The myths of ‘rising NHS compensation costs’ and ‘the increasingly litigious society’
Posted on 3rd May 2018
Listening to the BBC Radio 5 breakfast show on Thursday morning last week I was disappointed to hear some of the comments made by Dr Pallavi Bradshaw, introduced as a senior medico-legal adviser for “Medical Protection” which was described by Nicky Campbell as a ‘not for profit legal support group for doctors’.
“Medical Protection” was of course a reference to the members defence organisation, the Medical Protection Society, which most legal observers would consider to be a quasi-insurance company. It was surprising to hear the MPS described in such terms on the BBC.
Following this introduction there then followed a discussion regarding the conduct of crowds outside Alder Hey hospital, who whilst purporting to support Alfie Evans and his parents were in fact threatening and abusing hospital staff who are attempting to care for Alfie and other patients.
Obviously I, and any right thinking person, would strongly condemn the activities of the mob outside Alder Hey Hospital and any threats of violence or intimidation of hospital staff should be completely condemned and the offenders punished accordingly.
I completely agree with Dr Bradshaw’s comments with regards to protecting doctors and the support they need to enable them to do their job free from harassment or threats of violence.
What was disappointing to me was that Dr Bradshaw then went on to refer to the rising costs of litigation and make a very contentious declaration that the NHS has outstanding liabilities, in terms of compensation claims, of £50bn and then went on to ask “and where is that going to come from?”.
The answer is of course that the £50bn figure which is often quoted in the media is future liabilities that the NHS might face over a period of up to perhaps 80 years in the future.
Take for example the tragically brain damaged baby, born in 2017 with a life expectancy of 80 years requiring care and support 24 hours a day from a team of carers plus compensation for loss of earnings and an altered accommodation, then the NHS accounting methods calculate the entire cost of that claim and project it forward and add it into the future liabilities the NHS is now facing.
The problem in doing this of course is that when quoted in the media such figures indicate that the NHS is facing an immediate need to pay out this sum of money whereas in fact all such claims are paid on a periodical payment basis which means that they are paid annually sums subject to inflation.
The other issue is of course that a claim, notified to the NHS, which might on the face of it appear to have good merits will be allocated, for accounting purposes, to be an expected NHS future liability. Whereas in fact the claim may well fail or sadly perhaps the child might pass away much earlier than expected.
Accordingly the implication of the interview quote, that the NHS is somehow facing an immediate need to pay £50bn in compensation, is simply not correct.
The actual figure being quoted by NHS Resolution annual report of 2018 for future liabilities due to legal action is in fact £65 billion but as stated above that is projected expenditure over a very considerable period of time and it may well not come to pass that nowhere near that amount is actually spent on compensation for injured patients.
Dr Bradshaw then went on to conflate the issue of NHS funding for treatment with NHS compensation. As set out above those two sets of figures are calculated in entirely different ways. Whereas the NHS has an annual budget, the figures being quoted in relation to NHS liabilities have to be looked at an 80 year timescale, not on the basis that they are payable now.
She then went on to make the claim that “we are in an increasingly litigious society”.
Dr Bradshaw was interviewed on BBC 5 Live on 26 April 2018 and therefore she probably had not seen the latest press release from the Department for Work & Pensions Compensation Recovery Unit (CRU) which reported earlier this week that the number of cases registered for compensation during the period 2017/2018 in fact fell by 13%.
Therefore the suggestion that we are in ‘an increasingly litigious society’ is not backed up by the latest set of figures.
What is always disappointing is the ease in which repetition of the existence of an alleged “compensation culture” is accepted by the media when in fact the figures now show that claims are in fact falling and are likely to fall even further once the Government’s new Civil Liability Act comes into force in April 2019.
Dr Bradshaw then went on to assert that ‘we need to sit down and work out what we can and cannot fund’. This appeared to imply that the £50 billion compensation was somehow payable immediately or in this financial year.
Spread over eighty years future liabilities are in fact £750 million per year. Are we saying that the country can’t afford to pay this kind of sum to seriously injured patients who have proved their claims?
What was also missing from the interview was of course any mention of the Civil Liability Bill which has now started to make its way through the House of Lords.
This Bill is heading towards being passed as Act of Parliament by April 2019. It will introduce a fixed costs scheme for lower value clinical negligence claims and further will introduce a tariff scheme for road traffic accident claims. In addition the Government announced that they will be using the Civil Liability Act to alter the discount rate which is the method by which the value of high value claims is calculated.
From 2001 to 2017 the discount rate was set at a figure of 2.5% which was widely seen by most legal observers to be a rate which was extremely generous to insurance companies, and the NHS.
As at February 2017 the discount rate was then changed by the Lord Chancellor to a much more Claimant friendly figure of -0.75%. following this the Government quickly announced that it intended to review this figure following intense lobbying from the insurance industry.
The discount rate change of course has a massive impact on the NHS future provisions figures.
The provisioned liabilities for NHS claims was increased from £28.6 billion to £56.4 billion in the NHSLA annual report of 2015/2016. This was as a result of the change in the long term discount rate set by HM Treasury (for NHSLA accounting purposes) from +2.2% to minus 0.8%. This change accounted for £25.5 billion of the total increase in the provisions figure alone.
When the discount rate is changed yet again in 2019 I would expect that the NHS future provisions figure will reduce by a fairly significant sum – probably by tens of billions of pounds, I would expect.
But I doubt very much that this will be making any headlines and the nuanced educated debate we need in the media on access to justice is sadly still very lacking.