Government consultation on Fixed Recoverable Costs launched 31 January 2022

The Department of Health and Social Care (DHSC) have published a Consultation on Fixed Recoverable Costs for Lower Value Clinical Negligence Claims (“the Consultation”). The Consultation runs from 31 January 2022 closing at 11:45pm on 24 April 2022. 

Claimant legal costs that can be recovered from a losing defendant in clinical negligence claims are considered to be disproportionate, particularly for lower value claims, to the damages awarded and associated defence costs. Analysis of claims data shows that in 2020/21 claimant legal costs in the £1,001 to £25,000 bracket were more than twice the average amount awarded in damages (£22,124 average legal costs compared with £11,198 average damages awarded), a gap that has steadily widened over the years. The time taken to resolve claims has also increased significantly. For example, successful lower value (£1,001 to £25,000) claims settled in 2020/21 had an average "claim duration" (time taken from claim notification to settlement) of 1.3 years, an increase of 46% in claim duration since 2010/11.

Clinical negligence is one of the last remaining areas of lower value personal injury claims in which recoverable legal costs are not currently fixed. The Government’s intervention is welcome and long overdue, to streamline the legal process and bring proportionality to the clinical negligence market.

The aim of the process is to create a fast, fair and cost-effective system that benefits claimants and defendants and reduces the costs to the NHS.  One of the key objectives is to provide faster resolution with legal costs that are proportionate to the value of compensation. The maximum duration for the proposed “standard track” is 44 weeks and for the proposed “light track” is just 20 weeks. Claims will be assigned to a track pre-issue according to their complexity and the degree to which liability is agreed from the outset.

The proposal is for two resolution stages within the process to encourage agreement, even in difficult-to-resolve cases, and crucially, to minimise delay, cost and distress. These are:

• a stocktake meeting between parties and;
• a neutral evaluation by a barrister, to resolve as many cases as possible, even where there is significant disagreement

We would encourage all NHS bodies to respond to the Consultation and, in particular, on the core elements of the FRC scheme proposals presented in the Consultation document which include:

The streamlined process

It’s proposed that only claims with a value up to £25,000 are to be included in the scheme. Do you agree it should be limited in this way? Should the proposals be more ambitious?

There is to be a two-track FRC scheme, divided into a light track and a standard track. The light track will include claims where there is no issue on liability. It is said this will include those claims where there is a serious incident report which identifies care below a reasonable standard of care or where the coroner makes a finding of neglect. Do you agree this is appropriate? Are your investigations intended to assess whether the Bolam standard has been met? Will you need to find extra resource for your inquest teams to ensure better preparation for the inquest?

The new process will require parties to exchange medical evidence and partake in a mandatory stocktake to resolve claims pre-issue. It  is envisaged that the defendant will make a decision on liability within six months of receipt of the FRC letter of claim which must include:

• Medical records – to be collated, sorted and paginated by the claimant
• Experts’ reports on breach of duty of care and causation (limited to a maximum of 2 such liability experts in different medical disciplines)
• Witness statements (limited to 2 witnesses, statements in template form, including a statement of truth);
• Where applicable, any separate report on condition and prognosis
• Details of losses and supporting documentation, either in the letter or in a separate schedule if required, to be supported with a statement of truth
• An offer to settle the claim

If liability is to be denied, the FRC response letter must include:

• A reasoned denial
• Experts’ reports on breach of duty of care and/or causation (limited to a maximum of 2 such liability experts of different medical disciplines)
• Witness statements (limited to 2 witnesses, statements in template form including a statement of truth)
• A counter-schedule of loss responding to the claimant’s valuation of general damages and heads of loss to be supported with a statement of truth

This will put extra pressure on your in-house teams and clinicians. Is six months sufficient? Are you geared up to adhere to this timetable?

There is to be a mandatory neutral evaluation stage for claims that have not settled following service of the letter of response. This will be undertaken by a specialist panel of barristers for a fixed fee, The outcome will be non-binding, but the costs will ultimately be borne by the “unsuccessful” party, whether on the issue of liability or quantum, with the parties encouraged to make “offers” ahead of this evaluation. Is this putting too much pressure on the parties to reach a compromise? Should the outcome be binding? Should the parties still have the option of recourse to legal proceedings?

Fixed costs, exclusions, sanctions and implementation

The Government proposes to adopt the “defendant’s group proposal” on the costs that are to be recoverable in the standard track and light track. It would see a claimant recover £5,500 plus 20% of agreed damages if the clam resolves at the “stocktake” stage in the standard track, and just £1,500 plus 10% of damages agreed if on the light track. An extra £500 is allowed in each track if it goes to a neutral evaluation.

Do these go far enough? Should there also be an attempt to limit the amount experts can charge too?

The government has proposed the following should be excluded:

• Claims requiring more than two liability experts
• Claims with genuine multiple defendants (where allegations against each defendant are different)
• Claims involving stillbirths or neonatal deaths
• Claims where limitation is raised by the defendant as an issue

Do you agree? Should any cases be excluded? Should other cases be excluded based on sensitivity and/or complexity of the issues? How might that be determined?

There will be sanctions to encourage adherence to the rules of the scheme and incentivise resolution of claims within the scheme. The proposals merit close analysis. There can be little doubt that parties who resort to court proceedings will do so at their own peril, with quite punishing sanctions if a party’s assessment of the claim turns out to be wrong.

 The FRC scheme will apply to claims where the letter of claim is submitted after the implementation date of the scheme, regardless of when the incident occurred. This is likely to lead to a flood of letters of claim designed to beat the deadline. Will you be geared up to respond to any influx of claims?

NHS Resolution has been fully involved with DHSC on this work. The Consultation is available to view and comment. Your views are invited, and we encourage you all to respond to the Consultation online, by email to FRCconsultation@dhsc.gov.uk or by post. 

This is clearly important for Trusts and has potentially significant implications. We would be interested to hear your views and welcome any questions or comments you may have.  Please send any comments or views to frcconsultation@weightmans.com and we will aim to respond within 48 hours.