David Marshall, Partner
Email David
Few areas of the law are quite so political, of so much interest to commentators, as clinical negligence litigation. As a clinical negligence practitioner, I am not at all afraid to make the case for the tort system, to debate the real issues and to engage in dialogue about solutions to make the system work better in the interests of all those involved, and, most particularly, in the interests of those who suffer from avoidable medical accidents. However, rational debate is difficult in a climate of hysteria, misinformation and untruths about the current state of clinical negligence litigation.
One major issue is the way in which the statistics are presented. The National Audit Office, whilst providing a technically correct analysis, presents its figures in a way in which they can be and are misunderstood and/or misrepresented for political effect.
"Record Compensation claims costing the taxpayer £12.3 billion in one year" was the headline in the Independent on 27th August this year. Included in this was a claim that "The National Audit Office has found claims against the NHS stand at £4.4 billion and could rise to as much as £8.4 billion". A leading article in the same edition of the Independent commented that "the total sum that the public sector is liable for [not just the NHS] is equivalent to 5 pence on the basic rate of income tax".
Well, of course, the truth is rather different. In a parliamentary debate at Westminster Hall on 15 May 2002 Yvette Cooper, Parliamentary Under-Secretary of State for Health, stated that the annual cost of clinical negligence in 1999 to 2000 was £375 million. Still a very significant sum, but by no means the £8.4 billion of the National Audit Office as reported in the Independent.
So, what is the explanation? Put simply, the National Audit Office is setting out an actuarially calculated provision for the total amounts that the NHS predicts could be paid out in all claims, not the amount actually paid out, or to be paid out, in any one year.
But that isn’t the end of the story. First of all, the figures are only as good as the information put in. Working out a provision for claims requires an estimation by someone of whether the claim might succeed and how much might be payable if it does. Until recently, the responsibility for this lay with individual trusts. More recently the NHSLA has taken it over. However, many of the figures currently included in the provision are based upon estimates provided by the trusts. A valid accounting provision requires reliable estimates that are treated consistently. It is far from clear that this has historically been the case, particularly when the responsibility was scattered across numerous people in different departments in different trusts.
Secondly, there is the problem that if claims are notified they go in to the provision, but don’t come out again unless the Trust is notified that a claim will not proceed. So, let us say 10 cerebral palsy cases are notified as we need to investigate whether there is any liability, but only 1 proceeds. Unless the other nine cases are notified to the trust as not proceeding then, as claims by minors and often patients, they will remain on the books with a significant provision. Whilst we claimant lawyers are, for obvious reasons, often reluctant to say that there will be no future claim for a patient, some indication as to our client’s intentions would be very helpful to the NHS in clearing some of these old provisions. Looking at the statistics, and even given the slow progress of some cases, for legitimate reasons or not, they suggest to me a large number of old, abandoned but uncleared, cases.
Thirdly, whilst it is true that the figures are not picked out of thin air, but are calculated on actuarial principles, the fact that the basis of such calculation has significantly changed since 1998 make year on year comparisons difficult and potentially misleading. Furthermore, assessments of expected outcomes in respect of liability and quantum are very difficult to make in clinical negligence cases and the published figures give little detail as to how this is done in practice and how accurate these predictions in fact are. Bearing in mind the very recent change to methodology, it would seem unlikely that any meaningful analysis of the accuracy of the figures calculated on the new basis could possibly have been undertaken.
It is not easy to deconstruct and understand the published figures without access to the underlying detailed statistics. But it seems that provisions for all claims notified but not yet settled is estimated (but subject to my concerns as outlined above) at about £3 billion. On top of this £3 billion provision for the cost of all claims notified, an additional £1.4 billion provision is added in respect of claims which are "incurred but not received" (in other words, incidents which it is estimated have already happened but which have not been claimed for). I suspect that estimating the true cost of these is even more difficult. And finally the £8.4 billion mentioned by the Independent includes another £4 billion estimated by the NAO to reflect "other possible, but unlikely, costs of clinical negligence"!
None of this is to say that the NAO are not properly doing their job as auditors in setting out accountant’s provisions. However, in my view, it is incumbent on a public watchdog like the National Audit Office not only to audit the figures correctly, but also to ensure that these are made available to public and press in a form which is easily understandable to a layman, including all the relevant caveats. The quite astonishing level of misunderstanding shown by reputable journalists on national broadsheets show that the NAO has to date wholly failed in this task.
For further information email David Marshall or call 020 7940 4000.
