The NHSLA 2014/15 Annual Report: 99 percent of all statistics only tell 49 percent of the story
The NHS Litigation Authority (NHSLA) published its annual Report and Accounts for 2014/15 on Friday, 17 July 2015 . The Chief Executive Officer (Helen Vernon) claims in her report at the beginning (page 6) that, “Clinical negligence claims place increasing pressure on the health service, frontline staff, our members and, ultimately, patients” whilst arguing that “it is important that those who suffer injury are able to obtain high quality legal presentation” but “at a reasonable cost”. She also raises concerns about the emergence of non-specialist lawyers and targets excessive and disproportionate claimant costs, especially for the lower value cases.
In this year’s Report there are also more graphs than ever before, of all sorts of varieties. Some of the headline statistics (with relevant comparisons to some previous years) are:
Importantly, the Report (page 8) identifies eight “potential drivers of clinical negligence” costs (although the word ‘potential’ is omitted from the headline) and it is worth considering what the NHSLA has to say about these more closely:
1. “An increase in the number of patients being treated by the NHS”
This would certainly appear to be the case. By way of some examples, according to the NHS Confederation website, there were 15.462m total hospital admissions in 2013/14, 32% more than a decade earlier (11.699m); the total number of outpatient attendances in 2013/14 was 82.060m, an increase of 8.8% on the previous year (75.456m); and in 2013/14 there were 64 per cent more operations completed by the NHS compared to 2003/04, with an increase cost from £6.712m to £11.030m. Even the NHSLA Report notes the 26% increase in NHS Activity (as measured by ‘Finished Consultant Episodes’) over 9 years (page 8). The NHSLA’s statistics must be viewed on this background, therefore. For example, the NHSLA’s 2005/06 the total expenditure was £560m. This is a nearly a 48% increase in 9 years, perhaps accountable, at least in part, to the levels of patient increases referred to above.
2. “An increase in the number of reported incidents. This may indicate an increasing and positive reporting culture and so is not necessarily reflective of an increase in incidents occurring”
It is worth noting some additional statistics from The National Reporting and Learning System (NRLS), which reports an increase in adverse incidents in the NHS (excluding where the degree of harm is unknown) from 867,000 in 2006/07 to 1,499,000 in 2012/13 to 1,637,000 in 2013/14, a significant increase of 189%. Over 10,500 incidents resulted in severe harm or death. Some of this increase, as the NHSLA points out, is due to increased reporting, but the NHSLA’s apparent hesitancy in dismissing a real increase in incidents is borne out by the fact that it seems pretty clear that the number of incidents is in fact increasing. As with the above, however, this statistic must be considered on the background of the increase in NHS activity, so it is difficult to know if the increase is actual or relative.
3. “An increase in the number of patients claiming compensation as a proportion of reported incidents”
It is difficult to know upon what evidential basis this statement is made, as there is no justification or explanation for it in the Report. In 2006/07, there were 5,426 reported claims (cases both pre- and post-Letter of Claim). There were 867,000 reported adverse incidents, which could be interpreted as meaning that 0.6% of incidents were reported to the NHSLA. The equivalent figures in 2013/14 were 11,945 (assuming this figure is the appropriate equivalent) and 1,637,000 respectively, namely 0.7%. At face value, it would seem that any rise is pretty minimal, even allowing for any increased adverse incident reporting by Trusts. This perhaps lends support to the view that the ‘compensation culture’ is a myth, contrary to what the Government and insurers might have us believe.
4. “An increase in the number of patients who claim but who do not recover compensation”
The earlier NHSLA Reports do not appear to include data for this statistic (as far as I could find) so it is difficult to know whether this is true over the longer term. It does appear to be case between 2012/13 and 2014/15 there was an increase from 3,612 to 4,909 of cases resolved without damages being paid (Figure 2). However, it is not clear (to me at least) what this statistic actually means: is it referring to cases in which a Letter of Claim has been served or is it referring to cases in which an investigation is reported to the NHSLA but the claim is abandoned after investigation and no Letter of Claim is ever served (with negligible, if any, cost to the NHS)? Given that most claims appear not to be investigated by the NHS until after a Letter of Claim has been formally served, the latter would appear to be more likely. If this is correct, then the statistic is both misleading and a misuse of the word “claim”, as well as it being misleading to imply that the NHSLA has done anything much to “resolve” the claim in such a situation (usually the case is just not pursued after investigation). I suspect that there are cases in which the NHSLA resisted after a Letter of Claim was served and which were not then pursued, but much more relevant statistics would be those of claims in which a Letter of Claim was indeed served and/or claims issued at Court and what number/percentage of those the NHSLA then resolved without any payment of damages.
5. “An increase in the number of lower value claims”
Again as far as I can tell, this is only the second year that the NHSLA has included the graph on page 9 of the Report, but it does at least give the last 3 years’ statistics. While the text laments the increase in the number of lower value claims, the graph in fact suggests a small fall in the ‘£10,000-£25,000’ category, a small rise in the ‘£25,000-£50,000’ category (although still significantly greater than in 2012/13) and then pretty much level pegging for the rest. The actual values are not given and the graph’s axes are not easy to read, so it is hard to be truly accurate in any interpretation.
6. “Disproportionate claimant legal costs for lower value claims” and 7. “Excessive claims for legal costs from some claimant firms”
This is a drum the Report bangs with great regularity throughout, relying on the graph at Figure 4 on page 10. It is self-evident that claimant costs are high for the lower value claims, especially when compared to defence costs, and I suspect that the NHSLA is justified in highlighting that there are some cases in which the costs claimed have been excessive. However, whilst the NHSLA may be “transparent in what we pay to our defence solicitors”, the Report is anything but so in relation to some of the overall figures. To compare claimant solicitor and defence costs in the manner in which the NHSLA Report does is misleading, for the reasons given below, amongst other factors also mentioned below (although the list is by no means intended to be exhaustive):
a) The burden of proof in our civil justice system is on the claimant: accordingly, it is the claimant who is the party who has to establish the evidence to overcome this hurdle. Last year’s Report lamented claimant solicitors ‘front-loading’ work and costs prior to notifying the NHSLA of a claim. In both Reports it is not acknowledged that a claimant has to carry out often very extensive and expensive preliminary investigatory work, including costly independent expert opinion, just to establish whether a claim exists and that many clinical negligence claims, regardless of value, are very complex, involving very significant amount of work by experienced claimant lawyers to investigate and establish, let alone prosecute, such claims, which naturally increases costs.
b) NHS Trusts and the NHSLA can, and frequently do, carry out negligible, if any, work until receipt of a formal Letter of Claim, as said above; they also have access to “free” in-house medical opinion from the outset to assess risk and to offer preliminary advice. Defendant solicitors are not instructed until after the Letter of Claim, often not until after the issue of proceedings. This is not the case with claimants who have to instruct solicitors from the outset. Therefore, a substantial cost to the NHS (of in-house Trust legal teams and the NHSLA) is simply not being included in the overall figures and there is not a ‘like-for-like’ comparison being made.
c) NHS Trusts frequently fail to provide a full set of medical and associated records at the outset, requiring considerable work and cost by the claimant solicitors to obtain them before any investigation can be begun, let alone completed. The defence solicitors have no such onus.
d) Delays at various stages by NHS Trusts, the NHSLA and/or some defence solicitors in investigating and managing claims and in admitting liability early, even in light of SUI reports, Inquests, etc., serves only avoidably to increase claimant costs.
e) The NHSLA’s interpretation of “disproportionate” relates solely to value and not to any of the other aspects, in particular those referred to in the CPR (44.3(5)) when considering whether, “costs incurred are proportionate if they bear a reasonable relationship to (a) the sums in issue in the proceedings; (c) the complexity of the litigation; (d) any additional work generated by the conduct of the paying party; and (e) any wider factors involved in the proceedings, such as reputation or public importance”. It is not accurate to rely solely on (a) above as a measure of proportionality, regardless of whether the NHSLA’s view is that value is all that matters. For example, a claim involving a neonatal death may be as difficult to investigate as a multimillion pound cerebral palsy claim and vastly less valuable in purely monetary terms, but potentially just as devastating to the parents (if not more so), and it is not reasonable to view this type of case on a purely monetary basis.
f) The NHSLA has not factored in additional costs relating to the unnecessarily expensive costs budgeting process to date.
g) Defence solicitors do not charge the same hourly rates as claimant solicitors, not least because they have an institutional client who pays on a regular basis, win or lose, whereas claimant solicitors are increasingly on CFA retainers under which they are only paid if they win. It is perhaps notable that defence legal costs have increased broadly in line with claimant’s costs (11.6% versus 12.6%).
h) Claimant solicitors do not benefit from the costs of after the event insurance premiums, the insurers do.
i) The Courts have a robust system to address excessive claimant costs.
8. “Rising lump sums and annual costs (usually for care), over and above inflation, for high value claims”
On pages 11-13 and 32, the Report discusses periodical payments, of which the NHSLA has 1,500 on its books. The graphs show that, on average, both capital sums and annual payments have increased in the last decade. The Report acknowledges that this at least in part is due to underlying inflation but there are other factors at play. It is noteworthy that total expenditure excludes the annuities on the PPO cases, so the former figure is falsely deflated and this perhaps, at least in part, can explain why the total expenditure on claims overall has fallen for the third year in a row.
Planned expenditure for the NHS in 2014/15 was £113 billion, so the total expenditure by the NHSLA on clinical negligence claims is just over 1% of its annual budget. In 2005/06, the budget was £89.6 billion, meaning nearly 0.63% was spent on clinical negligence claims in that year. This is a 0.4% increase in 9 years. However, is it right to blame this increase primarily on claimant costs? Certainly, it is not difficult to see the political attractiveness in portraying the NHSLA and defence lawyers as the Saints and claimant lawyers as the Sinners, although, on closer scrutiny, and as I hope the above demonstrates, it would appear that there are many other factors that may serve to confound such a simplistic explanation.
Ms Vernon argues in her commentary that “no-one would argue against a reduction” in the costs of clinical negligence claims: I would agree, but in my view the best way to achieve this, as ever, would be to decrease both the number and seriousness of adverse incidents in the NHS in the first place; and then, when such incidents do occur, to address them promptly and properly. Whilst the Government and the NHSLA would, of course, argue that they are doing all they can by way of various initiatives to address the issue of adverse incidents, we are some 15 years on from the Report by the Chief Medical Officer (Liam Donaldson) entitled “An Organisation with a Memory” and yet it still feels (not least in the wake of Mid-Staffs, etc.) as if not much has been learned. The Government knows that any changes will take time to have a material effect, if indeed they ever do, such that in the meantime it seems the only solution they consider viable is simply to reduce the right to access to justice which, ultimately, will deprive many patients injured by the State of any fair and justified legal redress.
* Ron DeLegge II, Gents with No Cents