Managing the costs of clinical negligence in hospital trusts Contents

1Rising costs of clinical negligence

1.On the basis of a report by the Comptroller and Auditor General, we took evidence on managing the costs of clinical negligence from the Department of Health (the Department), the Ministry of Justice, NHS Resolution and NHS Improvement.1

The Clinical Negligence Scheme for Trusts

2.The NHS, including NHS trusts and foundation trusts (trusts) are legally liable for any clinical negligence by their employees. They must pay compensation (damages) to the claimant, and pay their legal fees. Since 1995, NHS Resolution (the operating name of NHS Litigation Authority from April 2017) has provided indemnity cover for clinical negligence claims against trusts in England, through its Clinical Negligence Scheme for Trusts (the Scheme). The Department of Health (the Department) oversees NHS Resolution and develops policy to manage the costs of clinical negligence. NHS Resolution is responsible for dealing with claims, including funding defence costs, and any legal costs or damages that become payable.2

3.From 2006–07 to 2016–17, the number of clinical negligence claims registered with NHS Resolution under the Scheme each year doubled, from 5,300 to 10,600. Annual cash spending on the Scheme quadrupled over this period, from £0.4 billion to £1.6 billion. The estimated cost of settling future claims has risen from £51 billion in 2015–16 to £60 billion in 2016–17. In addition to the increasing number of claims, there are two main factors contributing to the rising costs of claims. First, increasing damages for a small but stable number of high-value, mostly maternity-related claims. These accounted for 8% of all claims in 2016–17, but 83% of all damages awarded. Second, increasing legal costs resulting from an increase in the number and average cost of low-value claims. Over 60% of successful claims resolved in 2016–17 had a value of less than £25,000.3

Tackling the main factors behind rising costs

4.This Committee has raised concerns about the rising costs of clinical negligence claims on several occasions, going back to at least 2002. More recently the Committee has urged government departments to tackle the underlying causes of these rising costs, in reports in 2013, 2014 and again in 2016.4 However, although much of the rising cost was predictable, annual spending is still expected to double by 2020–21 to £3.2 billion, and current action proposed is unlikely to stop this growth. The forecasting of the future costs of clinical negligence does not currently go beyond 2020–21 so the Department does not know what it expects to happen to costs after that time.5 Small changes in the assumptions used by the court, when calculating the amount of damages to award, can have a big impact on the level of damages awarded. For example, a recent change of the discount rate, an adjustment of the lump sum awarded to take account of the annual income earned from investing this sum, has added an estimated £500 million to the costs of claims in 2016–17, and £3.5 billion to the estimated cost of settling future claims.6

5.On the small number of high-value claims, the Department told us that some of the cost increases are for good reasons, such as an improvement in life expectancy rates for people who suffer maternal incidents. The Department acknowledged that the only way, within the current arrangements, to bring down the costs of high-value cases is to reduce the number of cases, by improving patient safety, particularly in maternity cases. The Department, NHS Improvement and NHS Resolution have introduced a range of initiatives to improve maternity care and reduce the number of still births. In recent years, the number of maternity-related incidents has remained quite steady.7 The Ministry of Justice also highlighted an option of reviewing the current (1948) legislation, which requires that damages levels assume private provision of health and care costs, even though patients will receive free NHS care.8

6.On the rising number of low-value cases, but which have high legal costs, the Ministry of Justice accepted that government could have predicted the impact that legal reforms have had on the number of claims and claimants’ legal costs. These legal reforms included the introduction of ‘no-win-no-fee’ agreements, to promote access to justice among people who would not have been eligible for legal aid, and the capping of legal fees for road traffic accident claims which led to more clinical negligence firms moving into the clinical negligence market. The Ministry of Justice told us it had taken action to address some of these issues and that it hopes to extend fixed recoverable costs to as many litigation areas as possible, particularly clinical negligence claims below £25,000.9

7.NHS Resolution has also introduced a voluntary mediation service as a way of resolving claims without formal court proceedings. NHS Resolution told us that only 71 cases have used this service, with the new service meeting resistance from some claimant lawyers who prefer the more formal route for resolving claims. The Ministry of Justice acknowledged that alternative dispute resolution, including mediation, is currently not working very well in the civil justice system and that the Civil Justice Council has suggested compulsory mediation in some areas of civil business.10

8.Tackling the rising costs of clinical negligence requires action by more than one government department, but currently there is no overarching cross-government approach to tackling this issue. The Department of Health and the Ministry of Justice told us that they work together closely, and the Ministry said it would like to set up a joint programme board between the Departments and be more creative in their thinking on issues such as the law of damages and alternative dispute resolution as it applies to health.11 Countries which have most successfully controlled clinical negligence costs have carried out legislative reform.12

NHS culture

9.When this Committee last reported on whistleblowing in March 2016, it noted that an independent review into creating an open and honest reporting culture in the NHS reported that a significant proportion of health workers were afraid to speak out.13 Although there have been initiatives, such as duty of candour, to encourage trusts to report incidents, NHS Improvement recognises that across the NHS there is still huge variation in terms of having a culture that very quickly admits its mistakes, investigates them and learns from them. NHS Improvement told us that the staff survey indicates that overall, a greater proportion of staff now feel able to report an incident than previously.14 The Department told us that data transparency is essential to achieving this cultural change.15

10.There is a growing body of evidence that when things go wrong many people simply want an apology, or want to know that the issue is being dealt with and that it won’t happen again. NHS Resolution noted that evidence suggests that taking these actions, often ensures that a harmful incident does not turn into either a complaint or a claim. Recent research suggests that greater transparency does not lead to a greater number of claims. However, people may make a claim if they are dissatisfied with the response they receive from trusts following a harmful incident.16 NHS Resolution plans to work with the Parliamentary and Health Service Ombudsman, to better support trusts in post-incident handling and where possible prevent escalation into a complaint or a claim.17

11.The Department and NHS Improvement told us that trusts rated as outstanding are generally more transparent and focused on leaning lessons when things go wrong. However, they could not provide us with a list of trusts that are doing well in managing harmful incidents and complaints. NHS Improvement noted that the contribution trusts pay to the Scheme is based on the trust’s claims experience for the last five years and its exposure to future claims, measured by staff numbers and activity. So if a trust is reducing the number of claims made against it, the price it pays for indemnity cover comes down.18

Improving understanding and supporting learning

12.Currently, only a small proportion (less than 4%) of people experiencing a harmful incident will actually make a claim. But some patient groups are more likely to make a claim than others. For example, people aged 65 and over experience 53% of harmful incidents, but they only make 23% of all claims. NHS Resolution told us that patients’ propensity to claim is also significantly higher among those who have had a year off work and therefore lost earnings, as a result of a harmful incident. Even a relatively small change in the likelihood of, for example, over 65s making a claim could have a significant impact on clinical negligence costs.19

13.NHS Resolution collects data on claims, and shares this with trusts through an online portal. The portal also provides some benchmarking information that allows trusts to compare their performance against an anonymised peer group. The National Audit Office’s report noted that trusts had mixed views on the usefulness of the information, and found this data of limited use in helping clinicians gain insight to help improve patient safety.20 For the Getting It Right First Time initiative on orthopaedics, trusts have been able to review claims data and clinical indicators together, and NHS Improvement told us that greater transparency has had an impact as there has been up to an 8.5% reduction in orthopaedic litigation costs.21

14.Trusts collect data on incidents and complaints, though the national reporting and learning system. However, data on incidents, complaints and claims are not drawn together into one system, or collected using a consistent classification so it is difficult to get a composite picture, to stop incidents from occurring. NHS Improvement told us that the national reporting and learning system will be replaced by 2019, and that this new system should better support the collection of consistent data.22

1 C&AG’s Report, Managing the costs of clinical negligence in trusts, Session 2017–19, HC 305, 7 September June 2017

2 C&AG’s Report, paras 1–2

3 Qq 2–4, 6, 10, 13, 14; C&AG’s Report, paras 4, 12, 13, 2.16

4 Committee of Public Accounts: Handling Clinical Negligence Claims in England, 37th Report of Session 2001–02, HC 280, 13 June 2002; HM Treasury: Whole of Government Accounts 2010–11, 37th Report of Session 2012–13, HC 867, 11 April 2013; Maternity Services in England, 40th Report of Session 2013–14, HC 776, 31 January 2014; The Government Balance Sheet, 19th Report of Session 2016–17, HC 485, 14 October 2016

5 Qq 3–5, 10, 11, 13, 27, 67, 112; C&AG’s Report, para 9

6 Qq 96–97; C&AG’s report para 2.14

7 Qq 2, 6, 12, 41, 50–55

8 Qq 98, 113

9 Qq 9, 10, 66, 113; C&AG’s Report, para 14

10 Qq 57–59, 73–74; C&AG’s Report, para 3.23

11 Qq 7–10, 67, 113–115; C&AG’s Report, para 10

12 Q 86, C&AG’s report para 2.15

13 Committee of Public Accounts: Making a whistleblowing policy work: progress update, 29th Report of Session 2015–16, HC 602, 11 March 2016; Freedom to Speak up: an independent review into creating an open and honest reporting culture in the NHS, Sir Robert Francis, 2015.

14 Qq 12, 21–22, 28, 67, 75, 77

15 Qq 67–70,

16 Qq 28, 37, 57, 75, 89–90; C&AG’s report para 2.6

17 Q 36

18 Qq 16–20, 23–26; C&AG’s report para 1.4

19 Qq 34, 35, 37; C&AG’s report para 15

20 Qq 5, 38–42; C&AG’s report para 3.20

21 Qq 27, 38

22 Qq 43–46, 72

29 November 2017