CLINICAL NEGLIGENCE AND ATE PREMIUMS: A SUITABLE CASE FOR TREATMENT
In Mitchell v Gilling-Smith [2017] EWHC B18 (Costs)
the Senior Courts Costs Office upheld recovery of an After the Event Insurance Premium of £10,000.00 plus Insurance Premium Tax (IPT) in a clinical negligence case, where such premiums remain recoverable, but only in relation to the risk of incurring a liability to pay for reports relating to reliability or causation.
The total premium was £13,500.00 plus IPT, split into £10,000.00 covering the cost of experts’ reports and just £3,500.00 to cover all other disbursements and adverse costs.
At the time of settlement, the actual cost of the report was £2,000.00, so the Defendant had to pay that sum and five times as much for the insurance to cover that sum.
The Costs Master said that this premium “could not be characterised as disproportionate in a clinical negligence claim that settled for £200,000.00”.
That makes no sense at all. The proportionality test must relate to the disbursement and what it covers.
The logic of this is that in a big claim one could spend, say, £10.00 on a cup of coffee at court or whatever.
I am no fan of the National Health Service Litigation Authority, or Resolution, or Sellafield, or whatever it is now called, nor of its lawyers, but this is absurd and is a waste of money that could be spent on medical treatment.
Who, out of their own money, and not out of their mind, would pay £10,000.00 to insure £2,000.00?
How can the cost of insuring the risk of all other disbursements and adverse costs be only around one-third of the cost of insuring the medical reports?
This brings the clinical negligence sector into disrepute and is one of the drivers for the move towards fixed costs for all clinical negligence actions of all kinds.
The obvious answer is for the NHS to provide an expert at no charge.
Even taking into account cases which do not succeed or proceed, this would be far cheaper for the NHS and would give greater access to justice and prevent insurance companies taking NHS money.
Kerry Underwood 
1. The Claimant did not pay £10,000 to insure £2,000. The Claimant paid £10,000 to insure an unknown sum up to £100,000 and which would have been substantially more than £2,000 if the Defendant had disputed causation.
2. The risk of all other disbursements and adverse costs can be 1/3 of the cost of insuring the medical reports because a) given QOCS and the requirement to inform the insurer of any Part 36 offers, the chances of the insurer having to ever pay out adverse costs are very very low; and b) other disbursements are modest if Counsel acts on a CFA
Lee C
October 13, 2017 at 1:41 pm
Lee
1. Do you seriously think that if the premium was not recoverable a properly advised Claimant would pay £10,000.00, payable by the Claimant out of damages, to ensure that the costs of the medical report on liability and causation?
2. How so? On this claim the court fee alone would have been £10,000.00, plus other court fees, and so to say that other disbursements are modest is simply incorrect.
Furthermore what you are effectively saying is that the ATE insurer completely controls the litigation, which is equally unacceptable.
Kerry
kerryunderwood
October 18, 2017 at 3:32 pm
The fact that only 2k had been incurred is irrelevant. The insurance cover was for a greater amount and the question is was that the right insurance to take out at the point in time. If it was then it is proportionate for the case. If 2k of experts would only ever be needed even if the matter went to a fully contested trial then of course the premium is disproportionate but the nature of insurance and litigation is you don’t know what will happen or when / how a case may settle. I think the Costs Judge got it right here. I don’t agree that the NHS should provide experts – massive scope for conflict of interest or perception of conflict of interest.
Emma Heather
October 13, 2017 at 2:11 pm
Emma
Do you seriously think that if the premium was not recoverable a properly advised Claimant would pay £10,000.00, payable by the Claimant out of damages, to insure the costs of the medical report on liability and causation?
If the answer is No, then how can it be justified when a third party, and only a third party is paying?
Are you seriously suggesting that if there was no recoverability the split would be the same?
Why is the split not the same in, for example ,serious personal injury cases, where there is no recoverability?
I accept your point concerning a potential conflict of interest in relation to medical reports, but virtually all medical experts work for the National Health Service in any event, so you have that problem already.
I see little solution to that point, which I accept is a fair one.
Kerry
kerryunderwood
October 18, 2017 at 3:31 pm
Kerry
If the ATE insurer doesn’t have the opportunity to make a profit then there will be no ATE in which case how will disbursement’s be funded? The whole system grinds to a halt – as we have seen in other areas of litigation over the last decade but particularly the last few years.
I accept your point that most private consultants split their time between NHS and private practice but the conflict of interest is too great and justice has to be seen to be done. The Claimant must have free will in deciding it’s expert.
Emma
Emma Heather
October 18, 2017 at 4:54 pm
I have to disagree. When one reads the full Judgment it becomes apparent that Master Leonard’s decision is the appropriate decision. The policy was taken out 14 months after the Solicitor received instructions and after a Letter of Claim had been served. The Defendant, in its response admitted a limited proportion of liability and alleged contributory negligence as well as denying causation therefore had the claim failed to settle soon after proceedings were served when the Defendant made a good offer, the Claimant would have needed to obtain full reports on liability and causation, which costs would have at least, if not exceeded the premium payable. The sum at which the claim settled is all but one factor referred to by Master Leonard and frankly, the Defendant’s submissions and evidence submitted in support fell well short of proving the premium was disproportionate. It’s a very good Judgment in my opinion.
F. Rodriguez
October 18, 2017 at 12:37 pm
I disagree, for the reasons set out above, and I ask you the same question, that is whether if the Claimant was actually paying that premium, rather than it being recoverable, would you advise the client so to do?
Kerry
kerryunderwood
October 18, 2017 at 4:50 pm
You certainly can. The insurance policy was taken out subsequent to the Defendant’s partial denial of liability, full denial on causation and allegations of contributory negligence. The Claimant, at this point found herself in a situation where she would have to go on and obtain expert reports on both liability and causation that could cost well in excess of £10,000.00. The Defendant would no doubt contest the evidence and obtain its own evidence, there would be CPR 35 Questions and most likely JS’s because, let’s face it, this is the NHSLA. Potentially, Counsel’s input would be required with other disbursements such as fees for obtaining medical records etc.. being incurred in addition. The answer to the question is yes, I would advise the Claimant to take out the insurance policy to protect herself from the cost risks of facing bills for a value of, perhaps twice the premium of £13,000.00 that covered experts and all other disbursements, provided of course that the case had merits, which it clearly did.
F Rodriguez
October 18, 2017 at 5:15 pm
Interesting. |It just is not happening in non-recoverable work. In any event, I suspect recoverability will be scrapped as clinical negligence cases become subject to fixed costs.
Thank you for commenting.
Kerry
kerryunderwood
October 18, 2017 at 5:34 pm
Emma
I agree, but the suggestion is that the market is being distorted due to recoverability, just as it was in other areas when the ATE premium was recoverable.
In those areas pre-recoverability and now again post-recoverability ,premiums are lower and there is a wider range of products.
I always opposed success fee recoverability, but ATE recoverability is different, and there is a case for it as you will have heard on my courses and in my books, but in my view cases like this weaken the argument for recoverability.
Generally in the vast majority of personal injury work the claimant does NOT have a free will in deciding its expert, who is randomly allocated.
I accept that in actions against the NHS, there is an argument that random allocation may not be appropriate.
Thank you for commentiing.
Kerry
kerryunderwood
October 18, 2017 at 6:00 pm