The Extension of the Non-delegable Duty of Care Does it matter - yes it does so read on!!

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1 March 2014 (ISSUE 4) The Extension of the Non-delegable Duty of Care Does it matter - yes it does so read on!! 2013 And How the Legal Costs Landscape Changed Alterations introduced by the Jackson reforms. More Reforms for Scottish Negligence Claims A follow up on the developments addressed in the previous issue. The Duty of Candour How the Mid-Staffordshire public inquiry applies across the independent health and social care sector.

2 (a belated) Happy New Year Following on from the success of the newsletters we produced last year, and our summer seminar, we are back again with another edition of what we hope you will find to be useful and interesting articles from our legal panel. Plans are underway for the next seminar, which we see as a key part of keeping in touch with you all whilst giving us all something to think about. David Cameron Marketform Head of Claims There have been some changes to the medmal claims team and I am pleased to say that we now have a full quota of claims assessors ready to assist you. On a monthly basis we are toughening the targets which we set ourselves for responding to claims and your queries. We expect that, this year, we will slowly start to see some reduction in Claimant costs as the instances in which a success fee and ATE premium can be sought, in cases which were commenced from April 2013, are limited. It will be a long time until we see any significant costs reduction, given the time that it will take for all of those claims to flush through the legal system, and it will be interesting to see the effect this has on the level of damages that are recovered by Claimants given that there is due to be an uplift to take into account that the success fee and insurance premium are no longer recoverable. As ever, we look forward to hearing from you with any suggestions for matters that you would like to see dealt with in our newsletters although plans are already afoot for a summer holiday special taking us around the world in medical malpractice issues.

3 The Extension of the Non-delegable Duty of Care: does it matter - yes it does so read on!! Liability in negligence almost always depends on a fault based "personal" breach of duty. If I crash my car, I am liable if I'm at fault. If I delegate work to an apparently competent contractor, and that work is found wanting, then the contractor (not me) is liable to my client whose work I delegated. The situation is slightly different if an employer delegates a client's work to their employee: if I provide poor advice to a client, I am liable BUT because of my relationship with my employer, my employer is "vicariously" liable for my actions 1. There is, however, an exception. This is called the "non-delegable" duty of care. It is a rare beast in the legal jungle, until now only really seen in cases involving an employer's duty to its employees. An employer must provide a safe working environment for its employees, even if the employer delegates practical responsibility for health and safety to a contractor, something goes wrong, the employer will still be primarily liable because the duty owed to its employees cannot be delegated. One recent case, Woodland v Essex County Council 2 has apparently increased the range of cases where a "non-delegable" duty applies. THE FACTS Aged 10, Miss Woodland attended a Junior School in Essex. At the time, the National Curriculum included provision for swimming lessons. These were provided in school hours at a local pool. The lifeguard and the swimming teacher were independent contractors, they were not school or Education Authority employees. During the lesson Miss Woodland got into difficulties. She was rescued and resuscitated, but suffered hypoxic brain injury. Negligence was alleged in respect of the actions of the swimming teacher and the lifeguard. THE ISSUES The question for the Supreme Court was whether the Council had a non-delegable duty of care. Was it responsible for the alleged failings of its contractors? Usually the answer to this question would be no. However, the Court held that a non-delegable duty of care did apply because the following criteria had been satisfied: 1. The Claimant was a patient (in the ordinary sense, rather than lacking capacity) or a child or for some other reason was "particularly vulnerable or required the protection of the Defendant" against the risk of injury. 2. There was a pre-existing relationship between the parties which placed the Clamant in the custody or care of the Defendant, that gave rise to a positive duty to protect the Claimant from harm. 3. The Claimant has no control over how the Defendant performed its obligations. 4. The Defendant delegated to a third party some function which was an integral part of that positive duty. 5. The third party was negligent in his performance of the function delegated to him by the Defendant. Clearly this has direct application to other cases like Miss Woodland's. But what about cases involving Doctors, hospitals, and their patients? Mark Ashley DACB Beachcroft Associate 1 Although it can still sue me: see Lister v Romford Ice and Cold Storage [1957] AC [2013] UKSC 66

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5 Although technically not settled law, it has for some time been accepted that a hospital generally owes a non-delegable duty to its patients to ensure that they are treated with skill and care regardless of the employment status of the person who is treating them. There are exceptions to this, the most notable of late being a case 3 where an NHS Trust was found to be not liable for a contractor's failure to accurately report a genetic test. In that case the Claimants had not been patients of the hospital (they were patients of a hospital in Jordan, and the genetic sample had been sent to the NHS Trust for analysis), so the criteria set out above were not satisfied. BUT if the Claimant in that case had been admitted to an NHS hospital for treatment, and that treatment had failed due to a contractor's inaccurate report of a genetic or other test, it seems that the NHS Trust would be liable. So THE KEY QUESTION. Does this mean that private hospitals are liable for the errors of their contractors? The answer depends on who the contractor is, and on what the Claimant's relationship with that contractor is. In the test analysis example given above then it seems likely that the private hospital would be liable where the patient was in their custody (e.g. recovering after an operation). In the case of a surgical error, the position will often be different. If the Claimant has contracted with the surgeon and separately with the hospital, then there is a clear expectation that the duty of care is on the surgeon and not the hospital. If, however, the Claimant has contracted with a private hospital for it to undertake an operation and a surgical error occurs, then the private hospital would appear to be liable. The position is generally dealt with by insurers or the MDO of the surgeon indemnifying the hospital, but clearly the Woodward case is likely to see attempts by the claimant law firms to blur those lines. The effect of the non-delegable duty on insurers' outlay can be mitigated by ensuring that the indemnity position between hospitals, surgeons and other contractors is clear, and that surgeons and other contractors have adequate insurance cover. If the private hospital is stuck with a breached nondelegable duty of care then it can still sue the contractor for the full extent of its losses. In practice, Claimants are still likely to sue the person who they think is responsible for their injuries. The existence of a non-delegable duty of care may lead to more cases where a private hospital is joined to an action brought against a doctor, but provided the indemnity position with the doctor is clear, the implications of the Woodland decision for medical malpractice insurers is, we think, unlikely to be significant ultimately on damages exposure, but there could be an effect on un-warranted legal costs. Clients should be encouraged to re-visit their contractual governance and ensure that they have enforceable provisions allowing them to transfer risk quickly and effectively. 3 3 Farraj v Kings Healthcare NHS Trust and others [2009] EWCA Civ 1203

6 More Reforms for Scottish Negligence Claims Elena Fry Brodies LLP Partner Head of Insurance and Risk Last September, I wrote an article in MedMal about the gathering pace of Scottish law reform. Readers may remember I commented on the planned reform of Scottish courts, the increased level of bereavement awards north of the Border, and the possible introduction of a no-fault compensation scheme for clinical negligence actions. Since writing that article, there have been significant developments of which those with an interest in Scottish claims and litigation ought to be aware. Irrespective of the outcome of this year s independence referendum, it is clear that the Scottish Government intends 2014 to herald sweeping reform for Scottish claims and litigation. In this article, I will discuss some of the highlights. The Taylor Report reforming litigation costs in Scotland Sheriff Principal Taylor issued his Review of Expenses and Funding of Civil Litigation in Scotland on 11th September The report contains 85 recommendations and signals some radical changes for Scottish claims and litigation generally. However, Taylor specifically commented on the need to improve access to justice for victims of clinical negligence. Between 1 April 2008 and 31 March 2011, the total number of claims for clinical negligence in Scotland was just 3% of that in England & Wales (even though Scotland s population is approximately a tenth of the size). Taylor concluded that the cost of litigation was a prohibitive factor to many potential claimants. Whilst legal aid is still available in Scotland, few claimants meet the eligibility test and their solicitors often take the view that legal aid remuneration is inadequate to cover the work involved in complex clinical negligence cases. Accordingly, there are few solicitors in Scotland prepared to take on such cases unless secure funding is in place. To help claimants, Taylor concluded that there was merit in exploring the establishment of a boutique contingent legal aid fund ( CLAF ) to fund outlays (e.g. expert reports) in cases of alleged clinical negligence. Accordingly, he has recommended that the Scottish Government should commission financial modelling work on the viability of establishing a CLAF in Scotland. The Taylor Review did not simply look at clinical negligence claims, but considered all Scottish litigation. As a way of improving access to justice for all claimants, the starkest recommendation was the introduction of qualified one-way cost shifting ( QOCS ) in litigated claims. Like the Jackson reforms, QOCS means that if the claimant loses he won t have to pay the defender s legal costs. It is likely that the Taylor recommendations will be implemented and there is no doubt that the introduction of QOCS would encourage increased numbers of clinical negligence claims to be made in Scotland. If the Scottish Government consults and approves the establishment of a CLAF for clinical negligence outlays, clinical negligence claims in Scotland could proceed at very little financial risk to the claimant. Limitation period to be raised from three to five years Just before Christmas, Scotland s First Minister announced plans to introduce a new Damages Bill as one of the key priorities of the Scottish Government s legislative programme for One of the main proposals is to amend the Prescription and Limitation (Scotland) Act 1973 to increase the limitation period for raising a personal injury action from three to five years. This will apply to clinical negligence claims. The motivation behind the Bill is to assist claimants 4

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8 in complex cases where a high degree of investigatory work is required before an action is raised. Clearly this will have a major impact on clinical negligence claims investigation and management, not to mention the assessment of risk. Documents will have to be retained for longer periods of time, witness evidence should be captured just in case of late claim notification and key witnesses contact details will have to be kept up to date. Clearly this reform will not apply to England & Wales, but will claimants in the rest of the UK lobby for similar change? Periodical Payment Orders At the moment, Scottish Courts do not have the power to consider Periodical Payment Orders ( PPOs ) before approving a settlement. However, the Damages Bill announced by the First Minister intends to give Scottish Courts new powers to impose PPOs in damages claims, with scope for later variations to avoid the risks associated with lump sum compensation. Again, this reform will have a significant impact on the handling and cost of clinical negligence cases in Scotland. If the Scottish Government pushes through Scottish Court reform as well as limitation and PPO reform, the impact on clinical negligence risk and claims in Scotland will have to be carefully considered. When will these reforms be introduced? While we don t have a precise timetable for the implementation of these reforms, it is likely that the Scottish Government will set the wheels of change in motion before Summer Feel free to contact the writer or your Marketform contact for updates and more information. 6

9 The Duty of Candour Robert Francis QC's report into the Mid-Staffordshire NHS Foundation Trust Public Inquiry was heralded as the 'NHS event of 2013'. However, this description may be wrong on both counts: firstly, although the setting for the Inquiry's findings was an NHS acute trust, the main themes of the response to the Inquiry also apply across the independent health and social care sector; secondly, it seems clear that the events at Mid-Staffordshire, will shape the arena of quality governance for many years to come. THE CANDOUR LANDSCAPE Of all the changes emanating from the Inquiry, perhaps the flagship development is the introduction of a duty of candour. This new statutory duty is just one part of a wider landscape of "Openness, Transparency and Candour" covering such matters as: new guidance on best practice in handling complaints 1 ; promoting the ability of staff to raise concerns and whistle blow; and the need for clarity that so-called "Gagging" clauses do not prevent staff raising patient safety concerns by way of "a protected disclosure in the public interest". THE NEW DUTY OF CANDOUR There is much attention on what the new duty of candour will mean for providers and we consider some of the key issues below. In considering these points it should be borne in mind that the health landscape is already subject to existing duties of candour in the form of a contractual duty for all providers of NHS services (which has been in place under the NHS Standard Contract since 1 April 2013) and professional duties on registered medical practitioners and nurses under their Codes of Conduct. However, in relation to the new statutory duty, the following points need to be considered: To whom will it apply? The new duty will be introduced as a regulatory requirement on all providers registered with the CQC, requiring them to ensure their staff are open with patients and their families where there have been failings in care. As such, the Government has departed from Robert Francis' recommendation that the statutory duty of candour should be extended to registered medical practitioners and registered nurses, although the Government's response recommends that healthcare professionals' existing professional duties of candour should be enhanced (see below). However, even though the statutory duty will apply to providers, rather than healthcare professionals, there is still the possibility of individual liability for breach of the duty; in line with other CQC requirements, prosecutions can already be brought against directors or other senior officers within providers if the breach of duty occurs with their consent or connivance, or due to neglect on their part. When will the duty be triggered? Robert Francis' recommendation, in the Inquiry, was for the statutory duty to be limited to cases of death or serious injury. However, the Government have requested David Dalton and Professor Norman Williams to carry out an urgent review, which should be published imminently, on whether the threshold for the statutory duty should be reduced to cover incidents causing moderate harm; in our view, it would appear to make sense to align the statutory duty with the threshold under the existing contractual duty for NHS providers. Carlton Sadler Bevan Brittan Senior Associate Paul Taverner Bevan Brittan Partner 7 1 See Review of the NHS Hospitals Complaints System by Rt. Hon Ann Clwyd MP and Professor Tricia Hart;

10 Compliance with the duty A recent CQC consultation highlighted a desire from providers for more information about how the duty will apply. It seems clear that providers will be expected to not only notify patients/relatives of incidents but also to provide an explanation and, where appropriate, an apology. In terms of the practicalities of implementing this, providers might find help in the previous Being Open 2 guidance issued by the former National Patient Safety Agency. In issuing apologies, providers will also need to ensure that these are worded so as to not unnecessarily undermine a defence to a potential claim. It is very easy to make an admission of fact before a full investigation is complete which is tantamount to an admission of legal liability and difficult to row back from. A connected issue is making sure that any explanation or apology does not adversely impact the provider's insurance arrangements. Commercial medical malpractice insurance policies will invariably carry a form of wording which requires the insured not to make any admission of liability without the insurer's consent. Where a claim has already been made, and the insurer is involved in it, then any apology or explanation should be approved by the insurer before it is issued. The area where problems will arise will be incidents where no claim has been made, and the insurers are not yet engaged. In these cases, the provider will have to be very careful to ensure that any apology or explanation does not constitute a breach of the insurance policy terms. It may be prudent for providers to liaise with their insurers to see whether it is possible to agree appropriate types of wording in advance, particularly for apologies, that the insurers would be content for the provider to use. Sanctions for breach Whilst the precise wording of the draft regulations is still awaited, it appears likely that they will enable CQC to bring a prosecution for breach of the duty of candour, without the need to give providers a prior warning notice. Breaches of the duty of candour will also enable CQC to exercise other, civil, enforcement powers including, ultimately, the power to cancel registration and stop providers from operating. CQC will, no doubt, set out an enforcement policy clarifying how and when it will use its enforcement powers; it remains to be seen whether CQC's exercise of the power of prosecution will be, as Robert Francis recommended "in the last resort in cases of serial non-compliance or serious or wilful deception"

11 Interaction with other duties of candour Whilst, the Government are alive to the possible need to align the threshold for the statutory duty of candour with that under the existing contractual duty, in relation to duties on healthcare professionals, the Government's formal response to the Francis Inquiry states that regulators should agree consistent approaches "to be candid with patients when mistakes occur and whether serious or not". There is, therefore, the potential for health professionals to be under a professional duty to report incidents, and possibly even near misses, to patients in situations where the provider's contractual and statutory duties are not engaged. Providers will need to monitor developments in professional codes of practice closely and be aware of this situation. Impact on claims There are conflicting opinions as to the impact that the duty of candour might have on the volume of clinical negligence claims. On one view, the requirement to inform patients of adverse incidents, even where the patient is not aware of the adverse outcome and no complaint has been made, is bound to generate compensation claims that would not otherwise have arisen. Likewise, it is contended by some commentators that the increased obligation to provide apologies will encourage the bringing of claims by patients who might otherwise not have taken their complaint further. considerable legal costs can be avoided. Various studies from other jurisdictions have suggested that the volume, and costs, of compensation claims have fallen after the introduction of a duty of candour. Our view at this stage is that the impact of the duty of candour on the volume and cost of civil compensation claims is likely to be broadly neutral. CONCLUSION It is clear, given the potential sanctions for enforcement by CQC, that providers will need to keep abreast of developments in the forthcoming regulations setting out the duty of candour and provide their staff with appropriate training and procedures to follow to ensure appropriate explanations and apologies are given to patients and/or their relatives when there are failings in care. This presents a challenge for providers to ensure they provide the right levels of information, in order to satisfy patients and the regulator, without undermining legitimate defences to any claims which may follow, and without prejudicing their position with their insurers. The contrary view is that many clinical negligence claims are brought by patients who simply want an explanation as to what has happened to them, an apology, or an assurance that steps have been taken to prevent a recurrence, and that their claims could have been prevented if this information had been volunteered at an early stage. There is also an argument that if fault is acknowledged quickly in cases where there has been negligence, 9

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13 2013 and How the Legal Costs Landscape changed As the 2013 calendars are consigned to the recycle bins, now is a good time to review how the Jackson Reforms have altered the legal costs landscape began with fears that the courts and legal profession would grind to a halt under an avalanche of new costs rules and procedures. Although there has been plenty of creaking under the strain, lawyers and judiciary have continued to function and I am pleased to report that the demise of the costs lawyer has been greatly exaggerated! The reforms introduced on 1 April 2013 will have a major bearing on the cost of civil litigation in the future. Losing Defendants no longer have to pay success fees and ATE insurance premiums to successful Claimants in cases where Conditional Fee Agreements (CFA) or ATE insurance were entered after 1 April 2013, which will clearly save considerable costs. However, the full impact of those savings will not be felt until those cases have gone to trial or have settled. Unlike non-recoverable success fees and ATE insurance, the introduction of qualified one-way costs shifting (QOCS) to personal injury claims has hit Defendants immediately. Except in cases where a Claimant entered into a CFA or ATE insurance policy before 1 April 2013, or in very limited special circumstances such as misconduct, where a cost order has been made in favour of the Defendant, payable by the Claimant, these will be limited to the amount of any damages and interest paid to the Claimant. As an example, since 1 April 2013 a privately paying Claimant may discontinue a claim for damages arising out of personal injury and not be required to pay the Defendant's costs, even if that case commenced many years ago! The reason for this is that the damages and interest paid to the Claimant is Nil. Worked example: D succeeds on a preliminary issue and a costs order is made in their favour D's costs are 10,000 C goes on to succeed in their claim for 5,000 (global) The most that D can recover for his costs of the preliminary issue is 5,000 Many ongoing personal injury claims are still funded by CFAs entered before 1 April 2013 and as a consequence those Claimants are excluded from QOCS protection. Some pre 1 April 2013 CFA funded Claimants have cancelled CFAs and entered into private retainers before filing a notice of discontinuance; however that does not alter the Claimant s liability to pay the Defendant s costs as QOCS exemption exists when a CFA or ATE insurance policy was entered before 1 April 2013, irrespective of whether or not that CFA or insurance policy was still in place when the claim discontinued. The greatest immediate impact of the Jackson Reforms has been caused by the introduction of costs budgeting and the much stricter criteria for relief from sanctions. The importance of these reforms was highlighted in Andrew Mitchell MP s claim for damages from News Group Newspapers in the Plebgate scandal. Mr Mitchell s solicitors submitted a costs budget late and despite this case being issued before introduction of the new costs budgeting rules, Master McCloud applied the new CPR 3.14 and treated the Claimant as having filed a budget for court fees only. The filed costs budget was actually in the sum of 506,425.00! Mr Mitchell s solicitors applied to the Master under CPR 3.9 to waive sanctions and the Master refused that application. Mr Mitchell appealed the Master s decisions and on 27 November 2013 the Court of Appeal dismissed Malcolm Goodwin Goodwin Malatesta Costs Lawyer, Partner 11

14 both appeals. In his judgment (Mitchell v NGN [2013] EWCA Civ 1537) the Master of the Rolls highlighted the importance of costs management and budgeting to enable the courts to manage litigation and costs and that merely overlooking a deadline should not attract relief from sanctions unless the default is trivial. Clearly Mr Mitchell s delayed filing of a costs budget was not deemed trivial. During 2014 we will surely see the judiciary s resolve to successfully implement the Jackson Reforms tested to the full. We have already witnessed the Court of Appeal s determination to manage and control legal costs and as Lord Dyson MR concluded in the Mitchell judgment in time, legal representatives will become more efficient and will routinely comply with rules, practice directions and orders. If this happens, then we would expect the satellite litigation of this kind, which is so expensive and damaging to the civil justice system, will become a thing of the past. We will wait to see if the Court of Appeal is setting our expectations too high or if 2014 really will herald a new era of costs management and costs control, as well as the end of satellite litigation! 12

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16 MARKETFORM TEAM David Cameron Head of Claims Sarah Wallis Senior Medical Malpractice Claims Assessor Sherry Dalesandro Senior Medical Malpractice Claims Assessor LEGAL PANEL HELPLINE DAC Beachcroft Ian Cooper Corinne Slingo Bevan Brittan COSTS PANEL HELP SERVICE Harmans Goodwin Malatesta Robert Walker Claims Assessor Luke Profke Claims Assessor All articles represent the opinions of their authors and are not endorsed by Marketform. The contents are for general information. They are not intended as professional advice for that you should consult a solicitor, barrister, or other suitably qualified professional. Marketform expressly disclaims all liability for any loss or damage arising from reliance upon any information in this newsletter MKF-MedMal March (3/2014)