of the amended rules and the express difference between the issue as to whether a cost is reasonably or necessarily incurred, and the issue as to whether costs are proportionate…

“It is open to a claimant to choose a block-rated policy in the same way as it is open to a claimant to instruct leading counsel even if the case could perfectly well be done by a junior. The claimant has those choices, but that does not mean the costs associated with them are necessarily proportionate.”

Mewis v Burton Hospitals NHS Foundation Trust was a case involving an initial misdiagnosis of a condition that required surgery. After making a complaint, the defendant stated that the doctor apologised for the error.

A claim was started and the claimant took out ATE with LAMP with a premium of £2,120. In due course the matter settled for £1,500.

On assessment, District Judge Elias found that it was not reasonable to take out the insurance as the hospital had made an apology, and that the claimant’s solicitors themselves “clearly did not think that liability was an issue”.

On appeal, HHJ Thorp ruled that the district judge had not made a mistake in principle or stepped outside the “generous ambit that she is allowed on her discretion in this type of case”.

Though the letter from the hospital was not a formal admission of liability, the judge was “entitled to find that that letter was so clear that it was virtually impossible to see how the defendant could defend a case on the allegations that were later made”. Similarly there was no issue on causation raised before the judge.

HHJ Thorpe emphasised that he was ruling “very much” on the facts of the case and he did not intend it to have any wide-ranging effect.

The NHSLA spokesman said: “District judges are increasingly willing to disallow or reduce excessive ATE premiums. It is encouraging to see circuit judges are upholding decisions that protect the interests of the NHS and taxpayers in a fair and balanced way.”

Litigation Futures asked if the NHSLA was landed with extra costs in the 591 unsuccessful challenges. In response the authority said it rarely challenged ATE premium costs on their own, and it was not possible to disaggregate the expenditure for one component of a challenge from another.

“The £6m does not include the much larger savings that result from challenging CFAs, therefore it would be misrepresentative to consider the costs incurred due to unsuccessful challenges in isolation,” the spokesman said.

 

By Neil Rose


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