Companies & Ventures, DH Commercial Department of Health 4 th Floor, Zone B Skipton House 80 London Road SE1 6LH

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1 Companies & Ventures, DH Commercial Department of Health 4 th Floor, Zone B Skipton House 80 London Road SE1 6LH William Flenley QC Professional Negligence Bar Association 2 Crown Office Row Temple London EC4Y 7HJ Tuesday 4 August 2015 Dear William, REDUCING LEGAL COSTS IN CLINICAL NEGLIGENCE CLAIMS Pre-consultation I am writing to you in advance of our plans to consult formally on our proposals to introduce a fixed recoverable costs regime in clinical negligence cases. The Government is increasingly concerned about the rising cost of clinical negligence cases, particularly given they draw on the limited NHS resources from patient care within the NHS. The Department of Health has been looking at ways of bringing the costs of claims down, and believe the best way to reduce negligence claims is to improve patient care and safety. However there are three strands to consider in the overall picture, better care, better customer care and better litigation. This proposal goes some way to addressing the better litigation strand. From the available data managed by the NHS Litigation Authority (NHS LA), the Department of Health has noted that claimant legal costs are often more than six times those of defendant costs. Claimant s legal costs for cases in 2014/15 amounted to; 299% of damages awarded between 1 10,000; 164% for claims between 10,001-25,000; 112% for claims between 24,001-50,000; 83% for claims between 50, ,000 and

2 57% for claims between 100,000 and 250,000. There is a growing recognition that clinical negligence costs have increased greatly with provisions now reaching 28.6 billion. The annual cash costs to the NHS have risen substantially with a 35% increase over the past 12 months and this trend will continue. This is in part due to these excessive legal costs, at a time when the NHS is being asked to deliver productivity and efficiency savings of circa 22bn. Given this position the Department of Health is working with the Civil Procedure Rule Committee (CPRC), to consider the introduction of a regime of fixed recoverable costs in lower value clinical negligence claims. Subject to the consultation process, this would require the introduction of a fixed recoverable costs scheme, a possible revision of the current Pre-Action Protocol for the Resolution of Clinical Disputes and an amendment of the Civil Procedure Rules. The Department is now moving toward the formal consultation phase for our proposals. We continue to work closely with the CPRC, and the established subcommittee, and have presented an overall timetable. This includes the following proposed stages for consultation to support an October 2016 implementation date: Pre-consultation August 2015 Formal Consultation published November 2015 Formal Consultation closes - December 2015 Given the above, I am keen to get your initial views on our proposals. During this pre-consultation phase I will be seeking to elicit views from a broad spectrum of stakeholders with an interest in the outcomes. I have therefore prepared the attached questionnaire and your response would be gratefully received so that we can feed that into our overall considerations for the formal consultation document. To complement this process, we are also running a series of focus groups during the preconsultation phase with clusters of stakeholders for example medical defence organisations, private healthcare providers, patient organisations and professional bodies to gather a wide range of views on this important proposal at an early stage. We will use the same questionnaire attached at Annex A for focus group responses. If you think that your organisation might benefit from such a focus group session please contact Julie Badon on Julie.badon@dh.gsi.gov.uk Please could you send your questionnaire response directly to both Andrew De Whalley and Julie Badon at: Andrew.dewhalley@dh.gsi.gov.uk Julie.badon@dh.gsi.gov.uk 2

3 I would be grateful if you could provide your response by 31 st August Your response will be form part of the pre-consultation phase. Yours sincerely Michael Richardson Deputy Director Companies and Ventures 3

4 Annex A Please complete this questionnaire and submit to the Department of Health by 31 st August 2015 to Andrew.dewhalley@dh.gsi.gov.uk and Julie.badon@dh.gsi.gov.uk Or mail it to: Julie Badon Section Head Companies and Ventures Branch Commercial Directorate Room 2W56 Quarry House Quarry Hill Leeds 2 LS2 7UE Questionnaire The Government proposes to introduce fixed recoverable costs for all cases where the letter of claim is sent on, or after, the proposed implementation date of 1 st October Although this could affect cases where solicitors are already instructed but a letter of claim has not been sent, it leaves at least 12 months for such claimants to submit a letter of claim and so avoid the application of the proposed fixed recoverable costs regime. 1. Do you agree with this proposed approach to the transitional provisions? Yes or No If your answer is no, please explain how you consider the transitional provision should be set, having regard to the need for the effect of fixed recoverable costs to apply as soon as practicable. 4

5 The Government considers that the Fixed Recoverable Costs (FRC) scheme could be applied in clinical negligence to cases up to a value of 250,000 in damages and will apply both to pre-issue costs and post-issue, pre-trial costs. 2. Up to what value of damages do you think should be applied to the FRC regime? a. Up to 25,000 b. 25, ,000 c. 50, ,000 d. 100,000 to 250,000 Why do you believe this to be the right threshold? The Government is also concerned with the number and cost of expert reports obtained in lower value cases, which can add to the disproportionate costs incurred. The Government is therefore considering a proposal to cap experts' fees at a maximum recoverable sum which fairly reflects the likely number and cost of experts' reports needed in such cases. Under this proposal, the cap would apply to all reports both on liability/causation and on quantum/diagnosis. 3. Do you agree that capping experts' fees in this way would be a useful way forward? Yes or No If your answer is no, how would you propose that the use of experts and the cost of their reports might best be managed, particularly before the first case management conference? 5

6 Our provisional thinking is that the fixed recoverable costs and ancillary rules would be sufficient to control behaviour on both sides and that no further sanctions would be required than currently appear in the rules for fixed recoverable costs generally. We consider that to this extent, the behaviour issues likely to be encountered in introducing fixed recoverable costs for clinical negligence will be no different from those encountered in other personal injury claims. 4. Do you agree that no special provisions will be required to control behaviour in clinical negligence claims? Yes or No If no, what sort of Rules do you feel would assist in controlling behaviour alongside Fixed Recoverable Costs? For pre-issue costs, the Government is proposing a sliding scale for the fixed recoverable costs, calculated by reference to the level of damages agreed. This type of approach has been used successfully with other fixed recoverable costs regimes; it has obvious benefits in terms of applying proportionality and it is also acknowledged that it should encourage the solicitor to ensure that damages are recovered at the appropriate level. (The proposal for post-issue, pre-trial costs is likely to be for fixed costs in various stages according to when the case is settled.) 5. Do you agree with a sliding scale pre-issue? Yes or No If no, please explain what you would consider to be a more appropriate fixed costs structure for pre-issue cases. 6

7 THANK YOU FOR TAKING THE TIME TO ENGAGE IN THIS PRE-CONSULTATION QUESTIONNAIRE - please can you make clear on behalf of whom you are responding. 7