Examination of Witnesses (Questions 1-19)
MR NIGEL CRISP, MR STEPHEN WALKER MR STEPHEN ORCHARD CBE AND SIR HAYDEN PHILLIPS KCB
WEDNESDAY 17 OCTOBER 2001
1. Good afternoon, ladies and gentlemen. As you already know, David Davis, who is still nominally a member of this Committee, has been appointed Chairman of the Conservative Party. As a member of the Opposition Front Bench, convention states that he has to stand down from this Committee. We are all very much aware that the success of this Committee in the last Parliament owed much to his leadership and during his time as Chairman much progress was made by this Committee and by the National Audit Office in taking forward the oversight of public expenditure. This afternoon the Committee has paid me the great honour of electing me Chairman and I shall try to carry on the good example set by David Davis and his predecessor Robert, Lord Sheldon. Today we are considering the Comptroller and Auditor General's report on the handling of clinical negligence claims in England. I know that there has been quite a lot of activity as a result of the Comptroller and Auditor General's report. Could you please outline the changes the Department of Health are considering in the way they deal with patients' claims for compensation?
(Mr Crisp) There are two big issues which I shall outline very briefly and which then no doubt we shall want to come back to. The first one is that we have now agreed that the NHS Litigation Authority will handle all claims. We are now putting them within the same system to professionalise the overall claim and have a standard approach, whatever the size of the claim, across the NHS. That is one big and significant change in terms of how we handle claims. The other one is that since July we have set up a review of clinical negligence, led by the Chief Medical Officer (CMO) and with a wide ranging group of people working with him. There has been a call for ideas so that we can see all the issues which are around, many of them raised by this report, but elsewhere too, so we can look at all the issues and take a view as to how we carry it further forward. In addition to that and in a related point, we have also put out a document around changing the complaints procedure within the NHS, particularly to look at how the complaints procedure and the claims procedure fit together. Quite a lot of activity.
2. You mentioned taking forward these issues. Can you give us some idea of the timescale?
(Mr Crisp) Early next year is the answer to where we are going to be in terms of the report from the CMO's working party. The call for ideas actually finished in early October, so they are now debating the evidence which has been brought forward. It is actually quite quick; we are intending to do it fairly rapidly.
3. Will you be able to make decisions at that stage?
(Mr Crisp) That is certainly the intention.
4. May I refer you to paragraph 3.18? It states that people with a potentially valid claim under £10,000 are in practice ineligible for public funding and that Conditional Fee Agreements do not offer a remedy for small claims. What are you going to do to ensure that such people have access to justice?
(Sir Hayden Phillips) There is some indication that actually conditional fee agreements can possibly apply in small claims. There is a case of one where an award was made for £2,000 which went down that route, so I do not think that can be completely ruled out as an option. Secondly, what we want to try to do in relation to small claims is to try to make sure that we embed better into the system processes of mediation and alternative dispute resolution which will enable people to come to a conclusion more quickly. This we have to do in conjunction with the Legal Services Commission and the NHS Litigation Authority.
5. Can you tell us a bit more about the Conditional Fee Arrangements? I know that these ideas are being worked up at the moment, and you mentioned there was one case. Surely in the case of most lawyers they are simply not going to want to take on these cases based on Conditional Fee Agreements, are they, if the value of the claim is under £10,000?
(Sir Hayden Phillips) If they are small claims; this is a disincentive in that area. More generally it does appear that the market is growing. Over a year ago we had something like 100,000 cases in which litigation insurance had been taken out and that is information a year old. Since from April 2000 we made the success fee and the insurance premium recoverable from the losing party, that has provided a considerable incentive further. Equally I agree that solicitors' firms will not always be financially structured to be able to handle the cashflow consequences of receiving money much further downstream than they would if they were funded in other ways.
6. Do you accept that there is a problem with these claims under £10,000?
(Mr Orchard) You are right that there is a potential problem. The key issue from our point of view, and the report brings this out, is the relationship between potential benefit and likely cost. For the smaller claims some other approach rather than litigation is likely to be more appropriate; through the complaints procedure for example.
7. That is an area we may want to cover during this hearing because it is an interesting area. The proposed organisational changes within the NHS will take claims handling away from trusts and make it the responsibility of the NHS Litigation Authority. However, packages of remedies, as set out in paragraphs 3.25 to 3.28 of the report, are in the gift of trusts and not the Litigation Authority. What are you doing to ensure this change does not make it more difficult for the NHS to give patients the range of non-financial remedies, advice, help, which obviously they will want?
(Mr Crisp) Part of this is about at what point something does become a claim and at what point it is a complaint. What we are doing through looking at the complaints procedure is actually looking at how we handle the early stages of that and making sure we have a more sensitive complaints procedure to patients so that we can actually be thinking about what it is they actually need. Clearly there are issues raised in here of the range of remedies. At the point at which it becomes clear that this is a claim, that this is going to go down that particular route, we then have to hand it over to the NHS Litigation Authority. If I may ask Mr Walker to talk us through that, we shall then see how we manage to get the interface between the NHS and the NHS Litigation Authority, which is of course part of the NHS.
(Mr Walker) We are currently talking to trusts; we are in the middle of a series of road shows explaining how we hope this will work. Implicit in what we are proposing is that claims managers in trusts would still have essential roles, including investigative roles, local management roles, setting up of mediation locally, the delivery of packages like this which you will appreciate requires a good deal of training. Relatively few trusts do it at the moment. We are promoting this as good practice where it is appropriate and where it is what the claimant wants. Clearly it is not the answer if the claimant wants great sums of money. So far there is fortunately great enthusiasm in the trusts for the proposed way of working from 1 April next year.
8. You will appreciate that a lot of these problems can be solved with a more sensitive approach: more communication at an early stage is what many people want. Are you confident that you can achieve this?
(Mr Walker) Absolutely.
9. Even though the Litigation Authority is a more remote body.
(Mr Walker) The theory is that it can train and manage people at remote locations. We think so.
10. In 65 per cent of cases with settlement costs below £50,000 costs exceeded damages paid to claimants. How much scope is there to reduce the legal and other costs of settling claims, in particular for those settlements up to £50,000?
(Mr Orchard) Under our current regime, if the costs of the case are going to exceed £25,000 they are subject to individual contracts, a contract between the Commission and the conducting solicitor. We have much more continuous information about what is happening in a case in terms of its cost, the work which is being done, any changes to prospects of success or the cost/benefit test, which will in many cases enable us to stop cases much earlier because they can no longer be justified in terms of the costs which are being run up. At the bottom end of the scale, below £25,000, which are not subject to that individual contractual regime, there is room for a much more streamlined approach to assessing merits. At the moment effectively the conducting solicitor cannot really make a judgement about the merits of his client's case without for example getting the medical records, without getting expert medical evidence and possibly in some cases going to expert counsel for an opinion. If we can streamline all that at the bottom end of the scale, there is room for a significant speeding up of the process and significant reduction in costs.
11. Is there room for more mediation for smaller claims?
(Mr Orchard) In my view, unlikely. It is more likely to be some derivation of the complaints procedure or a speeding up of the handling of individual cases and getting to the true facts earlier.
12. The Legal Services Commission's Funding Code states that costs should not exceed damages awarded to patients. How then can you justify giving legal aid in so many cases where costs do exceed damages?
(Mr Orchard) Historically that is right, we probably did, but we have made significant interventions and changes since then: by the funding code, which is relatively new and only came in on 1 April 2000; the individual case contracting came in on 1 October 2000. There have been many interventions since that sort of thing was fairly commonplace. We have limited the availability to apply for legal aid now to some 280 solicitors firms only, all of whom are fairly well established experts in this field of law.
13. Do you think you can square the circle?
(Mr Orchard) Yes. Obviously there is still a lot of work in the system which needs to come out. The report makes clear the length of time these claims take, so they will be running down over a number of years. Even there we have started to get to grips with the old cases. For example, we have identified about a quarter so far of the old pre-1999 Act cases and are requiring solicitors to produce case plans in respect of those cases, whether or not they are on the new list.
14. It is striking that about 1,000 claims have been open for ten years or more and that until recently there were no action plans, targets or even discussions between the bodies concerned on how to tackle this backlog. What caused this failure of public service and what are you doing to remedy the situation?
(Mr Walker) There is no excuse: there are many reasons. The examination carried out by the NAO was only of the existing liability scheme, which relates exclusively to claims based on events which occurred before 1 April 1995. Prior to 1 April 1995 trusts and health authorities, for none of whom this was core business, were actually doing the best they could with locally instructed lawyers. It is now recognised, and it is one of the reasons why the Authority was created, that that was an inefficient system; there was no centralisation, no consistency. It is not entirely a function, as it may appear from a literal reading of the report, of trust and health authority inefficiency. There are many, many reasons why claimants do not want, for very good reason, to settle claims early, particularly claims for catastrophic injury, claims involving cerebral palsy arising from obstetric accidents. Most of the medical experts would argue that it is impossible to assess, for example, the development potential of a child until the child is five, six or seven years of age. They would also say the same about making a prognosis of life expectancy. It was never the role of the Litigation Authority as envisaged in our framework document that we should apply what might be called commercial rules or draconian rules to the parents of those children, particularly obstetric claims, brain damaged babies and the like. We have always taken it as an article of faith that within reason we allow those parents to develop their claim, to collect their evidence. Time passes. It looks even worse than it is in reality in hindsight. Our framework document requires us to satisfy patients as well as to protect the National Health Service. We have been attempting to do that.
15. You will understand our concern.
(Mr Walker) Absolutely.
16. Is the backlog going up or going down?
(Mr Walker) What we are doing now is liaising very closely with the Legal Services Commission for the first time to see first of all whether or not these older cases are actually still live cases. I am sure you will understand that if we, for example, repudiate liability, the claim remains open. There is no limitation defence available to the NHS in these cases so the claim remains open until such time as someone tells us it is not going to be pursued. We could close them off early and that would lead us to the Equitable Life Independent Insurance situation with inadequate reserves, inadequate provisions anyway. Yes, we are working with the LSC to see which claims are still live. What we are not doing is applying the most draconian tactics which might be available to us to the parents of children with cerebral palsy.
17. It looks to me from this report from the NAO what several of us have thought for a very long time, which is that frankly medical compensation is in a mess at present. Let me say from the start, as I always have to say in matters dealing with health, that I have a certain interest in declaring that my wife is a GP. I hope she is not on the back end of claims for compensation but she could be potentially. Given that it is a mess, given that many of us have thought it was a mess for a long time, it does seem that action is being taken very slowly to deal with the issues. Given that we have a compensation system, what in your view is the purpose of having that system? Is it because it is necessary to warn NHS staff when they have gone wrong in some way? Obviously the larger the claim or the larger the amount paid out the more they feel they made a bad mistake. Is it recompense for damage done to the patients so that if the patient has been through pain they at least have some money to make up for that? Is it to pay for the costs of future care, because in some cases a negligence case may mean that the patient concerned has to be cared for thereafter? Or is it simply to put more money in the hands of the lawyers, which seems very often to be what actually happens?
(Mr Crisp) It is a combination of the last two plus a third.
18. The last two including putting more money in the hands of lawyers.
(Mr Crisp) No, I beg your pardon. I was taking the last one as a slightly light-hearted one; my apologies. Numbers two and three but also a third one which is a very important point here which is that actually managing clinical negligence is also about managing risks to patients. The really worrying thing about these figures is the human issues which lie behind them. We have in place now, and it has been going on for five years since we set up the NHS Litigation Authority and brought in the Clinical Negligence Scheme for Trusts (CNST), much better measures of risk management. This is also about improving our services in a straightforward way as well as the points you make about both giving compensation and also ensuring that people have some ability for further treatment or whatever may be needed given the particular condition. That is a very big point for us as managers of the services: let us get the services better.
19. It seems to me that it would be at least arguable that all three things you have talked about thereand the third one you mentioned is in a way fairly similar to my first point about informing staff where they could do better in future
(Mr Crisp) It was not so punitive on stressed staff.